October 28, 2016 Tennessee Market Highlights Number: 44

FED CATTLE: Fed cattle trade was $4 to $6 higher on a live basis. Prices on a live basis were $103 to $105 while prices on a dressed basis were mostly $162 to $164. The 5-area weighted average prices thru Thursday were $103.13 live, up $4.89 from last week and $161.77 dressed, up $7.75 from a week ago. A year ago prices were $136.67 live and $209.79 dressed. There has been considerable concern over the past few years about a decline in cash cattle trade. However, cash trade has increased the past several months. One reason for this increase is the Fed Cattle Exchange where finished cattle are auctioned online using Superior Livestock Auction. Thus, on Wednesday, over 10,000 head of finished cattle were traded through the Fed Cattle Exchange which was the first sign of the established price for the week. The price of finished cattle then strengthened through the end of the week as live cattle futures found support for the first time since the middle of August. This is most likely the turnaround that the market has been waiting on since summer. Thus, prices are expected to be steady to slightly stronger the next couple of months.

BEEF CUTOUT: At midday Friday, the Choice cutout was $179.97 up $1.57 from Thursday and up $3.14 from last Friday. The Select cutout was $167.58 up $1.08 from Thursday and up $2.31 from last Friday. The Choice Select spread was $13.22 compared to $12.39 a week ago. Beef cutout prices have trudged through late summer and the first half of the fall season. This does not mean packers are doing poorly though. Packers have actually been benefiting from very strong margins because of low finished cattle prices. Low cattle prices provided packers incentive to pull cattle forward and harvest a large number of animals. This pulling forward of animals may be benefi-cial to the live cattle market in coming months as there will be fewer animals ready for harvest relative to what could

have been expected if cattle marketings were at “normal” rates. As the market moves through November and December, the expectation is for cutout prices to strengthen due to the holiday market. This means cutout prices will be supported by middle meats over the next couple of months. One more positive aspect of the cattle business that is not part of the cutout value is the hide and offal value. The offal value experienced record prices a couple of years ago, but then plummeted. These val-ues have begun creeping back up and will add value to finished cattle.

OUTLOOK: The first signs of life in the cattle market surfaced this week as the November feeder cattle futures price in-creased over $9 from the contract low late last week. The stronger feeder cattle fu-tures resulted in steer prices in Tennessee being up $3 to $6 per hundredweight com-pared to last week while heifer prices were up $4 to $10 per hundredweight. It is not common for calf and feeder cattle prices to escalate during October and November, but there is potential for prices to increase this year because the lighter weight animals have been undervalued for several weeks. Deferred contracts remain severely dis-counted to the nearby November feeder cattle contract, but the expectation is for those contract prices to converge to the cash price as the marketing time period is reached. Producers should not expect any tremendous price recovery over the next month though the expectation is for cattle prices to inch up with the biggest gains ex-pected after the first of the year. With that information, using this week’s prices only and not looking to the future price, the value of gain of carrying 475 to 575 pound steers to 775 pounds has a value of gain ranging from 75 to 78 cents per pound. Thus, if the price of 775 pound steers in-crease relative to today’s weekly auction price then the value of gain will be greater

(Continued on page 2)

Livestock Comments by Dr. Andrew P. Griffith Trends for the Week Compared to a Week Ago

Slaughter Cows

$1 lower

Slaughter Bulls

Steady

Feeder Steers

$3 to $6 higher

Feeder Heifers

$4 to 410 higher

Feeder Cattle Index

Wednesday’s index: 120.90

Fed Cattle

The 5-area live price of $103.13 is up $4.89. The dressed price is up $7.75 at $161.77.

Corn

December closed at $3.55 a bushel, up 3 cents since last Friday.

Soybeans

November closed at $10.01 a bushel, up 18 cents since last Friday.

Wheat

December closed at $4.08 a bushel, down 6 cents since last Friday.

Cotton

December closed at 70.82 cents per lb, up 1.75 cents since last Friday.

