Low Cattle Prices
If you’re a rancher, for the most part, when your calves are ready to be sold, you have to take whatever the market price is at the time you’re selling. Cattle prices have been falling and while there is a seasonal pattern for calf prices in the U.S., this year there have been some other contributing factors. David Anderson is a Texas A&M AgriLife Extension Economist.
“Most calves in the U.S. are born in the spring, weaned and sold in the fall. And so this is the time of year we get the biggest supplies hitting the market of calves going to our local auction markets really nationwide, so we always face a seasonal decline in prices.”
Anderson says this year was exasperated a bit by several things.
“We’re sort of at the peak of the cattle cycle. We’re sort of, the peak in terms of cattle numbers, beef cow numbers, but there’s an opposite cycle and that’s price and so when we hit a peak in the cattle numbers side of it we tend to see pretty low numbers on the price side of that cycle.”
Add to that some other peculiarities for this year.
“Practically the whole state lately has been on the drought monitor as in some form of drought so unfortunately that’s not unique. That doesn’t make this year unique but that forces some more sales earlier. It tends to force prices lower because you may have more people trying to sell and you’ve got fewer people buying because nobody’s got any grass.”
There was a fire in August that shut down a big packing plant in Kansas.
“There’s a plant that’s six percent of our slaughter that’s not buying so you’ve got to move those supplies around to other plants and so that causes lower fed cattle prices while that transition happens which also means lower feeder cattle prices, lower calf prices.”
Add to that climbing corn prices because of the fear of a late corn crop in the Midwest at risk of exposure to some early cold weather, but Anderson thinks prices may rebound.
“I do believe one of the things we will see is some higher prices going forward even in the calf market because what happens seasonally is, prices tend to bottom out in the fall and then they tend to go up, unless we get some of these other events happening with feed costs or corn prices.”