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Big Cow Gross Margin ?

Stocker Steve

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If you have a herd of cows that have a zero gross margin with low calf prices,
and you were willing to slash herd size to extend the grazing season - - thus getting to a + $100/hd gross margin,
what could be the downside of this herd reduction?
 

HDRider

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Is this your question?

300 cows = zero income
150 cows = $15,000
100 cows = $10,000
50 cows = $5,000
0 cows = zero income
 

Bigfoot

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Stocker Steve":2mfswgm8 said:
If you have a herd of cows that have a zero gross margin with low calf prices,
and you were willing to slash herd size to extend the grazing season - - thus getting to a + $100/hd gross margin,
what could be the downside of this herd reduction?

Not ashamed to show my ignorance. Can you rephrase that question?
 

M-5

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Bigfoot":38cvyqeg said:
Stocker Steve":38cvyqeg said:
If you have a herd of cows that have a zero gross margin with low calf prices,
and you were willing to slash herd size to extend the grazing season - - thus getting to a + $100/hd gross margin,
what could be the downside of this herd reduction?

Not ashamed to show my ignorance. Can you rephrase that question?



I just HUH !!! outloud or HOL !
 

Stocker Steve

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HDRider":320qvhwh said:
Is this your question?

300 cows = zero income
150 cows = $15,000
100 cows = $10,000
50 cows = $5,000
0 cows = zero income

You got the idea - - you can have "too many cows" for your forage base and have to buy in lots of inputs.
So you could stock heavy and buy in N and/or buy in hay profitably when calves were $2.20/lb, but not when calves are $1.10/lb.
 

Stocker Steve

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Aaron":1eynvt0f said:
If you can't make money with 10 cows, you won't do it with 100 and vice versa.

Maybe.
I am a stocking rate radical and have tried things few would believe.
For a more typical operation it would depends on whether you can flex your pasture size.
You might be landlocked into full season grazing for 50 cows - - so 10 is way underutilizing existing forage, and 100 requires a short grazing season and tons of inputs.
 

Dave

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There are some depends on other factors involved. For instance if you made money at $2.20 calves with hay costing $200 a ton you should still make money with $1.10 calves if hay is $85 a ton. But yes, extending your grazing season is always a good thing for the bottom line.
 

HDRider

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SS - I think your real question is where is the tipping point. I can feed x with very little input, but over that number my cost goes up because of the input costs.

I'd say for me, my tipping point is based on the class of cow, maybe ~60 cow/calves. I am working my way slowly to finding out what it is.

Stockers would be maybe 100 in the spring, then bringing in 75 new ones in the fall. Resting in the winter.
 

RanchMan90

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Buying outside hay would help to extend grazing also. The only downside I see to your theory would be losing equity selling in the low market and buying back in when the market comes back up.Wouldnt be hard to find something to spend that equity on right now though.
 

Stocker Steve

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Some real extremes out there. Some are zero input and won't buy a bag of clover seed. Others dry lot cows and buy in hay year round.
 

Bigfoot

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I can't answer your question, even though now I understand. I will say if your going to own one, it might as well be a good one. I'd rather own 2 cows that wean 700 pound calves, than three that wean 450 pound calves.
 

talltimber

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Stocker Steve":1yyvjx65 said:
If you have a herd of cows that have a zero gross margin with low calf prices,
and you were willing to slash herd size to extend the grazing season - - thus getting to a + $100/hd gross margin,
what could be the downside of this herd reduction?

That your fixed costs/cow goes up to where you can't sell off enough to get your 100/hd cleared without arriving at the yearly income/yearly expenses zero income first?

It makes a lot of sense inside my own head, not so much written down. :lol:

For example. Running 18 hd I have a cost of
$500/cow ish. I ran some numbers for where I'd be at 30 head and arrived at around $400/hd/yr. I haven't ran it out further than that yet, as it still covers me right now. I anticipate running numbers for fifty, but then (or an even less amount) having to account for an occasional forage problem to have to buy my way out of, like you are trying to get away from I am assuming.
 

Brute 23

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Stocker Steve":2q5l1jyi said:
If you have a herd of cows that have a zero gross margin with low calf prices,
and you were willing to slash herd size to extend the grazing season - - thus getting to a + $100/hd gross margin,
what could be the downside of this herd reduction?

There isn't. The majority of the people in the cattle business probably need to do exactly what you are talking about.

You can't spend yourself in to prosperity.

CB and others have talked about this multiple times. We have little to no control over the costs we received at market. We can control inputs. You make money with cattle by them being on grass and you staying out of the pasture.
 

Farm Fence Solutions

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Stocker Steve":1o1sgd4i said:
Some real extremes out there. Some are zero input and won't buy a bag of clover seed. Others dry lot cows and buy in hay year round.

We had more cow inventory than pasture for a couple years, and kept several on silage and dry hay for that time. LUCKILY, the dry hay I had bought last June became unavailable because of our wet spring/summer, and I had to sell a fair number of cows. :banana: We made good money the years we had those cows on the dry lot, but I'm glad we aren't feeding them this year. I really should call the man that backed out of that hay deal and thank him......
 

Stocker Steve

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RanchMan90":2jkf6bvs said:
The only downside I see to your theory would be losing equity selling in the low market and buying back in when the market comes back up.

1) I don't know how to creep up on cow numbers in a chaotic world, and I am not a great market timer. Since we have a huge spring flush in the snow country, and folks are currently begging me to buy their hay, it is very tempting to stock heavy... I think I would be better off long term to level cow numbers against some sweet % of average forage production. Then try to ignore the cow equity swing. :hide:

2) If trampling grass bothers you - - back fill the pasture with price protected deplorable disposables. They leave in August during an average year. They leave in June during a tough year. Right now I have all my 2016 heifers...

3) In a really really tough year you sell all your sucking calves in September.

So I would reform my evil sales barn ways, and not buy back cows, but rather trying to let winner (calve)s run.
 

Stocker Steve

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Farm Fence Solutions":375gk3ky said:
We had more cow inventory than pasture for a couple years, and kept several on silage and dry hay for that time. We made good money the years we had those cows on the dry lot, but I'm glad we aren't feeding them this year.

You are a rock star! Write a how to book and go on tour. ;-)
 

Nesikep

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As long as you're not losing money by having too many cows, you're better positioned if you have as many as you can hold... When markets turn around you don't have to go buying high priced animals to restock, rather you can sell off older cows at a good margin.. all the ones that hardly paid to keep in the bad years are now going to put money in your pocket.. Also, you have ASSETS.. If you need $50K and have 300 cows, you can sell a bunch and raise that money in a week, and production isn't going to suffer too terribly.. If you had already downsized to 150 cows, it's going to be much harder to recover from that.

I'm always weary of these "Profit" calculations... it's darned near impossible to really include everything, include it fairly, and account for different management methods...
This example sounds like the place was grossly overstocked and had to buy massive amounts of feed.. I don't think there are really all that many places like that, at least among our members here
 

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