xt7qnk362r10 https://exploreuk.uky.edu/dips/xt7qnk362r10/data/mets.xml   Kentucky Agricultural Experiment Station. 1937 journals kaes_circulars_003_303 English Lexington : The Service, 1913-1958. Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Circular (Kentucky Agricultural Experiment Station) n. 303 text Circular (Kentucky Agricultural Experiment Station) n. 303 1937 2014 true xt7qnk362r10 section xt7qnk362r10 ea
Extension Division
I-mc THOMAS P. COOPER, Dean and Director
r\\' to
Jnsis- -
aprt _
endcr Lexington, Kentucky
iicces. May, 1937
_ Published in connection with the agricultural extension work carried on by co-opera-
, tion. of the College of Agriculture, University of Kentucky, with the U. S. Department of
· Agriculture, and distributed in furtherance of the work provided for in the Act of Con-
i gress of May 8, 1914.

` 1

 Circular N0. 303
Price and Market Suggestions for Kentucky Stockmen
Livestock production is largely for a future market and there-
fore stockmen are constantly faced with the problem of estimating
price changes months in advance. Prices often change widely be-
tween the time a female is bred and the time the offspring is ready
for market, so the profitableness of the enterprise depends, to some
extent, on the producer’s ability to forecast future price trends. y
His estimates of the future market level are the basis for decisions
relative to the time of breeding, the quality to prepare for market,
his purchases of feeder stock, and whether to increase or decrease
his breeding herd. Many influences cause prices to change from
day to day, month to month, and year to year, and while it is im-
possible to predict to the cent what prices will be a month or a year
hence, we have learned that certain price changes occur more or
less regularly. Other price changes due; to unusual occurrences.
such as drouth, strikes, etc., are not periodic in nature and can be
forecast with less certainty. This bulletin is intended to provide
information regarding usual price movements with the hope that
it will assist stockmen in planning their production and marketing
of livestock.
l)z·nmn¢I. Every stockman is familiar with the fact that live-
stock prices constantly fluctuate, but many are not familiar with
the causes of these changes. lt is true that prices are set by the law
of supply and demand, but this is an inadequate explanation of
the reason why prices behave as they do, and is of little value to a
farmer planning his future production and marketing.
The demand for livestock is very closely related to the demand
for dressed meat which in turn depends largely upon the amount of
money the housewife has for buying meat. This is well illustrated
by the following chart (Figure 1) showing the relationship between
consumer income and the income to farmers from the sale of meat
animals. The demand for livestock products moves upward or
downward as the incomes of industrial workers move up or down.

4 Kentucky Exlension Circular N0. 303
The price of any one kind of meat would not be likely to follow
changes in consumer incomes so closely. If the supply of pork was
small and pork prices high, and beef supplies were large and prices
low, many housewives would increase their purchases of beef and
IOO ,` _,* \
_,· ~--- , \
' \
’ \
90 ‘\
co \ t [acme gt/rdusfr/al war/rem
/2mme fm sales qlmeafan/mal.? I
70 /
\ ’
\ xr
60 \ I,
‘ 1
\\ II
50 \ I
1924 'ze *2e ‘3>0 *52 ’5‘l *56
Fromm 1. The index of the income from sales of meat animals and the index of
the income of industrial workers. 1U. S. D, A.» The income to farmers from the sale of
meat animals closely followed changes in the income of industrial workers during the
period from 1924 to 1936. *
curtail their purchases of pork in order to get the most pounds ol
meat for their money, but there would probably still be enough
housewives willing to purchase pork to keep pork prices high in
relation to beef prices.
ll` we assume that changes in the amount ol money that will be
spent lor meat lollow closely changes in the national income we i
have a measure ol demand for all meat. \*Vhile there is some vari- l
ation from month to month in the spread between the price ol live- Q
stock and the retail price ol meat products, these prices are largely ,
determined by consumer buying power and market receipts of live- i
stock (see Figure 2). Changes in the relationship between the prices
of various kinds of livestock will depend largely on the available
market supplies.
Cyclical clmngcs in prices of livestock. Price changes are ol
three distinct types: cyclical, seasonal and day to day fluctuations. -
Cyclical changes occur both in prices and in production of livestock i
Cycles in production arise from ellorts of large numbers of pro-  

