August 2011 Articles

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VERY STRONG CALF AND YEARLING PRICES

VERY STRONG CALF AND YEARLING PRICES In the first six weeks of 2011, Kansas 500-to 600-pound steer calf prices ranged from about $139.00 to $155.00 per cwt. and averaged about $146.00, which was $34.00 per cwt. above the same timeframe a year ago. Kansas yearling steers (700-to 800-lb) for the first six weeks of this year averaged about $126.00 per cwt. compared to about $98.00 last year, an increase of $28.00 per cwt. It appears much of the seasonal price strength in calf and yearling prices has come earlier than normal in 2011. Still, cattle prices will remain strong and will most likely set new record highs this calendar year. From current price levels, the major headwind to additional increases in calf and yearling prices this year is the high cost of feedstuffs, especially corn. High feed costs normally tighten the price difference between feeder and slaughter steer prices, but that has not been the case so far in 2011. In the Southern Plains, the price premium of 700-to 800-pound feeder animals compared to slaughter steers has been wider than normal, a trend that is not expected to continue. So far in 2011, that weekly price difference in the Southern Plains has varied between about $18.00 and $23.00 per cwt. or between 17% and 22%. Last year was rather normal with the range between about $11.00 and $13.00 per cwt. (12% and 15%). In normal years, those premiums widen into summer, but may be tempered this year. Prices of cattle to go onto spring/summer grazing programs may not increase as much as normal over the next two months. Looking further ahead, prices of calves weaned this fall are forecast to remain well above a year ago. In the fourth quarter of 2010, Southern Plains steer calves (500- to 600-pounds) averaged just over $123.00 per cwt. Current forecasts are for those steers to bring $131.00 to $141.00 per cwt. in the October-December quarter. To reach $141.00 per cwt. on those steer calves, will require an abundant U.S. corn crop in 2011. Even with higher costs of production, very strong calf prices this fall will translate into continued improvement in cow-calf returns. Preliminary estimates by the LMIC put 2011 Southern Plains commercial herd returns over cash costs plus pasture rent at $45 to $50 per cow above 2010’s. If realized, cow-calf returns this year will be the highest since 2005. Source: Livestock Marketing Information Center (www.lmic.info)