Aloha and thank you for tuning in for season 2 of Livestock Wala'au! In this episode we’re going to share about the Beef Cattle Ownership Analysis Web-based decision support tools created by Dr. Dillion Feuz. Many cattle producers face uncertainty when selling calves at weaning or if they are retained through a background program. Here in Hawaii, beef cattle producers have additional concerns when retaining ownership especially overseas due to ocean/air freight rates and varying availability.
You can also tune in to S1 Ep 10 to learn more about Dr. Feuz.
Let us know how you think you will be able to use these tools in your operation by completing our feedback survey at the link below!
Check out our other social media platforms!
Guest Contact Information & Episode Resources
If you have any questions, comments or request for special topics please contact us at walaau@hawaii.edu
Thanks for listening! Check out our other social media platforms!
Aloha and thank you for tuning in for season 2 of Livestock Wala'au! In this episode we’re going to share about the Beef Cattle Ownership Analysis Web-based decision support tools created by Dr. Dillion Feuz. Many cattle producers face uncertainty when selling calves at weaning or if they are retained through a background program. Here in Hawaii, beef cattle producers have additional concerns when retaining ownership especially overseas due to ocean/air freight rates and varying availability.
You can also tune in to S1 Ep 10 to learn more about Dr. Feuz.
Let us know how you think you will be able to use these tools in your operation by completing our feedback survey at the link below!
Check out our other social media platforms!
Guest Contact Information & Episode Resources
If you have any questions, comments or request for special topics please contact us at walaau@hawaii.edu
Thanks for listening! Check out our other social media platforms!
Aloha Today's episode is brought to you by the Western extension Risk Management Education Center, USDA NIFA, and the University of Hawaii College of Tropical Agriculture and Human Resources and the livestock extension group. Aloha welcome everyone to the livestock follow out a podcast aims to provide educational support information, guidance and outreach to our livestock stakeholders in Hawaii. We are your hosts, Mele Oshiro and Shannon sand. And today, we're going to be speaking with Dr. Dillion Feuz about some tools that he's spent this year working on developing for our Hawaii cattle producers, specifically our folks that are exporting animals, and also looking at some grass finished stuff here in Hawaii. So Dylan, do you want to maybe tell us a little bit more about the decision support tools, I think we had you on before, to kind of gather everybody to see if they provide some background and feedback for the tools and information. And now the tools have been developed, we kind of want to share what you've developed in how folks can use these tools. Yes,
Dr. Dillion Feuz:yes. Aloha to you and everybody on this podcast, just a couple of things, I think I'll share a couple of PowerPoint slides first, just to kind of set the stage for a couple of things that the tools are trying to accomplish. And so I'll go through that fairly quickly. But I think it just helps to kind of recognize, oh, here's the here's one of the problems out there. And this is why, why the tools. So let me go ahead and share that PowerPoint screen.
Shannon Sand:And while you do that, I just want to let the folks that are just listening to this know that there is a video that's on YouTube as well, that will go through all the steps and different images that we will be talking and discussing here on the podcast. But we will also try to do our best on our podcast to kind of describe what we're looking at and how these tools are, I should say Dylan will. But do know that there is a video version of this as well. So you can look at these images that we're talking about.
Dr. Dillion Feuz:So welcome, everybody, just a quick couple of slides to kind of set the stage for what we're trying to do with the web based decision tools. This is just a graph here of mainland cattle prices. It's not reflective of Hawaii prices, but I only put it up there to show that prices vary over time they go up, they go down. And the question becomes, is all of that unknown, or, for some of that, can we know ahead of time that those prices are going to be higher or lower. Another example of some more short term price variability, again, a couple of mainland cattle prices from October and November of 2018, and 2020. And I just highlight here how quickly prices can change, even within a year, in this case one month. So in an October 2018, prices were$10 per hundredweight higher, or 10 cents per pound higher than in November. So that a big difference of $55 on a 550 pound cast as compared to 2020 when prices in November were $6 or six cents per pound higher. And so an increase of $33. So, you know, the question is, should you shout calves in October or November? Or can you know from one year to the next, whether prices will be higher or lower. So, if you're not familiar, there is a futures market. Chicago Mercantile Exchange runs a futures market for feeder cattle. And basically, we can look to that market to try to gauge what prices may be at some future point in time. Those futures markets usually go a little over a year out in advance so I can look at next month's prices. I can look at prices three months from now or six months or almost a year and try to get some idea of at least what the traders the experts in the markets are thinking might happen. So this is just a screenshot from a few days ago. Of the futures markets. So April was currently trading at 157 85. So that'd be $1.57 or $1.58 per pound, but you can see you can go out in this case I only went out as far as October. But looking at this, what it does tell us is that at least the traders right now, and the experts are agreeing that feeder cattle futures prices should gradually rise between now and summer and odd into fall. So, if you're a producer and you're going to be selling calves this fall, then right now the expectations are, those prices will likely be higher than the current prices are. So that's I'm not trying to get anybody to trade futures. I'm just trying to get you to look at that market to understand and I'll show you when we get into the tools, how you can quickly get to this site and see that,
Shannon Sand:for those that are listening, just listening right now, Dylan, I just want to I want to give them this. See if they can go back to reference but which column here? So there's a few different columns and I see that you're talking about? But which column here there's a last open high and low? What are you actually looking at for these, this? Which column should you reference?
