The Cattle Business:
Seasonal Feeder Cattle Price Trends
Livestock Update, April 2000
Bill R. McKinnon, Extension Animal Scientist, Marketing, Virginia Tech
Many feeder cattle producers often ask when is the best time to sell my cattle or when during the year are feeder cattle prices the highest. Some producers do not realize that these are actually two separate questions with frequently different answers.
To fairly analyze the monthly trends in feeder cattle prices, a sufficient number of years must be evaluated to take out the effect of the market's major moves up and down during the cattle cycle. Since the U.S. cattle cycle typically last about 10 years, the period of 1990-1999 was used to calculate the monthly feeder cattle prices presented below.
To determine the monthly average price for a particular weight class of cattle, prices received at special graded feeder cattle sales sponsored by the Virginia Cattlemen's Association were used. The prices represent a weighted average across all breeds and grades within a particular weight class. During the early 1990s the number of feeder cattle marketed during the months of January, February, May, June, July, August, and December were relatively small. Caution should be taken not to put too much faith in apparent price relationship noted during those months.
The price pattern for 5-weight feeder cattle comes as no surprise to most market observers. The prices reflect the impact of supply:demand dynamics that take place during each season. The supply of lightweight cattle is large in the fall as cow/calf operations bring their calf crops to town. Buyer demand is driven by the anticipated cost of putting on a pound of gain. In the fall months, buyers will likely have to feed harvested feed while spring purchased calves will generally go to relatively cheap grass. It was interesting to note that the peak for the 5-weight steers actually came in May instead of April. This may have been the result of stocker cattle operators trying to finish out their spring cattle purchases with only limited supplies of calves available.
The graphs below examine the monthly price pattern of 7-weight cattle and 8-weight steers. The trends indicate significantly stronger prices in the summer and early fall months than those in the more traditional fall marketing period. The seasonal price patterns may support the management practice of stocking pastures heavier than tradition in the early grazing season and then marketing a portion of the yearlings in the summer after the spring flush of grass growth. The remaining cattle would then more nearly match the forage growth during the balance of the growing season. The yearling cattle price patterns certainly suggest avoiding the crowded calf marketing period of October.
Stocker cattle operators should not fall into the trap of thinking they should always market cattle when the price tends to be the highest. The cost of adding additional pounds of gain should be compared to the value of the added gain.
The seasonal price patterns presented above should be used carefully. The monthly prices represent a ten year average. Producers must always be aware of ongoing and local conditions within the market that can upset traditional seasonal price patterns.