The best way to estimate what your calves are worth is to find prices of feeder cattle with similar weight, frame and muscle score in your area. The more local those comparable sales are the better.

In September, USDA’s Agricultural Marketing Service Market News acted to provide more localized feeder cattle prices in Iowa. Historically, Market News reported Iowa and Missouri direct feeder cattle trades as one. Now they provide separate reports for Iowa and Missouri. Focusing on Iowa more accurately reflects direct feeder cattle sales in Iowa. Just as sale barn location impacts price received by feeder cattle sellers, the location of direct sellers is important, too.

Every week market reporters canvas the Iowa market to obtain timely prices and volumes from voluntary sources. Market News makes the information publicly available in the Iowa Direct Cattle Report. It is easily accessible on the internet.

COVID-19 trimmed auction sales

About 385,000 feeder cattle ran through Iowa auctions in 2020, according to the Iowa Weekly Cattle Auction Summary report provided by USDA and the Iowa Department of Ag Market News. This was down about 8%, or 34,000 head, from 2019. Most of the 2020 feeder cattle trade involved calves born in 2019 and 2020.

Iowa’s 2019 calf crop was down 2.7% from 2018. The preliminary estimate of the 2020 U.S. calf crop made by USDA’s National Agricultural Statistics Service last July pegged another 0.7% dip. The Iowa annual change may have been higher or lower.

The COVID-19 pandemic drove the larger decrease in auction sales relative to the decline in the calf crop. As part of the food supply chain livestock auctions were deemed an essential business and allowed to remain open. However, major changes occurred in how they could operate. State governments provided guidance on protective measures.

Some sales occurred as originally planned. Other auctions went forward, but with bidding by video and internet, or phone only, or a hybrid approach. Some were postponed. Other auctions were canceled. Disruptions kept some producers from selling. Other producers chose to hold and hope for better prices.

While weekly runs were erratic, March and April feeder cattle volume at Iowa auctions averaged just over half of 2019’s volume. In May, feeder cattle auction receipts surged compared to May 2019 levels as delayed sales finally occurred.

Market volume matters

Do larger sales volumes lead to higher prices for individual markets? From a demand perspective, larger cattle numbers at a given market could attract more buyers, boosting buyer competition and commanding higher prices. Alternatively, a larger supply with limited buyers could depress prices.

Buyers being able to purchase a larger or more uniform quantity on a single day at a larger market could lead to higher prices because buyers' costs of operation per head could be lower. This lower cost would enable buyers to pay higher prices at larger markets. But competitive pressure among buyers would be necessary to force buyers to actually bid up.

Does potentially greater demand at larger sales offset the potentially dampening impact that larger volume may have on price? Research provides mixed results. Past research on Iowa feeder cattle prices does suggest high-volume auction sales receive higher prices, but the impact was relatively small at $1.10 per cwt for every 1,000-head increase.

A cursory view of Iowa auction feeder cattle prices, all weights medium and large No. 1 steers, helps explain the March-April feeder cattle sales volume slump. Nobody wants to sell in a down market, but some producers need to market cattle to have money to pay bills, buy feed for their animals and for many other reasons.

January and February 2020 prices were both 1% below the same months in 2019, March was 5% lower, April was 15% lower, and May was down 7%. By June, prices were back to slightly below a year ago. This prevailed, plus or minus, for the rest of 2020. In general, heavier-weight cattle suffered larger year-to-year price declines than lighter-weight cattle.

Shifts among various markets

USDA’s Market News reports feeder and stocker cattle receipts from auctions, direct sales and video-internet sales on a voluntary basis in the weekly National Feeder and Stocker Cattle Summary report. As expected, trends in national feeder cattle market receipts by market channel showed some divergence during 2020 compared to 2019.

Trade volume through auction barns dipped 4.1%. Total receipts slipped 6.5%, despite auction trade accounting for around 70% of feeder cattle market receipts. Volumes moving through direct trade posted the biggest decrease in 2020, down 17.3% from 2019. During the prior two years, direct trade volume was up 7.2% and 2.9%, respectively, making the large decline in 2020 notable.

E-market (video and internet auction) trade volume was down 4.7%, following a 10% rise in 2019. E-market trade volumes tend to be irregular, especially week to week, compared to auctions and direct trade.

The other large change in 2020 was the number of animals over 600 pounds marketed through these channels. The flow of 600-pound feeder cattle through auction sales remained steady at 52% of the auction sale volume. Direct sales have had the highest volume of cattle over 600 pounds, averaging 84% in 2017-19. This slipped to 77% in 2020.

On the other hand, video-internet, 600-pound-plus calf volume was 73% in 2020, up from 68% the three prior years. This suggests some of the E-markets, be it video-internet auctions held in conjunction with live auctions or video-internet auctions only, picked up some of these heavier calves. Does this mean many traditional in-person-only auctions may be willing to keep an online option? Maybe. Only time will tell. Some buyers, and some sellers, will go back to attending auctions in person only.

Market News uses a wide cross section of trade (buyers, sellers, order buyers, auctions) to establish market reports. Some sales data may not be included in a report because the sales do not fit within reporting guidelines. Brahman cattle in Iowa, is an extreme example. Direct trades are likely the most difficult to capture. A reporter needs to know about a transaction. Reporters collect information remotely through phone communication and email correspondences with cattle dealers, backgrounders, feedlots and producers.

Reporters periodically make contact visits to verify information. COVID-19 complicated those visits in 2020. A market reporter’s primary goal is to reflect accurate market conditions. Volume is an important part of market conditions, but is not be the primary goal in market reporting.

Schulz is an Iowa State University Extension livestock economist.