Market Advisor: Fall Feeder Calf Marketing Update
By Tim Petry, Livestock Marketing Economist
NDSU Extension Service
The fall run of feeder calves has started as evidenced by lighter-weight calves being sold at livestock auction markets across the northern Plains.
The fall calf-marketing season usually gets into full swing in mid-October and weekly receipts in the USDA Dakotas feeder cattle market report bear that out. For the week ending Oct. 12, 70 percent of the feeder cattle sold weighed less than 600 pounds. That compares with 17 percent weighing less than 600 pounds for the same week in September, when the heavier-weight yearlings were coming off grass pastures.
The USDA Agricultural Marketing Service (AMS) issues the Dakotas feeder cattle market report each week. It reports average feeder cattle prices and the total number sold at six auctions markets in North Dakota and 11 in South Dakota. The report can be accessed in the National Feeder and Stocker Cattle Summary, which is released on the AMS Web site (http://www.ams.usda.gov/mnreports/SJ_LS850.txt) every Friday afternoon.
Individual market reports can be accessed at http://www.ams.usda.gov/lsmnpubs/cfauction.htm, then click on the appropriate state and desired market.
Prices for calves in mid-October were very similar to last year’s prices and also comparable to prices received in 2004. However, prices are about $12 per hundredweight (cwt) lower than the record level that was recorded when corn prices were very low in 2005.
Corn prices this year also are similar to last year’s levels. However, last year corn prices increased about $1 per bushel from mid-September to mid-October. This year, corn prices are now similar to one month ago, but have increased and then decreased about 40 cents per bushel in the past month. So, the volatility that has occurred in the corn market during the last year is still evident.
Corn prices are one of the most important fundamental factors affecting feeder calf prices. A rule of thumb is that for every 10 cents per bushel that corn changes, fall feeder calf prices may change $1 per cwt in the opposite direction.
Corn prices likely will continue to be volatile during the next year, so feeder cattle prices also will be volatile. The USDA is predicting a record 13.3 billion bushel corn crop. However, strong demand for corn for an increasing number of ethanol plants and a robust export market predicted by the USDA to be up more than 10 percent from last year will be supportive to prices.
Last year, corn prices increased $1.25 per bushel from mid-October through February.
Calf prices certainly will be affected by what corn prices do during the coming weeks and months. Currently, March corn futures are trading about 15 cents per bushel higher than December futures prices.
Seasonal weakness in calf prices can be expected as heavy runs continue through November. However, prices should average slightly above last year’s levels in November unless corn prices skyrocket again.
Another important fundamental factor that will influence calf prices this fall and backgrounded feeder cattle prices in January and February is fed cattle prices.
Fed cattle prices averaged about $6.75 higher than last year during the first three quarters, which has been supportive to calf prices given the price of corn.
A strong export market, particularly to Southeast Asia, will be necessary to keep fed cattle prices above last year’s levels in the fourth quarter because pork and chicken production is increasing.
Feeder calf marketers are reminded that different lots of calves of the same weight and grade can sell at a relatively wide range in prices, depending on the many factors that can affect prices. For example, a recent market report from a western North Dakota auction market quoted prices for 500- to 550-pound medium and large No. 1 feeder steers from $114.50 per cwt to $128.50 per cwt. That is a $14 per cwt spread in prices and $77 per head on a 550-pound steer.
Calf producers are encouraged to contact their market at least several weeks prior to selling for tips on management and marketing practices that can help calves bring the highest possible price.
Calves that have documented appropriate vaccinations are bringing strong prices. Check with both your veterinarian and market to determine what health program is the best for your area.
Natural beef is increasing in popularity and calves that qualify for those programs may bring premium prices. The key is to document that they have not received growth implants, antibiotics or ionophores. Working with your market is important because you need at least two natural calf buyers at a sale for significant premiums to be paid.
Age- and source-verified calves may bring a premium because beef exported to Japan must be verified as coming from cattle that are 20 months of age or less.
Documenting the feedlot performance of past calf crops, beef quality assurance programs and special feeder calf sales sponsored by state or local purebred cattle associations are other possible ways to enhance calf value. High-quality replacement heifers also are bringing a premium.
The key to enhancing calf prices is to start the marketing process early. Don’t wait until sale day to haul the calves to market and expect to top the market.
NDSU Agriculture Communication
|Source:||Tim Petry, (701) 231-7469, firstname.lastname@example.org|
|Editor:||Rich Mattern, (701) 231-6136, email@example.com|