Cow-Calf Certification Practice Exam

What happens to cattle prices as feeder cattle weights increase?

1. Prices increase per cwt.

2. Prices decrease per cwt.

3. Prices remain constant

4. Prices fluctuate unpredictably

The correct answer is: Prices decrease per cwt.

As feeder cattle weights increase, prices generally decrease per hundredweight (cwt). This trend occurs due to several market dynamics. Heavier feeder cattle are typically perceived as less desirable for many buyers, particularly if they are nearing finished weight. Feedlots and producers may prefer lighter cattle that have more potential for weight gain and improved feed conversion ratios, leading to better overall profitability when they are eventually sold for beef. As the supply of heavier feeder cattle in the market increases, the competition among buyers can diminish, putting downward pressure on prices. Additionally, buyers are often looking for optimal purchasing opportunities; therefore, they may only be willing to pay higher prices for lighter weights that are expected to put on weight efficiently and yield a greater return when finished. Moreover, the seasonal trends and inventory levels will also influence pricing dynamics, as heavy feeder cattle may accumulate during specific times of year, exacerbating these downward price pressures. Understanding these market behaviors, therefore, highlights why an increase in feeder cattle weights tends to correlate with a decrease in prices on a per cwt basis.