Calf and yearling prices: Mid-year review and outlook

At mid-year, U.S. calf and yearling prices were similar to a year ago, but had rebounded strongly from the dismal market of October and November 2016. Underpinning higher prices was stronger than expected fed cattle prices and profits posted by cattle feeders. In the Southern Plains, yearling prices (700- to 800-pound steers) averaged below a year earlier during the first three months of 2017 and essentially equal to 2016’s for the second quarter. Calf prices (500-to 600-pound steers) were more than $30.00 per cwt. below 2016’s in the first quarter of this year, but in the second quarter posted a year-over-year decline of only $3.40 per cwt.

If fed cattle prices remain above a year ago for the balance of 2017, look for that to support calf and yearling prices compared to a year ago, too. Of course, prices last year were very depressed. Nationally, LMIC is currently forecasting that yearling prices will be at or above a year ago for the balance of 2017. Current quarter (July-September) calf prices are likely to be unchanged to higher, compared to 2016’s. In 2017’s the fourth quarter, Southern Plains calf prices (500- to-600 pound steers) are currently forecast to be $8.00 to $12.00 per cwt. above 2016’s.

Three usual drivers of calf and yearling prices in 2018 will likely be at play: 1) fed cattle prices; 2) size of the calf crop; and 3) feedstuff costs. Larger domestic supplies will likely pressure fed cattle prices lower compared to this year’s. How much prices slip depends mostly on beef demand, both domestic and foreign. Currently, LMIC is forecasting the annual average fed steer price in 2018 will be 2% to 6% below 2017’s. The 2017, U.S. calf crop was bigger than 2016’s, and 2018’s will increase, again. Feedlots and backgrounders could face higher feedstuff costs in 2018 which may provide some additional headwind to prices. For planning purposes, look for some erosion in calf and yearling prices in 2018 compared to 2017’s.

Source: Drovers