Agricultural News
Simple Yet Important Distinctions to Understand in Cattle Price Projections
Wed, 05 Oct 2016 12:22:02 CDT
Kansas State University recently hosted its Beef Cattle Stocker Field Day and in attendance was Extension Livestock Market Economist Dr. Glynn Tonsor. While there, he spoke with producers about several topics regarding calculating the costs related to grazing cattle and their potential value of gain. Dr. Tonsor spoke with Farm Director Ron Hays as well, to explain his method in determining the price a producer can expect to get, grazing stockers through to spring.
"You could take the current cash market and apply a value of gain," Tonsor said, using the September 28th Dodge City report as an example, comparing 5WT calves to 7WT calves, "and infer what the markets are paying them for the additional pounds. And if you do this, you'll infer over a dollar per pound, on what the market says they want."
Dr. Tonsor says this is a signal that markets are looking for heavier animals. However, he offers a word of caution with the same breath.
"But what I want to give caution on, is using that as a projection of value of gain," Tonsor said.
He explained you would not want to buy a 5WT calf, put an additional 200 lbs. on it and expect any certain price for it based off current market prices. He warns that it takes several months to do this, and a lot can happen between now and then.
"You have to look forward, there's seasonal patterns, there's lots of things you have to look forward to, not just today's heavy weight price," Tonsor said, digressing that despite all the volatility talk, "The punchline is, it more accurate to use the forward looking futures contracts historic basis than use the current market."
In effort to help producers better anticipate their costs and profits, Dr. Tonsor contributed to the development of www.beefbasis.com, a website featuring several helpful calculators.
Listen to Dr. Glynn Tonsor explain the intricacies of projecting cattle prices using the current cash market with Farm Director Ron Hays on today's Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
Listen to Dr. Glynn Tonsor explain the intricacies of projecting cattle prices using the current markets
Listen to Dr. Glynn Tonsor explain the intricacies of projecting cattle prices using the current markets
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