Calf prices

[tex452]

We bought 9 calves about 60 days ago that were not in good shape.
Looked to be charolais x along with some Hereford x.
We worked them and put them on feed and hay, they filled out pretty good.
We are selling them today at the local barn, so we'll see how they do.
These cattle were wild, after feeding them for weeks they still wouldn't come up to the bunk until we left.

 

[Otha]

The Livestock Risk Protection is not insurance on your cattle. It is insurance on the market. They use the futures as part of their prediction on what cattle will be worth on a given day of a future month. Today's quotes on steers 600-1,000 pounds for August 28 are based on a future value of $208. There is 10 levels of insurance you can buy. The lowest level is insuring $189.89 which is 0.9118%. The cost for that level is $5.00 per head. The highest level is $207.89 which is 0.9982%. That cost $34.00 a head. You don't pay up front. If at the closing date the market is below the level you insured to they pay you the balance up to the rate you insured. If the market is above the rate you insured then you pay the premium. The market level is based on 10 area markets around the country.

What have you experienced for basis I guess you'd call it. Say you buy some level of LRP insurance and sell august 28. That day the Index number is 1.95. Is there a good way to figure what your animals will sell for at different weights? Assuming they are good quality, and sold at one of the markets that the index number is based on.
Seems like to me with the large weight rage the insurance spans it might be hard to determine what level of insurance you need to purchase,.
I guess what I am asking is if I need $1.95 on some 750lb steers to break even then what level of insurance would likely need to be bought to cover that price plus basis? And how much would that change as the weight of the steers changed from 600-1000.
I am starting to mess around with LRP and would appreciate all the advice I could get.

 

[Dave]

What have you experienced for basis I guess you'd call it. Say you buy some level of LRP insurance and sell august 28. That day the Index number is 1.95. Is there a good way to figure what your animals will sell for at different weights? Assuming they are good quality, and sold at one of the markets that the index number is based on.
Seems like to me with the large weight rage the insurance spans it might be hard to determine what level of insurance you need to purchase,.
I guess what I am asking is if I need $1.95 on some 750lb steers to break even then what level of insurance would likely need to be bought to cover that price plus basis? And how much would that change as the weight of the steers changed from 600-1000.
I am starting to mess around with LRP and would appreciate all the advice I could get.

The thing to keep in mind is you are not insuring your cattle, your market, or the day you sell. What you are insuring against is large swings in the nation wide market. A good example would be 2014 and early 2015. Cattle were selling like hotcakes. Then about July of 2015 things seriously went south. Had a person taken out LRP it would have paid. My insurance guy said he has a client who had taken out LRP on a large lot of fed cattle last year. It was looking like he was going to be writing a large premium check. Then Russia invaded Ukraine. The market dropped and he got a large check instead of paying.

 

[Lee VanRoss]

I am thinking it would take large No1's to bring $1,95 for 750 # on almost any market. Assuming you have inventory that would meet the
criteria an LRP contract would certainly merit consideration. Failing that, or even including, a careful analysis of the system as it exists would
be in order. It would hold that one cannot continue doing the same thing and expect a different result. How you got those steers to 750#
will be key to whether an LRP policy will be viable or not. Good Luck

 

[bird dog]

There is no minimum amount of cattle required. You can do one head if you want. You do have to have the calves you insure. This is not a gambling program and they have the right to check and see and count your calves.

I did 30 head last year to get my feet wet and to understand the program. If you are familiar with puts and calls, the insurance is like buying puts. You purchase the right to sell at a certain price. As mentioned the breed, quality or color of your calves have nothing to do with it. You can buy coverage on calves that are not even born yet.

I did 15 heifers and 15 steers for a 599 lb ending weight when my calves were about 250 lbs. The contract was for about 5 months. My cost was about $30 per head. The price I bought was around $1.95 for steers, $1.85 for heifers which was about .15 higher than the markets at the time of purchase. The market did not move much and I was about $60 per head in the plus column at contract end. So with the contract costing around $900, they sent me a check for about $900 about a month after closing.

If interested, I suggest doing a small amount to help you understand. The pricing changes daily and the big players watch it like a hawk for a opportunity. When you go to a big sale like at the OKC stockyards, those buyers know what their cost of gain is so they can buy calves and almost simultaneously sell the LRP to lock in their profit. You can do the same by looking at the quotes and then going to the sale barn knowing what you can pay.

The same company that does my forage insurance also handles my LRP. It makes things a little simpler for me and the company has some folks on staff that are market analysts and can help you decide what to do.

I have not done anything with this years calves as the market seems to be still rising, so no need to lock in yet.

 

[Stocker Steve]

What you are insuring against is large swings in the nation wide market. A good example would be 2014 and early 2015. Cattle were selling like hotcakes. Then about July of 2015 things seriously went south.

