HISTORIC NOTE. Copyright 2005, Board of Trustees, University of Florida

Transcription

1 HISTORIC NOTE The publications in this collection do not reflect current scientific knowledge or recommendations. These texts represent the historic publishing record of the Institute for Food and Agricultural Sciences and should be used only to trace the historic work of the Institute and its staff. Current IFAS research may be found on the Electronic Data Information Source (EDIS) < site maintained by the Florida Cooperative Extension Service. Copyright 2005, Board of Trustees, University of Florida

2 September, 1981 BULLETIN 194 Analyzed Seasonality of Florida Cow Marketings and Prices James R. Simpson' Thomas H. Spreen, Florida Cooperative Extension Service / Institute of Food and Agricultural Sciences / University of Florida / John T. Woeste, Dean

3 SEASONALITY OF FLORIDA COW MARKETINGS AND PRICES by James R. Simpson and Thomas H. Spreen

4 TABLE OF CONTENTS Page LIST OF TABLES ii LIST OF FIGURES iv. TREND AND CYCLICAL PRICE MOVEMENTS FLORIDA COW MARKETINGS UNITED STATES COW MARKETINGS COMPARED WITH FLORIDA SEASONALITY IN UNITED STATES AND FLORIDA COW PRICES Florida United States MARKETINGS-PRICE RELATIONSHIPS ESTIMATION OF PRICE CHANGES: FALL AND WINTER TO SPRING SUMMARY REFERENCES APPENDIX i

5 LIST OF TABLES Table Page 1 Differences between October and March in marketings of stocker cows through Florida auctions, Comparison of largest and second largest months of cow marketings in Florida, Cows and bulls purchased by packers in Florida through different market outlets, Comparison of largest and second largest months of federally inspected cow slaughter in the United States, Comparison of highest and second highest monthly prices of Utility grade slaughter cows in Florida, Comparison of lowest and second lowest monthly prices of Utility grade slaughter cows in Florida, Comparison of average price changes from October to April and May, Cutter and Utility grade cull cows in Florida, Comparison of average price changes from January to April and May, Cutter and Utility grade cull cows in Florida, A-1 Marketings of slaughter and stocker cows through Florida auctions, A-2 Number and index of all cows marketed through Florida auctions, A-3 Florida cow inventory and all cattle marketings, A-4 Marketings of slaughter cows through Florida auctions by month and class of cattle, A-5 Number and index of cows slaughtered under federal inspection in the United States, A-6 Average monthly prices of Utility and Cutter grade slaughter cows, and all slaughter cows sold through Florida auctions, A-7 Index, prices received by farmers for livestock and livestock products ii

6 LIST OF TABLES (cont.) Table Page A-8 Average deflated (1967=100) monthly prices of Utility and Cutter grade slaughter cows sold through Florida auctions, A-9 Index of deflated average monthly prices of Utility and Cutter grade slaughter cows sold through Florida auctions, A-10 Average monthly prices of Utility grade slaughter cows, Omaha, A-11 Price difference between Omaha and Florida, Utility grade slaughter cows, A-12 Average price changes from October to April and May, Cutter and Utility grade cull cows in Florida, A-13 Average price changes from January to April and May, Cutter and Utility grade cull cows in Florida, iii

7 LIST OF FIGURES Figure Page 1 Cattle cycles since 1930, prices and inventory Florida cow inventory, Monthly marketings of all cows through Florida auctions, 1979, 1980 and average Number of cows slaughtered under federal inspection in the United States, Number of cows slaughtered under federal inspection in the United States, Indices of United States federally inspected cow slaughter and cows marketed through Florida auctions, average, Average monthly prices of Utility grade slaughter cows in Florida, Seasonality of Utility grade Florida slaughter cow prices, deflated index basis, average, Monthly price differences for Utility grade slaughter cows, Florida minus Omaha, and average, Price differentials of Utility grade slaughter cows, Florida minus Omaha, plotted against marketings of all cows through Florida auctions, Average price differentials of Utility grade slaughter cows, Florida minus Omaha, plotted against marketings of all cows through Florida auctions, iv

