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KSU Ag Logistics September 24, 2002

KSU Ag Logistics September 24, 2002. Learn More Than You Are Taught. Merchandising for a Feed Mill. Merchandising decisions are driven by two primary items: Spreads Relative Values. Wheat Middlings (Midds). Byproduct of the flour milling industry

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KSU Ag Logistics September 24, 2002

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  1. KSU Ag Logistics September 24, 2002

  2. Learn More Than You Are Taught

  3. Merchandising for a Feed Mill • Merchandising decisions are driven by two primary items: • Spreads • Relative Values

  4. Wheat Middlings (Midds) • Byproduct of the flour milling industry • Used predominately in beef rations, to a lesser extent in dairy rations, and to small extent in swine and poultry rations. • 16% Protein, 4% Fat, 8% Fiber

  5. Spreads • S/D Factors • Freight Economics • Ingredient Flow

  6. Mpls Buffalo 90 107 Pac KC River 60 65 65 Interiors 70 Chatt 55 TX 35

  7. Mpls Buffalo $74 $78 Pac KC River $88 $89 $111 Interiors $91 Chatt $100 $21 $23 $20 TX $107 $10

  8. Arbitrage • Buying in one market while simultaneously selling in a different market.

  9. Relative Value • Value among the same commodity. • Value relative to substitutes.

  10. KC Midds vs. River Midds • KC Protein 17% vs River Protein 16% • Who’s the better supplier? • 17/16 * $110=$116.87 • KC midds are worth $6.87

  11. Corn and SBM vs. Midds • Corn: 8% Protein $3.00/bu ($107/Ton) • SBM: 48% Protein $200/Ton • Midds: 16% Protein $110/Ton • What do you buy? • 80% Corn & 20% SBM= Midds • $125 Corn/SBM vs. $110 Midds • So Midds are the better buy

  12. Mpls Buffalo $74 $78 Pac KC River $88 $89 $111 Interiors $91 Chatt $100 $21 $23 $20 TX $107 $10

  13. Rice Bran vs. Midds/Fat • Rice Bran is 13% Protein, 16% Fat, $95/ton • Tallow is 100% Fat $300/ton • Midds are 16% Protein, 4% Fat, $110/Ton • 87.5% Midds + 12.5% Fat = Rice Bran • $95 Rice Bran beats $133.75 Midds/Fat

  14. Truck vs. Rail Factors • Pipeline Management • Demurrage • Plant Labor • Bull vs. Bear

  15. Questions?

  16. To Make Money. To Create and Keep Customers. What Is The Purpose Of A Business?

  17. Behavior vs. Results Good Behavior Bad Results Good Behavior Good Results Bad Behavior Good Results Bad Behavior Bad Results

  18. Seven Behaviors • Learn more than you are taught • If you don’t have a competitive advantage, don’t compete • Face reality as it is, not as it was or as you wish it to be • Eliminate delays • Manage things; lead people • Change before you are forced to • Be candid with everyone

  19. The Freedom Scale 5. Act on own, routine reporting only 4. Act, but advise at once 3. Recommend, then take resulting action 2. Ask what to do 1. Wait until told

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