2

than 75 to 78 cents. This represents a fairly decent opportunity for stocker producers. With the expectation of prices increasing in 90 to 120 days and the fact that most stocker producers will achieve a higher price due to marketing cattle in load lots, the value of gain nears $1 per pound. Most producers have a cost of gain that is much lower than $1 per pound which results in positive margins over the feeding period. Feedlot managers are sending the message to cow-calf and stocker producers that they desire an animal that is over 700 pounds which is what has resulted in lighter calf prices being severely discounted relative to heavier animals.

ASK ANDREW, TN THINK TANK: This week, we have been hosting a small ruminant conference in middle Tennessee. I have learned several production and economic lessons from this conference even though I am not a small ruminant produc-er. We had about 60 participants at the conference which was a little disappointing to me, because the information discussed was great. I really hope our livestock producers in this state are not just attending educational meetings to be eligible for TAEP grant funds. The TAEP funds have benefited many producers and industries in the state over the past decade. However, my hope is that producers are constantly seeking information in-stead of only worrying about maintaining their certification every three years to remain eligible for 50 percent cost share with TAEP. These are really continuing education opportunities. Please take advantage of these meetings and conferences.

Please send questions and comments to agriff14@utk.edu or send a letter to Andrew P. Griffith, University of Tennessee, 314B Morgan Hall, 2621 Morgan Circle, Knoxville, TN 37996.

FRIDAY’S FUTURES MARKET CLOSING PRICES: Friday’s closing prices were as follows: Live/fed cattle –December $104.35 -0.80; February $104.93 -0.63; April $104.25 -0.68; Feeder cattle –November $121.55 -2.33; January $116.00 -2.53; March $113.15 -2.33; April $112.93 -2.18; December corn closed at $3.55 down $0.03 from Thursday.

(Continued from page 1)

Livestock Comments by Dr. Andrew Griffith

Thursday October 27, 2016

Month Class III Close Class IV Close

Oct 14.78 13.68

Nov 15.51 13.83

Dec 15.37 14.15

Jan 15.45 14.48

Feb 15.65 14.91

Milk Futures

Cattle Hogs

———— Number of head ————

This week (4 days) 114,000 428,750

Last week (4 days) 113,750 440,750

Year ago (4 days) 110,250 431,250

This week as percentage of

Week ago (%) 100% 97%

Year ago (%) 103% 99%

Average Daily Slaughter USDA Box Beef Cutout Value

Choice 1-3 600-900 lbs

Select 1-3 600-900 lbs

———————— $/cwt —-———————

Thursday 181.54 168.81

Last Week 177.89 167.74

Year ago 217.95 211.07

Change from week ago +3.65 +1.07

Change from year ago -36.41 -42.26

3

Crop Comments by Dr. Aaron Smith

Overview Corn, cotton, and soybeans were up; wheat was down for the week. Com-pared to last year at this time December corn futures are 20-30 cents lower, November soybean futures are 80-125 cents higher, December cotton fu-tures are 5-8 cents higher, and July wheat futures are 40-60 cents lower. Global production of corn, soybeans, and wheat are projected to be at all-

