Question about determining pricing

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sidio_nomo

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Jan 9, 2015
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Hello,

Question: what "procedure" would you recommend for making the most informed decision on how much to bid for feeder bulls? I'm mostly concerned with how to incorporate external data, specifically,

A) the part played by Globex futures info on feeder calve prices (if any).
B) other data sources (e.g., USDA cattle auction info for say AL: http://search.ams.usda.gov/mndms/2014/1 ... 141211.TXT) that may/could/should play a role.

I'm less concerned about pricing based on "soft" factors (e.g., whether the cow looks sick, history of seller, etc.) ... my goal is to provide, at say weekly intervals, a "baseline" average number on top of which "soft factor" adjustments can be made, to support pricing decisions made at auctions.

Background: My dad does a small feeder bull operation in NW AL, and I (a systems engineer, with little knowledge of what-drives-what in the cattle "system" but very interested) am setting him up with necessary tools/info to assist him in decisions (e.g., spreadsheets helping him manage expenses, etc.), specifically, pricing decisions at auctions. I have effectively no knowledge on futures (besides a limited understanding that it's a "bet" on how prices will be at a certain time) and/or how futures drives cattle prices. I'm also new to this forum (apologies if this is a repost ... can't get the search to work). My impression is that a tool that regularly computed this info and text-messaged it to my dad (along with say local weather forecasts) may be helpful.

Off topic "you-should-think-about-this" or "I'd-do-it-this-way-instead" are MOST welcome, especially suggested procurement alternatives besides auction houses.

Please let me know if I can provide additional info on our specific operation (I can't guarantee I'll have the info). Thank you for your time and any substantial contributions.
 
I'm no computer whiz but when futures are only speculations and the price of beef is driven by demand , I don't think your going to build a progrsm that can replicate emotions. A lot of bulls and feeders are bought that way . welcome. If all he wants is a text and weather, I text him for a fee.
 
Welcome to Cattle Today boards. What you are wanting to build is not possible. The futures boards were developed for risk management. The problem is they are mainly just used by speculators. Try selling a load of southern yearlings even the feeder cattle board - won't happen. Try $6 to $8 back of the board and you can make a trade. Your father's got a good plan - buy bull yearlings and add value to them by making steers and adding weight to them. That is why bulls sell at a discount to steers. You have to figure in death loss from late castration and sickness from putting cattle from multiple sources together. Everyone who does this has different costs and you have to figure yours.
 
Most informed decision.
What is the bid on them? (You have to go one bid up to get them until no one less bids anymore)
What will it cost in feed to get them where I can sell them?
Projected death loss?
What price are the steeres of the weight these will be selling for now? (Determines what the cost of the Put will be to have them protected on the board should prices fall while I am getting them to sale time).
 
Thanks for the responses.

Maybe my more fundamental question is why my Dad is even looking at Globex futures info in the first place. Maybe he's relying on them for some reason when perhaps there's no connection between futures info and whatever reason he's using it. Maybe he's using it as a coarse feel for what demand will be in a few months. Maybe he's (without my knowledge) invested in the futures market and that's the reason ... will find out.

My conclusion from replies so far is that feeder cattle futures may be considered effectively irrelevant at the level of individual feeder cattle farmers' procurement pricing. Please correct me if you think otherwise.
 
The cattle market is a volatile market based on numbers, gut feelings, the weather, feed supplies, consumer demand and world events. It has never been stable enough to form a dependable bottom line.
Just when we think we have an aspect figured out we are proven wrong.
The only ones I have ever known who lasted long in the cattle business were the ones committed long term and had the ability to adapt and endeavor.
 
Texas PaPaw":1ut26fp7 said:
Welcome to CT.

On the attached link go down to the "Breakeven selling and purchase prices for cattle" title and download the buy-sell.xls spreadsheet. This is the best buying price decision tool I have found. Or you can just google buy-sell.xls

http://www.agmanager.info/livestock/bud ... efault.asp
Click to expand...


Thank you very much ... this seems consistent with what I was trying to provide. With our expense spreadsheet (broken down by "feed", etc.), we should be able to directly compute this spreadsheet's inputs. This was very helpful; thanks again.
 
only way to know what you can afford to pay is to figure all your costs to buy & raise. then figure a low price at sale barn, if you make money that way you will be fine if price is higher
 
Texas PaPaw":2eb8mejx said:
Welcome to CT.

On the attached link go down to the "Breakeven selling and purchase prices for cattle" title and download the buy-sell.xls spreadsheet. This is the best buying price decision tool I have found. Or you can just google buy-sell.xls

http://www.agmanager.info/livestock/bud ... efault.asp
Click to expand...
I looked at that. It is going to take me a minute or three to figure out that ss.
 

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