![]() The actual steer–heifer price difference is still unknown for October to December 2022. The price difference is reflecting the higher premium for steers due to higher underlying feeder cattle prices and is providing some downward incentives to start rebuilding the beef cow herd – at least for 2024. In almost every month this year for both lighter and heavier feeder cattle, the price difference has been larger than the 5-year average and the largest over the past 5 years. This year, the price difference was $27.68 per cwt. For example, price differences in March for 500-599 pound feeder cattle have averaged $13.51 per cwt. The price difference in both lighter and heavier feeder cattle is much larger this year than it has historically been over the last 5-years. This is what appears to be happening this year. steer prices rise faster than heifer prices because of their ability to finish), which translates to greater heifer discounts. However, higher prices for feeder cattle tend to expand the top end of the ranges (i.e. The magnitude of these price differences varies greatly given market conditions and overall consumer demand. During the cattle cycle, price differences tend to widen during periods of contraction and narrow during periods of growth. For heavier feeder cattle, the price difference climbs through the year, peaking in the summer, before declining again. In Nebraska, for lighter feeder cattle, the price difference tends to be largest in winter and slowly declines through the year. Price differences are larger for lighter cattle (500-599 pounds) versus heavier cattle (700-799 pounds) due to the price weight slide (see Tables 1 and 2). Nebraska feeder cattle provide a good indicator of how these price differences have varied over time, within season, and across weight class. The best fit line with one standard deviation is fit through all the transactions by sex and weight. Red dots are steer lots sold and green dots are heifer lots sold. The size of the dot indicates the number of cattle sold. Source: Various video auctions, USDA-AMS (2022) Note: Each dot represents an individual transaction. Price weight slide for feeder cattle sold via video auction out of the North Central Region for delivery in September, October, or November 2022. This form is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.Figure 1. Spam protection has stopped this request. However, we know that cattle prices are certainly paying attention to the corn market and research suggests that any continued corn price weakness can help to provide support for feeder cattle prices. While feeder prices have been on an uptrend over the past month, it can’t be simply attributed to lower corn prices alone. It is impossible to disentangle the relative impacts of factors affecting real-time price changes. So a decline from $4.00/bushel corn to $3.60/bushel would suggest a feeder price increase from $150/cwt to $152.70/cwt. To put their findings into a current context, what might a ten percent decline in corn prices imply for feeder cattle prices? It would suggest a 1.8 percent increase in feeder cattle prices. ![]() Further, they found that feeder prices have become more responsive to corn prices since 2008. Using monthly data, they found that a one percent increase in corn price reduces feeder cattle prices by about 0.18 percent. feeder cattle) can increase without increasing the total cost to produce a fed animal.Ī 2017 study by Tonsor and Mollohan at Kansas State University (available here) highlights this relationship and estimates the impact that a change in corn price has on feeder cattle prices. cost of gain) declines, the price of the other input (i.e. The inverse relationship exists because corn (feed) and feeder cattle are the two major inputs into the production of fed cattle. This relationship assumes that all other factors that affect price remain constant such as other feeding costs and live cattle price. In other words, as the price of corn decreases, the price of feeder cattle increases. Just 18 trading days later, it closed Monday at a contract low of $3.77.Ĭorn price is assumed to have an inverse relationship with feeder cattle prices. The December 2018 corn futures contract price hit $4.26 on May 23rd – its highest level since July 2017. Both nearby and new crop corn futures prices have tumbled by over 40 cents or approximately ten percent. – Josh Maples, Assistant Professor, Department of Agricultural Economics, Mississippi State UniversityĬorn prices have been on a sharp downtrend since late May due primarily to a combination of trade uncertainty and a strong start to the growing season. Originally posted in the BEEF Newsletter, June 27,2018
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