Dr. Dillion Feuz:To me, the last is the main one I'm looking at that's in this case, this was after trading, it ended that day. So it was the closing price for the last price. But even if you're looking at this during a trading day, the high the low is just going to show where prices have traded that day, the last is always going to be the most recent price, or if it's the close, it'll be the closing price. So I usually just look at that last price as the one to kind of base off. Here's where the market is currently. Okay. Okay, so just, you might say, well, how does this relate to calf prices? Well, that feeder cattle market is really based off those 12 Green states highlighted in green, and it's for seven to 900 pound steers. So two things happen, the further you may move away geographically from that green area, it's likely that prices are going to be lower because of transportation. And as you've changed weights, that will change the price. So lighter calves tend to be priced higher than heavier calves. So if we were looking at 450 pound calves, we would expect that price to be higher. And as long as you know that general relationship, then that's what can help you get an idea of what your calf price might be relative to that set of prices that they base the futures off of, if that makes sense. So just looking at the April contract, so this is the one that's currently trading, you can see that back in December, January, the expectation was prices be around 170 per 100 weight, or$1.70 per pound. And then something occurred in late February, that has dropped that price and to where now, the expectations are only the price will be around 156 157. So I'm going to talk about what is likely to result what likely cause that drop in those prices. But we might think about the futures market. If we say it's efficient in terms of no expert can generally consistently out gas or outperform the futures market in terms of predicting future prices. But it's but as conditions change, than we would expect prices change. So it's not. Most of the time. You see markets move throughout the year that the contract is listed because things change fed cattle prices change. Corn prices move, range and pasture conditions change the amount of cattle placed in a feedlot change. And so as those changes occur, then the market reacts to them. And so we have to continually update what we expect to happen with prices. So this is a chart of live cattle prices over that same timeframe. And you can see they varied a little but the prices today are essentially about equal with prices in December. So we wouldn't think that that would have too much impact on the feeder cattle crisis. But if we look at what's happened with corn prices, you can see that corn prices have greatly increased since February. Well, I think most of this is due to the Russian Ukraine problems Like, and concern that grains will not be getting out of that part of the world. And Ukraine is not a huge exporter of corn, but they are of grains in general of wheat primarily. And I think there's just a concern in the marketplace, that grains in general will be in short supply. And so that is also then saying corn will be short, because there'll be some substitution between corn and wheat. And that's running the prices higher. Well, if I'm a feedlot, and I'm expecting to sell my steers at the end for the same price, but I'm going to have to pay a lot more for my grain, then I'm going to try to buy feeder cattle for less money to put into my feedlot. Okay, so that's kind of on a national level of what's going on. And we can look at that. But how does that compare to our local price as well, we call the difference between our local price and that CME feeder futures price we refer to that as basis or basis risk. And so our local prices tend to reflect national prices. But they also vary individually, local weather events can impact that, for example, you know, a year and a half ago when we had the big fires on the Big Island of Hawaii, that may have impacted when people were taking cattle to markets. So that could have impacted local prices. Also, if we have more buyers, or more sellers in a given market timeframe that can change or transportation is obviously a huge factor impacting Hawaii prices. And so right now with the surge in fuel prices, it's probably likely that Hawaii price is relative domain that prices are going to move lower to reflect that higher transportation costs. So we have to keep track of local conditions as well as national conditions. So one of the things that we can do is try to learn historical relationships, and then use that to predict cash crisis in the future. So I've taken two different markets here, Washington State and Texas markets, and looked at auction prices over time, over the last five years average. And so these prices here this reflects the basis or how much the prices are higher or lower than the Chicago Mercantile Exchange feeder cattle futures. So in the case of wider calves, you see that they're typically higher than that futures. And the heavier ones that 750 850 are typically negative or below that to choose mark. You can also see that those prices vary spring to fall, and they vary from one location to the other. So in the tools that I've put together, I use this information to try to predict prices. Now the challenge was to try to come up with what those prices should be for Hawaii, relative to the futures market. Hawaii does not report any auction market prices, so there's really no publicly available prices. I reached out with a survey and got a limited number of responses back. I also talked to the Hawaii catalanes cooperative, talked to a few producers personally tried to get a few prices. And this is my best estimate of how these prices compare relative to the Chicago futures. It doesn't appear that there's too much seasonality or difference between spring and fall. And if anything, right now, these prices may be a little high because these were done before we had the big surge in fuel prices. So with that big surge in fuel prices, we may see these prices being a little more discounted than what they currently are. So let me go ahead then. So this is setting the stage for what we're trying to do with the tools. It will be available on the Hawaii rangelands site that will get links put out yet people may we can put them on your podcast Bucha point in time, but what it does is give a very brief description. I have six different tools on here. Let me just walk through one of them to Time to discuss.
