Q:

How are heifer prices determined?

A:

Quick Answer

Producers determine the prices of heifers by considering the strength of the forces of demand and supply in the market. The Department of Agriculture's Agricultural Marketing Service collects and disseminates information on the sale price of livestock. This information allows producers to determine the price of cows and heifers.

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How are heifer prices determined?
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Full Answer

Cattle producers usually sell their cattle to packers and slaughter houses. In determining the sale price, the producers consider the cost of raising the heifers and the prevailing market value of livestock. The forces of demand and supply determine this market value. When the market demand for heifers is high, the price of heifers rises. A low supply of heifers in the market also increases the value of the livestock.

The price charged on a heifer on a given day largely depends on the quality of market information available. Cattle producers suffer competitive disadvantages when packers hoard information on the fair market price of cattle. The Department of Agriculture established the Agricultural Marketing Service to ensure that all producers remain updated on the daily prices of livestock and farm produce. By comparing the daily prices of heifers across the country, the Agricultural Marketing Service is able to issue the average national price of heifers, which guides the sale and purchase of livestock.

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