It looks like calf demand is strong this winter as weather conditions keep pastures open and possible declines in calf availability push prices.
Light-weight steer and heifer prices, the kind most likely to be put on grass or wheat somewhere, have garnered higher prices this January than a year ago.
It is more common for calf prices to decline a bit in January as many pastures are full or dormant, only to recover to the annual highs in late March when supplies are lowest and pastures begin to green up.
GRASS MOWERS IN DEMAND
Andrew Griffith, agricultural economist at the University of Tennessee, said in a weekly letter to Extension agents called Tennessee Market Highlights, that “It would appear that grass cattle are already in strong demand as prices of both lightweight steers and heifers have made strong positive price movements the past two weeks.
“It would appear that cattle under 500 pounds are garnering the most attention as that is where the largest price gains have been experienced,” Griffith said. “It is easy to identify what producers are looking for, and that is lighter weight calves that are in thin flesh.
“Buyers are looking for calves that will take off and gain weight in a hurry,” he said. “This does not mean that producers should be selling light-weight and thin-fleshed calves. Doing this would mean that a producer is leaving easy pounds on the table and not marketing those pounds.”
The USDA’s Agricultural Marketing Service’s weekly average price for 400- to 500-pound steers in the Southern Plains last week was $193.45 per cwt, up $2.81, or 1.47%, from $190.64 the previous week and $7.44, or 4.00%, above $186.01 in the same week a year earlier.
SUPPLIES DECLINING?
But as much as demand for pasture calves may be playing a role in rising calf prices, supplies may be a bit shorter with expectations of even shorter supplies.
The 2014-2018 average price for those 400- to 500-pound steers runs significantly higher than last year, and the five-year average price includes years when the US cattle herd was smaller than it was reported a year ago or even on July 1.
It bears repeating that AMS numbers show an increase in total cow slaughter in almost every week last year, compared with the 2014-2018 average. What’s more, total cow slaughter this month has been above last year.
The USDA is scheduled to provide its annual Cattle (inventory) report today at 3 pm ET. With the increase in cow and heifer slaughter last year, some analysts are expecting the total herd to be down from last year, marking 2019 as the peak year in the current cattle cycle.
And with fewer cows or heifers being kept as herd replacement cows, fewer calves could have been born last year. This would make current supplies tighter and tend to support prices.
CATTLE, BEEF RECAP
Cash cattle trading was reported in the Plains this week at $122 to $122.50 per cwt on a live basis, down $1 to $4.50 from last week. A few dressed-basis trades were reported at $194 per cwt, down $4 to $5.50.
The USDA choice cutout Thursday was down $0.17 per cwt at $213.35, while select was down $0.45 at $211.48. The choice/select spread widened to $1.87 from $1.59 with 90 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $142.88 per cwt, down $0.71. This compares with Thursday’s Jan contract settlement of $142.45, up $0.35 and the Mar close of $135.65, up $0.67.