Shannon Sand:Yeah, that sounds good. Yeah. So this is the, what we're actually looking at. For those that are listening. It's just the range signs website is a site managed by Arizona State University, where we have the Hawaii range lands information. So there's all different types of publications and resources. And this is where these tools will be held. And the publication that Dylan spoke about will be on the on this site, as well as our u. H. CTR extension publication site. And that'll give you a walkthrough of how to use the tools and everything else. So
Dr. Dillion Feuz:okay, so I'm going to use one of these, this stalker West Coast tool is going to basically assume that you're a producer, here in Hawaii, you have not yet sold or shipped your cattle. And you're going to be looking at what you could perhaps sell your cattle for the gate price here at Hawaii, versus what you could do if you took them to the mainland, and kept ownership for some period of time. And so we'll work a couple examples of that. So we're gonna start off assuming that your cattle will get shipped to the West Coast market. And so we'll use those Washington State prices that I showed you, a few of them, we'll use those in the tool. So this is this is the tool that that pops up, it's completely live, you can whenever you change one number, it'll change all the associated calculated values. So in the tool, the green cells are ones that you can change as a user of the tool, and then the blue cells get calculated for you. So the first thing we have to do is choose when we're wanting to sell our ship to cattle. So I know kind of from the information I've obtained, it's kind of two major shipping periods on the island, there's kind of a spring shipping period, and a fall that match up with a fall and spring calving scenario. So let's go ahead and use kind of a current timeframe, we'll go ahead and say that we're going to shift to cattle kind of immediately right now, and April 1 of May. So we'll use April for the month. And then we can decide whether we want 125 pound 400 or 450. So if you knew that practice approximate weight of your animals, you could put that in there. So just for changing it up, I'll put that our calves will be weighing 450 pounds. So then, to get an estimate of the Hawaii gate price, if you click on this CME feeder cattle link, it's going to take take us directly to that CMA feeder cattle futures. I showed a screenshot of that. But here, this is live, this is as of today. So let's see where you are. 930 This time, so it's 130, the market is still trading live. So it could still change a little today. But April today is at 156 40. That's the last price. And what this change shows is how much that price changed from Mondays are Fridays, today is a Monday that we're recording this. So this is showing that it's down from the Monday, but we'll go ahead and enter the 156 in the cell. So I'm going to go back to the tool, click back. So if I put in 156. And maybe I'll just round it to that and we'll put that 44 cents. So that's like $1.56 pound or 156 100 Then it's telling me that the estimated price I might receive in kawaii today is 119. If you have talked to a buyer, and he's offered you a different price, you can go ahead and put that price in. And it will use that price rather than this suggested price. So you can accept the projected price or you can enter a different price. So for example, I was on the Big Island, Thursday and Friday, talk to a producer who had just sold some cattle for $1.15 Rather than dollar 19. So maybe we'll go ahead and enter the dollar 50 just to show how that works. So we can put 115 in there. And then we need to consider our freight how much it would cost us. So what this is saying is we're not actually selling the calves yet but we're saying If we sold them, we could get 115. And then we're going to compare what we can do if we keep ownership to that 115. Price. So ocean freight, the last I checked was 250. Again, that could be increasing. I don't know if the shippers have increased their rates yet or not, we'll go ahead and leave it at the 250. Just for the sake of argument, trucking, it may cost you six or $7 per head to get your cattle to the port, and then another five or $6 to get them from the port in the mainland, to wherever you're going to be. In this case, I'm going to assume they're going on to grass somewhere. So we'll we'll leave that maybe we'll update a little since I know diesel costs
Shannon Sand:11 or $12 a head. Yeah. But that is a nice thing with this. Is anything in this? Is this a green color?
Dr. Dillion Feuz:Yes.
Shannon Sand:Yeah. So anything in the green, I'm assuming we can pretty much change ourselves.
Dr. Dillion Feuz:Yes, that's, that's how it's designed. That's correct, Shannon. And so then you can decide how long your cattle are going to be in the program. So we could have grazing for 90 days, 120 days. So if they're basically starting first of May, in Washington, we should have good grass for May, June, July, August, maybe into September, the grass would still be good. So I'm guessing you'd probably go with 120 to 150 day grazing program, if you were going to do that. So let's, let's split it, let's go with 135 days. Just say we'd get into Navy, mid September. And then we can estimate how much average day to game we expect on that grass. And I've put in a default here of a pound and a half a day. Depending on the year, depending on how heavy your stocking how long you go, if you only go into early August, you might get a little more than that, if you go clear into late September, early October, you'd probably get a little less than that, because the grass is probably losing some of its it's getting more mature and losing some of its protein energy content. But we can go ahead and leave that at a pound and a half. And so what that shows is that, at the end of that program, you started with a 450 pound calf. If it gains a pound and a half a day for 35 days, with some shrink, estimated for the transportation, we'd expect that animal to weigh 639 pounds, basically mid September. So then, now it's asking me to record the last price for the September futures. So I can go back, I can click that and come back to the September futures. And September today is priced at 177 82 or almost 178. So again, we're thinking markets will be higher in the fall than they are today, which is a good thing, if I'm keeping ownership of cattle, right. So I can come back and put the 178 in here. Or I could put that 177 And whatever not a sense that was. And it tells me the model based on those historical price relationships of Washington State says a 640 pound 639 pound steer calf in September should be just slightly higher than that futures market. So we're basically at 178 64 which would be 1000. %11.42 per head. Well, how much is that going to cost me? This 175 I was looking at another example that's probably a little high. I tried to look up some recent grazing rates for Washington State, I couldn't find any. I found some grazing rates for this year for Nebraska grasslands. It's at $1 A head per day roughly. So we could maybe put something in there along those lines. So maybe if we back this off to 150 for the grazing portion of the program, or if you've got a relationship with somebody on the mainland that you could reach out to and say how much would you charge me to graze my cattle for that time? Then you could put that number in here. have an even more accurate? No. We might also have some other costs associated with that, maybe we need to do some vaccinations, some fly tags. Some people choose to implant their cattle with a steroid, a growth implant, some, if you're trying to stay on a organic label, then you wouldn't do that. So you have options, you could either do that or not do that. And that may change how much these veterinary medical or other supplies cost you, I'm gonna go ahead and leave it at$20. Just for sake of argument, we typically see some death lost in most retained ownership programs. I mean, it's not high, but maybe one one and a half 2%. You know, animals get struck by lightning. Sometimes you get something that bloats on something, or there's poisonous plants on different range lands. So again, cattle just die, it's probably wise to at least consider the possibility that some could, so I'll leave that one and a half percent interest rates. If you're not selling those cattle, then maybe you're going to have to borrow money. So if you're having to borrow money to pay for these feed expenses, you'd want put that in there, if you're not borrowing anybody, if you're using your own cash, you could lower that rate to maybe what you could get as a return if that money was just in savings, which isn't very much right now. Certainly borrowing rates are starting to go up.