8 SEASONALITY OF FLORIDA COW MARKETINGS AND PRICES James R. Simpson and Thomas H. Spreen Florida is an important cattle producing area, ranking 15th in the United States in total cattle and calves, and 9th in beef cows as of January 1, A cow-calf type enterprise characterizes Florida, but only about percent of the calves produced in the state are finished in Florida feedlots [11]. The Southeastern United States cattle industry is also predominantly cow-calf in nature. The 1981 U.S. cattle inventory report shows that breeding cows make up 45 percent of the total inventory of cattle and calves in the region as compared to 34 percent nationally. The percentage in Florida is still higher, at 54 percent [2]. Further, in 1980, cow slaughter accounted for 48.5 percent of federally inspected cattle slaughter in region 4 1/ as compared to 18.7 percent nationally [16]. With few exceptions researchers have overlooked the importance of slaughter cows to ranchers by limiting the study to feeder and fed cattle marketings and prices [3,4,5,7,8,13,19,20]. This is particularly unfortunate for Florida cattlemen, since receipts from the sale of cull cows represent a significant portion of their total revenue. This report focuses on the seasonality of Florida slaughter cow marketings and prices and their relation to the United States as a whole. In addition, there is discussion of the benefits--and costs--from various strategies which producers could employ to take advantage of the seasonal variation in prices. TREND AND CYCLICAL PRICE MOVEMENTS It has long been recognized that production and prices of beef cattle undergo movements over time that can be divided into trend, cyclical and seasonal components [7]. Florida slaughter cow prices are no exception to this axiom. Prices are affected by a trend component which is the long-run tendency for both prices and production to increase over time. Inflation serves to advance general price levels, and production has increased due to biological breakthroughs and a historically increasing preference for beef. Trend aspects are described in [3]. I/Region 4 includes the following states: Kentucky, Texas, North Carolina, South Carolina, Georgia, Alabama, Mississippi and Florida. JAMES R. SIMPSON is associate professor and extension livestock marketing economist, and THOMAS H. SPREEN is assistant professor, in the Food and Resource Economics Department.

9 (2) The cattle cycle is defined as the period from one low point in national cattle inventory to the next low point. This has traditionally been about years. The cycle results from a lagged response to changes in cattle prices [9]. There is no observable world cattle cycle although many countries, especially those which are major importers or exporters, do have a cycle which parallels that of the Unites States [11]. Cyclical price movements are inversely related to inventory changes (Figure 1). The United States embarked on a new cattle cycle in 1980 giving rise to the expectation that cow prices will probably remain relatively high through 1985 or 1986 at which time, if historical precedents are fulfilled, there will be another price decline and subsequent inventory reduction. In the meantime, there will be annual variations in cattle herd buildup and, consequently, variations in prices. Thus, the intervening years will be affected by political decisions, changes in consumer demand, inflation and related events which form an intermediate step between cyclical and seasonal factors. FLORIDA COW MARKETINGS About percent of all cows marketed through Florida auctions in recent years are classed as slaughter animals (Table A-1). The total number of cows marketed fluctuates considerably, depending on the period in which the industry finds itself on the cattle cycle (Figure 2). There was a low of 43,160 head of all cows marketed in 1980 compared with over 67,000 head in 1977 during the height of the liquidation or deceleration phase (reduction in cattle numbers) (Table A-2). In 1977 cows comprised about 4 percent of all cattle and calf marketings as opposed to 5 or 6 percent of the total in other years (Table A-3). About one percent of all slaughter class cows marketed in Florida fall in the Standard and Commercial grade compared with 8-13 percent as Canners, and about percent as Cutters (Table A-4). Approximately half are in the Utility grade. Stocker cows, as a percent of all cow marketings, varies considerably depending on the year and month. During the years of heavy national herd liquidation (the deceleration phase of the cattle cycle), October stocker marketings drop. For example, they fell from 21.3 percent of all cow marketings in 1973, to 10.8 percent in 1976 (Table 1). By 1979 they were back up to 23.7 percent of all cows sold through Florida auctions. March marketings of stockers also depend on the cattle cycle, with heaviest concentrations in the expansion (national herd buildup) phase of the cycle, and smallest percentages in the deceleration phase. The difference between October and March (11.5 percent in the period), has continuously declined to the point there has been little difference between October and March since The fluctuations by month for 1978, 1979 and 1980 are graphed in Figure 3. Despite wide fluctuations both within and between years, there are two definite periods of heavy marketings; spring and fall. Overall,

10 Cattle and Calves on Farms January 1 Price Received by Farmers for Beef Cattle MILLION $/CWT 140-1_-- - _--- _ -_ o = = onumber of Cattle Price I I I I I I I I 1 I I I 1 I t 1 I I 1 I I I 1 : I I I I r i I i I I I I I I I I I I I I I I I Projected range Figure 1. Cattle Cycles Since 1930, Prices and Inventory. Source: Farmers' Newsletter: Livestock, August, 1978, U.S. Dept. of Agriculture with adjustments for later years.

11 1,800-1,700-1,600-1,500-1,400- I 1,300- S1,200-0 i 1, Figure 2 Florida cow inventory, Year Source: Table A-3.

12 (5) Table 1 Differences between October and March in marketings of stocker cows through Florida auctions, October March Stocker Stocker Stockers, All as Share All as a pct. decl:ne Year cows Stocker of total cows Stocker of total October-March Head Percent Head Percent- --- Percent /72 5,133 2, ,909 1, /73 4, , /74 5,642 1, , /75 6,195 1, , /76 6, , /77 5, , /78 5, , /79 5,605 1, , /80 4,667 1, , Source: [2]. See Tables A-3 and A-4.

