November 14, 2002

Market Advisor: Feeder Cattle Price Update

By Tim Petry, Livestock Economist
NDSU Extension Service

Feeder cattle prices in North Dakota and South Dakota in mid-November are very near levels of one year ago. Although prices are lower than in 2000, the good news for this year is that prices are increasing while last year prices were falling sharply.

Prices for USDA medium and large frame No. 1 feeder steers at livestock auction markets in North Dakota and South Dakota for the week of Nov. 4-8 averaged: 400 to 450 pounds - $100.31 per hundredweight, 500 to 550 pounds - $89.76, 600 to 650 pounds - $84.25 and 700 to 750 pounds - $82.93.

The price slide from 400-450 pounds to 500-550 pounds was $10.55 per hundredweight compared with the 600-650 to 700-750 slide at only $1.32. Prices for the 550 to 650 pound steers, which is what many Northern Plains producers have to sell, continue to be relatively weak compared to their lighter weight and heavier weight counterparts for several reasons.

Lightweight feeder calves are selling well because of the versatility they offer in a wide range of backgrounding situations. They are in particularly good demand for winter wheat grazing in Texas and Oklahoma. Wet conditions in late October sparked winter wheat growth but hampered turn out of cattle. Expected drier weather in November should cause ideal grazing conditions. The cost of gain on winter wheat is lower than feed grain based rations, so lightweight calves are selling well.

Heavyweight feeder steers are in short supply because many were forced from summer pastures early due to severe drought conditions in many cattle-producing states. In the past four weeks, only 20 percent of the feeder cattle selling at North Dakota and South Dakota markets weighed more than 600 pounds.

Prices of 550 pound steers compared to 750 pound steers are being affected by 2003 live cattle futures prices. February and April futures contracts are currently trading $6 to $7 per hundredweight higher than June futures, reflecting the normal seasonal price pattern for fed steers. So, feedlots are willing to pay relatively higher prices for cattle that will finish in March rather than June.

Feeder cattle marketers should also be aware that cattle within the same grade and weight range may bring quite different prices, depending on many market factors that affect their perceived value by purchasers. The range in prices for 550-600 weight, medium and large No. 1 steers at an auction was recently quoted at $82 to $90.25 per hundredweight. The same USDA market report showed "fancy" calves selling at a $5 to $10 per hundredweight premium over average prices, vaccinated calves bringing $2 to $4 more and replacement quality heifer calves commanding $5 more per hundredweight.

Several positive factors should affect feeder cattle prices between now and the end of 2002. The biggest runs of feeder cattle are probably behind us, as major movement occurred from mid-October through the first week of November. Smaller Corn Belt cattle feeders in southern Minnesota, Iowa and Illinois typically enter the market after the corn is harvested and bring a spark to prices. And fed cattle prices are once again showing seasonal strength after being set back by the dockworkers strike on the West Coast that backed up beef destined for Pacific Rim markets.

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Source: Tim Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu