One way or the other, bull prices always follow the commercial calf market. It’s the degree and speed of the price change that’s always iffy.
“Historically, our seedstock business has tracked six to 12 months behind the commercial market,” says Coleman Locke, president of J.D. Hudgins Inc. at Hungerford, Texas. “If the commercial market declines or increases, ultimately we see it in our market.”
Plenty of variables are jiggling the bull price equation at this point in history, though.
For one thing, bull supplies are likely heftier than a year ago, as some seedstock suppliers expanded their offerings in anticipation of another year of herd expansion.
Consider BEEF’s Seedstock 100 list. Last year’s list represented 52,161 bulls marketed. This year’s comprises 54,699 bulls, about 23% more than two years earlier.
Though odds favor the national cowherd being larger on Jan. 1, other factors — including economics and drought in the Southeast — suggest expansion will continue to sputter, and perhaps end next year.
Then there is the steep year-to-year decline in calf prices.
At the end of the last week of October — the nadir of the fall market — steers weighing 600 to 700 pounds in the North-Central region averaged $121.85 per cwt, according to the regional weighted average from USDA’s National Weekly Feeder and Stocker Cattle Summary. That was 39% less than the same week a year earlier. Steers weighing 500 to 600 pounds in the South-Central region ($128.18) and Southeast ($113.60) were 40% less and 42% less, respectively.
Where price volatility earmarked the decline from the steep pitch of recent record-high levels, it appears price variability may be the hallmark of bull price adjustment.
Depending on who you talk to or which sales you watched, bull values at fall sales were surprisingly strong.
For instance, prices at J.D. Hudgins’ two fall sales were on par with their sales last spring and the spring before, which were the strongest in the program’s lengthy history.
“We haven’t seen any drop in the price for Brahman cattle at this time,” Locke explains. “There has been tremendous demand for Brahman cattle since recovery from drought in this part of the world.”
He adds that international demand continues to strengthen each year, following the lifting of the embargo on breeding stock that was implemented following the discovery of BSE in the United States in 2003.
On the other end of the fall extreme were reports of sales where the bulk of the offering traded at packer-pound prices.
In between, lots of sales seemed to track either side of the steep percentage decrease in calf prices.
Heading into spring
There appears to be similar variability in interest heading into the spring bull marketing season.
For example, Mary Lou Bradley-Henderson at Bradley 3 Ranch Ltd. in Memphis, Texas, says, “We’ve had tremendous early interest in our spring sale, which is very encouraging.” The ranch markets Angus and Charolais bulls.
“If we can get some price stability so that commercial producers know what they’re looking at, it would help,” says Kent Brunner of Cow Camp Ranch at Lost Springs, Kan., which markets Simmental and Sim-Angus bulls. “I think bull buyers will be selective, but I think there will be demand for performance bulls. They’ll still buy bulls that fit their pocketbook. Good bulls will be in demand, and buyers will go where they’ve had success.”
“Even with the market being down, we think the seedstock ranches that go the extra mile will have better sales than those that don’t,” says Bryan Gill of Gill Red Angus at Timber Lake, S.D. “We believe one of the things that will separate an average or poor sale from a good sale will be what the seedstock breeder will do after the bulls are sold. You need to make a reason why the commercial rancher will want to be a part of your program, and customer service is usually it.”
Across most genetic offerings this time around, such a line of demarcation might represent a swapping of market share, as buyers seek more value for their bull buying dollars.