13 (6) 8-7_ A6 A o \ \/ Avg I I I I I I I I I I I j F M A M J J A S 0 N D Month Figure 3 Source: Monthly marketings of slaughter cows through Florida auctions, 1979, 1980 and averaqe Table A-2.

14 (7) March and October are ranked first. October is about 14 percent above the monthly average, while March, with a seasonal index of 111, is 11 percent above the average (Table A-2). The index is derived by dividing each annual average of cows marketed by the monthly number of cows marketed in that year. Thus, the annual average=100. A comparison of the rankings by months shows the wide variation by years (Table 2). Between 50 and 60 percent of the cows and bulls slaughtered in Florida come from auction markets, with the cattle cycle being the major factor affecting purchase source composition (Table 3). During the years of national herd increase, i.e. through 1974 and in 1980, about 60 percent were continuously purchased through auction markets. But, in , years of extensive breeding herd culling, the percentage purchased from auction markets dropped continuously, reaching a low of 33 percent in Despite these cyclical shifts, the table shows that auction market prices can be considered representative of industry-wide prices, and can serve as the basis for the seasonal price analysis as presented in a later section. UNITED STATES COW MARKETINGS COMPARED WITH FLORIDA The number of cows slaughtered monthly under federal inspection from is given in Table A-5 along with an index of these marketings. The average ranges from about thousand head during periods of national herd buildup or stability, up to a record 868 thousand head in The peak month was December of that year when 1,123,000 head were slaughtered. The low was 386,000 head in April, 1973 when price controls were imposed [10]. Thus, the monthly federally inspected (F.I.) cow slaughter, graphed in Figures 4 and 5, show the dominating influence of the cattle cycle. A comparison of the largest and second largest months of federally inspected cow slaughter in the United States reveals that October is first, with November being second (Table 4). The index numbers for these months are and respectively, while December and January, and respectively, are nearly tied for third place. The months of February-July all run below the yearly average, clearly showing that fall is the major season of cow marketings. 2/ A comparison of Florida cow marketings and United States F.I. slaughter is given in Figure 6. It indicates that Florida marketings as reflected through slaughter levels are seasonally heaviest in March, with considerable movements taking place through June. United States marketings, in contrast, are lowest from February through June, with the peak months from October through January. In the next section an analysis is made to determine the effect of seasonality on prices. -'There are no data available on national marketings of stocker and slaughter cows. Thus, federally inspected (F.I.) slaughter has been chosen as the best approximation of trends. In all likelihood, there is more movement in September than shown, with considerable numbers of cows being placed on feed for three or four months.

15 (8) Table 2 Comparison of largest and second largest months of cow marketings in Florida, Jan.-June July-Dec. Year Year 1st 2nd Ist 2nd 1st 2nd 1971 Mar. June Sept. Nov. Mar. Sept. 72 Mar. Jan. Aug. Nov. Mar. Aug. 73 Jan. Mar. Oct. Aug. Oct. Jan. 74 May Mar. Oct. Aug. Oct. May 75 Apr. May Oct. Sept. Oct. Apr. 76 June Apr. Sept. Oct. June Sept. 77 June Mar. Nov. Aug. Nov. June 78 May Mar. Oct. Aug. May Oct. 79 May Jan. Aug. July May Aug Apr. Jan. Oct. July Apr. Jan. Avg. Mar. May Oct. Aug. Oct. Mar. Source: Derived from the index in Table A-2.

16 (9) Table 3 Cows and bulls purchased by packers in Florida through different market outlets, Number of head Percentage Direct, country Auction Direct, country Auction Year dealers, etc. markets Total dealers, etc. markets head percent Source: [18].

17 (10) 1,200 1, , o V 700 o / -.* , S_ I I I Ii J F M A M J J A S 0 N D Figure 4 Source: Number of cows slaughtered under federal inspection in the United States, Table A-5.

18 (11) I I 900- /. 76 / \ /i " - \ # '. v.'./ I : / 600- v.'*" 80 1, \ '... **, **... "" , J F M A M J J A S 0 N D Figure 5 Number of cows slaughtered under federal inspection in the United States, Source: Table A-5.

19 (12) Table 4 Comparison of largest and second largest months of federally inspected cow slaughter in the United States, Jan.-June July-Dec. Year Year Ist 2nd Ist 2nd Ist 2nd 1971 June April Nov. Oct. Nov. Oct. 72 June Jan. Aug. Oct. Aug. Oct. 73 Jan. Mar. Nov. Oct. Nov. Jan. 74 Jan. Feb. Oct. Nov. Nov. Dec. 75 June Jan. Oct. Dec. Oct. Dec. 76 Jan. Feb./June Nov. Dec. Jan. Nov. 77 Jan. Mar. Nov. Dec. Nov. Jan. 78 Mar. Jan. Oct. Aug. Jan. Mar. 79 Jan. Mar. Nov. Oct. Jan. Nov Jan. Feb. Oct. Dec. Jan. Feb. Avg. Jan. Mar. Oct. Nov. Oct. Nov. Source: Table A-5.

