SEASONAL PRICES for TENNESSEE FEEDER CATTLE and COWS

SEASONAL PRICES for TENNESSEE FEEDER CATTLE and COWS

Tammy L. McKinley Extension Specialist Agricultural & Resource Economics

economics.ag.utk.edu

AE16-06 July 2016

TABLE OF CONTENTS

Seasonal Prices: Introduction...............................................................3 Tennessee Steer Prices, 300-400 lbs. ................................................5 Tennessee Steer Prices, 400-500 lbs. ................................................8 Tennessee Steer Prices, 500-600 lbs. ............................................... 11 Tennessee Steer Prices, 600-700 lbs. .............................................. 14 Tennessee Steer Prices, 700-800 lbs. .............................................. 17 Tennessee Heifer Prices, 300-400 lbs. ............................................ 20 Tennessee Heifer Prices, 400-500 lbs. ........................................... 23 Tennessee Heifer Prices, 500-600 lbs. ........................................... 26 Tennessee Heifer Prices, 600-700 lbs. ........................................... 29 Tennessee Heifer Prices, 700-800 lbs. ........................................... 32 Tennessee Utility Cow Prices ............................................................ 35 Choice Finished Cattle, Five Market Area ....................................... 38

Data Sources USDA/Tennessee Department of Agriculture Market News Service Livestock Marketing Information Center

Special Acknowledgment: Publication based on original work

by Dr. Emmit L. Rawls Professor Emeritus, Agricultural Economics

Seasonal Prices: Introduction

When planning to market cattle there are many factors a producer needs to take into account, one of which is the seasonal price pattern for the cattle to be marketed. Having an understanding of the historical monthly highs and lows can greatly impact returns especially in the short term. A producer can use the historical price patterns to decide whether to sell now or at a later date after the cattle have added some weight.

Included in this publication are the historical average monthly prices for Medium and Large Frame No. 1 steers and heifers and cull cows from Tennessee Auction Markets and for Choice Finished cattle from the Five Market Area of Texas-Oklahoma, Kansas, Nebraska, Colorado, and Iowa-Minnesota. The prices were obtained from the USDA and Tennessee Department of Agriculture Market News Service. Similar graphs and tables are presented for each category of feeder and slaughter cattle. A description of these follows: On page 5 there is a graph of monthly prices for 300 to 400 pound steers for the past 10 years. Below it is a graph containing monthly prices for 2014, 2015 and the five year average for those same cattle. At the bottom of page 5 is a graph of the seasonal index of prices for the 300 to 400 pound steers. The index shows the percentage variation in prices during the year. If the annual average of prices is considered to be an index of 100, then in March the index, represented by the solid line, is about 105 or 5 percent above the annual average. Similarly, in October the index is about 93 percent indicating that prices are about 7 percent under the annual average. The graph also includes lines for plus and minus one standard deviation from the average. The variation in prices has been within those two lines two thirds of the time in the past 10 years. The wider apart the lines, the greater the variation in prices during that month.

The table on page 6 shows more precisely how prices change from one month to the next. For example, comparing January to February prices over the past 10 years, prices increased 7 out of 10 years by an average of $8.19 per hundred. In the extreme right column, the overall price change was $5.38. From February to March, prices increased 6 out of 10 years or 60 percent of the time by an average of $11.05. Four years out of ten prices declined or 40 percent of the time by an average of $6.51. The overall price change was an increase of $4.02. The numbers in the right column, the overall average price change, can be added over a period of months as long as the weight of the animal stays within the specified weight, in this case 100 pounds. If the weight gain on feeder cattle is greater than 100 pounds, one needs to use the Buy/Sell Margins Calculator (available at or by calling 1-800-345-0561) to estimate the price change over time. The table on page 7 contains the raw

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data for the past 20 years as well as the five and 10-year averages, seasonal indexes and their respective standard deviations.

How to Use the Seasonal Price Index in Decision-Making

One example of how the material can be used is illustrated below. In this example we will use the data for 500-600 pound heifers from pages 2628.