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 Pricc and Market Suggestions for Kentucky Slockmen 9
an extent that large numbers of breeding animals were marketed
and the production cycle was headed downward more rapidly than
would have been expected under normal conditions. Breeders who
have a thoro knowledge of the causes as well as the direction of such
periodic movements are in a better position to adjust their produc-
tion to take advantage of shifts three or four years hence.
t6·i0 t
I ` s `
r I ` ` `
IO `_` —-_- ",» 7/., "_
‘* ..
-n n -— N . ` I
5S Dll
to ia 1
Common /
is il
the · _
tttle I I I I I I I I I I I I
will O
>rit‘e Frourzs 6. Average seasonal price movement of beef steers at Chicago (1926 to 1935
averagel. Prices of better grades of steers ordinarily reach their peak in late summer
,l` ttl or early fall, when supply is limited and demand is strongest. The seasonal low is us-
ually reached in late spring when the supply is plentiful. Prices for the lower grades do
got lshow so great seasonal movement but tend to be higher in the spring and lowest in
ie ate fall.
ls to nornieally to linrnislr il mucli higher percent ol` the leed require-
gnire ments ol. common and medium grades than lor better grades ol
ullll Ulllllf wllere long heavy leedin ‘ ol rrain is ret tlired to lllllli€ tllelll
¤ , E t l
trenl grade choice or prime when marketed. lnasntuch as ttonnnon grades
etter ol cattle are in demand for the utilization ol pasture during the
rring suunner, market receipts ol` this class are light during the pasture
s are season and irices are relativelv hi rh durinr the late sirirw and
, t . e I
rmal early summer. Durinr the late summer and earl ‘ lall, when this
class ol cattle is marketed H101`€ freely as pastures become short,

I2 Kenlucky Extension Circular No. 303
prices tend to adjust themselves downward. ln contrast, the bulk Ir
of cattle which are to be finished, go into the feed lot in the fall and I move
are sold as prime and choice cattle in the spring months. Pyicg
The same reasoning can be used to explain the seasonal move- _]anu;
ment of other market grades of cattle. A study of the seasonal In ye
movement of cattle prices is of particular interest to cattlemen who norm
are in a position to feed some grain in addition to pasture. The each
wide variation in price, in the fall, between good and common
grades of cattle, indicates the advisability of feeding enough grain DONT;
to enable the cattle marketed to be graded good or better. Corn .
mon grades are not in demand in the early fall and this type ol  
cattle should either be finished to a higher grade or held to a later · I ll
market. r
The seasonal movement of prices paid for the various grades ol [0
livestock, as shown in Figure 6, was arrived at by averaging the
corresponding monthly prices of each grade l`or each year during q
the period 1926 to 1935. lf we were to plot the prices for any one C
year we would lind some variation from the average. ln fact the
high or low point in prices is seldom reached on the identical dar
in two successive years but the same general trend occurs year after irgrrcglc
year. lf a person is familiar with the general seasonal movement ol gudrrigi
prices he is then in a better position to judge the trend of prices in Eggs;
any season in light of the number of cattle on farms, number of (Till-
tle in the feed lots and the available supplies of feed. is
T/ze Ejfccl of Large and Small Corn Cro/Js on Culllc Prices. The lll K
amount of feed grain available for feeding livestock has a very del- I P"‘)‘l
inite effect on the seasonal movement of cattle prices. \Vhen ll y <‘h<>ii
comparison of beef—steer prices for periods following large antl y Oclf
small corn crops is made, a wide variation from the normal price   (lol)
movement is found (Figure 7). ln preparing this chart, live years   H I5
when corn crops were below average and live years when they were   "l_C
above average were selected and the respective averages chartetli · '"'ll
Instead of using the calendar year, as was done in preparing charl~ law
on the seasonal price movements for the various market classes, il lll ll
period from August of the year with the abnormal crop to October _"
of the following year was used. This period was selected so as te ~l llml
show the ellect of the size of the corn crop on steer prices as soon zn   `ulll
the abnormal crop was reflected in market receipts of corn. The l [ml
prices used were the average for good grade steers.   full