20 (13) II - / \ / 110 \ S/ Florida marketings / -, \ \ \\ \ > / \ I \ X L \ I \ \ II S- \ / S100 \ \ I 90 ^ \ I V I I United States 85-9 F M A MA S S I I Ir I 71. 7,J T -I Source: Tables A-4 and A-5. Figure 6 Indices of United States federally inspected cow slaughter Figure 6 and Indices cows of marketed United States through federally Florida auctions, inspected average, cow slaughter and cows marketed through Florida auctions, average, Source: Tables A-4 and A-5.

21 (14) SEASONALITY IN UNITED STATES AND FLORIDA COW PRICES Monthly changes in cattle prices, especially of a seasonal nature, are important as a guide for development of strategies for overwintering cull cows. In this section a comparison is made between Florida and United States monthly prices as a guide for these strategies. Florida Average monthly prices from for Utility grade slaughter cows in Florida are given in Table A-6, and graphed in Figure 7. In the early years of the 1970s, prices remained fairly constant, with little or no apparent seasonal variation. The average monthly prices for Cutter grade slaughter cows, and for all cows sold through Florida auctions are given in Table A-6. There has been a continual upward trend in cow prices over the past 10 years in conjunction with inflation. This steady upward trend must be adjusted when analyzing seasonal prices in individual months. The inflationary distortion has been adjusted by deflating the prices found in Table A-6 by using the Index of Prices Received by Farmers for Livestock Products (Table A-7). The deflated prices (Table A-8) are placed on an index basis in Table A-9 and graphed in Figure 8. The indices can be interpreted as follows: the April average of 108 means that, over the period prices averaged about 8 percent above the annual average. The graph shows the clear seasonal patterns with March, April and May about 15 percent above October and November. The averages are informative and useful, but need to be augmented with an analysis of annual variations to provide sufficient data for planning an overwintering program. One aspect of the variations is shown in Table 5 in which years are divided in half, January-June and July- December, and a summary given of the month with the highest prices of Utility grade cows. April is usually the highest month in the first half while July or December is generally the highest month in the second half. For the year as a whole, with the exception of 1973 and 1978, the months in the first half of the year always have the highest prices. April is first with March and May tying for second. The low price months in the first half of the year are almost always January and February, while there is wide dispersion in the second half with all the months appearing at least once (Table 6). For the year as a whole, the lowest price month is September, followed by October. United States The average monthly prices and indices of Utility grade slaughter cows at Omaha from 1971 through 1980 are given in Table A-10. In general, the patterns are about the same, but Florida prices do not reach the peaks of the Omaha prices and, also, Florida prices drop lower in the fall. The price differences between Omaha and Florida are given in Table A-11 and graphed in Figure 9. With the exception of 1979, which was a year of relatively high prices, Florida prices have almost always been

22 " / S " , "-., "...~-" ' "" ~" "".".. -"- ""-""-"" "r-.' ^ J F M A M J J A S 0 N D (Month) Figure 7 Average monthly prices of Utility grade slaughter cows in Florida, Source: Table A-6.

23 (16) l I (Month) (Month) Figure 8 Seasonality of Utility grade Florida slaughter cow prices, deflated index basis, average Source: Table A-9.

24 Table 5 Comparison of highest and second highest monthly prices of Utility grade slaughter cows in Florida, Jan.-June July-Dec. Year Year 1st 2nd Ist 2nd 1st 2nd 1971 Mar. Apr./May Aug./Dec. July Mar. Apr./May 72 May Apr. Nov. Aug./Oct. May/Nov. Apr./Aug./Oct. 73 Feb. Apr. July Nov. Feb. Apr. 74 Jan. May July Aug. Jan. May 75 Feb. Mar./Apr./May Dec. Nov. Feb. Mar./Apr./May 76 May Mar./Apr. July/Nov./Dec. Aug. May Mar./Apr. 77 Mar. Apr. Dec. July/Nov. Mar. Apr. 78 Apr./May Mar. Dec. Nov. Apr./May Mar. 79 Apr. May Aug. July/Dec. Apr. May 1980 Apr. Feb. July Aug. Apr. Feb. Avg. Apr. Mar./May July Dec. Apr. Mar./May Source: Table A-9.

