Nature dictates many of the production and supply patterns in the livestock industry. For example, a majority of the annual calf, lamb and kid crops are born in late winter and spring.
By the time animals are weaned vegetation and forages are readily available.
This also is the time when the animals’ nutritional requirements are at a peak. Nature has a method of keeping this pattern fairly consistent unless interrupted intentionally by man.
According to Texas A&M AgriLife Extension, during the hot summer months, the fertility rates of both females and males decline as flesh condition declines with decreasing forage.
For these reasons, supplies of feeder animals are usually largest during the fall and lowest during the spring. This production and supply pattern usually causes spring livestock prices to be higher than fall livestock prices.
Seasonal consumer demand patterns (such as a higher demand for beef in the spring) have caused livestock producers to alter production patterns to take advantage of market opportunities. Severe winter weather can disrupt marketings and cause prices to increase because of reduced weight gains.
For these two reasons, fed cattle prices usually peak in March or April. Feedlots attempt to have supplies of fed cattle to meet this demand.
Feeder cattle (700 to 800 pounds) are contracted or purchased in the late summer or fall to ensure that there are feeder cattle supplies to meet this market.
At the same time, feedlot buyers must compete with stocker operations buying cattle to stock winter small grain pastures. During the 1970s and 1980s, this increased the demand for stocker-feeder cattle in the summer. Summer prices for these cattle are bid up from spring lows.
Therefore, we now have two periods of the year when prices for 700- to 800-pound feeder cattle rise above the annual average prices—one peak in the winter and another in the summer.
Seasonal price movements can be measured over a period of years. Monthly prices can be indexed to show, proportionally, how much they are above or below the annual price average.
With changing consumption patterns or transition periods of increasing or decreasing supplies, seasonal price patterns may change either permanently or temporarily.
Monthly price indexes can be used as an indication of possible price trends for a period of time. The variability factor, in cases where the price series is statistically normally distributed, can be used to estimate the possibility of prices varying within the estimated range.
For more information on this or any other agricultural topic please contact the Hopkins County Extension Office at 903-885-3443 or email me at [email protected].