Your local cattle market????

JD Seller · Oct 7, 2015

The bottom sure has dropped out of it here. Fat cattle at the sale barn Monday where in the $1.18-1.20 for fats. Cull cows where $.79. These prices will really shock the pants off of the fellow that where giving $5-6 per LBS. for 100 LBS. baby bottle calves just 4-6 weeks ago. LOL

This price drop is one good reason that I try to put a floor under our cattle with cash contracts for future delivery. If your selling some of those $2.5-2.75 five hundred pound claves from late winter or early spring your swimming in the red ink now.

Even with lower cost feed your going to be hard pressed to show a profit on feeding cattle in the near term with these type of prices. There is sure a lot of feed put up around here. I know guys that rarely chop corn silage that have several bags or silos full. That is committed to feeding.

Brown Swiss · Oct 8, 2015

Thanks for the heads up, you made me look up what is driving it down so fast! A few things, the week of 9/24 was the largest number of slaughter in 2015, plus they are coming in heavier, and beef demand is down! Looked up Bloomington's report and fed Holsteins are at 109 to 113.75, I honestly wasn't expecting them to drop quit that quick! My grandfather always said what goes up must come down!
Cattle

MN Scott · Oct 8, 2015

Its a correction just like the grains. Cattle have skipped one 10 year cycle because of drought and several other issues. Just like grains the experts were predicting big money for several years out and people believed them. Guys around here were paying 3 to 4 K for bred cows last year. Crazy stupid, now they are going to learn the hard way how the cattle business has always worked in the past. I'am kinda glad the market is adjusting, it will hopefully put the brakes on herd expansion and the markets will not totally tank out. All boils down to more supply than demand. JD do you contract directly with packers? Around here most cattle go thru the sales barns.

john in la · Oct 8, 2015

From TWILA on 10/2/15
Wheres the Beef?

Tom in TN · Oct 8, 2015

Two months ago, I sold five calves in the range of 500 - 600 lbs. at the Tennessee Livestock Producers sale barn in Columbia, TN. They averaged around $2.35 lb,. Last week I sold four more of about the same range. They averaged $1.50 a pound. I have four in the weaning pen right now that I'll sell in about a month. I expect them to be even lower.

Volatile market right now.

Tom in TN

JD Seller · Oct 8, 2015

MN Scott: The majority of our cattle are contracted with the packers. The majority are a grade and yield contract not just a straight price one. The only cattle we sell through the sale barn are the problem cattle. Slow finishing, lame, and etc. Then I also watch the option markets too. If the price is right we can sometimes pickup some additional money there. The money involved in the feeder business is so high WE can't gamble without putting a floor under the purchased calves.

We do have a pretty good local cattle market. .

mtny · Oct 8, 2015

Neighbor milks 50 cows. Last bull calf sent netted less than 30 $. Not long ago 100 pounders were bringing 400 .

Bruce from Can. · Oct 8, 2015

So I guess this would be a good time to be a buyer . Bred cows should soon be on the way down too. Just my dumb luck ,I have 4-5 old cull milk cows to go out this fall. Oh well,I am used to taking it in the neck, just going to get ripped off again.

DoubleR · Oct 8, 2015

That's my luck
I paid 1.85 for a group of holsten steers averageing 490 lbs last week.

Traditional Farmer · Oct 8, 2015

The baby calf market is crazy anyway when cattle are high baby calf prices go thru the roof and by the time they're old enough to sell the prices will be down.On the other hand
if you buy baby calves when they're bringing next to nothing when cattle prices are down by the time the calf is ready to market cattle prices will most likely be on the way up.And Holstein baby calves will usually out sell beef type calves but when they are market age the beef type always bring more.Sold most of my calves back in August like I do every
year to avoid the Fall flood of calves into the market which usually lowers prices.

LAA · Oct 8, 2015

The current slump reflects reduced demand for beef due to a sluggish economy and lower priced pork, chicken etc. It makes no sense to me when you say you try to put a "floor" under your cattle with forward contracting, you are still at the mercy of the markets with a basis contract and when prices are falling you can actually wind up losing more than you would have without a contract, especially with the spreads between feeder cattle prices and fed cattle prices we are seeing these days. No packer is going to lock in any forward prices off basis except maybe on some branded pens of cattle or organic/ hormone free etc. and those are few and far between. It makes much more sense to be flexible in your operation and feed the class of animal that will return a profit, heifers are much cheaper right now and will be even cheaper in December and January, anyone with feed and hay will make money next year selling replacements if bought right this winter, the cow herd is still in the expansion mode.

formenwhogrow · Oct 8, 2015

Sale barn reports from western PA from last week are showing 5-6 weight steers ranging up to 1.85 and heifers about 10-15 cents back. I'm glad I didn't wait around to contract my feeders. Sold them the first week of September for a Nov. 1st delivery.