25 Table 6 Comparison of lowest and second lowest monthly prices of Utility grade slaughter cows in Florida, Jan.-June July-Dec. Year Year Ist 2nd 1st 2nd 1st 2nd 1971 Feb. Jan. Aug./Dec. July Aug./Dec. July 72 Jan./Feb. Mar. Sept. Dec. Jan./Feb./Sept. Mar./Dec. 73 Jan. June Sept. Aug. Jan./Sept. Aug. 74 Jan. Feb. Oct. Nov. Oct. Nov. 75 Jan. Jan. Sept. Oct. Sept. Oct. 76 Jan. Feb. Sept. Oct. Jan./Sept. Oct. 77 Jan. Feb. Oct. Sept. Oct. Sept. 78 Jan. Feb. Sept. July/Aug./Oct. Jan. Feb. 79 Jan. Feb. Sept./Nov. Oct. Jan. Nov Jan. May Oct. Sept. Oct. Nov. Avg. Jan. Feb./June Sept. Oct. Sept. Oct. Source: Table A-9.

26 (19) //\ Average S/ S of- 0i, \ N S\ / 8 V\ / I.oo. / \ / I I I I I I I I I I I J F M A M J J A S 0 N D Fiqure 9 Source: Month Monthly price differences for Utility grade slaughter cows, Florida minus Omaha, and average Table A-11.

27 (20) about $2.00 per cwt. above Omaha's prices in January, declining to about $0.50 above Omaha in the midsummer, and then climbing steeply from October through December. In 1979 the same pattern prevailed, except that the differentials were about $1.00 higher than in previous years, with the winter peaks about $5.00 per cwt. above Omaha in the winter, and $2.00- $3.00 higher than Omaha in the summer. MARKETINGS-PRICE RELATIONSHIPS Another way of comparing the price differences between Omaha and Florida is by plotting the average monthly Florida marketings against the price differences between Florida and Omaha to determine the effect the quantity of Florida cows marketed might have on Florida prices. The result for 1979 is a very good fit for 8 of the 12 months (Figure 10). One exception is May and June, a period of the heaviest marketings in Florida (about 5,000 head monthly through auction markets) but one of the lightest months of federal cow slaughter (and national cow marketings). As a consequence, Florida prices are about $1.00-$2.00 higher than Omaha prices during these months. The price differences in September and October between Florida and Omaha are considerably lower than would be expected according to price/ quantity relationships. But, the explanation again lies in comparing the Florida-national cow marketing patterns. Nationally, September is much higher than most other months and, while October is one of the heaviest months nationally, it is one of the lowest months in Florida. Thus, even though there are a restricted number of cows sold in Florida, there is a relatively small price differential. The relationship shown in Figure 10 can be thought of as an elasticity, with the differential being almost completely inelastic at the lower levels of marketings (3,100-3,400 head monthly), and more elastic in the 3,500-4,500 head range. The same relationship between Florida marketings and the price differences is shown in Figure 11 for the period In this case, the function is almost completely inelastic. September still has the lowest differential. The largest differentials are all in the winter months, from November through March, with about a $1.00 decrease into the April-October period. ESTIMATION OF PRICE CHANGES: FALL AND WINTER TO SPRING The data developed in Tables 5 and 6 suggest that January and October are the first and second lowest price months in Florida for slaughter cows, while April and May are the highest price months. An analysis is made in this section to determine the average gain, in terms of price differences, that could have been obtained in the 1970s from placing cull cows on feed or pasture during these months. Table 7 contains a comparison of the average price changes from October to April and May. The data used in the computations are given

28 (21) 6 - * Dec. 5 - * Mar * Feb. 4 - u C-) * Nov. S* June 3 - * July 4 4- S 2 - Uu r-= S 1 -. Apr. * Oct. Jan. May * Sept. * Aug. I I I I I I Monthly marketings (1)000 head) Figure 10 Price differentials of Utility grade slaughter cows, Florida minus Omaha, plotted against marketings of all cows through Florida auctions, Source: Tables A-2 and A-11.

29 (22) 4-3- * Dec. 4-1 S. o Feb. * Nov. * Jan. S 2 - * Mar. 4- S- U July * Apr. * May * June Aug. * * Oct. Figure 11 Source: * Sept. I a a I I I Monthly marketings (1,000 head) Average price differentials of Utility grade slaughter cows, Florida minus Omaha, plotted against marketings of all cows through Florida auctions, Tables A-2 and A-11.

