March 21, 2017 • Page 14 shop online at www.missourivalleyshopper.com National Ag Week March 19-25, 2017 Developing a 2017 Cattle Marketing Plan SDSU iGrow Prior to that, the feeder index reflected BROOKINGS, S.D. - When developsteers weighing 650-849 pounds. ing a cattle marketing strategy for 2017, "The change in weights may change producers should consider basis as well the number and timing of feeder cattle as the multitude of factors which confrom South Dakota included in the index. tributed to the continued price decline, However, the relative value of feeder catsaid Matthew Diersen, Professor & SDSU tle in South Dakota compared to national Extension Risk/Business Management levels is not expected to change," Diersen Specialist. said. "Sound price histories and benchTo this point, Diersen said a 5-year marks can help guide future marketing average of historic basis could be used as plan decisions," Diersen said. "Even with an expected basis for the coming year. the changes in prices and futures conThe average feeder cattle basis has tract specifications, average basis levels ranged from about $3 per hundredweight for fed and feeder cattle seem reasonable in January to above $9 per hundredfor South Dakota. However, the historic weight in July and August (see Figure 2). basis on calves is not likely to reflect the Cull Cows value of such calves in South Dakota and In most years cull cow revenue is a such prices should be derived differently significant portion of total cattle revenue moving forward." for cow-calf operations. "Calf prices Contributing factors can fluctuate and culling percentages Looking back on 2016, Diersen contrib- can vary to affect the share of revenue, utes price declines (over 2015 and 2014) but overall cull revenue is important," to a continued expansion of cattle invenDiersen said. tory levels, ample feed availability which He explained that typically, the price contributed to heavier slaughter weights of cull animals is measured or considas well as expanded supplies of competered as a percentage of fed cattle prices. ing meats, such as pork. "During the past five years, the monthly Looking ahead, Diersen said early in cull cow price in South Dakota has averthe year is a good time to assess what aged 66 percent of the live cattle futures those changes mean for price levels and price," Diersen said. basis expectations to help implement a He added that more detail or scrutiny cattle marketing plan. may be warranted for pricing or crossThe data behind cattle price trends hedging as the ratio has varied from 54 are available in Monthly Cattle Prices percent to 77 percent. However, for planand Basis Levels, which can be found on ning purposes a cull cow price could be iGrow here. found using two-thirds of the live cattle Leading price to consider is fed cattle futures price. The only Agricultural Marketing Average basis on calves difficult to Service (AMS)-reported location with fed come by cattle sales in South Dakota is the Sioux The largest segment of cattle producFalls Regional Livestock (SFRL) market. ers in South Dakota sell calves at or "Generally, the SFRL price for fed closely after weaning. A price series to cattle tracks or is similar in level and monitor is that of 500-599 pound steers. changes with the five-area price, a na"Historically, there was a stronger seational benchmark," Diersen said. sonal pattern in calf prices throughout He explained that the SFRL price can the year, roughly reflecting seasonality in also be compared to the Live Cattle fufed cattle and feeder cattle at other times tures price. "The basis can be monitored throughout the year," Diersen said. for any localized price changes and to Pricing and protecting tools and stratarrive at an expected price level to use egies for calves (for example, Livestock for planning purposes," said Diersen. Risk Protection) still rely on some comBasis is the difference between the parison to feeder cattle prices. However, cash price and the nearby futures price. Diersen said moving forward, caution "The historically prevalent pattern should be taken before using any kind of in fed cattle prices is readily seen in the average basis on calves. basis," he said. "The wide price swings in feeder cattle For example, Diersen explained that and feed prices in recent years is masked the basis in May is often positive, reflectby looking solely at the basis. The weight ing an expectation of lower cash prices change in the feeder index would also during June. bias any historical comparison," he In other months, such as September added. through December, the basis is often Cattle producers could search for a negative, reflecting the transportation comparable year, but Diersen said this cost to slaughter markets. does not seem like a practical option The SFRL prices and basis levels given the many moving parts. include cattle with yield grades of 2-4, An alternative to consider for a calf baslightly wider than the futures specificasis is to estimate the feed cost to achieve tions of 2-3. Looking at 2016 numbers, gains from a 550 pound to an 800 pound Diersen noted that there was a discount animal. Subtract the feed cost off of the implemented for delivery on the October feeder value to find a per-head value of a contract at SFRL in Worthing. 