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Giving you the down-low on cattle price lows

TL;DR:

  • New Mexico cattle market shows a 6 yr price cycle between low and high prices. Prices increase in wet years and decrease during dry years.
  • More cattle were being fed & bred during the three wet years, and many more cattle were sold during the three dry years.

What you need to know: In the cattle industry, we have seen cattle prices rise and fall. We have witnessed many good and bad years, even seasons, of cattle prices. Researchers in New Mexico studied these price trends and found that cattle prices are consistently changing seasonally, with the lowest prices being October through January.

The research found that price fluctuations weren't just seasonal, however. There was also a consistent, almost predictable, rise and fall in prices every six years. Prices were increasing for three years, then decreasing for three years. So why the decreases?

A one-two punch caused price changes: wet years, where ranches bred and calved out more cows due to extra feed availability, followed by dry years that forced a high number of calves and cows to be sold. The wet year cattle retention rate increased the cattle prices in wet years, and the major sell-off during dry years negatively impacted cattle prices as there were too many cattle in the market.  

Industry Application: Communication between ranches and government organizations across our industry could help ranchers avoid these pitfalls. Cattle prices are higher during wet years when ranches are keeping calves on feed longer and focus on increasing their herd size. This research suggests ranches should sell more calves during high moisture conditions and expect historical price changes to repeat when droughts occur.

Read more about it: Beef Cattle Price and Production Patterns in Relation to Drought in New Mexico