30 Table 7 Comparison of average price changes from October to April and May, Cutter and Utility grade cull cows in Florida, Difference, Utility/Utility Buy Utility grade, sell Utility grade Buy Cutter grade, sell Utility grade and Canner/Utilityb/ Difference Difference Year Oct.-Apr. Oct.-May May-April / Oct.-Apr. Oct.-May May-April / Oct.-Apr. Oct.-May Dollars per cwt / / / / rn 75/ W 76/ / / / Average Source: Table A-12. a/no sign indicates that May has the highest price change; a negative sign indicates April yielded the highest price change. b/the interpretation is, for example, that regardless whether October placed cattle were sold in April or May, have been an average gain of $3.82 by buying Cutter grade cattle and selling them at the Utility grade. C/For example, $6.62-$3.82 = $2.80 and, $5.27-$2.47 = $2.80. there would

31 (24) in Table A-12. The analysis indicates that, on the average, buying Utility grade cull cows in October, and selling at the Utility grade in April, would have yielded an average additional $6.09 per cwt. through price changes alone. Selling in May rather than April would have brought about a similar change, $5.68 per cwt. If the cull cows were Cutter grade upon placement, and were sold at the Utility grade, an average of $10.09 would have been realized in price changes to April, and $9.72 to May. The average premium for obtaining a higher grade was $3.91 for October to April, and $3.52 for October to May (Table 7). January is another low-price month in which cattlemen could place cows on feed or pasture in an effort to profit from gain and maximum price changes. If Utility grade cows were placed on feed in January and sold at the Utility grade, an average of $3.41 per cwt. price increase would have been realized by selling them in April (Table 8). In contrast, an average of $6.78 would have been realized by buying Cutter grade cows and finishing them to the Utility grade. This is a difference of about $3.37 due to grade differences. The net result of comparing placements in the two periods, October- April and January-April period is that an additional $3.31 per cwt. can be gained by placing cattle on feed in October rather than January. There are, of course, various additional costs which could be incurred as a result, and careful budgeting is required to determine the costbenefit relationship. SUMMARY Data on marketing cull cows in Florida from indicate that about half of all cattle sold through Florida auctions are Utility grade. Approximately 90 percent are slaughter class cows. It was determined that although there are wide fluctuations between years, there are two definite periods of heavy marketings, spring and fall. March and August are the top ranking months. About percent of cows and bulls slaughtered in Florida come from auction markets. Florida cow marketings were compared with United States marketings, as represented by cows slaughtered under federal inspection. The analysis shows that United States marketings are heaviest from October through January, i.e. seasonally opposite of Florida. Monthly average prices and indices were developed for Florida and Omaha for the Cutter and Utility grades. It was determined that about a 15 percent difference exists between trough and peak prices in both Florida and the United States. April and May are seasonally the highest price months in both Florida and Omaha. Florida prices have almost always been about $2.00 per cwt. above Omaha's prices in January, declining to about $0.50 above Omaha in midsummer, and then climbing steeply from October through December. The differentials were higher in One reason for Florida having higher prices is because of the relative isolation by the state from the major cow slaughtering areas and by being a carcass beef deficit state. Another

32 Table 8 Comparison of average price changes from January to April and May, Cutter and Utility grade cull cows in Florida, Buy Utility grade, sell Utility grade Buy Cutter grade, sell Utility grade Difference, Utility/Utility Difference Difference and Canner/Utility b/ Year Jan.-Apr. Jan.-May May-Apr.A/ Jan.-Apr. Jan.-May May-Apr.a/ Jan.-Apr. Jan.-May Dollars per cwt rn sc ,76 Avg Source: Table A-13. a/no sign indicates that May has the highest price change; a negative sign indicates April yielded the highest price change. b'the interpretation is, for example, that regardless whether January placed cattle were sold in April or May, there would have been an average gain of $3.37 by buying Cutter grade cattle and selling them at the Utility grade.

33 (26) reason is that the size of Florida marketings is counter to national marketings. October, for example, is one of the heaviest months nationally, but one of the lightest months in Florida. The seasonal price analysis indicates that the greatest price change, about $10.00 per cwt. average during , could have been obtained by placing Cutter grade cows on feed or pasture in October, and selling in April or May. Similar grade placements in January with sale in April or May would have yielded nearly $7.00 per cwt. In no years would a loss from price changes have been experienced by placements of Cutter grade cows in either October or January if the cows had been sold in April at the Utility grade.

