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September 28, 2006 Market Advisor: Make Plans for Fall Calf Marketing
Cow-calf producers should start making plans for marketing calves, even though the actual sales date may be weeks or even months away. Calf prices at livestock auction markets in the northern Plains were averaging very near last year’s levels in mid-September. Many 550- to 600-pound steers were selling between $120 and $130 per hundredweight (cwt) and premium-quality calves were bringing even more. Cyclically short supplies and strong demand were supporting prices. Feeder cattle supplies outside of feedlots on July 1 were up only 1 percent from last year, and placements into feedlots were 17 percent above 2005 in July and 10 percent higher in August because of dry weather conditions in many northern and southern Plains states. Placements of cattle weighing less than 600 pounds were up almost 43 percent in July and just less than 63 percent in August! Two important fundamentals that affect demand for fall calves are corn prices and fed-cattle prices. The USDA is estimating the second largest corn crop ever at 11.1 billion bushels, which is helping keep a lid on prices, even with the increasing demand for corn for ethanol production. December corn futures prices in mid-September fell about 30 cents per bushel from July highs. Typically, for every 10-cent-per-bushel decline in corn prices, fall feeder-calf prices increase about $1 per cwt. Fed-cattle prices have increased $8 to $10 per hundredweight from July lows because of increasing export demand for beef and seasonally declining beef production. Furthermore, moderating energy prices and lower supplies of chicken from the beginning of the year are helping domestic demand. Some seasonal weakness in calf prices can be expected as the heavy runs come to market in October and November. However, prices still should average near or slightly below last year’s record levels. 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 market factors that can affect prices. It is common in the fall for prices of 550- to 600-pound, USDA medium and large frame No. 1 steers to differ $10 per cwt, and even up to $20 per cwt, at the same sale. Producers are encouraged to contact their market early, at least several weeks prior to selling, for tips on management and marketing practices that can help assure that calves bring the best possible price. Of course, uniform, large-lot sizes of calves are in high demand and bring strong prices. However, other factors can affect the sale price as well. Calves with appropriate vaccinations that can be documented are bringing premium prices. Check with your veterinarian and market to determine what health program is best for your area. Natural beef is increasing in popularity and calves that qualify for those programs may bring premium prices. The key is being able to document that they have not received growth implants or antibiotics. Working with your market is important because it takes 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. Several large
beef retailers in the U.S. now prefer source-verified beef. The USDA maintains
a list of firms that qualify for USDA export verification and quality
system assessment at Other ways to enhance the value of calves is by documenting feedlot performance of past calf crops, beef quality assurance programs and special feeder-calf sales sponsored by state or local purebred cattle associations. Of course, high-quality replacement heifers also are bringing premium prices. The key to enhancing the prices of fall calves is to start the marketing process early. Don’t wait until sale day to simply haul the calves to market and expect premium prices. You have a commodity that is selling very well, so working with your market in advance will enhance your bottom line even more. ### Source: Tim
Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu |
Market Advisor: |
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North Dakota State University |