Example: Deciding Whether to Sell 500 pound Heifers In November or January

A producer is considering whether to market 500 pound heifers in November or feed them to gain 1.5 pounds per day for later sale in January weighing 590 pounds. Cost to feed is $100 per head and the interest (opportunity cost) is 6 percent for 60 days.

Value of 500 pound heifer in November @ $150 per hundredweight

= $750

Cost to hold in a gaining condition until January

= $100

Interest @ 6 percent for 60 days

= $8.38

Value in November plus cost to hold

= $858.38

Assume gain of 1.5 pounds per day and sale weight of 590 pounds

Price needed to breakeven = $858.38 divided by 590 pounds = $145.49

From page 27 - The overall average price change from November to January is -$0.52 (November to December) plus $5.72 (December to January) or a total of $5.20 per hundredweight (cwt).

Since the historical data indicates prices would increase from $1.50 per pound or $150 per cwt to $155.20 per cwt and the producer could afford for prices to decline to $145.49 per cwt and still breakeven, the rational decision would be to feed the calves and sell in January.

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Tennessee Steer Prices

300-400 Lbs., 2006-2015

320 280 240 200 160 120

80

$/Cwt.

$/Cwt.

Tennessee Steer Prices

2014, 2015, & Five Year Average, 300-400 lbs.

340 320 300 280 260 240 220 200 180 160

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

2014

2015

Five Year Avg (2011-2015)

115%

Tennessee Steer Seasonal Price Index

Medium No. 1, 300-400 lbs., 2006-2015

110%

105%

100%

95%

90%

85% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

(+) STD

Avg

(-) STD

Source: USDA/Tennessee Department of Agriculture Market News Service

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Month to Month Price Changes 300-400 lbs. Steers - Medium Frame No. 1

2006-2015

Period Jan-Feb Feb-Mar Mar-Apr Apr-May May-Jun Jun-Jul Jul-Aug Aug-Sep Sep-Oct Oct-Nov Nov-Dec Dec-Jan

Number of Years Prices

Increased 7 6 4 4 2 5 5 3 3 7 7 7

% of Time Prices

Increased 70 60 40 40 20 50 50 30 30 70 70 70

Average Price Increase ($/cwt) 8.19 11.05 4.40 4.57 10.76 9.35 9.64 5.89 5.90 4.53 7.09 13.43

Number of Years Prices Decreased

3 4 6 6 8 5 5 7 7 3 3 3

Source: USDA/Tennessee Department of Agriculture Market News Service

% of Time Prices

Decreased 30 40 60 60 80 50 50 70 70 30 30 30

Average Price Decrease ($/cwt) -1.17

Overall Average Price Change ($/cwt) 5.38

-6.51

4.02

-6.62

-2.21

-5.24

-1.31

-5.78

-2.47

-13.10

-1.88

-4.04

2.80

-9.81

-5.10

-7.88

-3.75

-10.47

0.03

-6.65

2.97

-10.09

6.37

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Tennessee Steer Prices

300-400 lbs.

Year

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Jan

60.81 76.44 102.41 94.89 114.65 118.26 113.75 102.28 120.10 135.40 152.56 119.46 117.40 108.92 115.44 143.54 183.86 180.96 215.28 303.57

Feb

61.63 84.51 104.08 97.85 115.67 120.16 115.76 105.15 120.98 142.50 157.02 129.59 127.95 108.74 118.81 150.53 200.90 185.76 213.06 302.47

Mar

60.56 89.74 104.15 98.39 122.94 123.51 111.47 102.76 126.18 149.08 146.24 131.23 124.80 110.37 125.77 165.91 200.32 174.23 227.86 328.34

Apr

55.59 92.22 105.61 97.19 123.90 118.88 105.10 104.78 127.92 154.13 141.73 133.02 116.21 115.42 130.11 164.76 194.53 166.36 234.30 316.54

May

53.05 93.04 97.93 94.00 116.91 112.24 102.40 104.69 131.23 154.42 139.13 131.08 117.65 117.52 129.68 148.27 196.54 157.50 247.04 315.44

