2nd: Calf & 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 2016ís for the second quarter.
Calf prices (500-to 600-pound steers) were more than $30.00 per cwt. below
2016ís 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 2016ís. In 2017ís 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 2016ís.
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
yearís. 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 2017ís. The 2017, U.S. calf crop was
bigger than 2016ís, and 2018ís 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 2017ís.