time highs for the 2016/17 marketing year, however, so is global consumption of all three commodities. Stocks-to-use (global ending stocks divided by global consumption) provides some insight into why corn and wheat prices are lower and soybean and cotton prices are higher than last year. Comparing the 2015/16 marketing year 2014/15 marketing year stocks-to use is 3% higher for wheat, 1% higher for corn, 2% lower for soybeans, and 13% lower for cotton. The simple interpretations of these stocks-to-use numbers are that relative to consumption there is more wheat and corn and less soybeans and cotton than one year ago. If we examine average stocks-to-use ratios for the past 10-years, the only commodity that has lower projected stocks-to-use ratios than its 10-year average is soybeans, 23.5% compared to 23.7%. The other three commodities are projected to be significantly higher than their 10-year averages – wheat 34% compared to 28%, corn 21% compared to 17%, and cotton 78% compared to 68%. Stocks-to-use ratios provide some justification for the higher prices for soybeans and cotton compared to last year. Moving through the 2016/17 marketing year export demand for all four commodities will continue to be important for domestic prices. South American crop progress and currency exchange rates will continue to be too very important factors in the pace of US export sales. Corn December 2016 corn futures closed at $3.55 up 3 cents since last Friday. December 2016 corn futures traded between $3.46 and $3.58 for the week. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee and weakened in Lower-middle Tennessee. Overall, basis for the week ranged from 26 under to 10 over the December futures contract with an average of 5 under at the end of the week. Ethanol production for the week ending October 21 was 991,000 barrels per day down 7,000 from last week. Ethanol stocks were 19.919 million barrels, up 877,000 barrels. This week’s Crop Progress report estimated corn harvested at 61% compared to 46% last week, 70% last year, and a 5-year average of 62%. In Tennessee, this week’s Crop Progress report indicated corn harvest-ed at 98% compared to 97% last week, 95% last year, and a 5-year average of 91%. Dec/Mar and Dec/Dec future spreads were 8 and 35 cents, respectively. In Tennessee, January 2017 cash forward contracts averaged $3.68 with a range of $3.33 to $3.86.

Corn net sales reported by exporters from October 14 to 21 were below expectations with net sales of 31.5 million bushels for the 2016/17 marketing year. Exports for the same time period were down from last week at 20.6 million bushels. Corn export sales and commitments were 41% of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31) compared to a 5-year average of 40%. March 2017 corn futures closed at $3.63 up 1cent since last Friday. December 2017 corn futures closed at $3.90 up 1 cent since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2017 Put Option costing 37 cents establishing a $3.63 futures floor.

(Continued on page 4)

4

Crop Comments by Dr. Aaron Smith

Soybeans November 2016 soybean futures closed at $10.01 up 18 cents since last Friday. November 2016 soybean futures traded between $9.80 and $10.20. For the week, average soybean basis weakened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee. Basis ranged from 29 under to 9 over the November futures contract at elevators and barge points. Average basis at the end of the week was 11 under the November futures contract. This week’s Crop Progress report estimated soybeans harvested at 76% compared to 62% last week, 84% last year, and a 5-year average of 76%. In Tennessee, this week’s Crop Progress report indicated soybean condition at 73% good-to-excellent and 6% poor-to-very poor; and soybeans harvested at 75% compared to 62% last week, 64% last year, and a 5-year average of 48%. November/December 2016 soybean-to-corn price ratio was 2.82 at the end of the week.

Nov/Jan and Nov/Nov future spreads were 11 cents and -7 cents, respectively. Net sales reported by exporters were within expec-tations with net sales of 75.2 million bushels for the 2016/17 marketing year. Exports for the same period were up from last week at 103.2 million bushels. Soybean export sales and commitments were 61% of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31), compared to a 5-year average of 60%. January 2017 soybean futures closed at $10.12 up 20 cents since last Friday. In Tennessee, January cash contracts average $10.17 with a range of $9.67 to $10.42. Novem-ber 2017 soybean futures closed at $9.94 up 9 cents since last Friday. November/December 2017 soybean-to-corn price ratio was 2.55 at the end of the week. Downside price protection could be achieved by purchasing a $10.00 November 2017 Put Option which would cost 69 cents and set a $9.31 futures floor. Cotton Delta upland cotton spot price quotes for October 27 were 69.76 cents/lb (41-4-34) and 72.51 cents/lb (31-3-35). Adjusted world price (AWP) decreased 1.41 cents to 59.25 cents per pound. This week’s Crop Progress report estimated cotton condition at 48% good-to-excellent and 16% poor-to-very poor; cotton bolls opening at 93% compared to 89% last week, 95% last year, and a 5-year average of 92%; and cotton harvested at 39% compared to 30% last week, 39% last year, and a 5-year average of 37%. In Tennes-see, this week’s Crop Progress report indicated cotton condition at 79% good-to-excellent and 3% poor-to-very poor; cotton bolls opening at 99% compared to 99% last week, 97% last year, and a 5-year average of 93%; and cotton harvested at 61% compared to 45% last week, 42% last year, and a 5-year average of 40%. December 2016 cotton futures closed at 70.82 up 1.75 cents since last Friday. December 2016 cotton futures traded between 68.08 and 71.09 cents this week.

