What are you planning for your beef herd with record prices?

[justintime]

I don't think any of us have ever seen prices like we are presently seeing. Last week an Internet sale here saw  one set of 450 steers averaging 990 lbs sell for $1.98/ lb for delivery direct to an Alberta feedlot. This amounts to an average price of $1960/ head and totaled $882,000 for this set of steers. In this same sale several sets of steers averaging 850 lbs brought $2.12/ lb or $1800/ steer.
In the last 2 days I have had two people tell me of commercial cow/calf pairs selling for $4000. I need to find out where this is happening if it is true. I am also hearing that the fall bred cow sales are almost full now which means there will be many more dispersals in this country again. Two weeks ago, I sold my last two bulls, that I was intending to hold over to sell as two year olds to a guy who dispersed his herd 3 years ago. This guy is actually starting to buy cows again!  IMO, he got this a bit backwards. The two bulls he purchased were late April bulls but both passed the semen test with excellent scores so he wanted them. He offered me $3800 each and I decided I better take the money now rather than take my chances next spring. My calf crop this year is about 80% bulls so I have lots of bulls to pick from for our spring sale.
Our local 4-H regional sale was held yesterday and 152 steers grossed just under $800,000. There was only a small number of steers that sold under $3.00/ lb and they were right at the start of the sale after the Champions sold. Some 4-H clubs averaged over $5/ lb.
So my question is:  what are you planning for your herd? Are you planning to expand, decrease cow numbers or sell out?

 

[dutch pride]

Just a small timer so doesn't really make much difference to me but for the guys that make a living with cows, I would think that these prices are requiring a lot of thought and discussion. I would think it would be pretty hard to sell out with markets for calves at a point where they can make money like never before. On the other hand, if you were thinking about retiring soon, I'm not sure that the value of your stock will ever be higher.

Does anyone think prices are artificially inflated by guys keeping most heifers back to try to rebuild herds after reducing herd size during the past couple dry years?

DLZ

 

[DiamondMCattle]

I work on a commercial operation in North Central Nebraska with an out 15000 acres and 1300 momma cows. My boss and I have discussed the fact of when is the point where he just sells everything and never has to work again. Its an interesting thought to ponder.

 

[beebe]

I am going to sell maybe the bottom third of them and then keep alot of heifers so I have a young herd.  I will use the extra grass to finish more grass fats.

 

[justintime]

Are we getting the highest profits in history or are we just finally catching up after many desperate years?  We were discussing this at our local fair and a neighbor of mine said that he purchased his first new JB round baler off the dealer's lot for $5000 in the late 70s. He said he had priced a new JD baler from the same dealer a few weeks ago and it would cost him $62,000 ( Canadian $). In 1978, I purchased a new Chev 3/4 ton 4X4 truck and a 20' gooseneck stock trailer, on the same day for $7800. A few weeks later we had our production sale and it averaged $1740. It took just over 4 animals in that sale to buy the truck and trailer. The truck and trailer I drive now would cost over $100,000 new ( and I got the truck for $25,000 under list because it was a year old on the lot). Our sale this spring averaged $4145. To buy the truck and trailer it would take over 24 head today. When you consider everything we have to purchase to maintain our cattle herds, I wonder if we actually are making more money in this time of record prices, or are we just not used to actually getting paid properly for our product?

 

[cpubarn]

To those of you with significant sized commercial herds...

I am a corn farmer, I have always believed that $4 corn was the best deal, but $5 to $8 corn destroyed the industry.  It was fun while it lasted, but the corn price here now starts with a $3, and in my opinion will go lower if we get a big crop.  Use these prices to pay off debt, buy a capital improvement or two with cash or buy your spouse something she has always wanted.  As has been already said, cull hard and get young with your herd.  These prices will not last forever...  I think we may have a awhile, but someone will import or grow something to take the place of that expensive beef...

Mark

 

[Barry Farms]

Keep the best sell the rest.  8)

 

[Till-Hill]

To those of you with significant sized commercial herds...

