The following commentary is a mix of my own commentary and that from the Livestock Marketing Information Center.
Bred cow prices at auctions during the last quarter of 2018 were down 10-20% from a year earlier in key cattle production regions. USDA’s Agricultural Marketing Service (AMS) reported average prices in Georgia auctions for 1200-1300# cows bred 4-6 months earlier at $912.30 per head in December versus an average price in December 2017 of $1119.89, a 19% decline. The same comparison in Montana for mid-aged 1200-1300# bred cows showed a 6% price decline in December compared to a year earlier. Not surprisingly, Midwest auction cow price changes from late 2017 to late 2018 posted a drop between that of Montana and Georgia, as Saint Joseph, Missouri prices were down 15%. Female prices in Mississippi have been following a similar trend as shown in the chart above.
Interest in purchasing breeding stock has been cautious relative to current spot and futures market pricing for calves and yearlings. Steer calf prices in Oklahoma City during December were only 4% lower than a year ago. Feeder cattle futures prices for delivery in November 2019 were 2% higher in December than one year earlier. In mid-January, the November feeder cattle contract closed at $149.85 per cwt .versus $144.93 a year earlier. The LMIC is projecting Southern Plains steer calf prices (500-to 600-pound steer) in 2019 to average $167-$174 per cwt., which compares to the 2018 calf price average of $171.39. The forecast for yearlings (700-to 800-pound steer) is $145-$150 per cwt., providing a reference point for current futures market values. The yearling price for 2018 was $150.
Average annual (2018) bred cow (or replacement cow, per the St. Joseph, MO auction market quote) prices reported by AMS dropped to the lowest levels in five years. In some markets, prices declined back to averages last seen in 2010. St. Joseph, MO is the case in point, where drought last summer in northern Missouri led to some forced liquidation of herds. At the time of those lower bred cow prices (2012-2013), the beef cow herd was shrinking at a 2%-3% annual rate and the number of beef heifers being retained for breeding purposes was 20% lower than in 2018.
Purchasing a bred cow or any type of female is usually an investment in the future with the goal of earning revenue from her calves. The current lower bred cow and pair prices imply it will not require exceptionally strong feeder calf prices over the next few years for many of those cows to be profitable investments.