17 January 2013

2 minute read

North America

Both calf and heavy feeder cattle markets were astounding through spring as tight supplies and an early spring kicked the markets in full gear. Things turned south quickly by mid-summer as dry conditions and shrinking expectations for the corn crop resulted in a considerable drop in feeder cattle prices.

Some of that ground was gained back by fall, but prices remained well off their spring highs. However, fall 2012 prices were still $5-$10 per cwt over 2011 levels. Improved pasture conditions and hay production in the fall also worked to increase the hay supply and decrease the number of winter feeding days for many producers.

Another point of discussion would be the difference between calf prices in the spring and fall. During 2012, this differential was between $20 and $30 per cwt, or $100 to $150 per head, for 5wt calves.

Some of this was due to weather challenges and changes in feed prices during the year, but this wider differential is likely to be more of a trend if corn prices stay high.

Kentucky calf markets will be more adversely affected by high corn prices in the fall and winter, when pasture is generally not available. This will tend to put downward pressure on fall calf prices, much more so than spring calf prices. While choice of calving season should be driven by many factors, producers should stay aware of these trends in the market.

Heifer development estimates for July 2012 were unchanged from 2011, a year when cattle numbers nationwide decreased by 3 per cent. Secondly, the number of heifers on feed didn't move below 2011 levels until the October report (these estimates come out four times per year).

Third, new crop grain prices are likely to continue to pull pasture and hay ground into row crops. The result should be continued tight feeder cattle supplies for the upcoming year.

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