The Importance of Market Reports

Anticipation. It’s one of the most important aspects of farming and ranching. Knowing the weather forecast is key to making planting, spraying and harvesting decisions. Although it is out of our control, we can make informed choices by paying attention to signals that indicate what storms might be heading our way. The same goes for commodity markets. Market reports are a tool to help us make informed decisions and put ourselves in the best position to succeed. 

What do market reports do?

Market reports help educate producers on a variety of information regarding supply, demand, price and other performance data. They add transparency to the industry by helping show what commodities are worth. This data can be used to inform price negotiations, marketing decisions and the performance of a producer’s commodity. Ultimately, they help our industry ensure integrity exists when transactions take place so that producers aren’t taken advantage of by other industry players. 

How can I tell if market reports are reliable?

Mistakes happen. All a person can do is try to make the best decisions given the information at hand. But that doesn’t mean there isn’t an obligation to make sure the best information is obtained. At the federal and state level, we have a variety of market reports that are produced with integrity. USDA and VDACS both work hard to report accurate information with adequate descriptions. The most important thing is to, first, consider the source of the report. Secondarily, the report must be placed in context to determine how reliable it is. On the cattle side, a report from a sale without many cattle should not be given as much credibility as a sale with a more robust offering. One thing I like to do is to compare individual sales to our state’s weekly and monthly averages to determine how in line it is with others. Our feeder cattle grading system (and the great job our graders do) allows us to compare prices for similar cattle across the state. It is important to compare apples to apples!

What market reports should I be looking at?

It certainly depends on the commodity that you are raising/growing. Because the cattle industry is what I know best, I’ll focus on a few of my favorite reports here.

• VDACS Graded Sale Reports. Prices from every state graded sale are recorded and reported by VDACS employees. Those reports are typically available less than 24 hours after a sale. If you don’t see a sale listed you are curious about, it is likely because the sale is not state graded. It could be a barn-graded or regular sale. Market News-Livestock-Virginia Graded Feeder Cattle Sales
• VDACS Historical Feeder Cattle Prices. These reports capture all the state graded sales that took place on a monthly basis and report monthly weighted average prices for each weight class of steers and heifers. There are some great charts that VDACS maintains with all of the monthly graded sale data. These can be used to look up historical prices and seasonal trends. Market News-Livestock Virginia Livestock Historical Prices
• VDACS Market News. Here is the place you can find commodity reports for a variety of Virginia crops/commodities. Virginia Market News-Serving Va Agriculture for Over 100 Years
• USDA Feeder & Replacement Auctions. These are reports for national feeder and replacement auctions organized by state. Feeder and Replacement Cattle Auctions | Agricultural Marketing Service (usda.gov)
• CME Feeder Cattle Index. This is a 7-day weighted average of eligible graded steers from a 12-state region in the Midwest. This report is typically considered to be what an 8cwt steer is worth on the national market. It is used to determine the ending value of Livestock Risk Protection feeder cattle endorsements. One important thing to note is that Virginia cattle prices are typically lower than the CME Index due to the transportation discount buyers factor in for having to truck cattle longer distances to feedlots. Here is a link to learn more about the CME Feeder Cattle Index: http://www.cmegroup.com/trading/agricultural/files/understanding-cme-feeder-cattle-index.pdf
• AMS 5-Area Weekly Weighted Average. This weekly report captures prices for eligible negotiated fed cattle. It is important, even in a state that does not have many fed cattle, because the price for fed cattle directly impacts what feeder cattle are worth. It is also used to settle Livestock Risk Protection policies for fed cattle. Publication | 5 Area Weekly Weighted Average Direct Slaughter Cattle | ID: bn999680j | USDA Economics, Statistics and Market Information System (cornell.edu)
• USDA Cattle Contract Library. A large number of cattle are sold through “Alternative Marketing Arrangements” (AMAs). USDA has created a database to publish information related to those contracts so that producers can learn what cattle and programs are bringing premiums. Cattle Contracts Library Pilot Program | Agricultural Marketing Service (usda.gov)
• USDA National Boxed Beef Cutout. This report is important because it directly impacts what packers are willing/able to bid for fed cattle. There is a strong correlation between the price of fed cattle and the reported boxed beef cutout. Publication | National Daily Boxed Beef Cutout & Boxed Beef Cuts - Negotiated Sales - PM | ID: 9880vq97f | USDA Economics, Statistics and Market Information System (cornell.edu)
• WASDE Reports. Monthly WASDE reports shed light on average seasonal commodity prices obtained by producers throughout their marketing year. This report also has supply and demand insights available for a wide variety of commodities. The calculated stocks-to-use ratio is highly important for several commodities. WASDE Report | USDA

What should I keep in mind when looking at these reports?

Most every cattle producer believes they raise the best cattle. That is not to say cattle producers are arrogant or self-obsessed. But we all take a lot of pride in what we do and put a lot of time and effort into breeding quality stock. If you look at market reports and believe your cattle are not bringing what other cattle are throughout the state, you have a variety of options.

1. Put them through the dirt. By that, I mean sell them competitively. Auctions exist to promote price discovery and can often lead to higher prices (although commissions do exist). 
2. Participate in a value-added program. For feeder cattle, the Virginia Quality Assured (VQA) program has a tremendous track record of success since its inception in 1997. Other value-add opportunities exist as well. 
3. Sell at a different time of year. Use market reports to see when we have historically higher prices. 
4. Look at retained ownership/direct marketing opportunities.
5. Improve your genetics/get an unbiased third-party opinion. As much as you might think of them, the industry might put a different value on the type of cattle you raise. Use industry resources to improve the quality of livestock you are producing. 

Where can I access these reports?

Thanks to a grant and ongoing support from the Virginia Cattle Industry Board, the Virginia Cattlemen’s Association has launched the VA Cattle App as a one-stop shop to access many of these market reports and other industry information. Make sure you download it from your App Store today!

You can also access multiple reports on the Knowledge Center’s Ag Industry News page, or sign up to receive the KConnection newsletter for market reports, ag news, local events and blog articles.

Customers of Farm Credit of the Virginias have exclusive access to the Member Portal. The Member Portal contains market news for cattle along with cattle nutrition, breeding and genetics, grazing management and marketing and selling live cattle and/or beef resources. Reach out to your loan officer or branch office for login information.

Author:

Brandon Reeves, Executive Director of Virginia Cattlemen’s Association

breeves@vacattlemen.org

540-280-8805