Shannon Sand:That's it. I was gonna say we could have a whole I would love to have a whole discussion with you at some point on inflation and the cost rise. This is.
Dr. Dillion Feuz:Yeah, you're you're the you deal with that more than I do in terms of the accounting issues and how inflation and interest rates.
Shannon Sand:It's gonna be an interesting few years, I think, to be honest still. And so something like this could be really helpful to people, when they're needing to put it put a try to make a decision on what's best. Right, exactly.
Dr. Dillion Feuz:Yeah. And let's just let's just play with an interest rate. Let's take a real low interest rate. I'd say we're only 3%. Yeah. And that gives me a total feeding period costs at 195. Yeah, if we jumped those rates to 8%. Yeah. Yeah, that increases that $12 per head per head. Yeah. So that's, you know, you think about that, that starts to be real money if you're doing 100 head or something. So that's kind of gone, what, 810 years where we haven't paid much attention to interest rates. We've been
Shannon Sand:spoiled. I'm not even gonna lie. I've enjoyed life a lot. last few months has been interesting.
Dr. Dillion Feuz:Yeah. And I've got enough gray hair that I remember when interest rates on short term money for ranch double digits. Yeah,
Shannon Sand:I remember. I remember learning about it in school. But yeah, have
Dr. Dillion Feuz:you know, the the ranch I grew up on? We were in that? Yeah. In that vicious cycle where there was a lot of interest rates. And then you definitely, you know, you shop for interest rates. You, you went in and cried to your banker wanting lower interest rates. I hope we're not headed to that timeframe. But certainly, that's something that we will have to watch. Yeah, closer. And this tool that you do that, if you if you go to a bank, and you get that interest rate, that you can put whatever rate that is into the tool and observe what that does to your economics. So then in this case, we conclude with kind of this, this is a summary then of what what's happened are, we did sell the calf at the end of that period in September for $1,142. Ahead, our initial calf had we sold it, we could have sold it for $518 per head, our transportation between our shipping, ocean shipping and our our truck shipping was estimated at 262. Our feeding cost in terms of the grass, our vaccinations, any supplies estimated at 207 and that gives us that net return for this four and a half month feeding period of $155 per head. Most of that is the result All of the market expecting to increase during this timeframe, because the current futures are at 157. I think it was. Yeah, it was lower. Yeah. Yeah. 156. And we're projecting April to be at 178. Year, though, yeah, that is most of why you're seeing that increase. If in fact, we don't get that full increase, let's say we only get a 165 futures market. So I'm just gonna change this to show you what can change. So if that market only increased to 165, right, that drops our net return to 72?
Shannon Sand:Yeah, okay. Can I Can I ask a question? Because I was like, I don't know how many people I'm gonna I'm making assumptions here when I'm looking at your, your spreadsheet and stuff. Because we're assuming everyone's shipping to the West Coast, and not like Texas, or wherever else, because well, one that's much further away. So it just cost you money more probably in the long run anyways, but I'm going with the assumption that the price, since it's estimated to be 165 64, we're dealing with a positive basis. Do you want to talk about basis just a little bit in case because I was like we, from what I've seen in Hawaii, we don't deal a whole lot with that here, just because again, a lot of times it is sold to like your neighbor, if it's not just sold, again, like in this situation where you're selling a large lot off Island.
Dr. Dillion Feuz:Right? So yeah, and whether you sell in Washington, on the west coast, or in Texas, or somewhere in the southwest, right, those prices are going to be a little different. And we actually have, there's a separate tool, this was the West Coast stock or one, there is a Southwest stock, okay, good shipping into Texas. And so then this basis would be estimated differently. So behind the scenes, what you're as a user, what you're not seeing is historical data, that is generating what this price is relative to the futures price. So this says over the last five years, in September, a calf weighing 640 pounds, should be just slightly over in terms of 64 cents per hundredweight over the futures market. If we let me just change this, so we get a different weight calf, if we change this number of days down to 120. Yeah, then we get a lighter calf. And then you can see, the lighter calf is expected to sell for even more money. So
Shannon Sand:your return is lower per head to look at that it's you versus I think it was something Yeah,
Dr. Dillion Feuz:no, you're not feeding it as long. Yeah. So you're, you're not putting that weight on. One thing to always remember in a retained ownership program, any kind of retained ownership, if you can add weight for less than what the market prices are, that might be making you money, if it's costing you more to add that weight than what the market price is that you're going to sell at that program, probably not going to make you money.
Shannon Sand:I mean, that's the nice thing with this tool, though, is like you that's a 15 day difference between 120 and 135. And as a lot of money. Yeah, yeah, that's a good bit a difference in terms of your return.