(Continued on page 5)

5

Crop Comments by Dr. Aaron Smith

Dec/Mar and Dec/May cotton futures spreads were 0.44 cents and -0.92 cents, respectively. Net sales reported by exporters were down from last week with net sales of 129,300 bales for the 2016/17 marketing year. Exports for the same period were down from last week at 127,100 bales. Upland cotton export sales were 53% of the USDA estimated total annual exports for the 2016/17 mar-keting year (August 1 to July 31), compared to a 5-year average of 51%. March 2017 cotton futures closed at 71.26 up 1.79 cents since last Friday. December 2017 cotton futures closed at 69.9 up 0.82 cents since last Friday. Downside price protection could be obtained by purchasing a 70 cent December 2017 Put Option costing 5 cents establishing a 65 cent futures floor. Wheat Wheat net sales reported by exporters were above expectations with net sales of 23.7 million bushels for the 2016/17 marketing year. Exports for the week were down from last week at 9.7 million bushels. Wheat export sales were 61% of the USDA estimated total annual exports for the 2016/17 marketing year (June 1 to May 31), compared to a 5-year average of 62%. December 2016 wheat futures closed at $4.08down 6 cents since last Friday. December 2016 wheat futures traded between $3.98 and $4.18 this week. December wheat-to-corn price ratio was 1.15.

Dec/Mar and Dec/Jul future spreads were 20 cents and 49 cents, respectively. March 2017 wheat futures closed at $4.28 down 7 cents since last Friday. March 2017 wheat-to-corn price ratio was 1.18. Nationally, the Crop Progress report indicated winter wheat condition at 59% good-to-excellent and 7% poor-to-very poor; winter wheat planted at 79% compared to 72% last week, 81% last year, and a 5-year average of 82%; and winter wheat emerged at 60% compared to 47% last week, 58% last year, and a 5-year av-erage of 58%. In Tennessee, winter wheat condition was estimated at 68% good-to-excellent and 9% poor-to-very poor; winter wheat planted at 58% compared to 38% last week, 49% last year, and a 5-year average of 37%; and winter wheat emerged at 20% compared to 7% last week, 20% last year, and a 5-year average of 14%. In Tennessee, June/July 2017 cash wheat ranged from $4.23 to $4.61. July 2017 wheat futures closed at $4.57 down 5 cents since last Friday. Downside price protection could be ob-tained by purchasing a $4.60 July 2017 Put Option costing 33 cents establishing a $4.27 futures floor. Additional Information: If you would like further information or clarification on topics discussed in the crop comments section or would like to be added to our free email list please contact me at aaron.smith@utk.edu.