I am a corn farmer, I have always believed that $4 corn was the best deal, but $5 to $8 corn destroyed the industry.  It was fun while it lasted, but the corn price here now starts with a $3, and in my opinion will go lower if we get a big crop.  Use these prices to pay off debt, buy a capital improvement or two with cash or buy your spouse something she has always wanted.  As has been already said, cull hard and get young with your herd.  These prices will not last forever...  I think we may have a awhile, but someone will import or grow something to take the place of that expensive beef...

Mark

I'm young with a wife and baby girl. I have fought the last 15 years of my life to get where I am. Finally have 30 head around and have already sold two cows I have enough genetics in the herd from. If this deal gets much higher I will sell the mature cow herd maybe the bred heifers and possibly the baby heifers and just keep the very top end to flush. I can't be making payments when I can pay off everything and make a down payment on a farm with these girls around. I own a truck, trailer and my cows. Day time job is herdsman on dairy farm where I have been for 14 years and also own dairy cows. I don't want to miss the high of this deal. I've been having a really rough time deciding what to do and when to at least sell the cows that are not the best of the best. We will cash in on the sale barn steer calves this year but when will that happen again? But that's not my target market! How much higher will the average person pay for a burger???

Commercial guy who has always bought junk and cheap whatever he could find for bulls wouldn't even look at a 2 year old 3/4 Hereford bull I bought to clean up custom AI cows last year for $1,500. Talked to him other day he bought a $3,500 Simmental to bred his sale barn cows. He sure thinks it's going to be better next year........

 

[BroncoFan]

I agree that now is the time to seriously cull our herds of the old cows and the cows that just arent quite getting it done. It will benefit the long term also because only those cows that are good producers will be left to pass on their genetics.

 

[BTDT]

I have always held the belief that a sub standard cow cost you more in low income years than in high, so I cull whenever I need to regardless of price.
I have saved back several heifer calves the last 3-5 years, so my herd ranges from 15 year old cows to virgin heifers. I have 3 that I plan to sell at weaning, but I am also offering all my heifer calves for sale. 

I honestly think the prices are just now getting caught up with "city prices" (clothes, cars, furniture, etc).  I overheard a few older ladies talking at the groc store about how rich the farmers were getting due to the high prices.  I smiled and said "The safest, best, and cheapest food supply in the world and you are unappreciative.  I expect to see a cow in your yard so you can raise your own beef." 

 

[Pleasant Grove Farms]

We have been ranching for 40+ years....my dad long before that;
we are not doing anything different than ever.  We are culling the cows we need to, we have
not stopped keeping replacements.  We are perhaps trying to put on some more pounds on those
cull cows; got $1/lb. for a 14 year old cow that had lost her calf; she would have brought maybe $450
total not many years ago.

I do think these prices will stay around for a good long time; as long as ppl keep eating beef they will stay.
I have these observations....the full time farmer who has pulled out all fences and plows up to the road will
never get back into livestock.  there has been alot of grassland that wasn't even suitable for farming that has
been plowed up and as long as the crop insurance and gov't supports stay around, that will not be put back
to grass.  I believe the nation's cow herd, along with being the smallest since records have been kept, is growing
quite old....guys haven't been keeping back their heifers with these prices, they have been selling all heifers and
paying off debt; so even if heifers are now being retained for replacement, will they really expand the national
cow numbers or just be replacing those old cows that got to stay around an extra few years so those heifer calves
could go to market?

 

[aj]

Some people are still in a drought. Sherman county ks is still in extreme drought......but the weather pattern may have changed. I just hope we don't lose to many feedlots or even packing plants with less cattle and small margins. Land prices and pasture rents will be very competitive also. If you totally sell out you may not find a banker to get you back in and capital gains can eat you alive also.

 

[DLD]

I don't think the retail price of beef is rising much, if any, faster than any other typical consumer good.  Considering that, I think we're still a long way away from consumer cost slowing down our market.  What we are seeing is an increase in the demand for lower end cuts, thus the tremendous packer cow/bull prices we're seeing.

