Leveraging the Price Slide: A Marketing Opportunity Amid Record-High Prices

The market price discount, commonly known as the price slide, refers to when lighter-weight calves command higher prices per pound compared to heavier calves of similar type and kind. In general, this occurs due to diminishing marginal feed efficiency, or the incremental rate at which an animal converts feed into weight gain. As with any specie, nutrient utilization is most efficient earlier in an animal’s life, making weight gain at heavier weights more costly. Although heavier calves generate a larger value per head, the resulting discount dilutes that value, making the additional weight worth less on a per-pound basis. The “slide”, illustrates the inverse relationship between price and weight—a relationship that is not constant relative to price fluctuations. The slope of the price slide varies from year to year and across months due to the seasonality of feeder cattle supply and placement demand. However, it is highly correlated with corn prices, a key feed input and major factor in feedlot cost of gain. The price-weight relationship at specific weight classes conveys important market signals.