Cheaper grain, great performance and premiums in deferred futures have led to excessively heavy cattle shipping out of northern feedyards, and the trend is affecting prices, according to University of Nebraska economist Darrell Mark, PhD.

In the weekly “In the cattle markets” column, Mark says that on an annual average, Nebraska slaughter cattle trade at prices about 53 cents lower than those in Texas and Oklahoma. The price differences fluctuate seasonally though, with northern cattle bringing premiums at some times of the year.

The spread typically widens during fall and winter, with southern cattle priced higher than those in the north, and that seasonal trend has kicked in this year, even more prominently than usual. Mark says the spread dropped from a northern premium of $0.52 per hundredweight during the second week of August to a northern discount of $1.86 per hundredweight during the week ending Sept. 19. This, he says, is about a $1 per hundredweight weaker spread than normal, and below the minimum since 2004. Part of the reason, he says, relates to shorter supplies of market-ready cattle in the south, but weights are a major factor, with packers discounting large numbers of heavyweight cattle.

Read the full article from KansasStateUniversity.