We're producing less cattle to feed more people than ever before.  We will see some cycling up and down, due to the usual factors of feed costs/availability, weather, etc...  But, barring some kind of major economic disaster which will affect everyone, not just us beef producers, we shouldn't see a major crash at least in the next few years.

All that said, we've been so dry for so long that we're running way less cows than we need to be anyway.  I'd like to take advantage of this market to get rid of some less productive cows, but as long as they're raising calves, it's really hard to sell them right now, because it's going to cost so much to replace them.  Like many others, I've been selling heifers trying to get caught back up - of course there's always a few I just can't part with.  Hopefully next year we can keep a few more.

 

[GaryS]

It depends on how you look at it whether or not these are record prices.  I have had a few cows for a long time and while 2.25 a lb seems high historically it is not record profits as some think.
I have sold calves for .30/lb but diesel fuel then was .23/gallon so at today's diesel fuel price the calf would have to be 2.7/lb.  Bah Humbug! to the records, all of the comparable inputs have gone up as well from an acre of pasture, to the truck you drive, how about what does your tractor cost now, or the baler or your kid in college?  These are not record profits!  Things need to change or there will not be a beef industry..........average age of cattle man or woman is 60 yrs old so there may be some sell outs into retirement, who can blame them?  Flip side of the coin is how, who, could make a start into this business at today's prices for all of the inputs?
Cows eat grass and I have some marginal land that can not be put to any other good use so I guess I will keep on keeping on, but I am not making record profits, if I show any at all?  <cowboy> 

 

[RyanChandler]

I don't see how people counter record profit claims by stating the cost of unnecessary inputs. 

I will be selling all my commercial cows as heavy breeds early winter and reinvesting in purebred cows come spring.

 

[Charo]

We will stay at 130 purebred cows, maybe sell more calves to feedlot. With the land prices we don't expect to grow.

 

[hamburgman]

Why sell the commercial cows for purebreds Xbar?

 

[GaryS]

Completely lost on some, the point of my argument was in 1958 a .30 calf/100weight when all other inputs were much lower was actually more profit than what were seeing now.  The gent said un-necessary inputs but I see things like grazing land and feed as necessary!  I am glad for you that they are not.

 

[RyanChandler]

Why sell the commercial cows for purebreds Xbar?

I have a limited amount of land and I feel like I need to specialize in one direction. I'd prefer a larger contemporary group for my purebreds and just a number of economies of scale type benefits. I cost me no more to raise a purebred calf than it does a commercial calf and while sometimes the purebred steers are a break even or even a loss over their crossbred counterparts, the purebred heifers bring more than enough to offset that variance.  I also think purebred cow prices haven't had the % increase in price that we've seen with commercial cows.  A $5k purebred cow last year is still a $5k purebred cow this year.  I guess you could say there is a favorable exchange rate right now for those looking to transition to purebreds. 

While land is a necessary input most if not all of the other implements that make farming/ranching 'easier' than they were in the 30s are not.  Farmers/Ranchers today have a substantially higher living standard than they ever had-- not just in monetary terms but in terms of the physical effort required to operate.  Lots of fancy implements, fancy trucks and trailers that provide luxury and ease of effort to us but are ultimately unnecessary to produce our product. 

 

[oakview]

It is very tempting to cash in.  I am breeding 50+ this year.  I have plenty of pasture, so I could increase the cow herd numbers if I wanted to.  Tell me the wisdom of keeping my pen of 7 late summer/fall yearling heifers.  I intend to breed them for September, 2015, calves.  If I sell the resulting calves, it will be about May 1, 2016, before I get a return.  I can sell the heifers now, if they weighed 800 pounds, a friend that just returned from the sale barn said they'd bring $2/pound.  Lot's to consider.  What about the 8 spring heifers just bred?  My motto has always been to buy high and sell low.  It seems that I can do that consistently, so I'm sure I'll do the right thing again this time.