Feeder and stocker cattle marketing venues

Should feeder cattle buyers and subsequently sellers be subject to cash marketing legislation similar to what’s being proposed on the fed side of the business?

Nevil Speer

August 6, 2020

2 Min Read
Feeder cattle sales venue
Nevil Speer

As some background, the proposed 50/14 legislation is meant to increase weekly negotiation in the fed market – requiring each respective processing facility (over 125,000 head annual capacity) to purchase at least 50% of its weekly kill based on a negotiated spot price. The thought is that greater cash sales would subsequently mean reduced alternative marketing arrangements (AMAs) in the fed market.   

 There are several key reasons why feedyards have willingly moved away from selling on a negotiated cash basis over time and moved towards greater utilization of AMAs. One of the most important being the avoidance of time, hassle and cost associated with weekly negotiation.   

With that in mind, let’s turn our attention to the feeder market. It’s impossible to exactly pinpoint the manner in which all stocker and feeder cattle are marketed in any given year. Nevertheless, analysis of feeder cattle receipts by venue, coupled with some additional calculations, help provide some longer-run trends. 

Feeder cattle sales venue

This week’s graph represents relative feeder and stocker cattle sales by sale type. The figures are representative of total receipts by marketing venue reported by USDA. Unreported sales (direct or auction) reflect the remainder of the estimated calf crop. What’s most important are the trends: 

Related:Where are the feeder cattle? Everywhere but feedyards

  • The proportion of cattle marketed through either direct channels or video/internet sales have remained relatively steady during the past 10 years.

  • The biggest change comes via declining auction market sales.

  • A greater segment of the feeder population is being sold and going unreported versus 10 years ago. 

Last, it should be noted that direct sales don’t necessarily represent straight-up cash negotiation – they can occur based upon some sort of pre-arranged formula and/or pricing agreement. Direct sales that are reported all occur on a voluntary basis.

Nevertheless, based on the trends above, feeder/stocker cattle sellers are increasingly selling their cattle outside normal reporting venues – namely unreported direct sales now approaching 60%. They do so primarily for the same reasons feedyards choose to sell cattle through AMAs: avoidance of cost, time, and/or hassle associated with other marketing venues.  

Has your marketing venue changed during the past 10 years? Or perhaps your neighbor? Should feeder cattle buyers and subsequently sellers be subject to cash marketing legislation similar to what’s being proposed on the fed side of the business?

Nevil Speer is based in Bowling Green, Ky. and serves as director of industry relations for Where Food Comes From (WFCF). The views and opinions expressed herein do not necessarily reflect those of WFCF or its shareholders. He can be reached at [email protected]. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.

Related:Beef producers hammer out compromise policy on addressing price discovery

About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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