6

Friday, October 21, 2016 — Thursday, October 27, 2016

Commodity Contract Month Friday Monday Tuesday Wednesday Thursday

Soybeans Nov 9.83 9.92 9.90 10.10 10.14

($/bushel) Jan 9.92 10.02 10.02 10.21 10.25

Mar 9.98 10.09 10.09 10.28 10.31

May 10.05 10.15 10.16 10.34 10.36

Jul 10.10 10.20 10.21 10.38 10.40

Aug 10.09 10.18 10.19 10.36 10.37

Corn Dec 3.52 3.48 3.49 3.54 3.57

($/bushel) Mar 3.62 3.58 3.59 3.63 3.66

May 3.69 3.65 3.66 3.70 3.73

Jul 3.75 3.71 3.72 3.76 3.79

Sep 3.81 3.78 3.79 3.82 3.85

Dec 3.89 3.86 3.87 3.90 3.93

Wheat Dec 4.14 4.02 4.04 4.11 4.14

($/bushel) Mar 4.35 4.24 4.26 4.32 4.33

May 4.50 4.41 4.42 4.47 4.48

Jul 4.62 4.53 4.55 4.60 4.62

Sep 4.77 4.67 4.70 4.76 4.78

Soybean Meal Dec 306 307 308 319 327

($/ton) Jan 308 308 309 320 328

Mar 309 310 311 321 328

May 311 312 313 322 328

Jul 312 313 314 324 329

Aug 312 313 314 323 328

Cotton Dec 69.07 68.77 68.49 69.26 69.76

(¢/lb) Mar 69.47 69.22 69.02 69.87 70.28

May 69.97 69.78 69.54 70.30 70.68

Jul 70.09 69.95 69.73 70.42 70.75

Oct 69.51 69.37 69.15 69.74 69.99

Live Cattle Oct 101.15 103.12 102.72 103.05 104.12

($/cwt) Dec 101.87 104.25 103.90 104.40 105.15

Feb 102.80 104.62 104.55 105.15 105.55

Apr 102.07 103.82 103.70 104.60 104.92

Jun 94.87 96.22 95.95 96.65 96.92

Feeder Cattle Oct 121.87 122.37 121.55 121.97 121.92

($/cwt) Nov 119.70 122.52 122.65 123.92 123.87

Jan 115.50 118.07 117.70 118.35 118.52

Mar 113.25 115.07 114.87 115.45 115.47

Apr 112.95 114.77 114.52 115.17 115.10

May 112.52 114.15 114.07 114.62 114.50

Market Hogs Dec 41.85 43.20 44.62 44.20 45.37

($/cwt) Feb 48.72 49.70 51.37 51.12 52.32

Apr 56.72 57.52 58.72 58.67 59.87

May 66.00 66.27 66.97 66.95 68.35

Jun 69.67 70.45 71.42 71.25 72.32

Futures Settlement Prices: Crops & Livestock

7

Cattle Receipts: This week: 8,578 (11) Week ago: 8,719 (11) Year ago: 5,985 (9)

This Week Last Week Year Ago

Low High Weighted Average Weighted Average Weighted Average

—————————————————————— $/cwt ——————————————————————

Steers: Medium/Large Frame #1-2

300-400 lbs 114.00 152.50 126.75 122.48 224.93

400-500 lbs 104.00 137.50 119.46 114.47 203.61

500-600 lbs 97.00 122.00 110.45 106.67 188.94

600-700 lbs 92.00 116.00 105.87 101.24 176.28

700-800 lbs 89.00 113.00 101.80 96.32 167.89

Steers: Small Frame #1-2

300-400 lbs 116.00 117.50 116.77 108.45 182.87

400-500 lbs 105.00 120.00 112.96 98.29 162.63

500-600 lbs ——— ——— ——— 84.19 142.70

600-700 lbs ——— ——— ——— 85.94 143.55

Steers: Medium/Large Frame #2-3

300-400 lbs 94.00 142.50 115.26 110.23 182.54

400-500 lbs 92.00 123.00 106.09 100.01 177.63

500-600 lbs 80.00 110.00 96.80 92.97 176.87

600-700 lbs 84.00 106.00 93.52 93.20 163.96

700-800 lbs ——— ——— ——— ——— 151.66

Holstein Steers

300-400 lbs ——— ——— ——— ——— 163.17

500-600 lbs ——— ——— ——— 55.00 144.86

700-800 lbs ——— ——— ——— 65.50 ———

Slaughter Cows & Bulls

Breakers 75-80% 44.00 48.99 49.91 75.66 54.50

Boners 80-85% 53.80 54.74 79.69 45.00 62.50

Lean 85-90% 38.00 58.50 49.10 49.31 73.40

Bulls YG 1 65.00 87.00 78.14 78.00 109.41

Heifers: Medium/Large Frame #1-2

300-400 lbs 94.00 122.50 110.53 104.62 196.96

400-500 lbs 88.00 118.00 101.67 94.58 179.06

500-600 lbs 82.50 112.50 96.05 91.42 168.74

600-700 lbs 74.00 102.50 91.14 85.43 160.24

Heifers: Small Frame #1-2

300-400 lbs 82.50 94.00 87.77 88.96 145.90

400-500 lbs 73.00 100.00 84.71 77.82 145.98

500-600 lbs 70.00 92.50 81.79 76.62 135.48

600-700 lbs ——— ——— ——— 78.00 149.74

Heifers: Medium/Large Frame #2-3

300-400 lbs 80.00 114.00 96.78 93.66 172.23

400-500 lbs 77.00 102.00 89.34 84.74 162.85

500-600 lbs 70.00 93.50 85.77 78.74 155.51

600-700 lbs 71.00 88.00 81.54 78.62 145.40

Prices on Tennessee Reported Livestock Auctions for the week ending October 28, 2016

