Seasonals Give Cattle Marketing Insight

It is very important for cattle producers to pay attention to seasonal price tendencies, especially during a time when prices are expected to move one way or another.

Producers also need to give heed to the overall cattle cycle, or the trend of US herd growth or decline, and the things that are influencing the trend of herd sizing.  The two can give insight into what is going on and how the trend might project into the future.

Andrew Griffith, agricultural economist at the University of Tennessee, wrote in his weekly Market Highlights letter that “it is very difficult to predict the market price of any commodity, and cattle prices are no exception.  The one glaring truth about all forecasts and price prediction is they will be incorrect.

“In most instances, analysts willing to stick their neck out to predict supply, demand and prices are generally satisfied if they get the direction of movement correct and the timing of shifts fairly accurate,” Griffith said.

Years ago, a market analyst said when talking about making forecasts of any kind, “tell them when or how much, never when and how much.”

 

FEEDER CATTLE A GOOD EXAMPLE

 

This year, most cattle industry participants expected calf and feeder cattle prices to rise in early spring, which has happened as live cattle prices advanced, Griffith said.

A Livestock Marketing Information Center graph of weekly 700- to 800-pound Southern Plains feeder steers shows the trend this year and how it has followed the pattern of the 2011-2015 average very well.

The strain on prices of a very fast regrowth of the US herd from 63-year lows shows up in last year’s line, which trended lower beginning in March.  Prices for these feeder cattle made a small recovery in November and December, but the trend this year has almost mirrored the average.

Feeder cattle prices have not advanced as quickly as fed cattle prices initially, but have closed the gap in recent weeks, Griffith said.  This is important because producers who marketed calves in February could have achieved higher prices by holding calves through March while adding pounds to the animals.

The value of gain in Tennessee over the last month based on increasing calf sale weight by 50 pounds ranged from $1.51 5o $2.12 a pound for steers and $1.40 to $1.72 for heifers, Griffith said.

“Thus, carrying a 525-pound steer from the end of February to the end of March and selling a 575-pound steer would have added nearly $105 worth of value to the animal,” Griffith said.

Paying attention to the seasonal tendencies in February might have clued some producers in to the possible direction of prices, Griffith said.  Gains may not be as lucrative as this year, but it always is worth some study.

 

CASH CATTLE QUIET

 

No cattle traded on the weekly fed cattle exchange auction Wednesday.  Last week, average auction prices were $2.34 per cwt lower at $130.97, versus $133.31 a week earlier.

No cash cattle trade was reported Wednesday.  Asking prices were reported at $130 per cwt on a live basis and $208 on a dressed basis.

Last week, cash trade ranged from $126 to $128 per cwt on a live basis and from $208 to $210 on a dressed basis.

The USDA’s choice cutout Wednesday was down $1.98 per cwt at $209.71, while select was up $0.12 at $200.51.  The choice/select spread narrowed to $9.20 from $11.30 with 124 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $133.13 per cwt, down $0.17.  This compares with the Apr settlement Wednesday of $130.52, down $0.50.