34 (27) REFERENCES [1] Florida Dept. of Agr. Federal-State Cattle Report, Florida. Florida Crop and Livestock Rpt. Serv. [2] Florida Dept. of Agr. Florida Agricultural Statistics-Livestock Summary. Florida Crop and Livestock Rpt. Serv. [3] Franzmann, Jonn R., and Rodney L. Walker. "Trend Models of Feeder, Slaughter, and Wholesale Beef Cattle Prices." Amer. J. Ag. Econ. 54(1972): [4] Handke, Paul, and Gene Futrell. "Forecasting Guidelines for Choice Steer and Heifer Prices." Economic Report Series No. 12. Ames: Iowa State Univ., Jan [5] James, John B. "Factors Affecting Price Differences of Cattle in the Southwest." Unpublished Ph.D. dissertation. Texas A&M Univ., v [6] Larsen, John T. Seasonality of the Cattle Market. U.S. Dept. of Agr. ERS-468, [7] Mcllroy, Walter. "Application of the Econometric Model, Distributed Lag, To Forecasting Slaughter Cattle Price." Unpublished Ph.D. dissertation. Okla. State Univ., [8] Oliveira, R.A., C.W. O'Connor, and G.W. Smith. "Short-Run Forecasting Models of Beef Prices." Paper presented at the Western Agricultural Economics Association Annual Meeting. Bozeman, Montana, July [9] Simpson, James R. "Cattle Cycles: A Guide for Cattlemen." Univ. of Fla. Food and Resource Econ. Dept. Staff Paper 100. Gainesville: [10] Simpson, James R. "An Analysis of Wage and Price Controls and Cattle Supplies: A Primer for Meat Packers and Processors." Univ. of Fla. Food and Resource Econ. Dept. Staff Paper 105. Gainesville: [11] Simpson, James R. "World Cattle Cycles and the Latin American Beef Industry." Univ. of Fla. Food and Resource Econ. Dept. Staff Paper 129. Gainesville: [12] Stegelin, F.E., and J.R. Simpson. "An Economic Analysis of the Effect of Increasing Transportation Costs on Florida's Cattle Feeding Industry." Univ. of Fla. Food and Resource Econ. Dept. Staff Paper 161r. Gainesville: [13] Teigen, Lloyd. "Costs, Loss and Forecasting Error: An Evaluation of Models for Beef Prices." Unpublished Ph.D. dissertation. Mich. State Univ., 1973.

35 (28) [14] U.S. Dept. of Agr. Agricultural Prices. Washington. [15] U.S. Dept. of Agr. Livestock and Meat Statistics. Washington. Various issues. [16] U.S. Dept. of Agr. Livestock Slaughter. Washington: January 23, [17] U.S. Dept. of Agr. Meat and Livestock Situation. Washington. [18] U.S. Dept. of Agr. Packers and Stockyards Resume. Washington. Various issues. [19] Whyte, Charles D. "Dynamic Short-Term Estimating and Forecasting Models for Wholesale Beef Price." Unpublished Ph.D. dissertation. Ohio State Univ., [20] Yager, William A., R. Clyde Greer, and Oscar Burt. "Optimal Policies for Marketing Cull Beef Cows." Am. J. Agr. Econ. 62(1980):

36 Table A-1--Marketings of slaughter and stocker cows through Florida auctions, Year Jan. Feb. Mar. pril May _ June July_ Aug. Sept. Oct. Nov. Dec. Total Head Month Slaughter ,279 3,461 4,999 3,425 3,288 3,920 2,799 2,652 3,946 3,081 3,290 2,439 40, ,078 3,163 3,938 3,207 2,380 2,582 2,484 3,646 1,881 3,240 3,316 1,660 34, ,909 3,591 4,011 3,518 3,660 3,201 3,326 4,106 3,520 4,443 3,274 2,412 42, ,535 3,340 3,716 3,112 4,194 2,038 4,436 3,547 3,070 5,137 3,292 2,878 42, ,475 3,603 4,771 5,346 5,009 4,581 5,738 5,070 5,666 6,138 5,365 3,911 59, ,651 4,787 5,066 5,625 4,715 6,887 4,278 3,910 5,181 4,647 4,375 3,976 59, ,424 4,261 5,641 5,286 4,667 6,244 4,764 6,355 4,077 4,761 6,529 2,663 60, ,508 5,154 5,883 5,926 6,286 5,005 3,358 4,424 4,058 4,353 2,914 2,329 54, ,364 2,602 2,417 2,972 4,276 3,692 2,997 3,669 2,419 3,650 2,721 2,635 37, ,448 3,159 3,296 3,754 3,124 2,928 3,157 2,377 2,604 3,113 2,112 2,457 35,529 Stocker ,360 1,370 1,611 1,370 1,482 2,005 1,410 1,679 2,280 2,052 1,987 1,627 20, ,761 1,582 1,971 1,432 1,185 1,367 1,500 2, , , , , , , , ,46C , , , , , , ,631 Source: [2].