 I’ricc and Market Suggestions for Kentucky S/ockmcn 13
lk In years following small corn crops the seasonal downward
id V movement of prices during the spring tends to be delayed and the
price level during the fall usually is higher than in the previous
rc. ];mtiary, with the trend of prices upward during the entire period.
il] In years fOllOWlllg l2ll`g€ COl`ll CYOPS, l)l`lC€S tend to 1`€C€(l€ IllOl‘C tllilll
*10 ]]()l`]]1Hl (lllflllg _]2lllUZ1l`y 3ll(l F€l)l`Ll2ll`y 2lll(l 2ll`€ llslllllly l()W€1“ (lllrillg
hc eaell 1]'10l`l[ll tllllll lll [llC SZ`llllC lll0I”l[ll of tll€ l)I‘€ViOl1$ y€2ll`.
in I
, Dollars
Iz Years rj sm0?/ com any
nr .
ol   _ `
Ig `   - ’ s gl
ttl · ~
l `
l \
    \\" ---____¢"--__`
hc "`__,»---"
‘ 9 Years Q large corx crc/0
1 O
dl Frcunz 'I. Prices of good-grade beef steers at Chicago following years of large and
[gr small corn crops. The size of the corn crop alters beef prices the following year. Large
_ corn crops result in an increase in marketings of fed steers and small crops reduce the
ol number of fed steers to be marketed the following year. Following small corn crops,
_ fed—steer prices trend upward and usually reach a high point late the next fall. When
in the com crop is larger than normal, prices fall more than usual during the succeeding
spring and show but slight recovery the remainder of the year.
fill- .
;\ccording to a study ntade by Homer   Henney. and reported
rho in Kansas Agricultural Experiment Station Bulletin 258, "The corn
icy. . produced in the eight major corn-belt states affects the number of
I i, choice and good steers slaughtered at Chicago in September and
my October the following year .... An increase of l0 percent in a corn
.· .. ; cro 1 com yared to the yrecedin ` cro > has resulted in a > yroximatelr
itt y t l l ,
can l a 15 to 20 percent increase in the number of fed steers slaughtered
UC ; at Chicago the following fall. Or, in other words. an increase of lll
ledi · million bushels of corn results in an increase of approximately
mt l·5(l(l fed steers slaughtered at Chicago in September and October
. . ofthe followin]>l}' Zltld in demand for that grade. During the spring, demand
[hc E f"l` <`¤ttlc to go on pastures usually is strong. but farmers having
y f€€‘_\ .   ·” \
5 `*T.`——-_-»r?"{·~-¤e·---·‘ ·
0 use
Fmum: 9. Monthly receipts or cattle by markets, for deliveries originating in Kv¤· ()()(
tucky 41932-1935 average}. The majority of Kentucky cattle are marketed as grass-lill-
with the bulk of marketings during September, October and November when pasture l>€· lar
comes less plentiful.

