THE FLORIDA CATTLEMAN AND LIVESTOCK JOURNAL
|2015 Projected Average Florida Feeder Calf Prices|
For questions or comments regarding this publication contact: Chris Prevatt, University of Florida, IFAS
The record high feeder calf prices experienced during the last five years have added new excitement for Florida cow-calf producers. The combination of strong beef demand (domestic and foreign), tight feeder calf supplies, improved forage conditions, cheaper feedstuffs, low interest rates, and cheaper energy prices came together to push feeder calf prices to record highs. These conditions should continue to support high feeder calf prices for the next several years.
The Rise in U.S. Feeder Calf Prices
U.S. weekly average 550-pound feeder steer prices from January 2010 through November 2014 are shown in Figure 1. Note the tremendous change in feeder steer prices over this almost five-year period. U.S. weekly average 550-pound feeder steer prices beginning January 2010 were $103.78/cwt. and have risen to $282.73/cwt. in November 2014. This represents a market price increase of about $179/cwt. or $984/hd. That is a market price improvement of 172% for U.S. 550 lb. feeder steers in the last five years. The cumulative inflation rate (consumer price index) during this time period was only 8.9 percent. Thus, the improvement that was realized in beef prices has significantly exceeded the rate of inflation.
More recently, the price of U.S. 550 lb. feeder steers has moved to new record highs on a monthly basis for 19 consecutive months. This historic run in feeder steer prices started during May 2013 at $152.15/cwt. and has continued through November 2014 at $282.73/cwt. The dramatic increase in market prices has provided a gain in revenue of $130.58/cwt. or $718/hd. That is a market price improvement of 85.52% for U.S. 550 lb. feeder steers in less than two years. The extreme increases in U.S. feeder steer prices have caused cattle producers to question if there is any improvement left for 2015?
What Do We Expect For 2015 Florida Feeder Calf Prices?
As we push into 2015, feeder calf prices are expected to continue to climb higher but not at the same rate that was seen in 2014. Domestic and foreign beef consumers are projected to continue to show strong demand for beef even in the face of higher prices. Lower energy prices and low interest rates have provided consumers with more spending money which contributes to a strong beef demand. Add that to a limited supply of U.S. feeder calves and cheaper feedstuffs, and that should provide enough incentive for further improvement in feeder calf prices during 2015.
The 2015 Average Florida Feeder Calf Prices are projected as shown in Figure 2. The feeder calf prices were projected using 2015 CME Feeder Cattle futures prices (as of 11/24/2014) and basis estimates of Florida feeder calves for various weights. The average projected prices are blended for steers and heifers of medium-large frame and #1-#2 muscle score calves.
Using the information above, the Projected 2015 Average Florida Feeder Calf Prices were estimated to range between $3.49 per pound for a 300-pound feeder calf to $2.26 per pound for a 600-pound feeder calf (blue line, left vertical axis). Note that the projected average feeder calf price per pound decreases as the weight of the feeder calf increases.
Alternatively, when feeder calf prices are expressed as dollars per head, the 300-pound feeder calf price was the lowest at $1,046 per head (red line, right vertical axis). The highest price was $1,355 per head for the 600-pound feeder calf. Notice that feeder calf prices expressed on a dollars per head basis increases as weight increases ($1,046, $1,121, $1,165, $1,223, $1,270, $1,307, and $1,355 for the respective weights). If your cost of production per calf is less than these amounts, you should realize a profit with your 2015 cow-calf operation.
Obviously, we can’t guarantee the above projected prices for 2015. As new information enters the marketplace each day, these price projections can change depending on whether the new information is price supportive or not to the market. However, the current strong economic factors are expected to continue to support high feeder calf market prices during 2015.