Seasonal Cattle Price Patterns

File B2-19
Updated April, 2015

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Cattle prices, influenced by changes in cattle slaughter, supplies of other meat and poultry products, demands for cattle for feeding or grazing, and consumer demands for beef, vary over the course of a year. If these changes are repeated from year to year, there may be seasonal patterns of price changes that are somewhat consistent and predictable.

Seasonal price patterns may change some over time if there are changes in production technology, industry structure, or other factors that affect production or demand patterns. The price indexes in this report are based on the period from 2005 through 2014.

Seasonal Price Patterns

Two kinds of information are reflected in the seasonal price indexes presented here.

Price Index
The first is an average price index for each month. This index shows the average relationship of prices in a particular month to the average for the year.

Variability Range
The second type of information presented is a variability range that provides an indication of the reliability of the price index for a particular month. It is based on the variability of prices for a specified month during the years included in the index calculation. Specifically, points on the charts that are above or below a particular monthly index indicate the range where the index for that month could be expected to fall 68 percent of the time. The 68 percent range statistically represents the average plus or minus one standard deviation.

Use January of Figure 1 for example. The monthly index value is 97 and the range is -77 to 118, so the price in a particular year will likely fall in this range approximately two thirds of the time. The smaller the variability factor (the closer the points are to the index value), the more reliable is the monthly index.

Figures 1-4

Patterns by Type of Cattle

The material below presents information on seasonal price patterns for various classes and types of cattle, as well as an indication of the reliability of these patterns from year to year. Different classes of cattle have somewhat different seasonal patterns of marketing and prices.

The figures in this report reflect the average monthly indexes, with the variability range indicated by points above and below the index values. Actual monthly index numbers and the variability factors are shown in Table 1.

Table 1

Choice Steers (1100-1300 lbs.)
On average during the 2005-2014 period, prices trended up seasonally from January to April, then declined into the summer months before increasing again in the fall as shown by Figure 1. Prices were lowest in Juneand highest in November and December. Prices were near the annual average throughout the entire year with high in November and December and a low in June.

Yearling Steers (700-800 Ibs.)
On average, yearling steers show great seasonal variation during the 2005-2014period as shown in Figure 2. Prices steadily trended upward from January to June, then remained rather constant from July to December with seeing a high point in September. Prices were highest in mid-fall and lowest in early months of the year. Prices were near the annual average throughout the entire year.

Steer Calves (500-600 Ibs.)
During the 2005-2014 period, prices have relatively little differences in the average price index throughout the entire year (Figure 3). Steer calf prices were highest in November and December and lowest in January.

Cull Cows
Cull cow prices vary greatly on average during the 2005-2014 period as shown in Figure 4. Prices trended upward from January to May and are stable from May to Augustand decline again from Septemberto December. Cull cow prices were highest in the summer and lowest in November, December, and January. Prices were below the annual average in the first twoand last three months of the year. They were above the annual average March- September.

Forecasting Cattle Prices

The seasonal price index may also be used to forecast prices for the months ahead based on the historic relationship. To forecast a future month, divide the current month average price by the index for the current month and multiply this number by the index for the future month. For example, if May fed cattle prices average $140per cwt., the forecast for August would be 140 / 1.00 x 0.99 = $138.60/cwt. Adjusting for the variability suggests that there is a 68 percent probability that the August monthly average price will fall between $114.64and $162.56.

Probability of Price Changes

The actual pattern of short term price movements over time is another potentially useful guide to seasonal price changes. Information File B2-20,Cattle Price Changes By Two-Week Periods summarizes information on average price changes of choice slaughter steers by two-week periods throughout the year. The number of years that prices increased and decreased provides an indication of the probability of particular short term price movements. The average percentage increase or decrease gives some idea of the possible magnitude of price changes. For example, the data indicates there is a fairly high probability that prices will increase from the first half of March to the last half of the month. But there’s a low probability that prices will rise from the last half of April to the first half of May.

This information can be useful in making short term marketing decisions on cattle. It can help with decisions on whether to market a bit lighter than normal or to carry cattle an additional week or so before marketing.

 

Lee Schulz, extension livestock specialist, 515-294-3356, lschulz@iastate.edu