Given rising carcass weights, increased production costs and unpredictable market prices, astute beef-cow producers are always searching for more efficient, profitable ways to manage their herds. Considering alternative calving seasons should be a part of that.
I've conducted cost-and-return analyses for producers who changed calving season but ended up reducing net income because they didn't make a corresponding change in marketing strategy.
Traditionally, calving decisions have been based on production efficiency — do whatever's easiest on the producer, then hope for acceptable market prices. Today, it's risky to hope for decent prices when you're selling in what's traditionally the season's lowest market. Market timing is critical with today's small profit margins.
A key motivation for changing calving season is the potential for market premiums associated with some alternative calving seasons. Financial rewards are going to ranchers who select a calving season not by convenience but seasonal price patterns.
The financial rewards favor ranchers who select calving seasons that produce in-herd “market-timing points” during the year that match “seasonal price-pattern peaks.” In other words, seasonal price patterns suggest optimal market-timing points for marketing beef cattle.
Seasonal Prices For Slaughter Cattle
Any given year, slaughter cattle prices typically follow a specific price pattern. Figure 1 depicts a typical price pattern for slaughter steers, which is generally experienced during the upward — and downward — years of the cattle cycle. Prices tend to hit the low in late summer (August-October) and work upward to an April peak.
The April price peak marks the time frame between the end of “old-crop” cattle and the beginning of “new crop” cattle. He who produces new crop cattle first, wins. For example, (as of this writing), February 2003 Live Cattle Futures prices had already hit $80/cwt. before retracting. The reality, however, is that most new crop cattle will be harvested in June, July and August — typically, months of the seasonal lows. The large number of spring-calving herds is the reason most cattle are harvested in June, July and August.
The data suggests that slaughter-cattle seasonal price patterns are changing. The 1975-1984 seasonal price index had the seasonal high in May. In the 1985-1994 time period, cattlemen were filling that May hole and driving the seasonal high to April.
I believe the peak price in recent years may have now moved to March — at least that's true the past two years. I wouldn't be surprised to see 2003's spring spot-market price peak occur in March 2003.
Prices For Seasonal 700-800-Lb. Feeder Cattle
Figure 2 indexes the seasonal price pattern for 700-800-lb. feeder steers. Again, there's a prominent annual price pattern. In the earlier 1975-1984 time period, feeder cattle prices peaked in April and hit a seasonal low in November-December; most spring-born calves are sold in October-November at the annual seasonal low.
The more recent time period (1985-1994) suggests a distinctly different price pattern. Peak price moved from April to September, with a second peak in January.
With today's genetically fast-track cattle, it's hard to produce 800-lb. yearlings off grass to match the current September seasonal price highs. But that's what the market wants and will reward.
Regarding the January price peak, today's Northern Plains' spring-born, fast-track calves are typically weaned and then slowed down in the backgrounding enterprise for marketing as 800-lb. feeders in February-March. This program worked better under the old seasonal price patterns than under the new seasonal price pattern.
Seasonal Prices For 500-600-Lb. Feeder Calves
Figure 2 also presents the seasonal price pattern for Northern Plains' 500-600-lb. feeder calves for two different 10-year periods — 1975-1984 and 1985-1994. While they tend to follow the same general pattern, there are some shifts occurring.
In the earlier pattern, feeder prices increase from an October low through the June high. In the later index, prices increase December through the April high, then decrease from April through the August low; a mini-peak occurs in September.
The seasonal price pattern suggests that long-term economic rewards will go to the calving season that produces weaned calves for sale in a March-April time period and/or for the September mini-high.
Cull-Cow Seasonal Prices
The seasonal cull-cow price pattern is the most distinct and pronounced. Figure 2 shows that 1975-1984 peaks seasonally in April and hits a November low. The 1984-1994 seasonal peaks are in February, increasing through September, and dramatically decreasing into November. Most spring-calving cull cows are sold at fall weaning time, thus the November seasonal price low.
Match Calving Season To Optimal Market-Timing
Figure 3 shows my suggestions for the best calving season that matches key market-timing points identified via the seasonal market price patterns. For example, April is typically the seasonal price-pattern high for selling weaned calves. The calving season that best meets this “April optimal market timing” is fall calving.
Harlan Hughes is a North Dakota State University professor emeritus. He lives in Laramie, WY. Reach him at 701/238-9607 or [email protected].