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Spring prices for lightweight calves may have topped out
 


By MATTHEW D. ERNST
Missouri Correspondent

KNOXVILLE, Tenn. — Fields may be muddy, but the market outlook is sunny in cow-calf country, as feeder cattle prices stay strong this spring.
Cattle farms south of Interstate 70 are accustomed to early-spring mud. But wintry mixes in February, and plenty of moisture in March, made getting to market more difficult than usual. And the mud stuck around last week, with some cows in the Lower Ohio Valley kept off pasture by the same weather disturbances that kept the region’s corn planters about two weeks behind.
Parts of Tennessee experienced the same soggy trend. “Most producers are reporting their cattle are still eating some hay,” said Chris Ramsey, Sullivan County extension agent, in northeastern Tennessee. Sunshine late in the week likely sent more herds in the south Eastern Corn Belt onto pasture.
Despite muddy fields, feeder cattle volumes at Kentucky and Tennessee markets rebounded in late March, with exceptional price levels for 300- to 500-pound calves through April 10. The seasonal price decline apparently started last week, when fed and feeder prices fell.
“There is never complete certainty in cattle markets, but it would seem the spring price for lightweight calves has reached its apex and has begun its slow decline through the summer and fall,” said Andrew Griffith, University of Tennessee beef marketing specialist.
One group that could benefit from a feeder cattle price decline: Stocker producers who buy light calves and background them to heavier weights. Lower calf prices help offset feed costs required through the summer months.
High feeder cattle prices kept most producers shipping lightweight calves. The producer with calves still at home this week might consider backgrounding up to heavier weights for fall sale.
“The market may be reaching a point where it is more advantageous to vaccinate, wean, pre-condition and introduce calves to a feed bunk for a few months, which allows the calf to gain additional weight and reduces risk to the buyer which generally results in stronger prices,” explained Griffith, who thinks yearling prices will peak sometime between July and September.
Fewer cattle on the market – a result of drought-decimated herds and heifers held back for expansion – kept up fed cattle prices through the winter. That gave beef packers the upper hand over cattle feeders in arriving at fed cattle prices.
Feedlots had to pay more for feeder cattle, with strong prices through March, with packers demanding larger animals producing heavier carcasses.
Cattle feeders may soon have the advantage, according to last week’s Livestock, Dairy and Poultry Outlook. Fed cattle prices held, increasing slightly during the last half of March. “Cattle feeders appear to have the upper hand in the ongoing tug-of-war with beef packers over fed cattle prices,” reported the USDA.
Last week’s apparent seasonal decline in feeder cattle prices reflected the futures market, as nearby contracts closed down-limit last Friday. But cattle feeders should be able to sustain slight price declines. That is owing to lower corn prices, and a fed cattle price outlook that does not appear to be declining going into the summer grilling season.
Cow-calf producers expanding their herds are also helping keep cattle prices up. Fewer heifers headed to feedlots means less beef available overall. Beef supply constraints mean that wholesale beef prices will remain at historically high levels, according to the USDA. In Indiana, producers reported 45,000 heifers held for replacement at the start of this year; that was up 6,000 from January 2014.
4/23/2015