Page 20 - Demo

The Midwest Cattleman %u00b7 October 24, 2024 %u00b7 P20POLLED RED AND BLACKThe fall months are when a majority of producers across the country are selling springborn calves or yearlings from last fall. Due to the increase in supply of calves, prices typically decline during these months. A way to show this seasonality trend is to look at the seasonal price index. The average annual price index shows the relationship between each month%u2019s average price and the annual average price. When the price index is above 100%, that means prices in that month, on average, are higher than the annual average, (spring). When the price index is below 100%, that means average prices in that month are lower than the annual average, (fall).The maximum and minimum indices are used to show the approximate range of prices during that month. For example, during 2014-2023, average October prices in the Southern Plains were 96 percent of the annual average, but there was variability where prices ranged between 86% and 108% of the annual average for October.The graph below includes 2023 when prices did not follow the seasonality trend of declining in the fall, but rather increased. For instance, average prices for 500-550-pound feeder cattle in Florida increased by 18 percent from March to October. On average from 2018-2022, prices during this same period declined by about 9 percent. Prices continued rising into 2024, but then began falling as we approached the summer and fall months, following the typical seasonality trend.In terms of where we are in the cattle cycle today compared to in 2015, the price trends look similar as if we have already seen peak prices and are headed for lower prices. However, the difference to notice between 2024 and 2015 is inventory levels and the rate of expansion. In 2015, expansion had already started when prices were at the levels we are seeing today. There was no incentive for prices to climb back up after the typical dip in the fall. In the current market, we have not started seeing signs of stabilization, much less expansion, and have already hit record prices that we saw back in 2015. This indicates that while we are experiencing some seasonality this year, it is not expected that we are headed for a continuous low level of cattle prices.However, drought conditions have impacted the fall cattle market for the past two years, causing this seasonal price pressure to occur earlier than usual. With fewer cattle available this year, the market will continue to reflect tighter supplies for the remainder of the year and into 2025.James Mitchell is an assistant professor in the Department of Agricultural Economics and Agribusiness at the University of Arkansas and an extension livestock economist with the University of Arkansas System Division of Agriculture. James has B.S. and M.S. degrees from Oklahoma State University and a Ph.D. in Agricultural Economics from Kansas State University.continued from page 17TWO YEARSSeasonality in Feeder Cattle PricesBy Hannah Baker, M.S., State Specialized Extension %u2013 Beef and Forage Economics, University of Florida