8

Friday, October 21, 2016 — Thursday, October 27, 2016

Friday Monday Tuesday Wednesday Thursday

Low High Low High Low High Low High Low High

———————–——————————————— $/bushel ———————————————————–———

No. 2 Yellow Soybeans

Memphis 9.84-9.89 9.82-9.94 9.80-9.83 10.05-10.05 10.09-10.11

N.W. B.P. 9.89-9.92 9.90-10.01 9.80-9.93 10.03-10.10 10.06-10.14

N.W. TN 9.62-9.73 9.71-9.82 9.70-9.74 9.81-9.93 9.93-9.94

Upper Md. 9.69-9.77 9.75-9.82 9.75-9.75 9.94-9.95 9.96-9.98

Lower Md. 9.63-9.68 9.72-9.77 9.71-9.76 9.90-9.95 9.94-9.99

Yellow Corn

Memphis 3.47-3.57 3.43-3.54 3.44-3.55 3.49-3.60 3.52-3.63

N.W. B.P. 3.50-3.54 3.50-3.54 3.45-3.55 3.55-3.60 3.58-3.63

N.W. TN 3.32-3.42 3.28-3.38 3.25-3.39 3.34-3.44 3.38-3.48

Upper Md. 3.27-3.44 3.23-3.43 3.24-3.44 3.29-3.49 3.32-3.52

Lower Md. 3.53-3.62 3.48-3.58 3.49-3.54 3.54-3.59 3.58-3.63

Wheat

Memphis ——— ——— ——— ——— ———

Prices Paid to Farmers by Elevators

100120140160180200220240260

Tennessee 500-600 lbs. M-1 Steer Prices2015, 2016 and 5-year average

2010/2014 Avg 2015 2016

8510 512 514 516 518 520 522 5

Tennessee 700-800 lbs. M-1 Steer Prices2015, 2016 and 5-year average

2010/2014 Avg 2015 2016

8595

105115125135145155165175

5-Area Finished Cattle Prices2015, 2016 and 5-year average

2010/2014 Av g 2015 2016

35455565758595

105115

Tennessee Slaughter Cow PricesBreakers 75-80%

2015, 2016 and 5-year average

2010/2014 2015 2016

9

Blue Grass Stockyard—October 27, 2016 1 load of 65 steers; mostly blk/bwf, avg. wt. 775 lbs.; $117.50 1 load of 66 steers; mixed; avg. wt. 775 lbs.; $123.50 2 loads of 130 steers; mixed; avg. wt. 775 lbs.; $121.00 2 loads of 116 steers; mostly blk/bwf; avg. wt. 850 lbs.; $118.00 2 loads of 110 steers; mostly blk/bwf; avg. wt. 940 lbs.; $116.25 Hardin County Stockyard - October 26, 2016 1 load of 66 steers; avg. wt. 777 lbs.; $125.85 East Tennessee Livestock Center—October 26, 2016 1 load of 60 steers; avg. wt. 840 lbs.; $117.75 1 load of 57 steers; avg. wt. 875 lbs.; $115.00 1 load of 65 heifers; avg. wt. 725 lbs.; $114.50

