3. The Oklahoma Stocker Industry Derrell S. Peel Oklahoma State University

4. The Beef Industry Demand Marketing System Production

5. Cattle and Beef Markets Demand –What gets produced –How much gets produced –Who gets it

6. Cattle and Beef Markets Marketing System –Moves products from “Gate to Plate” –Time, Place and Form functions Storage (When) Transportation (Where) Processing (What Changes)

7. Cattle and Beef Markets Production –How things get produced What resources are used

8. Beef Production and Marketing System MARKETINGPRODUCTION

10. U.S. Beef Cows By Region Percent of U.S. Total, 2002 NORTHWESTNORTHERN ROCKIES NORTHERN PLAINS SOUTHERN PLAINS GREAT LAKES NORTHEAST MIDWEST GULF APPALACHIAN SOUTH SOUTHWEST SOUTHERN ROCKIES EASTERN SEABOARD 6.0 4.1 4.7 6.9 3.9 14.3 26.8 12.1 2.2 7.1 7.0 4.0 1.0 U.S. Total = 33,099,700 head

11. Regional Share of Beef Cows, January 1, 2002

12. Regional Cattle and Meat Flows Cattle Flow Meat Flow

13. Major Cattle Feeding States and Fed Cattle Slaughtering Plants (Four Largest Firms, 1998) IBP ConAgra Excel National Beef/Farmland 7 Major Cattle Feeding States

14. What is the Stocker Industry?

15. The U.S. Stocker Industry A very important but poorly understood sector of the beef industry –geographically widespread –diverse production systems –hard to measure

16. Characteristics of Stocker Production Animal Growth (versus fattening) Use of Forages (versus concentrates) Viable Enterprise –Time Required

18. Regional Share of Feeder Supplies Outside of Feedlots, Jan. 1, 2002

19. Southern Plains Feeder Share

20. Diversity of Stocker Production Grazing –Summer Season Long/Early Intensive Native Range/Tame Pasture Crop Aftermath –Winter Annual Cool Season Perennial Cool Season

21. Diversity of Stocker Production Semi-confinement –Put and Take –Creep Feeding –Dry Winter Confinement –Harvested Forages

22. Regional Stocker Cattle Production Scattered Mixed Summer Winter Fall

23. Okla Washington Idaho California Colorado Kansas U.S. Ave., 75.2 % January 1 Stocker Ratio, 2002 Wyoming Montana Oregon New Mexico 68.84% 44.1% 59.1% 27.6% 56.4% 42.1% 88.7% 144.3% 123.5% 77.4% 75.5% Utah Texas 74.1% 78.6% 45.7% Florida 74.1% 63.1% N Dakota S Dakota 69.2% 89.0% Nebraska Mo Ky 71.7% Tn Al 64.3% 69.3% Ga Ar 75.0% Iowa 96.0%

24. Okla Washington Idaho California Colorado Kansas U.S. Ave., 75.2 % January 1 Stocker Ratio, 2002 Wyoming Montana Oregon New Mexico 68.84% 44.1% 59.1% 27.6% 56.4% 42.1% 88.7% 144.3% 123.5% 77.4% 75.5% Utah Texas 74.1% 78.6% 45.7% Florida 74.1% 63.1% N Dakota S Dakota 69.2% 89.0% Nebraska Mo Ky 71.7% Tn Al 64.3% 69.3% Ga Ar 75.0% Iowa 96.0%

25. Regional Stocker Ratio, January 1, 2002

26. Stocker Ratio, January 1

27. Unique Role of Winter Stockers Fall demand for wheat stockers helps offset seasonally large fall marketings of calves Helps stabilize seasonal price patterns

28. Seasonal Price Pattern

29. What is the “Job” of the Stocker Industry? Stocker gains are the cheapest beef cattle gains Beef industry flexibility Feed industry balance Quality Improvement

30. The Production Role of Stockers Utilize forages for cheap gain Increase feeder cattle weight/age Upgrade cattle quality

31. The Inventory Role of Stockers Allocate feeder cattle supplies over time –seasonally –year-to-year Provide variation in cattle slaughter age

32. Size of the Stocker Industry On January 1, Stockers = 20% of cattle inventories On July 1, Stockers = 8% of cattle inventories

33. U.S. Average Stocker Ratio, January 1, 2002

34. The Market-Balance Role of Stockers Maintain economic balance between livestock, grain and forage markets –respond to economic shocks

37. The Stocker Industry Is The Beef Industry “Shock Absorber”

38. How Does The Stocker Industry Accomplish All These Things?

39. Stocker Economics: Price Levels and Price Spreads Profit potential of stocker enterprise is determined buy/sell spreads High prices = Large price spreads Low prices = Small price spreads

40. Feeder and Fed Steer Prices, 1992-2001

41. Value of Stocker Gain March 1998 400-500 lb. steer price = $104.45 Beginning value = $470.03/head 700-800 lb. steer price = $75.81 Ending value = $568.58 Value of 300 lbs. gain = $98.55/head or $0.328/pound

42. Value of Stocker Gain July 1998 400-500 lb. steer price = $77.98 Beginning value = $350.91/head 700-800 lb. steer price = $70.01 Ending value = $525.08 Value of 300 lbs. gain = $174.17/head or $0.581/pound

43. Sources of Profitability in the Stocker Industry Selling Feed –Returns to forage Management Services –Upgrading cattle quality Speculation –Holding cattle over time

44. The Stocker Industry Dilemma When prices are rising: –Buy/Sell margins widen –Trend is positive When prices are falling: –Buy/Sell margins narrow –Trend is negative

45. Value of Gain (Based on 200 lbs of Gain)

46. Stocker Industry Adjustments Change beginning weight Intensity (rate of gain) Length of time Animal quality Steers versus heifers

47. Steer Price/Weight Relationship, OKC, 1992-2001

48. Steer Price/Weight Relationship: Cyclical Effects

49. Steer Price/Weight Relationship: Seasonal Effects

50. Stocker Budget Breakdown

51. Stocker Breakeven Dynamics

52. Stocker Price and Breakeven Over Time

53. Major Factors Affecting Stocker Profitability Purchase Price Time Feed Cost Animal Performance

54. Summary Stocker industry plays a vital role in the cattle industry Southern Plains winter wheat pasture grazing plays a unique role Stocker production is especially important in Oklahoma