Price and Mar/cel Suggcslimi.s· for Kenlucky Sloc/amen l5
tv e- hires durinr the ear inav be affected bv the trend of fat-
. ect Cl ] i i ,
of cattle prices, changes in production and marketing, as well as by
nt changes in the general price level. Drouth in either the range
country or the corn belt may also cause variations from the normal
Z5 .
/7»/e Cc/7/Ta?   /1//ar/(cf.; —·—-—
firzcmnafx -——
Z0 [vu/2}‘V/W6 - ---
[VJNJV/[ZE .........
/·R li-\§;r;>\ "._·_~·.
IO /' _-»7·' \>  
,-T¥-’?·‘ ‘¤\  
rom 5   ____    
lur- `'`'‘`
4 0 . ,
lcf nw. MAR. MAY Jutv sm Nov.
i' Fmum: 10. Monthly receipts of calves by markets. for deliveries originating in
ol Kentucky t1932-1935 average). The peak of marketings for central Kentucky and Cin-
ciniiati comes in May, while at Louisville and Evansville it comes in August, tData from
which Figures 9. 10, 16, and 24 were drawn were gathered by C. D. Phillips of the Ex-
periment Station, Lexington, Kentucky,1 The five central Kentucky markets are: Bour-
bon County Cooperative Livestock Association, Paris; Boyle County Stockyards Company. -
Danville; Gentry-Thompson Stockyards Company, Lexington; Lexington Livestock Coin-
mission Association, Lexington; Winchester Stockyards Company, Winchester.
seasonal price iiioveiiieiit. lt beconies apparent. then, that a knowl-
edge of the normal trend of prices for feeder cattle may he of great
help in determining the time to buy, but it should not be followed
blindly. This knowledge must be supplemented with up-to-date
inforniation on conditions tliruout the cattle industry.
liarly in the filth century Kentucky was one of the leading states
in the production of hogs and as late as 1850, Kentucky ranked
second in number of hogs. This high level continued until about
l80E% when a rapid decline occurred. During the period from l802
to l00~l. the number of hogs in the state dropped from over 2.300,-
  000 to less than I.000,000 head. This tremendous reduction was
`€ b°" léitgeli due to increased competition that canie with the settlement

16 KF}?/Il(`}€)’ Extension Cirrular N0. 303
2 as of 1I
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§·'§ wnth
O »-· .
N7 ago smu
°“¤ feed
gg (ou}
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Q :5
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E 3 den
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 1 "‘!|?
Price and 1\/Izzr/tm Suggc.sIi0n.s for Kentucky Stocltmen l7
`ertile lands now known as the corn belt. Kentucky found
o t1e r
it diflicult to compete in hog production with tl1is newly settled
area where corn could be produced more cheaply. \\’hile the area
·` in the state which is >lanted to corn remained rather constant
vs it 1
·` te l88(l. an increasin ro Jortion of the’ corn was utilized in
smc .
l`eeding cattle. sheep and poultry. The principal hog producing
counties are in the western part of tl1e state where wide river bot-
toms furnish a soil well adapted to the production of corn. Hen-
derson county leads in the production ol` both coin a11d hogs.
I6‘1O IQOO ‘ID ‘2O ‘3O ‘55
Fmmu: 12. Number of hogs on farms in the United States on January 1, from 1890 `
to 1937. The major peaks occur at intervals of approximately 6 years.
I’r0duc/{rm Cycles. Figure l2 shows tl1e number ol` hogs on
farms in the United States, lor tl1e >eriod from 1890 to l9E$7. The
number ol hogs tends to increase lor two to three years and to de-
crease lor a like >eriod, causin ¤‘ c cles of hve to six years in dura-
tion. l`hese c ‘cles oli >roduction are brouvht about bv mass
l D r
changes in production in response to prices. \‘\’hen prices are rel-
atively high the number ol sows kept for breeding is increased and
as the ollspring reach the market in increasing numbers, prices de-
cline. breeding is curtailed and the cycle is completed.
I’>‘icc C)·cIc.r. Figure I3 shows the price cycles and the average
\‘alnt· per head on _lanuary l. for the period, lS9fl to l93li. This
chart shows both the actual value per head and the deflated valine
}>01` head. The deflated value, represented by the heavy line. shows
the value ol hogs alter a correction has been made for changes in »

