This puts downward pressure on feeder cattle prices although the impact is delayed as it takes at least 6-8 months before the potential calf will reach the feedlot. Higher corn prices increase the cost of gain in feedlots. Higher feeder cattle prices create incentives for more calves to be brought to market and bred cows are the quickest way to do so. The feeder cattle and corn markets are the two largest drivers of bred cow prices. Selling the same quality, age, and pregnancy age results in a difference of $138 per cow.Ĭurrent market conditions will also play a role in the price of bred cows. Prices are lowest in the summer and fall months in areas that are heavy spring calvers as producers are culling their herds and determining which heifers to be retained – a 4% discount ($1,104). Prices peak in early March at approximately an 8% premium ($1,242). The highest premiums are in February and March as many producers are purchasing cows that are on the same calving cycle in anticipation of summer grass and pastures. Producers looking to buy bred cows in the late winter or early spring should expect to pay a premium. Selling this same bred cow at different times of the year will impact the price received. These premiums and discounts exist as there less risk of losing a calf as age increases, lower production costs before the calf’s birth, and revenue is received more quickly when late-gestating cows are purchased. Discounts and premiums are nearly linear between a 4% premium ($1,196) for an eight-month-old bred cow, a 5% discount ($1,092) for a 4-month-old bred cow, and a 12% discount ($1,012) for a one-month-old bred cow. Similarly, the closer the cow is to calving, the more expensive the bred cow becomes relative to a six-month-old bred cow. Producers considering marketing older cows as bred should acknowledge the heavy discounts assigned as age increases. A four-year-old bred cow would cost $1,150 (0% discount), a seven-year-old bred cow would cost $1,035 (10% discount), and a ten-year-old bred cow would cost $920 (20% discount). Producers selling cows older than this should expect to receive a discount and the discounts tend to decrease almost linearly from 0%-20% as cows age. February 2023 prices for this type of cow in Oklahoma City, OK is $1,150 but has averaged $870 over the past three years. To illustrate how these factors could impact producers' decisions to either buy or sell bred cows this year, I walk through several scenarios assuming we have a three-year-old bred cow that is six months pregnant, is a medium/large 1-2, and black hided. One study using Oklahoma City bred heifer and bred cow sales from 2000-2015 estimated the premiums and discounts for each of these factors in the bred cow market (see Mitchell et al. Age, weight, months bred, genetics and market conditions are the primary drivers of bred cow prices. However, the national bred cow price masks several factors that impact price. There is a premium due to the longer useful life of the cow in the herd but smaller than expected due to potential issues with calving which can occur with first calf heifers. The premium is the widest in the Spring (March-May) and lowest in the Fall (September-November). In other words, bred heifers are on average 2.5% more expensive than bred cows. For example, the price ratio of bred heifers to bred cows has averaged 2.5% over the last 5 years. Bred heifers receive a premium over bred cows. The quickest way for these producers to increase the feeder cattle supply is through the addition of bred cows or bred heifers. There will be producers who have feed resources and believe profits are to be had in 20. For Northern Plains cattle producers, it may get a bit tougher before things improve from a feed perspective. If this weather pattern does materialize the change will benefit the Southern Plains with a cool and wet spring/summer whereas the Northern Plains generally stay dry in the summer before a cool/wet fall. Much has been said about the ENSO weather patterns changing this year. Some producers have already run out of hay as heavy snow has limited winter grazing and persistent drought conditions shortened the grazing season and reduced overall hay production. Higher prices for feeder cattle are expected but higher feed costs, especially hay, and other inputs are limiting the profit potential. Continued liquidation in 2023 will depend on the profit margins producers expect to receive. Feeder cattle supplies will be reduced nationally in 2023. The USDA Cattle Inventory report showed a 4% reduction in beef cows, a 6% decrease in heifers held back for retention, and a 5% reduction in heifers expected to calve this year (USDA-NASS 2023). This article was first published by "In the Cattle Markets" on Feb.
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