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Fourth Quarter Fed and Feeder Cattle Price Performance

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Slaughter steer prices this fall have posted the biggest increase from September of any year in the last eleven. Based on the 5-market Choice steer price monthly average (reported by USDA’s Agricultural Marketing Service), October prices were up $5.35 per cwt. from the prior month. In 2013, the September-to-October increase was $5.13, and in 2014 the rise was $4.44. Over the last ten years, the average September-to-October price change was a decline of $0.16, in no small part due to drops in 2015 and 2016 of $4.45 and $5.03, respectively.

The comparisons of fed cattle price increases in 2017 from September to November were even more dramatic. The average change for that two-month span during the prior eleven years was up by $1.42 per cwt. This year the price increase was $14.26. The biggest September-November price change since 2005 before this year was in 2014, which posted a gain of $9.82. In 2015, fed steer prices recorded the biggest September-November price drop in the last eleven years of $8.21. In 2016, November cattle markets started a rebound that continued into 2017.

During the fourth quarter of 2017, the lowest fed steer price (5-market average) occurred in the very first week (week ending October 7th) at $109.45 per cwt. The quarterly high was for the week ending November 4th at $123.53. For the quarter, fed steers are projected to have averaged just over $117.50 per cwt., more than 9% above 2016’s.

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In light of the auspicious price performance of fed cattle in 2017’s fourth quarter, feeder cattle prices also have increased but kept within the bounds of gains seen in recent years. Using the Oklahoma City auction market for 750-to 800-pound feeder steers as a reference point for yearling cattle values, prices moved up in both October and November. The September-October price increase in 2017 was $3.61 per cwt. followed by a $3.09 gain in November. Prices then declined in December.

On a weekly basis feeder steer prices in 2017’s fourth quarter peaked at $166.28 per cwt. the week ending November 10th and then generally eroded, averaging $149.87 for the last auction of the calendar year. In 2017’s final quarter 750- to-800-pound steers at Oklahoma City averaged $155.10 per cwt. That was a year-over-year surge of $26.48 per cwt. or up 21%.

The year-over-year gains in yearling prices in the fourth quarter of 2017 was directionally consistent with the demand for yearling steers caused by rising prices of fed cattle. Additionally, specifically the increase from early October into November, prices were supported by the supply side of the feeder cattle market. The supply driver for the yearling market in the fall is the calves that were born in the prior year. In 2016, the U.S. calf crop expanded by 3%, according to USDA’s National Agricultural Statistics Service (NASS). Calves born in Oklahoma during 2016 surpassed the prior year tally by 8%. Oklahoma City auction market receipts for 750- to 800-pound feeder steers in October were up 7% from the previous October. In November, market receipts for 750-to 800-pound steers fell short of the prior November by 7%. That suggests both supply and demand factors drove the last leg up in prices (into early November).

Market receipts for 750- to 800-pound steers in Oklahoma City in December continued to be less than a year ago. As in November, that situation reflected large numbers of yearling animals placed into feedlots during August through October. Further, the composition of 750- to 800-pound steers moving through the Oklahoma auction is also made up of more calves than a year ago, with 8.9% of the steers noted as calves versus 4.3% last year during the November-December interval. Even though feeder steer prices declined during December, the tight supply of traditional yearling steers likely mitigated the price drop.

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