18 ]\r(’}1/l((`]t’}‘ ExI<·11.sio11 Circzzlrtr No. 303
the general price level. The deflated value was arrived at by divid- mm}
ing the january 1 actual price by the index number of prices of all mm
commodities for the (jOl`l`€S)Ol1(l1l1(" date. B it deflatin the value,
fluctuations due to changes in the price level are largely eliminated Z
and the resulting line shows what the probable movement of prices Z5
would have been if the eneral >rice level had remained at the
level that obtained during the period, 1910 to 1914.
I I5
2O 1 X
' \
1 ` to
/7cft1a2 Pr1c¢=\_ J .‘ ,‘
I5 1 ` ,’ "
‘ t 1
I x 1 "’\ 5
1, ‘ ’\ I \ I
iO 1 V \' 1 1
\\ \l ‘ I
//\\` -I/\\’I O
5 ll` x Il / ` II
~ , ` _ - - » .
De}/ered Pr1c0
0 ‘ 2.123%
1890 IQOO `IO `ZO ‘50 ‘55 Jmlu
Fmum: 13. Average farm value per head of hogs on farms in the United States.
1890 to 1936. Major peaks in price cycles occur at intervals of approximately 6 years.
High points in the price cycle come at the time the production cycle is near its low point. _
These cycles are due to farmers alternately producing too many and then too few hogs to larr
meet market demand at a uniform price. _
. ings
A comparison o1` Figures 12 and 13 shows that the price and Hm
production cycles are ol` about equal duration. The high point in Pm
the price cycle comes at about the same time as the low point in the
production cycle and vice versa. As in the case ol cattle cycles, hog deli
cycles are not always ol` equal length or depth, but knowledge ol lar;
the reaction ol` prices to changes in the number of hogs and the litg
length ol` time necessary for the mass ol` hog raisers to adjust their mo
production can be used to advantage by the average farmer in cle:
planning breeding and marketing operations. ing
Smsomzl IH.?/1`l[/Il/1()}I of ]'l(l}`}`OZLlt}l_QZY uml ll[(ll`/H?/l·}Ig`.Y in //1c lm
Uni/1·1l S/alex. The seasonal distribution ol` larrowings largely de- md
tcrmines the seasonal movement of hoes to market. Almost twenty- iw
U I ol`
live percent ol` the year's litters are larrowed in April. The peak ol
marketings comes eight or nine months later. The peak ol fall lm
[arrowings usually occurs in September with the secondary peak 01

]>;·i(·(e and Market SIlg`g`('.$`/li()}I.$` for Ken/uc/cy Stor/mimi IQ
tl. mmkcrjtqgs eight months later. Figure lil illustrates the seasonal
tll nature oI` Iiarrowings.
id Z
~ I5
Frcuaz 14. The percentage of farrowings of hogs by months, for the United States
{1931-1935 average. B. A. E. - U S. D. A.1 Approximately 25 percent of the year‘s litters
are farrowed in April. This results in a peak in marketing in the following December or
xtes. _ _ _ _
ms. ln Ixentucky, where winters orthnartlv are not severe, inanv
Jini. _ _ ’ _ _ _ '
;s to Iarmers can manage their herds so as to avoid the peaks ol Iarrow-
, ings and have a much better chance ol disposing ol` their hogs at a
md time when tnarketings are light and thus avoid the seasonal low
in price periods.
the Swmnizzl l’ricc C/uoigzcr. The price ol hogs tends to Iollow lairly
how tlelinite seasonal chan res. This seasonal movement oli >rices is
B t.
r ol largely in response to volume ol marketings and is illustrated by
the 1·`i "lu`e I5. showing the avera<¤‘e irice ol` average weight hors bv
¤ h h br D I ,
ieir months and the percentage distribution ol marketings. This chart
· iu clearly shows the market advantage that may be gained by market-
ing hogs in months when receipts ordinarily are light. lt has been
HH, pointed out already in this circular that seasonal movements ol
dC_ luilrkelings and price do not always Iollow the same course each
mv }‘C&u` but that knowledge ol the normal movement plus inlormation
k Oy ol current conditions should greatly aid Iarmers in planning their
[HH production and marketing.
k ,y,[ lt will be noted that the price ol hogs tends to reach a seasonal

20 Kentcuc/cy Extension CI·l`(,"lll(lI' N0. 303
ieak in the earlv [all, usuall it in earlv Se tember, before the heavy -‘ -.
( l , , put
shipments o[