37 Table A-2-- Number and index of all cows marketed through Florida auctions, ' Year Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Total Avg Head Month ,639 4,831 6,610 4,795 4,770 5,925 4,209 4,331 6,226 5,133 5,277 4,066 60,812 5, ,839 4,745 5,909 4,639 3,565 3,949 3,984 5,727 2,425 4,092 4,245 2,150 50,269 4, ,658 4,169 4,633 3,934 4,292 3,677 3,813 5,079 4,258 5,642 3,785 2,865 50,805 4, ,041 3,753 4,119 3,574 4,714 2,450 5,053 4,105 3,650 6,195 3,732 3,281 48,667 4, ,055 4,029 5,336 5,770 5,441 5,033 5,483 5,503 6,495 6,991 6,044 4,458 66,638 5, ,176 5,268 5,638 6,292 5,142 8,003 4,667 4,251 5,717 5,207 4,848 4,249 65,458 5, ,958 4,807 6,243 5,917 5,108 6,848 5,388 7,062 4,887 5,729 7,336 3,197 67,480 5, ,021 5,801 6,802 6,639 7,362 5,727 3,991 5,255 4,876 5,605 3,759 3,080 63,918 5, ,339 3,408 3,173 3,832 5,221 4,296 3,721 4,403 3,213 4,677 3,415 3,148 46,846 3, ,215 3,982 3,828 4,430 3,528 3,536 3,680 3,034 3,309 4,002 2,641 2,975 43,160 3,597 Avg. 4,794 4,480 5,229 4,983 4,914 4,944 4,398 4,875 4,505 5,327 4,508 3,346 56,405 d,701 Indexb/ , i Avg , '/Sum of slaughter and stocker cows, Table A-1. -/Derived by dividing the annual average of cow marketed by the monthly number of cows marketed. Thus, the annual average=l00.

38 (31) Table A-3 -- Florida cow inventory and all cattle marketings, Cows as All cows All cattle a percent 2 years and and calf Cow of all cattle Year older marketings-/ marketings-/ and calves ,00 head , , , , , , ,230 1, , , , , ,670 1, ,615 1, ,579 1, ,410 1, , , Source: [1]. a/january 1. ball sales, auction and direct. -/Auction markets only.

39 Table A-4--Marketings of slaughter cows through Florida auctions by month and class of cattle, Year Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Total Head Month Standard Commercial NO , , Utility ,181 2,132 3,083 2,105 2,135 2,358 1,652 1,481 2,161 1,829 1,830 1,534 24, ,943 2,055 2,399 2,033 1,303 1,378 1,398 2, ,707 1, , ,233 2,148 2,408 2,122 1,974 1,788 1,980 2,422 2,104 2,468 1,854 1,289 24, ,176 2,130 2,259 1,774 2,618 1,148 2,602 1,800 1,479 2,630 1,712 1,575 23, ,367 1,805 2,338 2,774 2,599 2,327 2,824 2,461 2,342 2,626 2,064 1,501 28, ,439 2,307 2,535 2,770 2,288 3,215 2,073 1,871 2,240 1,934 1,885 1,640 27, ,419 2,141 2,887 2,459 1,982 2,991 2,236 2,712 1,557 1,918 2,654 1,294 27, ,237 2,768 3,305 3,386 3,369 2,545 1,669 1,990 2,145 2,279 1,570 1,372 28, ,656 1,391 1,171 1,589 2,183 2,302 2,139 2,583 1,595 2,347 1,670 1,603 22, ,199 2,291 2,165 2,299 1,812 1,847 2,227 1,520 1,556 1,848 1,154 1,425 22,343 (cont.)

40 Table A-4--Marketings of slaughter cows through Florida auctions by month and class of cattle, (cont.) Year Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Total Head Month Cutter ,043 1,498 1, , , , , , ,032 1, , , ,177 1, ,246 1,037 1,393 1, , , , ,384 1,285 1,130 1,772 1, , ,595 1,248 1,808 1,872 1,760 1,651 2,093 1,877 2,234 2,325 2,313 1,730 22, ,287 1,809 1,859 2,057 1,794 2,791 1,738 1,513 2,195 1,947 1,915 1,708 23, ,240 1,578 2,154 1,975 1,947 2,491 1,977 2,795 1,928 2,047 2,902 1,027 23, ,825 1,966 2,069 2,055 2,331 2,000 1,391 1,941 1,554 1,728 1, , ,402 1,029 1,044 1,126 1,750 1, ,097 8V , , ,184 1, , ,869 Canner , , , , , , , , , , C ,845 Source: [2].

41 Table A-5-- Number and ii.dex of cows slaughtered under federal inspection in the United States, Year Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Total Average ,0-----, hea , , , , ,198 1,081 1,123 10, , , , , , , Month Index Avg Source: [15]. -/Monthly slaughter divided by average slaughter for each year. Thus, annual averaqe=10 0.

42 Table A-6--Average monthly prices of Utility and Cutter grade slaughter cows, and all slaughter cows sold through Florida auctions, Month Year Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Avg Dollars per cwt do Utility Cutter All Cows Source: Fll.

43 (36) Table A-7-- Index, prices received by farmers for livestock and livestock products / Month Year Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec = Source: [14]. p/for the United States as a whole.

44 Table A-8-- Average deflated (1967=100) auctions, monthly prices of Utility and Cutter grade slaughter cows sold through Florida Month Year Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Avg Dollars per cwt Utility Cutter Source: Calculated from Tables A-6 and A-7.