Pair-a-dice farm · Oct 8, 2015

I sold a load of 500# steers Tuesday. They averaged $2.03. I normally keep them until they weigh 7-800# but the price really drops off for the heaver calves. Last fall I sold some 700#+ steers for $2.69. As has been said this is an adjustment. I've been involved in the cattle business for over 50 years and anyone who didn't see this coming is either a newbie or was wearing blinders.

RGMartin · Oct 8, 2015

50 cent cull cows here in western PA. Only a fool would think it could last forever.

Billy Shafer · Oct 8, 2015

My part of Texas

Billy Shafer · Oct 8, 2015

Try again.

JD Seller · Oct 8, 2015

LAA our contracts are NOT just basis contracts. They are CASH contracts. So much per LBS. between such and such date. Then premiums for dress percentage and other things. If I think the market is going down or up I may place option positions to try and gain on the market change. I have some puts that are in the money right now as the market fell faster than many thought it would. That includes me too. I thought/hoped we would have higher prices until Thanksgiving or so.

Gambles · Oct 8, 2015

'Bout a week ago, I was at a 4H meeting and two other parents were there who work at two differnet sale barns.
The price is dropping and they told me that there will be some cattle farmers who will be taking a serious beating.

notjustair · Oct 8, 2015

They are right about 1.75-2.00. I did the math this year and make the most money selling about three weeks after weening. You lose money feeding them to any larger size and that's taking into account the fact that part of this time they are pastured. Even with cheap corn and my own hay I'm better off selling early.

LAA · Oct 8, 2015

So you bought puts when you expected cattle prices to remain strong until Thanksgiving????? Why would you take on the additional risk of option trading if you have a ''cash'' contract? You can't hedge a sure thing. What packer do you deal with? If they are not using the futures market to hedge their buys what methodology do they use? All so called fed cattle ''forward'' contracts I have ever seen or heard of were basis contracts and the seller picked the sale date, and by extension, the ''cash'' price =/- basis depending on the actual cash price versus futures on the particular date selected to deliver cattle. In addition, negotiated grid sale premiums are set on choice/prime and yield grade averages on an individual animal basis after slaughter, there is no other way for the packer to accurately evaluate the carcass otherwise, base price is set at cattle delivery and premiums or discounts are calculated after slaughter.

LAA · Oct 8, 2015

October and November are traditionally the weakest months for cull cow prices due to culling in Texas and the western states, I have never seen a year that money could not be made by buying thin cows in the fall and carrying on stock piled grass or fall pasture or hay until February or March.

JD Seller · Oct 9, 2015

LAA my puts strike price date is after Thanksgiving. I felt that the price drop was going to be later this year and bought a contract to reflect that. So I may not make anything on them if the market goes back up.

As for who the live contracts are with. They are not directly with any packer. There are several regional buyers that supply a couple of different store chains and restaurant chains. The contract spells out what the cash price is per LBS. Then there is a premium for dress percentage, loin eye size and fat layer thickness. So the actual premium is paid after slaughter. We can actually get docked if the dress percentage is not good enough. The loin eye size and fat thickness are all positive payment only. These contracts are also beef breed specific too, so no dairy breeds. We do not know where the cattle will be slaughtered until they load the cattle out. They contract the kill with different packers.

Two of these buyers are relatively new to me in that they have only been around 4-5 years. The other one has been around 15-20 years. All of them have a specific end user. One of these actually wants lighter cattle as they pay better for a thinner fat layer.

Your correct on your description of direct packer contracts. They are not competitive around here for me. I can usually beat or equal them at the local sale barn as far as price goes.

Pair-a-dice farm · Oct 9, 2015

There are a few around here that are getting cleaned. They bought some 300# calves back in the early summer for $3.50+. They have pastured them all summer and will be lucky to sell at break even. Still GOOD calves are selling at a decent price. It may sound like bragging, and is I guess :lol: but the calves I sell typically bring a couple of dimes more than the average. Preconditioning pays off and the buyers will pay extra if they know what you have done. My calves have had all of their shots, wormed, are weaned at least 60 days and are eating out of a bunk. I've been doing it this way for 20+ years and have made money since I started the program.

Your local cattle market????

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