Dr. Dillion Feuz:Yeah, because we're changing, changing the weight gain, we're changing the price. So all of those things changed. So you as a user of this tool, as a producer, you can go through and say, Oh, do I want to go for 120? Yeah, do I want to go for 150 days? And maybe 150 days, I dropped my wait just a little. Maybe I only get me
Shannon Sand:one 1.4 1.45 or something? Yeah, it's
Dr. Dillion Feuz:gonna go 1.45 and see what that does. But you can see that that actually makes us makes us more money, because we are still adding a few more pounds to that animal. Yeah. And in this case, we're getting a heavy enough animal that now our price, our cash price is slightly below the futures market. So we've gone to a negative basis because we have a little heavier calf
Shannon Sand:calf. Yeah, yeah. So I guess that's my other question, since you have one for the Southwest as well with Texas and then and I'm assuming Texas kind of Oklahoma would all qualify for that area.
Dr. Dillion Feuz:Correct? Yeah. Yeah. I'm just using kind of one market and ready
Shannon Sand:to be a lot easier. Yeah, cuz that's a lot.
Dr. Dillion Feuz:People could go you could have your calves in New Mexico, or Oklahoma or Kansas. You can ship to anywhere. Same way with Washington, Oregon, California. Yeah. I've just picked a couple more goods to try to give a general estimation of what prices?
Shannon Sand:Well, I think, I think a lot of them here my understanding mele, you can correct me if I'm wrong. I think a lot of them shipped to the west coast, but they're I think there are I know there are some that shipped to the southwest. I don't know exactly where but I know there's a few. Yeah, regardless, they're gonna hit on the west coast. So when you go down further, you're gonna have to have higher trucking costs. What I was thinking is, is it might be more expensive, depending on the trucking costs and stuff so that interest rates going to play, I think, a big role in the next, like, well, it's currently playing a big role now, but like in the next year or so even with this. So
Dr. Dillion Feuz:yeah, so let me point out another thing on this tool, this return is basically the return above selling this calf, for $518 per head on the island, it does not say anything about what it costs you to raise that calf, up to that 450 pounds. There is a couple of there's a publication and a spreadsheet, maybe I'll just pull up the publication quickly. That's done by university YC tar, on telling about how you can calculate that cost of production. So that's in there, there's a whole big spreadsheet on that. And so if you are interested in what your costs are raising that calf to the selling point is, you would need to go here. The other thing that I've done that on that spreadsheet, we have just, you know, I changed the price here and said, Well, what if it only went to 156 Rather than our 165, rather than the 174. So if I put that back at 174. It'll make us more profitable. But obviously, we don't know what it's going to be. But again, we can look back historically, and see how much contracts typically change over a four or five month timeframe, and model that risk. And so that's what this graphic here at the bottom says, it says yes, we're expecting this 139. Or in this case, it's right at 138, we're expecting that return. But we know that prices can vary up or down from that. So it's saying two thirds of the time, you'd expect in a worst case, if prices kind of fell from what they currently are that you'd still be at a positive 47. Or it could get up as much as turn $30 per head 90% of the time, so we get down in here in this area, then we can start to see some losses. So that's saying basically, in one out of 10 years, the market may swing enough that rather than making$139 ahead, you could end up losing 17 or in very rare circumstances, you get out here in the tails, we probably don't need to plan much for those. But occasionally those kinds of crashes happen when something major impacts the market. You know, for example, if all of a sudden the US got Foot and Mouth Disease in their cattle, well, that can have a major impact on the markets. And we could see it swing more than what we typically see. But I would say, you know, it's probably pretty easy to say, Yeah, our returns could vary quite easily between this 47 and 230. Or even if you did a little narrow range and said, Okay, I'm 140 plus or minus $50. You know, that's only letting prices vary $5 per hundredweight. Well, that's we can get that variation, as I showed you earlier from one month to another month. So that's what this graph is trying to show you. It's not without risk. So do you want should we look at the Texas example.
Shannon Sand:That would be a lot of fun. The
Dr. Dillion Feuz:spreadsheet, the the tool looks identical. The difference is behind the scenes. Now this is based off Texas prices resident Washington prices right and then we'll have to adjust the transportation that we're considering. So we could do the same type of scenario. Let's assume that we are putting them in today. We'll go with that same for 50 pound calf Our futures market quotes again, April, we're still at 156. So well, we'll put that in. Just to show you I can do it, I'll put the 156 40. So it's saying again, our prices at 119. Again, we could, maybe we're a bigger producer, and we're running a little higher volume of cattle. And so we might get that one night T from the Hawaii base price, right. Whereas a small producer may get a few dollars less just because that buyer is having to
Shannon Sand:source places in order to make sure they have a uniform logica, right. Yeah, exactly. They
Dr. Dillion Feuz:got to buy up to cattle for two or three producers to make the road. Maybe they're feeding him for a few days themselves. So let's go ahead and leave the one night Team 40. So we'll we'll just put that in here at one night team. So our ocean Frank, if we, if we're going ocean, maybe it's the same. Loading up a plane and shipping them that way. Oh, directly. Yeah, that could which could get him to Texas. But we could let's, let's assume that we're doing the same ocean freight. But then we're putting them on a on a semi. And going from California across the text to like, what is that I can that goes across to Texas? Yeah. Are I already somewhere? One of those?
