Harlen's Cattle Price Cycle Update ?

[Stocker Steve]

The November Beef mag published his updated estimate showing feeder prices bottoming in 2020.
Harlen made a case for reducing production costs, which have been going up an average of $4.15/cwt/yr.
What is your take?

 

[kenny thomas]

If they get cheaper part of them won't get any bids here. I have bought several this fall for .50 lb or less. Seen a couple at. 20.

 

[kenny thomas]

I definitely will be considered a hobby farmer by then. Very little profit in it for me if it gets cheaper. Even if I buy for .50 and they gain weight good the cost of gain is higher than the weight gain will bring.

 

[MtnCows93]

I definitely will be considered a hobby farmer by then. Very little profit in it for me if it gets cheaper. Even if I buy for .50 and they gain weight good the cost of gain is higher than the weight gain will bring.

im confused are you buying cows for .50 or 500lb calves?

 

[kenny thomas]

Buying calves. 300 to 500. Mostly red or off color.
No cows here bringing that high.

 

[kenny thomas]

Before everyone thinks I am crazy I will explain. I buy the thin calves that need some TIC. I buy year round. Some weeks I get 2-3 and some weeks 8-10. Usually only go to one sale a week. Gonna sell some steers after Thanksgiving that i bought last winter weighing light 200. I think they will weigh 800 now. Think i had about $175 a head in them. Hoping for $1100 A head but will be ok with $1000.
It's not quick or easy but it's what I do.

 

[True Grit Farms]

I have enough problems keeping healthy cattle healthy, you sure won't have to out bid me. You and Larry Shoat have the knowledge to make it work.

 

[kenny thomas]

Wish I knew half what Larry knows.

 

[Chocolate Cow2]

Two weeks ago at a local sale some thin, poor looking calves were selling at 19 cents. A buyer stopped the auctioneer and asked for clarification if this group was being sold by the pound or by the head.
It's a tough market right now. Anything with any sort of issue is discounted hard. Same salebarn sold close to 5,000 head last Thursday. It was a 12 hour sale.

 

[Son of Butch]

The November Beef mag published his updated estimate showing feeder prices bottoming in 2020.
Harlen made a case for reducing production costs, which have been going up an average of $4.15/cwt/yr.
What is your take?

Then how far are we from the bottom?
20%?
down another 10% in 2019? and another 10% again in 2020 or what?
Worse than that.... 30%?

 

[Turkeybird]

Good cattle are still selling good

 

[True Grit Farms]

There's a good bit of price difference between bulls and steers. Seems we're loosing money every day holding out for a better market.

 

[Stocker Steve]

Then how far are we from the bottom?

We will know for sure when we look back in 2022. Harlen threw in a comment about exports being a variable. I think actual prices in 2017 to 2018 were better than Haren had projected because of demand, so he made the cattle price cycle longer. He did not comment on the dairy problems - - other than pointing out cull sales are a big part of total cow/calf income.

His guessimated annual feeder price cycle curve shows about a 24% drop from 2018 average (which will be higher than current Nov prices). So 10 to 15% drop per year for 2 years. My take away is that there will be cattle industry profits over the next couple years, but they will not occur in an average commercial cow/calf operation.

The optimists think there will be a profit in corn next years. We have been getting summer rains for the last couple eyars, so that and genetics have produced some bumper crops. I think people have been in denial about the soy bean war. i think there will be profits in feeding out heifers. I think there will be profits in direct marketing cow burger. I think there will be profits for those who sell high and buy back lower. And the packers will keep making money. :nod:

 

[Dave]

Harlen has been wrong before. We can only hope he is this time too. At a 24% drop the $1.50 calves are $1.14. The $1.00 calves sell for $0.76. At those prices a lot of hobby farmers go fishing instead. The commercial guys who have too much debt go broke. And if that happens a lot more cows go on the market which drives prices down lower. As always the thing is to buy in at the low point and ride the market up.

 

[Aaron]

If that comes true, you will see a mass exodus of the over age 60+ producers in the next two years. There were quite a few around here ready to quit between drought and prices this fall. But it did get them thinking about how they will exit without losing to taxes. Young guys, will turn to crops, even though that is a losing proposition as well, but works better with off-farm job hours and get winters off.

 

[hurleyjd]

Prices might get better after we win the trade war. Just hope it is soon and I have some cattle to sell.

 

[Stocker Steve]

Harlen has been wrong before. We can only hope he is this time too. At a 24% drop the $1.50 calves are $1.14. The $1.00 calves sell for $0.76. At those prices a lot of hobby farmers go fishing instead. The commercial guys who have too much debt go broke. And if that happens a lot more cows go on the market which drives prices down lower. As always the thing is to buy in at the low point and ride the market up.

I think Harlen is wrong about half the time. Too much fast fund money, packer consolidation, droughts, and trade wars for a poor economist to model effectively. I think u need to use his projections as a scenario, not a given, and have a plan for it. If things get that bad I plan to sell a tractor, buy a pontoon boat, and take Aaron fishing. :cowboy: He will look good with a cowboy hat and some bling, on a big ass pontoon boat.

Bankers prefer to extend and pretend rather than flood the market with foreclosures. I am amazed at how land rents have held up. I think a lot of folks are willing work off farm to make the tractor payment. Some poor SOBs will even work off farm to make a cow payment.

 

[Stocker Steve]

Prices might get better after we win the trade war. Just hope it is soon and I have some cattle to sell.

Winning a trade war is like winning a civil war. Great great grandma slept out in the wheat fields for a while to avoid the Sioux, waiting for a husband who never came marching home... No winners in that mess.

 

[Aaron]

If things get that bad I plan to sell a tractor, buy a pontoon boat, and take Aaron fishing. :cowboy: He will look good with a cowboy hat and some bling, on a big be nice pontoon boat.

If things get that bad, I am investing in a 2nd pencil and a whole wad of paper. Ranching might suck at times, but nothing depreciates like a boat. Stick with the tractor.

 

[kenny thomas]

If that comes true, you will see a mass exodus of the over age 60+ producers in the next two years. There were quite a few around here ready to quit between drought and prices this fall. But it did get them thinking about how they will exit without losing to taxes. Young guys, will turn to crops, even though that is a losing proposition as well, but works better with off-farm job hours and get winters off.

I think you are correct. I'm in the 60+ crowd and not doing it for a living anyway. Soon I will tire of it and go fishing. I make more clear money working 40 days a year on a fire crew than I do on 40 cows.