The past few weeks we have focused on market reactions to the Tyson beef plant fire (read again HERE, HERE, and HERE). This event negatively impacted cattle prices and will remain a key topic throughout the Fall. But this is far from the only factor affecting cattle prices, especially as more time passes since the fire. One of the key factors that usually pushes prices lower during this time of year is seasonality.
We have discussed seasonal patterns in this newsletter before (see HERE). In short, they are the normal price patterns throughout a year driven by production and marketing patterns. Seasonally, either September and October are the lowest price months of the year for both fed cattle and feeder cattle due primarily to large volumes. Using the Alabama price index data above, September prices for 600-700 steers are 3% lower on average than during August and October prices are about 6% lower. The story is the same for Mississippi and most Southeastern states. It is also important to note that August is usually a little stronger than July – a bump which did not happen this year.
A common question right now is “when will prices get back to where they were before the fire?” But the story is more complicated than that given the time of year that the fire occurred: right before prices usually find a bottom. Auction prices have recovered some since the lows seen the week following the fire. Mississippi auction prices were 4 to 7 percent lower last week than the week prior to the fire depending on weight class. This is an improvement from the 6 to 10 percent drop seen in the week after the fire. Prices may not get all the way “back” partially because seasonal patterns usually negatively impact prices this time of year.