– Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky
The cattle markets continue to be at higher levels than I would have projected this time last year given production levels for all major meats. A lot of large groups of 800-900 lb steers are still moving in the $150’s. Exports have remained strong and I also think the overall strength of the US economy has encouraged solid beef movement. Heavy feeders moving now, are still being sold based on strong spring CME© Live Cattle futures prices, but as is always the case, there is a sizeable drop from April to June. I don’t expect heavy feeders to hold at these levels as we move towards the end of the year and the summer live cattle contracts become the driver.
Calf markets have also held pretty well through the first part of fall. Some of this is due to a relatively strong spring feeder cattle board, but there is also little question that good fall forage growth has spread fall calf runs out more than usual. Figure 1 shows Medium & Large Frame #1-2 steer prices at Kentucky auctions. As I wrote this, I just had two weeks of October prices to include, but I did go ahead and roll October into the chart. You will notice a significant drop from September to October and most of this occurred in the second week of this month. State average prices fell by about $5 per cwt from the first week to the second.
Figure 1. 550# Medium & Large Frame #1-2 Steers
KY Auction Prices ($ per cwt)
Source: USDA-AMS, Livestock Marketing Information Center, Author Calculations
As I was thinking about price levels and cow-calf revenues this fall, it occurred to me that I always show Medium & Large Frame #1-2 Steer prices for my price charts. This is primarily because that is the best data set that I have available and I tend to use that as an index for our calf markets. But, USDA-AMS does track Medium & Large Frame #2-3 steer prices as well. Although there are a few weekly gaps in this series, it does give us an opportunity to look at how much price discount is typically seen when calves fall into the lighter muscling, 2-3 category.
I pulled the last five years of prices for both groups in order to do a simple comparison. From 2013 to 2017, the average monthly price differential between Medium & Large Frame #1-2 steers, and those falling into the #2-3 category, was $20.74 per cwt. On a 550 lb steer calf, this is well over $100 per calf. Much like frame size, muscling has a very significant impact on calf values and is something that producers should be aware of as they make genetic and culling decisions about their cow herds. A quick summary can been seen in figure 2. (Note that price levels are very high because the chart only includes 5 years and 2014 and 2015 are pulling the averages upward).
Figure 2. 550# Medium & Large Frame Steers (#1-2 vs #2-3)
KY Auction Prices 2013-2017 ($ per cwt)
Source: USDA-AMS, Livestock Marketing Information Center, Author Calculations