10/26/16 Warren County Livestock Receipts: 1,512 (Prices for Blk, BWF, CharX) Steers: Med & Lg 1 Heifers: Med & Lg 1 300-350 lbs 131.00 300-350 lbs 111.00-115.00 350-400 lbs 135.00 350-400 lbs 114.00-115.00 400-450 lbs 133.00-136.50 400-450 lbs 103.00-110.00 450-500 lbs 123.00-126.50 450-500 lbs 95.00-102.00 500-550 lbs 114.00-119.50 500-550 lbs 96.50-103.00 550-600 lbs 114.00-117.50 550-600 lbs 91.00-103.50 600-700 lbs 109.75-112.25 600-700 lbs 90.25-93.50 700-850 lbs 105.25-110.00 700-850 lbs 93.00-97.75 850 and over 114.50 851 and over 90.00-92.50 Steers: Med & Lg 2 Heifers: Med & Lg 2 300-350 lbs 133.00 300-350 lbs 99.00-107.00 350-400 lbs 126.00-127.50 350-400 lbs 90.00-99.00 400-450 lbs 101.00-129.50 400-450 lbs 89.00-103.00 450-500 lbs 109.00-116.00 450-500 lbs 80.00-88.00 500-600 lbs 111.00-114.75 500-600 lbs 82.00-92.00 600-700 lbs 105.00-110.00 600-700 lbs 72.00-93.75 700-850 lbs 114.50-115.50 700-850 lbs 85.00-91.00 851 and over 83.00-85.00 Bulls: Med & Lg 1-2 300-400 lbs 117.00-124.50 400-500 lbs 110.00-116.50 500-600 lbs 96.50-102.50 600-700 lbs 94.75-96.75 700-800 lbs 81.00-87.00 800-900 lbs 80.00

10/25/16 Woodbury Livestock Market, LLC Receipts: 99 (*Weaned/Vaccinated) Steers: Med & Lg 1-2 Heifers: Med & Lg 1-2 300-350 lbs 120.50 300-350 lbs 111.50 500-550 lbs 108.50 400-450 lbs 105.00 550-600 lbs 104.50 450-500 lbs 100.00

700-800 lbs 98.00-102.00* 500-550 lbs 90.00-92.50 800-900 lbs 100.00*-104.00* 550-600 lbs 86.00-95.50 600-700 lbs 89.50-90.00 700-800 lbs 84.50 Bulls: Med & Lg 1-2 400-450 lbs 112.50 450-500 lbs 108.00 500-550 lbs 101.50-104.50 550-600 lbs 96.50 600-700 lbs 91.50 700-800 lbs 85.00-87.50 10/25/16 TN Livestock Producers Fayetteville Receipts: 422 (121 graded & grouped) Steers: Med & Lg 1-2 Heifers: Med & Lg 1-2 300-400 lbs 114.00 300-400 lbs 110.00 600-700 lbs 99.00-113.00 400-500 lbs 89.00-92.00 700-800 lbs 108.50-110.00 500-600 lbs 91.00-98.00 600-700 lbs 93.50-97.50 700-800 lbs 94.00 800-900 lbs 82.00 Bulls: Med & Lg 1-2 400-500 lbs 94.00-113.00 500-600 lbs 96.00-103.00 600-700 lbs 92.00-102.00 700-800 lbs 80.00-89.50 800-900 lbs 73.00 10/25/16 Somerville Livestock Sales Receipts: 91 Steers/Bulls: Med & Lg 1-2 Heifers: Med & Lg 1-2 300-400 lbs 98.00-118.00 300-400 lbs 400-500 lbs 91.00-118.00 400-500 lbs 95.00-100.00 500-600 lbs 88.00-108.00 500-600 lbs 87.00-93.00 600-700 lbs 87.00-98.00 600-700 lbs 80.00-85.00 10/24/16 Morris Brothers Stockyard, Pikeville, TN Receipts: 135 Steers: Heifers: 200-249 lbs 50.00 250-299 lbs 100.00-120.00 350-399 lbs 115.00-122.00 300-349 lbs 118.00 400-449 lbs 121.00 350-399 lbs 81.00-100.00 450-499 lbs 107.00-110.00 400-449 lbs 81.00-97.00 500-549 lbs 102.00 450-499 lbs 54.00-92.00 550-599 lbs 92.00-107.00 500-549 lbs 87.00-93.00 600-699 lbs 101.00-106.00 550-599 lbs 71.00-109.00 600-699 lbs 79.00-91.00 700-799 lbs 69.00 Bulls: 200-249 lbs 120.00-124.00 450-499 lbs 76.00-99.00 250-299 lbs 127.00-133.00 500-549 lbs 82.00-95.00 350-399 lbs 116.00-118.00 550-599 lbs 89.00 400-449 lbs 85.00-116.00 600-699 lbs 82.00-85.00 700-799 lbs 75.00-82.00