Jun

55.62 95.83 87.10 96.78 115.59 117.05 96.47 105.76 135.38 147.86 140.27 123.34 115.27 113.49 126.15 140.84 177.70 156.45 267.42 314.23

Jul

57.21 101.75 79.91 98.90 119.42 111.09 95.96 109.12 137.93 131.45 134.78 132.33 110.97 113.39 131.24 146.59 151.63 166.32 284.46 284.68

Aug

62.37 100.10 82.72

96.65 114.49 111.45 97.12 109.21 142.37 138.96 138.78 130.62 116.97 110.92 130.38 138.12 168.67 186.61 285.32 277.98

Sept

61.95 96.17 77.21 98.23 108.94 113.81 95.36 113.97 136.28 142.13 142.95 128.70 115.37 109.54 122.65 136.06 171.62 173.95 295.86 236.69

Oct

60.49 91.73 80.84 99.58 110.38 106.13 97.84 114.35 136.12 136.04 132.00 120.96 107.13 105.60 118.98 141.19 166.43 182.92 299.45 221.27

Nov

61.90 87.60 83.85 101.37 119.44 102.06 99.65 115.81 134.02 138.93 121.66 122.44 105.04 106.89 122.92 149.85 168.46 193.32 303.38 202.28

Dec

64.61 97.34 89.34 109.81 117.30 110.86 100.46 116.21 129.39 139.86 124.42 123.26 97.85 109.70 133.06 162.50 167.49 194.10 323.03 190.5

Avg

59.65 92.21 91.26 98.64 116.64 113.79 102.61 108.67 131.49 142.56 139.29 127.17 114.38 110.87 125.43 149.01 179.01 176.54 266.37 274.50

Low

53.05 76.44 77.21 94.00 108.94 102.06 95.36 102.28 120.10 131.45 121.66 119.46 97.85 105.60 115.44 136.06 151.63 156.45 213.06 190.50

High

64.61 101.75 105.61 109.81 123.90 123.51 115.76 116.21 142.37 154.42 157.02 133.02 127.95 117.52 133.06 165.91 200.90 194.10 323.03 328.34

2006-2015 Average S.I. STD

164.10 101.1%

5.2%

169.48 104.3%

6.5%

173.51 105.5%

5.9%

171.30 104.0%

5.8%

169.98 102.5%

5.5%

167.51 100.0%

5.6%

165.64 99.1%

6.2%

168.44 100.6%

4.7%

163.34 97.7%

6.0%

159.59 94.7%

4.5%

159.62 94.5%

4.3%

162.59 95.9% 5.2%

166.26 100.0%

5.4%

140.77 94.5% 4.3%

188.08 105.5%

6.5%

2011-2015 Average S.I. STD

205.44 103.4%

3.7%

210.54 105.4%

7.8%

219.33 107.9%

7.3%

215.30 104.9%

7.2%

212.96 101.8%

7.2%

211.33 99.4%

7.7%

206.74 97.0%

7.8%

211.34 99.0%

6.2%

202.84 94.8%

5.7%

202.25 94.5%

4.9%

203.46 95.2%

5.2%

207.52 96.7% 6.1%

209.09 100.0%

6.4%

169.54 94.5% 3.7%

242.46 107.9%

7.8%

Source: USDA/Tennessee Department of Agriculture Market News Service

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Tennessee Steer Prices

400-500 Lbs., 2006-2015

290 270 250 230 210 190 170 150 130 110

90 70

$/Cwt.

$/Cwt.

Tennessee Steer Prices

2014, 2015, & Five Year Average, 400-500 lbs.

300 280 260 240 220 200 180 160

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

2014

2015

Five Year Avg. (2011-2015)

Tennessee Steer Seasonal Price Index

Medium No. 1, 400-500 lbs., 2006-2015

115% 110% 105% 100%

95% 90% 85%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

(+) STD

Avg

(-) STD

Source: USDA/Tennessee Department of Agriculture Market News Service

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