Shannon Sand:I would not have a clue. That would be you. If I recall correctly, so that might I don't remember. I never did it all the way to
Dr. Dillion Feuz:Texas Panhandle. Yeah, but anyway. Yeah, we'd probably need to increase this trucking. Right. Right, because we're probably going to be trucking those. That's probably west coast. Texas Panhandle I'm thinking is at least 1000 Miles isn't that. And I think, but I've just tried to do some quick calculations in my head. If diesel is is $5. And I think it's roughly five that you can consider your your cost, the cost of diesel per loaded miles, we have 5000 divided by you could put roughly 100 head on a semi. So we're looking at, like $50. Again,
Shannon Sand:it's considered I would imagine it would be considerably more after trucking. Um, yeah.
Dr. Dillion Feuz:Yeah. So let's, let's throw in a $50 per head. Okay. Trucking cost on that. And you're negative
Shannon Sand:right now. I'm finished filling it in. But I'm just looking down there. I'm like, Oh, no.
Unknown:Yeah, well, we'll put some futures price in here. And that'll help. Yeah. But we'll see. So then we could get into the southwest. And again, we have to decide maybe we're, maybe we're just going to do a dry lot background program where we're going to feed him some silage. Yeah, and add some weight. So let's say we're only going to do that for 90 days. Okay. So we'll do a 90 day program, we'll probably get better than a pound gain on that. Two, two and a half. Are you thinking oh, that's just what I was thinking. So let's go with we'll go with two and a quarter we'll split the difference. Yeah, so that we're getting almost the same weight of way out. So we did 150 pounds 150 Day grazing program, right, but we're doing it in a shorter program, right and feeding them probably some hay and silage, maybe a little grain to build them up. Okay, so now we've got to look at the August feeder cattle board. So we can click on that link and go to the board and so August is that 174 77 The last price so we can come back and enter that in and so it's estimating that we'll be at one seven or eight. So we'll be three $4 Just under$4 under the futures or negative relative for a 640 pound calf and the Texas market. So now, our feed costs. Let's see how many pounds that we gained. We gained For 50 to 650 200 pounds, I think our feed costs on a signage program are probably going to be closer to $200 a head, your head, probably about$1 per pound again, right now on silage, given corn prices have gone. So if we put $200 here and if we leave these other costs the same, we're basically getting down to where we're just not much more than breakeven on that program.
Shannon Sand:Yeah. But I mean, that could change. Because if you look at like, a few years ago, when gas was cheap, or like, a couple years ago, I mean, it would have been a different situation, right? I mean, that still makes a lot of that difference, too. Right? And if you're actually flying, if they actually fly straight in as well, instead of going ocean and truck, then that also makes it probably still have $10. Ahead and freight charges, though, but yeah,
Dr. Dillion Feuz:yep. So that's, and that's the game you can play with this tool is you can say, oh, it's going to cost me a lot to trick them. Let me see what I could do if I flew him right into this. And so maybe we, I don't think the flight will cost too much more. But let's, let's say we upped that to 260. And then we only have the $12. Tracking similar to what we had on the other. Okay, now we're up to 30 Just made $35. Ahead. Yeah, rather than $7. And so that's the, to me the Yeah, what I'm trying to do with these tools is let producers come in and make assumptions, try some different things, so that they pay for feeding cattle. Us is more profitable than really feeding cattle, but at least it gives you an opportunity to maybe not make some critical mistakes. And so if you say, oh, yeah, I've always just shipped my cattle in California and then put them on truck to New Mexico. Well, maybe because of the higher fuel prices, that decision won't turn out as well as it used to. And so this tool will let you, you know, kind of explore that and then explore on Well, what are my options? What could I do differently? So you can you can come in and and changing things up a little? Yeah, yeah, the thing that might happen, you know, different different feedlots, different producers, different areas have different crops that they could be feeding. And so maybe rather than a silage program, maybe you're somewhere like if you're in Idaho, for example, a lot of times they can feed some potato waste as part of that backgrounding program, while maybe those costs haven't gone up as much as corn. And so if you were doing this in Washington, maybe rather than$200, maybe you're down $175. Yeah. So you can again, you can go back and forth, play out a couple of these scenarios, and decide which one may at least provide you the best opportunity moving forward? Yeah.
Shannon Sand:I mean, this is kind of a, I mean, it's a good way to go in and like, play kind of a what if scenario, if you have a few different options for what you can do with your calves? You know?
Dr. Dillion Feuz:So? Yeah, so I'm gonna stop sharing my screen. And are there some more things that we'd like to just talk about in terms of we had a little discussion on the interest rate, we've had some discussion on transportation, other things that you see as critical that perhaps we talk about, and how we could maybe look at that on one of these tools.
