Development of Wheat Pasture Could Mute Seasonal Low of Cattle Prices

Cattle going through an auction ring.
( Todd Johnson, Oklahoma State University Agricultural Communications Services )

Feeder cattle prices are likely to stabilize or perhaps move lower as October progresses into November, with the seasonal low being somewhat muted compared to historical norms.

Rainfall across much of Oklahoma has helped the rapid development of winter wheat pasture. Some may even be ready for grazing in the next week or so, adding to the strong demand for stocker cattle, said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.

“Despite a 32 percent year-over-year increase in combined auction volume heading into October, average Oklahoma auction prices for preferred stocker weights jumped sharply the last week of September,” he said.

Prices for 450- to 500-pound, medium/large, number 1 steers increased $6.64 per hundredweight from the week before to $183.23 per hundredweight. and prices for 500- to 550-pound steers were up $4.89 per hundredweight to $171.77 per hundredweight. Prices for steers weighing less than 450 pounds were mostly higher as well, compared to the previous week.

“These counter-seasonal price increases sometimes happen when winter stocker demand kicks in before the fall run of calves, thereby offsetting – at least in the early fall – the supply pressure that typically pushes prices to a seasonal low in October,” Peel said.

Oklahoma feeder prices at the end of September were generally 4 percent to 10 percent higher than the same time last year.

Prices for feeder steers weighing more than 650 pounds were also higher compared to the previous week. However, prices for steers weighing between 550 to 650 pounds declined compared to the previous week. As a result, weekly average prices are nearly equal for steers weighing between 550 and 750 pounds.

“This price pattern contrasts with the more typical pattern of higher prices for lighter weight animals,” Peel said. “However, this unusual feeder price pattern occurs quite commonly in Oklahoma in the fall when stocker demand supports lightweight feeder prices and feedlot demand supports heavy feeder prices, leaving a hole with weak demand for the middle-weight feeder animals.”

In general, six-weight steers at this time of the year are too heavy to be preferred for stockers and too light for feedlots, who favor heavier placement weights to maximize the number of fed cattle that will finish against the April Live Cattle futures contract and avoid the sharp break between the April and June Live Cattle contracts.

Peel said numerous factors will affect the likelihood of a seasonal stocker calf price low in the next month. Supplies will grow as feeder volumes increase to a seasonal peak by early to mid-November.

“With the larger 2018 calf crop, the fall run of calves is expected to exceed last year,” he said. “However, demand for wheat pasture stockers may partially or totally offset increased stocker calf supplies. I really don’t expect much more increase in stocker prices, but additional increases are possible in the next couple of weeks.”

Recent purchase price increases have reduced the return potential for winter stockers, underscoring the need for producers to carefully budget winter stockers to guide upcoming purchases. For cow-calf producers, recent calf price increases have added upwards of $50 per head to calf value in the past six weeks or so.