The price slide shifts up and becomes relatively steep under these circumstances. And, if corn is cheap, feeders are happy to pay more for lighter calves, as feedlot cost of gain is low. Feeders are willing to bid up feeders at all weights when domestic and global demand for beef is strong. Demand for beef (which increases demand for calves) and corn prices (which affects feedlot cost of gain) are two major factors that affect the severity of the price slide. Remembering that the previous numbers are the average over the last 18 years is important, and some years have more drastic price slides than average. By weaning a month early, would your cows begin to put on body condition earlier, resulting in lower winter feed costs? What would it cost to carry your calves an extra month? Would $65/head be sufficient? The answer, as it always is in economics, is it depends. The big question is, are any of these proposed changes in marketing dates worth it? Retaining ownership a month to add weight results in increased revenues of almost $65/head. Selling that calf two months earlier results in reduced revenues of $118/head, while selling one month early only reduced revenues by $41/head. Again, using the average values from 1999–2017, calf values are shown for expected weights at different times for a calf expected to weigh 550 pounds in mid-October. Table 2 shows the value of a calf at different weights in late summer and fall to show how the calf’s value changes as it gains weight over the year. The price slide occurs within the year and across weight classes. This discrepancy is due to the first 475 pounds of the now heavier calf discounted by $0.27 per pound, as they were valued at $1.72 per pound at the lighter weight class. However, the difference in value of a 675-pound steer and a 475-pound steer over this timeframe is only $163.23, or $0.82 per pound. Many people would think a 675-pound steer should be worth $290 more than a 475-pound steer ( 200 pounds × $1.45 pound) in this case. The average price per cwt for 675 steer calves over this period was $145.48. While the increase in value for heavier calves is expected, most people tend to overestimate the value of added calf weights. For example, 475 pound steer calves generally bring almost $50/head less than 550 pound steers, and 675 pound steers bring The difference is also shown for each weight as compared to a 550-pound steer over the same period. Table 1 shows the average October value for steer calves at various weights from 1999–2017. As heavier calves bring lower prices per pound, animal value increases at a lower rate than weights. The graph shows the effect steer weights have on prices. Louis Federal Reserve and are shown in 2017 dollars. The prices were adjusted for inflation using the Producer Price Index as reported by the St. All prices are from the Livestock Marketing Information Center (LMIC) and are USDA-reported data. Figure 1 depicts this phenomena for Wyoming steer calves using October sales prices from 1999–2017. While heavier calves do generally bring more money per head at weaning, the increased value often isn’t as large as many people expect. One of the recent trends in the cow/calf sector is to increase weaning weights by shifting calving dates, increasing mature cow size, or improving herd genetics overtime. Optimal cow size, calving date, and animal costs cause much debate. The Impact of the Price Slide on Calf Values at Auction Understanding how price slide affects forward contracts can help producers decide whether or not to deliver calves that are under or over the agreed-upon weight. If making operational changes to increase weaning weights – for example, buying more expensive bulls or shifting calving dates – understanding how that decision affects calf values, not just weights, can be important. The price slide is important to consider when making production and marketing management decisions. Price slide is seen at auctions as well as in agreements in forward price contracts. Price slide is the naturally occurring phenomenon that cattle prices (often expressed in dollar per hundredweight ) tend to decrease as an animal’s weight increases. By John Ritten, Steven Paisley, Bridger Feuz, Hudson Hill
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