Shannon Sand:Nothing that comes to mind at this moment, but you are the creator of this tool. So you know it better than Yeah. So it's like, what, what do you I mean, I think this is a really powerful tool, and it has a lot of potential for people who are trying to look at their options and decide, in particular right now. And in the future, like what, you know, what is my best scenario to go with at this moment in time, you know, or to look at and think the potential options are for the future. But yeah, I mean, what what about you? I mean, I know that's kind of why you designed it, but
Dr. Dillion Feuz:yeah, so one of the things that came out, as I mentioned, I met last weekend person with a few different producers. And we went through the tool with them, and one of them said, Oh, I could use this tool to maybe bargain for a little better price in Hawaii, if I'm selling the calves in Hawaii, if I can work through this tool, and it's there looks like there's a big profit in keeping ownership, then I could go to that buyer and say, Look, your, the likely return is, you know, a couple $100, that seems a little excess, I know you're taking on some risk, but maybe can't we get that wide gate price up another 10 cents a pound or something for me, and so that I'm getting a little of that return, and you're still getting a good return on the cattle. Now, whether that will work or not, you know, it depends on how much leverage you have, how bad the buyer wants, your your calves, how bad he needs them. You know, in some cases, those buyers are probably responding to feedlots or people putting calves on grass. And if those people say, hey, we need some more cattle, then they may be a little more willing to come up in price. Whereas if that buyer is trying to have to hunt for somewhere to put those cattle, then he's probably not going to be willing to raise the price too much. But at least the tool may give you an opportunity. Or the other thing I'll just show you on these feeder cattle markets. Alright, so if we were looking at the current market, April. So we can, we can pull up on any of these things, this little blue symbol symbolizes chart. And so we can look at that chart. Wait for it to come up. Got to change it to days. So we can look at that chart and see what prices have done over the last few days. In this case, the markets have stayed fairly constant for about the last 10 days. But if we were, if we were marketing back in this timeframe here, where the prices have come up 10 or 15 cents per pound or 10 or$15 per hundredweight over the last week or two. And the buyer was still offering me the same price that I know he'd offered my neighbor two weeks ago, well, then I can say, I know the futures market is now 10 cents a pound higher. Why are you still offering me the same price? Why can't you come up at least seven or eight cents? So I think, again, that's my hope is that these tools, come back here. I hope that these tools can help. To me, the more educated you are about what's going on in the market, the better you are at negotiating, you won't, you won't always get the price you want. You know, that's just the nature of the market. But I feel like if you can show this talk to a buyer. Again, in some circumstances, maybe it'll only get you two or three cents. But that's, you know, that can wind up being 20 $30 per calf. And sometimes, that's enough to buy, buy something you're needing right now. So that's my hope was the tools is that not just that the people that use them aren't just those who know they're going to be taking cattle to the mainland. But even if you're selling them here, you can use it to get an idea of Oh, baby. Maybe we can do that. Now, I think Melia the introduction you mentioned a grass finishing. So I'm working pretty heavily right now as Mark Thorn. And we're working on a similar tool for grass finishing. We don't have that one completed yet. But that will be another option that we'll put on the same website where people can look at, okay, I don't like the price that I'm being offered to sell my calves and I've got a little extra grass. What could my return maybe look like if I kept those grass, kept those calves and finish them on grass in Hawaii. So we're working on that tool. Mark has done some work. What is the mental allottee Research Station? Melanie? Yeah, Milani for several years. And so he's got some historical data on what kind of gains we might expect on calves. We've got some data on the carcass, merit of those how many might great choice select on So what kind of price they can receive. So we're trying to build that into a tool that producers can again use. And we recognize that grass conditions vary from year to year and vary from location on the islands, different different grasses. So it's a little more complicated tool thickens a little longer to get all the kinks worked out. But we hope to have that, again. Maybe by June, we're planning some Field Days in May and June. And we're hoping maybe to have at least a rough draft of that tool ready to show people get some feedback at that point in time. That'd be good.
Shannon Sand:I think there's so much different little points in the grass fish finish system that kind of influences everything, right, from your gains to your quality of that animal and whatnot. So a very variable, like he said, with the amount of forage or type of forage and quality of the forage across the island really does change. So
Dr. Dillion Feuz:good. Yeah, great. And whether you you supplement or not, supplement, and get better gains, but then you've got to put the cost of that supplement in. So the tool hopefully be able to show very clearly, whether that pays off or not in terms of, okay, I can know how much that supplement costs, right. If it gets me enough of additional gain, it's worth it. If it doesn't, it's not. And so those are we're trying to build those scenarios into that. Cool. Cool.
Shannon Sand:So you mentioned to the prices, the future prices based on it certain region of states. Yeah, you showed that map? So how different like if we go more west coast? I mean, the futures price, how much influence or change? Do you really see if it goes like, how do you is there? I don't know, I guess maybe you want to talk a little bit about that? Because you said it will fluctuate a little bit. But
Dr. Dillion Feuz:yeah, so I've looked. That's been several years ago. But there's also there's some video auction markets on the mainland that are pretty popular in some areas. And so those are a good market to collect data, where the market conditions are the same. And then you can look at cattle being purchased in Washington, Wyoming, Kansas, Nebraska. And you can also get where the destination of those cattle are going. So it's the buyer tracking them from Wyoming into Kansas? Or is that are they going from Wyoming to Texas? Are they going from Washington, just to a feedlot in Idaho, so you can get all that data. And what I found in looking at that is that Nebraska, tends to have the highest calf prices. So if you took the identical calf, let's say a 500 pound Angus cross calf, but it didn't abrasca It's going to receive typically the highest price, as you move west, that price of that same calf is going to be decreased. But interestingly, it's not decreased by the full amount of transportation. And other words, the buyer is picking up some of the transportation cost in that price. So if the cost was $10, to truck that calf from say, Utah to Nebraska, and if the calf was worth $500. In Nebraska, it would maybe be worth $493 In Utah, and so it discounted at $7 for the calf, but not the full $10. Then there's some fluctuation based on quality. For example, northern cattle typically grade a little better than southern influence cattle because the southern cattle have a little more brain influence to deal with the heat in the southwest. And so those calves, when they feed out, they know that they're not going to typically grade as many choice or upper choice. And so the northern states tend to get a little higher price than the southern states. All those things can also vary a lot by individual producer replication. If you've started to build up a reputation, you get a little better price than not and here's one where the state of Montana has a pretty good reputation is a pretty quality cow calf state their prices for the cattle truck the same distance from Montana, as from Idaho, Wyoming, Utah, if you have the same distance in trucking, the Montana price tends to be a little higher than the Utah Idaho price. So those bases numbers are mainly reflected by transportation. But they're not. There's other things that influence well. And, you know, I've only looked at just the Washington market and the Texas market for this tool, just trying to give a a general gauge and guideline, but I would think, in general, whether you're in Washington, Oregon, or kind of the eastern side of, of Idaho, most of those calves, are probably going to get fed out in a feedlot in that same area, there's a pretty good feeding area, in that Eastern Washington, Western Idaho area. And there's also a packing plant there. And so that market is somewhat separate, as compared to if you're in Eastern Oregon, well, maybe you're gonna get shipped to Nebraska, Kansas to a feedlot, or maybe you'll get shipped back up to Washington, it's, it's hard to say, I mean, it's based on what numbers are doing everywhere who needs to write.
