Market Timing
A beef producer’s ultimate economic role is to convert low–value or unmarketable forage resources into a quality protein product. With forage–driven production systems, most cows calve in the spring. Weaning and selling those calves in the fall causes a supply bulge that results in lower calf prices in the fall. See figure to the left — Feeder Cattle Seasonal Index price relationships.
While every year will have its own price pattern, fed cattle prices are usually highest in March, averaging about 8% above the annual average. Heavy sales of feeder calves tends to depress prices in the fall. Thus prices in August, September, October, and November tend to be about 5% below the annual average price.
Nobody really knows when the variations in cattle numbers will affect cattle prices, or by how much. Anybody who has a guess can argue the point by using some previous cycle as evidence.
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Montana Beef Quality Assurance,
2116 Broadwater Ave., Suite 307/11
Billings, MT 59102,
406-896-9068,
cpeck@montana.edu
Montana Beef Network,
119 Linfield Hall
Bozeman, MT 59718,
406-994-4323,
mharbac@montana.edu