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As we enter the full swing of the fall run in Western Canada, beef cattle producers need to think about the right time to sell their calves while also considering the different marketing avenues, whether it's online, an auction mart, or direct from the ranch.
On top of these decisions, producers should fully understand certain terms to avoid potential income loss.
Because cow-calf producers usually only sell calves once a year, these terms can fall out of memory and should be reviewed.
One important term for many producers is price slide.
A price slide is established when forward contracting calves to a buyer ahead of a specified delivery date of those calves.
This enables the buyer to offer a price prior to the actual weighing of the calves.
The buyer and seller will negotiate on a delivery date, shrink, slide, and the expected average or base weight of those calves at the time of delivery, and a base price per pound.
The currently weak feed grain market has created conditions for strong calf prices and an increased risk for the future fed cattle market.
Thus, the price slide has widened substantially for forward contracted calves.
Where 20 slides have been the recent standard,
This year, it's not uncommon to see a 40 slide and in some instances up to an 80 slide, some of the largest price slides seen in history.
These numbers refer to the dollars reduced or added per 100 weight from the originally negotiated base price.
On a per pound basis, these numbers become cents.
If calves are delivered heavier than the originally contracted weight, the price slides down to accommodate the extra pounds.
If calves are delivered lighter than the originally contracted weight, the price slides up.
Though sellers should be aware that this slide margin will still trigger even if the calves aren't a complete 100 weight over or under that contracted weight.
Instead, the slide is reduced percentage-wise to make up for smaller weight differences.
It's important for beef producers to understand the difference in final price that their negotiated slide will result in.
It's also helpful to keep track of what slides are being offered in a given season, even if you aren't forward contracting calves.
For example, the difference between a calf contracted at 625 pounds with a 40 cent slide coming in at 600 pounds versus 650 pounds is either plus $100 or minus $95, respectively.
You can use those numbers to gauge whether it's worth keeping your calves a bit longer to put more weight on them, or sell them earlier to save on your cost of feed if the markets aren't compensating well enough for heavier calves.
More information or examples of calculating price slide, can be found on the Sask Ag Now webpage.
For any other livestock related inquiries, contact the Agriculture Knowledge Center at 1-866-457-2377.