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Angus calves at auction bring record premiums

Record-high calf prices last year spelled good news for most U.S. ranchers, but there was an extra bonus for many of them.

That came in the form of record-high premiums paid for Angus calves at auction compared to non-Angus contemporaries, as reported to Certified Angus Beef LLC. The database on more than 300,000 calves sold in 13,794 lots at 10 markets since 1999 is part of the company’s “Here’s the Premium” project.

“Everybody who sold calves enjoyed the market response to supply and demand, but some may not have noticed the price differentials still held,” said Steve Suther, the CAB director of industry information who initiated the study.

Data from nine cooperating auction markets last fall showed the all-time high Angus premium in absolute terms. That was $5.30 per hundredweight for the combination of 504-pound heifers and 511-lb. steers sold in 660 lots.

On the steer side, it was $6.20 per cwt., down 8.6 percent from the 2008 record, but 17 percent above the 2006 figure. Meanwhile, the heifers set a 14-year high of $4.40 per cwt. above non-Angus.

As always, market managers reported the winning bids on known Angus-based genetics from 450 lb. to 550 lb., noting breed type, sex, weight and price versus non-Angus steers and heifers, keeping muscling, frame and other non-breed factors constant. They also note any preconditioning, management or sale factors.

Kansas State University agriculture economist Kevin Dhuyvetter, who has analyzed the data from the start, says lots identified as weaned or vaccinated earned premiums of $7.36 per cwt. compared to other lots, regardless of breed type.

Premiums for Angus calves have grown in a near linear trend since 1999. Dividing those 14 years into two equal periods shows a per-head Angus steer advantage growing from $21.21 in the first seven reports to $31.40 in the four reports representing the last seven years. Angus heifers moved up from $15.05 to $19.72 per head in those same averages.

“I’m not sure if there’s a replacement heifer phenomenon or simply that as prices in general have increased, the premiums associated with Angus genetics have increased in absolute terms,” Dhuyvetter says.

“It does stand to reason that if people start rebuilding herds, we would see a narrowing of the steer-to-heifer spread,” he adds “If Angus calves continue to bring premiums, then Angus heifers that might be going as replacements should be gaining in value to non-Angus heifers.”

People raising Angus cattle have seen ever-better maternal traits and weaning weights over those years, Suther said. “If they followed the calves’ progress through the feedlot, they saw an uptrend in their ability to gain and grade, and the carcass premium rewards are on the rise, too.”

That could explain data from Superior Livestock video auctions since 2000 showing combined steer and heifer Angus premiums have dominated values by breed type for that similar span of time.

Data from 13 years of marketing 4.9 million cattle in 40,799 lots on the leading U.S. video auction shows a clear dominance of Angus genetics. Most of the calves sold on the video include data on breed type, which has always had an effect on sale price.

In the first two years, the lowest premium above the Brahman-cross base were English and English crosses.

Since 2002, the breed category with the smallest premium over those “cattle with ear” has been English-Continental crosses.

In 12 of 13 years, and including 2012, the breed category with the highest premium was “Primarily Angus.” The only year it did not show the highest premium was in 2011, when it was edged out by black and black whiteface calves.

Data analyst Mike King began to break out and quantify those reported breed type variables in 2000.

He set strict guidelines to classify cattle, based on seller description, into one of five categories: mixed English or English crosses, English-Continental crosses, primarily Angus, black or black-whiteface, and cattle with “ear.”

Brangus calves would fall into King’s latter category. On the other hand, a pen of mostly black English calves with less than a 90% share of black individuals only qualified as English/English crosses. Lots of black or black-whiteface calves had to be at least 90% black hided, and primarily Angus calves had to be described as at least 90% Angus by the seller.

The spread showed its narrowest range ever in 2012, but primarily Angus calves sold at a premium $4.40/cwt., which was 55 cents above the black and black whiteface, and 51 cents above English and English cross premium.

Date: 4/29/2013

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