The Cattle Business: Fall Calf Price Trends
Livestock Update, May 1999
Bill R. McKinnon, Extension Animal Scientist, Marketing, Animal and Poultry Sciences, Virginia Tech
Cow-calf producers often ask when are calf prices highest or when is the best time to sell their calves. These are two very different questions with different answers. It should come as no surprise that on the average the highest prices for lighter weight (400-650 lb.) feeder cattle come during the early spring in Virginia. In March and early April, stocker cattle operators are beating the bushes for the relatively limited supply of light weight feeders. Though the highest per cwt. prices may come during this time period, the overall economic picture (total income -- total cost) probably suggests another strategy for the average cow-calf operator.
For most Virginia cow-calf herds, the fall period offers the first legitimate marketing option. The fall months mark the period of the biggest calf runs. Graph 1 illustrates the weekly price trends for 500-599 pound L&M1 steer calves sold through the Virginia Cattlemen's Association sponsored graded sales during the last four years. The graph illustrates the typical mid-October slump we experience as large numbers of calves essentially overwhelm the marketing and transportation capacity of the state. The calf market typically declines in November as many calf buyers finish their fall calf purchases. We usually experience a mild price rebound in late November and early December with dwindling numbers of calves coming to town.
Price per pound is only one variable in the timing of calf sales. If calf weights and forage availability stayed constant from September through December, the market would dictate late September sales. However, calves do gain weight during the fall and so the added weight must be calculated into the price per head value. Graph 2 represents the change in price per head using the weekly prices from Graph 1 and assumes an average daily gain of 1.75 pounds per day during the fall months. The value per head graph assumes a 500 pound steer in early September that grows into a 666 pound steer by late November. The weekly price per pound is also adjusted for weight differentials as the weight of calf increases.
The potential fallacy with Graph 2 is the assumption of a constant 1.75 pound average daily gain from September through November. The availability of amount and quality of forages will typically decline into November which may slow calf growth rate. As the fall progresses, other economic issues will impact the calf marketing decision such as reserving late fall forage for cow maintenance needs and allowing cows to put on some condition before the harsher winter feeding season begins. The local calf sales history and opportunities may also impact the timing of calf sales. The timing of calf sales depends on more than just price per pound.