Factors Affecting Feeder Cattle Prices In New York State

Abstract

Price determination for feeder cattle is complex because many factors (and their interactions) impact feeder cattle markets. Further, feeder cattle price differentials associated with feeder cattle weight vary as economic conditions change over time. By collecting market price data from 2011 through 2013 for a series of feeder cattle auctions at a livestock exchange in upstate New York and futures price data on finished cattle and feed inputs, the effects of various market conditions, lot characteristics, quality attributes, and auction characteristics on local feeder cattle prices are identified. Feeder cattle prices are found to vary importantly by the levels and volatilities in fed cattle and corn futures prices, sex of the animal, and month of sale. Results also reveal significant premiums for feeder cattle based on certain breed, heavy muscling, and preconditioning, while buyers discount for bulls, horns, smaller frame size, light muscling, and unthrifty cattle. The values of these premiums and discounts vary as cattle grow. Larger uniform lots, the number of buyers, and earlier sale time within an auction are also associated with higher prices on average. The values of these price changes are important as producers compare these values with the costs associated with management practices that address them.