Shannon Sand:Well, it's really good. I mean, I think these tools are going to be hopefully be useful for folks, like you said, these just to be able to have that broader picture of what you know, is going to be the best decision for them. And their whatever market they're going to and whatever, you know, production that they're doing for their animals, they're in their management system. So
Dr. Dillion Feuz:you know, one thing I'll say from a mainlanders perspective. Just I haven't seen a lot of Hawaii cattle, I tend to run off the roads, I've been pulled over twice with drunk driving when I was only looking at cattle on the sides of the road. So I was swerving. And to get out, walk the line and prove that I was sober. But by looking at cattle when I go past and, and then the limited amount of carcass data I've seen, and some data that I've seen from Hawaii Coop. I think Hawaii competes fairly well with quality cattle. You know, I think a lot of people are the main everything Oh, Hawaii, that's tropics, it's hot. The cattle probably are not that good of cattle. But the reality is where most of the cattle are grazing. It's a fairly temperate climate. I mean, it's 60 and 70 degree temperature. It's not that 95 and 100 degree.
Shannon Sand:Yeah, I don think perople realize the number of microclimates we have here. Yeah,
Dr. Dillion Feuz:yeah. And so the cattle quality, I think match up very well with more northern mainland cattle quality. And so I think the cattle tend to be successful when they get shipped to the mainland, and compete very well. greater gains and carcass quality. So that's a that's a positive for the Hawaii. Three is that they've, they've maintained, and I think, continued to push for some pretty quality cattle. Yeah, that's,
Shannon Sand:I mean, that's good to know. And a good thing to hear, because yeah, I don't think like Shannon said, you know, when they think of Hawaii, we think of, you know, white sandy beaches and very tropical climates and very high, you know, temperatures, but some of the more productive areas, actually, for our beef cattle is up in the sort of colder temperate areas of the island. And that's where a larger amount of the herds are, you know, and where these cattle come from. So, not to say that we don't have them in the in the warmer spots too we do, but typically, those that are going out into market or whatnot are in those kind of cooler regions. So thank you, Dylan, for joining us and sharing the tools with us. I think I and I hope folks you know, are able to use the tools if they've got questions about the tools, you know, feel free to reach out to us we will make sure that Dylan's contact and everything is in there. Again, remember there is a video portion to this podcast as well. So you can see the tools that he has displayed and we've talked and gone through on screen as well. You know, go ahead and use that to your best advantage. And like I said, you know, email us if you have any questions, but anything else you want to add Dylan before we close out, I'm
Dr. Dillion Feuz:just I'm coming to the end of my sabbatical that I've been here on Hawaii, but it's been a great experience. I've enjoyed working with you, Mele and Shannon and with Mark Thorne. I've enjoyed working with what producers I have been able to engage with. Yeah, I've certainly learned a lot, and hope to be able to come back to the island over the next year or two, and maybe, again, speak to some of these tools. If there's some updates that producers would like to see, be happy to make those. Yeah, it's been a good experience for me. And I look forward to continuing to work with you in the future.
Shannon Sand:Yeah, we do. And you know, we do have another project coming up that we will be working on some more risk management, tools and other educational opportunities for everybody. And I think with, you know, sort of folks getting to use due to this more new normal of us, will be able to be in person a little bit more, and hopefully be able to have another tool when Dylan folks are done with the grass finish tool, be able to share that and like he mentioned, hopefully have another field day that we can, you know, be able to share some of this stuff with everybody in person. Yeah, so thank you again, Dylan, for joining us today. Yes, thank you. And make sure to join our Facebook page, the livestock extension group, if you haven't already, be sure to visit the UHC jar Extension website and our YouTube channel listed in the show notes, which is where you will get to see the live demonstration version of it. And as Dylan has been going through, both of those are all of the tools like step by step. So yeah, yeah. And again, for additional information about this or any of our other topics or comments, comments, send us an email at walau@hawaii.edu. Thanks again for listening to the livestock walau. A hui hou! Uh before we go show some love for your favorite podcast by leaving us a review on Apple podcasts. Then stay tuned for next month's podcast. Thanks again to our sponsors the Western extension Risk Management Education Center, USDA NIFA, the livestock extension group and CTAHR. A hui Hou!