Slides can have many uses in marketing cattle.
Feeder-cattle prices depend on the weight of the cattle, with lightweight cattle typically having the highest price per pound (or hundredweight) and lower prices for heavier cattle. Not only do prices vary across cattle weights, but the size of the price adjustment depends on the weight of the cattle. Price slides are a measure of the amount of price adjustment as weight changes from a base weight.
Price slides have a number of uses, the most common of which is adjusting the price of forward-contracted cattle if actual weight is different from the specified base weight. Price slides are also useful for producers to evaluate price changes for the weight gain of calves in a preconditioning or short backgrounding program, or perhaps the additional weight from creep-feeding calves.
Prices slides are often stated in terms of traditional rules of thumb, e.g., a 10¢ slide on calves or a 6¢ slide on yearlings. The price volatility of recent years has shown that these rules of thumb using absolute levels are inadequate to accurately capture price adjustments over a wide range of price levels.
Price slides depend on the price level and thus are more accurately stated as a percent of the base price. Table 1 shows annual average and monthly average price slides for selected weights of steers and heifers. It is apparent that price slides are not only different for different weights, but also vary for steers and heifers and at different times of the year.
As an example of how to use these price slides, suppose the base price of 575-pound (lb.) steers is $150 per hundredweight (cwt.). The annual average price slide is 6.7%, which results in a price adjustment of $10.05 per cwt. If the steer actually weighs 30 lb. more or 605 lb., the price would be adjusted down by $3.02 per cwt. ($10.05 × 0.3 cwt.) to $146.98 ($150-$3.02). In this example, the price slide is close to the traditional 10¢ slide. However, while the percent price slide is constant, the absolute price adjustment depends on price level. Thus, the 575-lb. steer would have a price slide of $8.04 per cwt. if market price were $1.20 per cwt. or $12.06 per cwt. if the market price were $180 per cwt.
It is evident from Table 1 that the percent price slide for heifers is generally lower compared to steers for the lighter weights, but is roughly equal to the steer price slide for heavy feeders. It is also apparent that price slides for both steers and heifers vary across months. Price adjustments can be fine-tuned using the monthly average price slides. In general, price slides are relatively constant across months for lightweight calves and for the heavy feeders.
Table 1: Feeder Price Slide (Percent of Base Price), Oklahoma Combined Auctions, 2000-2016
|Weight (lb.)||Weight (lb.)|
Price slides in the middle feeder weights (575 lb.-725 lb. for steers, 550 lb.-700 lb. for heifers) have wide variation across months. For example, 675-lb. steers have an annual average price slide of 4.0%, which varies from 8.2% in March to essentially zero in October.
Price slides expressed in percentages adjust automatically and appropriately to changing market prices. Understanding price slides can help producers improve cattle marketing and evaluate production alternatives for feeder cattle.
Source: American Angus Association