AMES, Iowa — Producers want to know that they are getting fair value for their cattle relative to similar cattle. Producers need reliable price transparency on cattle traded to confirm true value.
The Livestock Mandatory Reporting (LMR) program encourages competition in the marketplace by bringing transparency, breadth and depth to market reporting. USDA’s Agricultural Marketing Service (AMS) is responsible for implementing LMR and for publishing information in ways that producers can readily understand and use.
The 5 Area Weekly Weighted Average Direct Slaughter Cattle report (LM_CT150) provides a wealth of information on negotiated cash sales. The 5-Area includes Texas/Oklahoma/New Mexico, Kansas, Nebraska, Colorado, Iowa/Minnesota feedlots. For the week ending Sunday, August 1, 2021 the steers, live FOB, over 80% Choice price range was $120 – $125 with a weighted average price of $122.48 per cwt. There are cattle characteristics that dictate higher or lower prices. The weight range, for example, was 1,225 – 1,575 pounds.
Local markets may have different supply-and-demand situations which can also influence the price received. For that same week and type of transaction the Iowa/Minnesota report (LM_CT167) had a price range of $121 – $125 with a weighted average price of $123.98.
To further aid in price transparency, USDA-AMS publishes a weekly price distribution for live FOB, live delivered, dressed delivered, and dressed FOB negotiated sales. The price distribution, in $0.50 per cwt increments, includes beef type steer lots, heifer lots, and mixed steer/heifer lots of all quality grades.
The live FOB weekly price distribution, in the LM_CT150 report, ranged from $116 to $127.49 for the week ending August 1 (Figure). Of the total 38,593 head count in this transaction grouping, 36% (or 13,864 head) were in the $120 – $120.49 slot, 21% in $122 – $122.49, 11% in $123 – $123.49, and 10% in $124 – $124.49. Per the LM_CT167 report, 37% of the Iowa/Minnesota volume was in the $124 – $124.49 range.
The 5 Area Weekly Direct Slaughter Cattle Report – Formulated, Forward Contract, And Negotiated Grid Purchases (LM_CT145) report shows that for the week ending August 1 the formula net weighted average price for steers, grading over 80% Choice, sold on dressed basis was $198.46 per cwt. The price range was $183.95 – $254.87 and the weight range was 757 – 1,097 pounds. In Iowa/Minnesota (LM_CT147) the price was $201.83 ($193.61 – $218.50).
Two new reports will help producers better understand market trends.
On August 9, USDA-AMS began publishing a National Daily Direct Formula Base Cattle report, which will allow correlations between negotiated trade and reported formula base prices to be assessed. Also by comparing formula base and net prices, the net impact of premium and discount adjustments can be better understood. Daily morning, afternoon, and summary formula base price reports will be national in scope to ensure confidentiality. Weekly and monthly reports will be at the national and regional level and include forward contract base purchase prices.
A National Weekly Cattle Net Price Distribution report will be first issued on August 10. The data will represent the distribution of average net prices in increments of $2/cwt from the weighted average net price of each purchase type. Purchase types will include negotiated, negotiated grid, formula, and forward contract.
These new reports are yet another example of USDA-AMS receiving stakeholder feedback and making enhancements to reports and published data to reflect the dynamics of the industry and the value of market information.
— Lee Schulz, ISU extension livestock economist
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