Video Sales Self-Reported and Self-Graded Livestock Markets

Video Board Sale and Graded Sales

Video Board Sale and Graded Sales

10

When times get tough, maximize capital efficiency by Wes Ishmael in Cattle Economics September 15, 2016

“Objectives have to be lined up with marketing and the finan-cial plan,” says Sterling Liddell, a senior analyst with Rabobank Food & Agribusiness (FAR) Research and Advisory group. “Managing the balance sheet, long-term, must be as important as managing cash flow.”

The latter speaks to the ability to survive over months. The for-mer gets at sustainability over the long haul. Both promise to get tougher.

“The current environment continues to pressure revenue and earnings for U.S. row-crop farming, and, unfortunately, the near-term sector outlook remains somewhat ominous,” Liddell says in a recent special FAR report, Farming the Efficient Fron-tier. “In order to survive and thrive, farmers must adopt strate-gies that maximize bottom-line profit, rather than simply focus on crop yield.”

In fact, FAR analysts believe transitioning the focus from yield and volume toward efficiency represents a paradigm shift ne-cessitated by structurally lower commodity prices, relatively high input costs and an extended period of low average re-turns.

Margin operators in the cattle business — stocker operators and cattle feeders — have plenty of recent experience trying to figure out how to earn as much or more revenue with fewer head, relative to equity levels. Now, Liddell says, cow-calf pro-ducers need to focus more intently on capital efficiency: getting the most out of every dollar of equity placed at risk.

There are different equations used by different industries at different times to get at capital efficiency, aimed at output rela-tive to the capital required to maintain that output at a specific level. Examples are return on capital employed (earnings be-fore interest and tax/capital employed) and asset turnover ra-tio (gross farm income/average total farm assets).

One way or the other, the notion is to understand if dollars invested are working for you — and how hard. These measures can help ferret out whether a current enterprise should be con-tinued, altered or discontinued.

Along with capital efficiency, Liddell cites these as components of efficiency-driven strategies:

• Planting discipline. Planting acreage up to, but not exceeding the point where marginal costs equal marginal profits. For cow-

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calf producers, aside from thinking of this in terms of cows and heifers retained, Close points out this takes on different shades, given the slower inventory turnover. But you get the idea.

• Price realization. Coordination of merchandising and hedging activities to maximize the price per bushel harvested.

In the context of the cow-calf business, producer management has plenty to say about revenue generated per cow and per acre.

Moreover, no cow-calf producer must be a simple price-taker. Never mind the opportunities to qualify calves for multiple branded programs through management — all producers have the opportunity to seek more bids for their calves.

Increased efficiency is also where Liddell and Close see the most opportunity for the beef and cattle industries as a whole, likely through increased communication and cooperation be-tween sectors. It stems from need.

There’s competition, for one thing.

“Poultry is going to return to its long-term, real pricing trend [downward,”] Liddell says. “If protein competitors can’t or don’t respond, they simply lose market share.”

There’s also the fact that Close and Liddell say current national herd expansion appears to be ushering in the longer, more fa-miliar cattle cycle, which has been absent for more than two decades.

“To get into that long-term cycle, we’ve got to get beef exports back to 11% of production,” Liddell says.

From the perspectives of both the industry and the nation, Lid-dell adds, “We have to recognize how important trade is to U.S. agriculture, and how important agriculture is to the U.S. econo-my.”

Columbia Graded Sheep and Goat Sale Weighted Average Report for 10/24/2016 Receipts: 476 (336 goats: 140 sheep) Last Sale not reported For complete report: https://www.ams.usda.gov/mnreports/nv_ls320.txt

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