The Packer-Feeder Game

The Packer-Feeder Game provides cattlemen an opportunity to sharpen their fed cattle marketing and purchasing skills in a fun, game-like environment. The game provides a realistic market for fed cattle and live cattle futures. Participants role play as cattle feedlot managers trying to market cattle at a profit and as packing plant managers trying to buy cattle at a profit. Actions by players direct market prices. Workshops require 24 and can accommodate up to 50 participants. Workshop length varies from four to about 14 hours.

 

The Fed Cattle Market Simulator was developed by Dr. Clem Ward, Dr. Jim Trapp, Dr. Derrell Peel, and Dr. Steve Koontz, all livestock marketing economists. Clem, Jim, and, Derrell are at Oklahoma State University and Steve is at Colorado State University.

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Participants

• Learn to compute feedlot break-even prices for fed cattle.
• Find out how to estimate packer break-even bid prices for cattle and how to determine the number of cattle packers need.
• Bargain head-to-head to negotiate cash prices or forward contracts.
• Determine how to best market three genetic types of cattle either on live weight, dressed weight, or with a price grid.
• Use the futures market to hedge sales or purchases.
• Use financial statements to plan your marketing/buying strategy.
• See the dynamics of the market over time.
• See who has the bargaining edge when cattle supplies are tight - and when cattle supplies are plentiful.
• Try to out-compete their peers!

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FCMS Overview

• Eight feedlot teams of 2-4 people market fed cattle.
• Four meatpacking teams of 2-4 people purchase fed cattle.
• Cattle supplies are exogenously controlled and cycle from larger to smaller to larger supplies.
• Cattle can be marketed/purchased any time during a five-week market window at weights ranging from 1200-1300 lbs.
• Cattle genetics range from low quality, high yielding to high quality, low yielding.
• Feedlots are penalized for feeding to excessive weights but packers have an incentive to purchase heavier cattle.
• Each packer has a different cost structure and minimum cost volume.
• Feedlot and packer teams negotiate sale/purchase prices in seven-minute trading weeks.
• Cattle can be priced on a live weight, dressed weight, or grid method.
• Teams can trade futures market contracts (one nearby and two distant contracts) and forward contract cattle.
• The beef demand function is based on a nine-week polynomial lag model estimated with weekly beef industry data.
• Market News reports within-week trading activity (volume, contracts, high and low prices) and end-of-week market summaries (volume, prices by weights, boxed beef price, cost of gain, feeder cattle purchase price).
• Cattle on Feed reports are presented monthly.
• Teams receive weekly profit/loss statements.
• Ego awards, "Best team trophy" and "Best supporting team ‘gold and silver cow chips on a shingle’ trophy" are given monthly.
• Each workshop ends with a "lessons learned" debriefing period and an evaluation form.