OSU's Derrell Peel Talks about the Conitued Increasing Cattle Prices Over the Last Six WeeksMon, 11 Nov 2019 17:11:47 CST
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel talks about how beef prices continue to trend in an upward pattern.
"The fall calf run is in full swing in Oklahoma. USDA-AMS reports that combined volumes for seven Oklahoma auctions are up 7.0 percent year over year over the past six weeks. Prices for most weight classes of feeder cattle increased last week, suggesting that the last week of October may have been the seasonal low. However, cold weather this week may dampen demand and could pressure prices a bit more as large fall run numbers will likely continue for another couple of weeks.
"Wheat pasture has been slower to develop this fall with dry conditions in many regions delaying wheat pasture growth. Rainfall remains limited in western parts of the state with most of the eastern half receiving substantial precipitation in the past two weeks. However, wheat pasture across the state continues to get closer to turn out and there is still considerable interest in winter wheat grazing across Oklahoma.
You can review the table mentioned in the story here.
"Table 1 shows current steer prices in Oklahoma. The prices are a typical pattern for this time of year with prices per hundredweight decreasing sharply from 400 to 600 pounds and prices largely unchanged at weights from 600 to 800 pounds. Columns 3, 4 and 5 show the price changes for various amounts of weight change. The current price patterns show that feeder cattle value increases rather slowly across the light weights (column 7) and increase by larger increments at weights above 600 pounds.
"The current price patterns suggest marketing considerations for both cow-calf sellers and stocker buyers. For example, the value of additional weight for retained weaned calves depends on the weaning weight of the animals and the amount of additional weight planned. At 450 pounds, the value of 50 pounds of weight gain is only $34/head but the value of 50 additional pounds for a steer weighing 550 pounds at weaning is $46/head. However, under the current price pattern the value per pound of additional weight is higher as more weight is added. Of course, prices at this point in time do not account for prices changes over the time it takes to add additional weight. However, current price patterns provide information about potential value relative to additional costs to add weight.
"Stocker buyers may also consider the implications of buying different size animals depending on total weight gain planned over the winter. Four-weight steers are very popular for stockers and sometimes get overpriced at this time of year relative to heavier weight steers. In Table 1, the value of 250 pounds of gain for a 450 pound steer is $269/head while the value of the same amount of gain for a 550 pound steer is $343/head. Of course, profit potential depends on cost of production and expected selling prices."
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