550 pound animal and back out a price. "Despite these factors, the impact on basis going forward is not expected to be significant “Don’t Gamble” - Insure With for the same quality of cattle. Thus, to cover typical variability in basis, a 5-year average basis could be used for planning purServing the Yankton Area Since 1949 poses," he said. 5-year average Home, Auto, Business, Life, Bonds The latest 5-year average fed cattle basis for 209 W. 4th St. • Downtown Yankton, SD South Dakota, by month, ranges from above $5 per 605-665-3611 hundredweight in May to less than $5 per hunsmithins@iw.net dredweight in December (see Figure 1). "Expected basis should be adjusted if seasonality in futures is significantly different than in other years," Diersen said. He explained that with an expected basis, forYour farm is more than a ward bids for cattle can be compared to what would business. It’s your home _ even be likely using futures part of the family. And I’ll contracts for different help you find just the right months. "If a forward bid insurance to protect it. is less than a basis-adjusted futures price, then a Let’s talk today. producer could negotiate for a more favorable bid," Tim Asche Agency he said. Yankton, SD 57078 Feeder Cattle (605) 260-5560 The value of feeder tasche@amfam.com cattle, and the resulting prices, reflect the feed and feeding costs involved in finishing cattle. Beginning in November of 2016, the feeder index American Family Mutual Insurance Company, S.I. and Its Operating Companies reflects feeder steers 6000 American Parkway, Madison WI 53783. Visit amfam.com for details. 012443 Rev. 1/17 ©2017 weighing 700-899 pounds. M.T. & R.C. SMITH INSURANCE Yield Goal… Truly Defined Sara Berg – iGrow Whether it’s over a cup of coffee in December or back in the combine at harvest, yield is on the producer’s mind. In the spring, goals are set, plans are made, and crops are planted. Although plans are carefully drawn, we never know what might happen during a given growing season. Having measurable, specific goals for your business is always a good idea, and one of the most important goals is maximizing yields. Defining Yield Goal At face value, many think of ‘yield goal’ as what we hope to see the crop produce this year. However, by technical definition, yield goal actually describes yield history, while taking into consideration potential for improvement. According to the South Dakota Corn Best Management Practices, it is recommended to consider yield history of 10 years or less when developing a yield goal. Outliers from years with abnormally low or high yields should be excluded, and being realistic, yet optimistic is always important. Some sources suggest adding an additional 5-10% above your average yield history to account for improvements in production from year to year. It is Interested in this spot? also common practice to create yield goal values for fields or groups of fields with similar soil properties and topography within a farm. If one field varies quite significantly in soil physical properties from its neighboring fields, calculating separate yield goals is crucial, however if the fence line seems to be the only major difference, an average across fields is most likely appropriate. Using Yield Goals Many decisions are made based upon yield goal; fertilizer applications being one of the most important. The South Dakota Fertilizer Recommenda- agronomists misinterpret the meaning of yield goal when calculating N needs, over application of nitrogen fertilizer may happen, causing environmental and economic risks. This scenario could happen with any nutrient calculation based upon yield goal. Taking Time for Records Keeping records on your farm and taking the time during these cold winter months to sit down and calculate a yield goal for next year could pay off significantly in the long run. A good time to update field yield goals is when you report production for crop insurance purposes. tions Guide was developed with yield goal in mind, making proper yield goal calculations even more important. For example, corn nitrogen recommendations are calculated by taking: (1.2 x yield goal - soil test N - legume credit). If producers or For more information about yield goal calculations or nutrient recommendations see the South Dakota Corn Best Management Practices guide or the South Dakota Fertilizer Recommendations Guide, or contact Sara Berg. INTERESTED IN THIS SPOT? Call 665-5884 to place your ad here. Call 665-5884 to place your ad here. www.missourivalleyshopper.com www.missourivalleyshopp Interested in this spot? www.missourivalleyshopper.com Visit our Web site www.missourivalleyshop www.missourivalleyshopper.com Call 665-5884 to place your ad here. Visit our Web site at www.missourivalleyshopp (800) 359-4094 • premiumbesttransport@gmail.com Visit our Web site at Interested in HUBBS AGENCY, INC. this spot? www.missourivalleyshopper.com Call 665-5884 to place your ad here. “The Crop Insurance Specialists” Ph. 877-260-5126 or 605-260-5126 YOU NEED IT TODAY? NO PROBLEM! Fax 605-260-5128 • Yankton, SD Agriculture.... Planting the seeds of success. FAX IT 605-665-5882 Missouri Valley Shopper ank h 216 W. 4th St. • YANKTON,SD 605-665-5884 Interested in this spot? T WE DO You ALL GLASS! Call 665-5884 to place your ad here. INTERESTED IN THIS SPOT? CALL 665-5884 TO PLACE YOUR AD HERE. FARMERS! www.missourivalleyshopper.com RON’S AUTO GLASS 1915 Broadway Yankton, SD 605-665-9841 Visit our Web site at www.missourivalleyshopp