Some people fixate on the number of cows since it is easy to measure, but there are many more market variables in play.

I doubt that cow numbers jumped up in 2015 and tanked the calf market.

 

[Stocker Steve]

Talked to the manager of the local auction mart today and he said good 750 lb heifer calves were getting $1,750 but they were having a hard time getting over $2,000 for good bred heifers. Cows are still being liquidated.

Any idea why calves are so high in Canada?

 

[Stocker Steve]

Even with good calf prices, I got my soil test back and to use the recommended amount will cost me 3 times what I paid a couple of years ago.

Neighbor sold some #1 calves this week. Selling price was higher than last year, but his profit margin was lower than last year.

Still time to buy seed corn and crop insurance...

 

[Silver]

Any idea why calves are so high in Canada?

If you do the conversion to USD is it much different than US prices?

 

[HatCreekCattleco]

Some people fixate on the number of cows since it is easy to measure, but there are many more market variables in play.

I doubt that cow numbers jumped up in 2015 and tanked the calf market.

This is true, the chart graybeard posted shows a jump of 1 million head from 2014 to 2015. So what else caused prices to drop so quickly? Seems I seen a chart somewhere that showed that drop correlating with the county of origin labeling change.

 

[Dave]

If you do the conversion to USD is it much different than US prices?

Not too much difference. Every time I see those Canadian prices I do the conversion. Prices are pretty close to what calves are bringing here.

 

[Dave]

I wrote down the results of the first 6 lots through the ring yesterday. All from the same place. Mixed color and breeding with more reds than blacks.
47 head of steers weighing 443 sold for $2.54
11 steers at 377 pounds brought $2.71
10 steers at 499 sold for $2.45
11 steers at 580 got $2.28
12 heifers at 368 sold for $2.58
26 heifers weighing 408 sold for $2.54

 

[Stocker Steve]

If you do the conversion to USD is it much different than US prices?

Depends on what and where you compare. Here heifer pricing is less consistent than steers.

Last fall local Canadian heifers were cheaper than northern MN heifers. Last week they were higher - - average 750# heifers were U$S 1331 in Winnipeg and U$S 1268 in a good northern MN market. I would say U$S 63 per head is different. Have to think about $ per pot.

We have a couple local guys who make a living moving cattle around. They usually have an angle on shipping and sales commission to make this work.

We have lost some of our local grow yards - - which I think has depressed local prices and benefited traders.

 

[Stocker Steve]

Talked to the manager of the local auction mart today and he said good 750 lb heifer calves were getting $1,750 but they were having a hard time getting over $2,000 for good bred heifers. Cows are still being liquidated.

Lute demand is up here. Could be a future shortage.

 

[MurraysMutts]

Friend wanted 4 to feed out. I got him 5 for 200 less than quote...
5 is better he says

 

[gcreekrch]

Good job of buying Murray!

 

[gman4691]

4 steers and 1 heifer going to sale tomorrow...all solid black (Brangus)...I'm not too good at guessing weight but I would imagine somewhere btween 450 to 500 lbs. They look good as far as straight backs, frame, and muscle goes...the steers looked pretty tasty to me - might should have kept one to eat...we shall see what we shall see...prices are pretty good at the moment so these should bring a nice little check...here's hoping

 

[gcreekrch]

Alberta or Saskatchewan, not sure. 475 lb steer calves contracted for fall delivery. $4.25 per lb. These calves are not even born yet.

Just trashy northern cattle.

 

[Brute 23]

Alberta or Saskatchewan, not sure. 475 lb steer calves contracted for fall delivery. $4.25 per lb. These calves are not even born yet.

Just trashy northern cattle.

I assume that's Canadian $?

Not surprising. We are not far off now for our trashy eared cattle straight off the cow. With there being no sign of going down, not sure I would take that deal.

 

[farmerjan]

Been checking, and Oct 2, 8 wts, futures is at 2.22.... this was before the OPEC nations cut their production.... and all their affiliates also cut their production goals...
I am hoping that son will lock into the LRP for the animals we expect to have by then... because if it drops, it will give us some guarantee.
A wise man said recently that any deal that made a profit is a good deal.... and I totally agree with him... I applaud @gcreekrch for doing that contract and making a profit off them... you don't have to make a killing, an honest profit is fair and if it goes to he// in a hand basket, it will be the smartest move he ever made... if it goes higher... he can sell what he does not have contracted and make more money on them... and still having made a profit on the contracted ones and paid his bills with them.
This new drop in oil production has immediately raised the price of a barrel of oil over $10.... and the quieter news is there are now 18 countries that are not going to trade for oil in US dollars but in the Chinese Yuan... it will send our inflation into the strastosphere... and what that will do to the value of the animals is just too volatile....