Extension News

New ISU Extension Marketing Resource Helps Livestock Producers Face Volatile Prices

10/20/2009

AMES, Iowa – Cattle producers have a new tool to help them develop a marketing strategy, thanks to the work of livestock economists working with the Iowa Beef Center and Iowa State University Extension.

John Lawrence, Iowa Beef Center director, and Shane Ellis, ISU Extension livestock economist, spearheaded the development of the Cattle “Crush Margin” tool, now available online. This forecasting resource projects the gross margins of fed cattle that will be marketed over the next 16 months. The projections are based on futures prices and the historic Iowa basis for live cattle, feeder cattle and corn. 

“During the past three years, livestock producers have faced dramatic volatility in the livestock and feed prices,” Ellis said. “This new resource emphasizes the importance of establishing a profitable gross margin rather than focusing only on maximized revenues.”

Using the projected gross margin as a barometer, it is possible to identify the opportunities when profitability could be secured with a hedge or other price risk management technique.  Projections are updated online every Wednesday or more often if significant futures price fluctuations occur. 

A similar decision making tool is also available for swine finishers. The crush margin tool and accompanying resources can be accessed through www.iowabeefcenter.org/margins

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The Iowa Beef Center at Iowa State University in Ames, Iowa, was established in 1996 with the goal of supporting the growth and vitality of the state’s beef cattle industry. It serves as the university’s extension program to cattle producers and is comprised of faculty and staff from ISU Extension and the colleges of agriculture and life sciences and veterinary medicine. Together, the Iowa Beef Center’s members work to develop and deliver the latest in research-based information regarding the beef cattle industry. For more information about the Iowa Beef Center, visit them online at www.iowabeefcenter.org or http://blogs.extension.iastate.edu/iowabeef.

Contacts :

John Lawrence, Iowa Beef Center,
(515) 294-6290, jdlaw@iastate.edu

Shane Ellis, livestock economist, (515) 294-8030, shanee@iastate.edu

Taylor Gerling Shore, Iowa Beef Center,  (515) 294-9124, tgerling@iastate.edu

Willy Klein, Extension Communications and External Relations, (515) 294-0662, wklein@iastate.edu