BRUBAKER Cattle Trends!

[DOC HARRIS]

This report appeared today, and I would welcome OPINIONS of the report, and perhaps 'regrets' for ignoring admonitions from this corner four years ago when the subject of increasing the numbers and quality of one's breeding herd to take advantage of anticipated increased demand several years in the future was being suggested and encouraged! There were many excuses for procrastinating upgrading one's herd, but few justifiable reasons!

This is another opportunity to consider the future of your business protocols!

DON'T GET ME STARTED!

DOC HARRIS


Cattle Trends
If you study price trending in the cattle markets since fall of 2010 you are aware that cattle prices are at an all-time high in all segments of the industry.

Terminal prices for fats and feeders are driving the market. This is largely due to the lack of cattle numbers throughout the country. We see this trend continuing over the next several years, as pressures on the cattle population continue. Drought, lower rentention of replacements, land development and a decline in younger generations taking over farms & ranches will continue to slow the population growth.

This is simply economics 101, Supply & Demand,. Demand for beef products remains steady with some growth in certain segments. When supply is down and demand is steady to higher, prices rise and the market becomes more stable.

The amazing part of this market structure is it is all happening when feed costs reach new highs. Historically, when feed costs rise cattle prices decline. Cattle prices rising while feed inputs rise is a trend not seen in recent history.

The more you can control your inputs the greater profits you will make in this market. Control your inputs through genetics and management. Select genetics that are capable of providing growth, muscle and milk on grass (your cheapest feed resource) and hay. Utilize the sun, rain and soil to provide the ingredients to produce more pounds of beef per acre, without or with limited use of high cost feed

 

[Isomade]

I couldn't agree more Doc. That is exactly what I have been trying to do, unfortunately the new land I purchased last year that should run 30 more cows is now feeding the same herd due to Drought :roll: . The subject matter however is spot on, there will be profits to be had IF and only IF one has the correct genetics, and can control the ever rising cost of inputs. Inputs will likely continue to rise at a rapid rate so the profit gap between the profitable and sub-par operations will get bigger which will likely decrease the per-capita cow herd even more.

 

[Stocker Steve]

Overall trends are up, but I think you need to carefully look at the gross margin for the segments or enterprises you can operate. Last time I did that replacement heifers looked interesting.

 

[Wild Cattle]

I agree DOC. I believe that we have seen a long term shift in the supply curve. Might be permanent. Cow numbers are going to be down for a good while and may never recover fully. We are in the middle of changing our operation from 80% stockers toward 50 % cows. We have the right type for a base with some Scottish blood bulls coming this fall. Low in put cattle that don't need much help, moderate and correct. Seems to me that quality bred heifers will be worth some money after the drought (if it doesn't bust me first). Feeder cattle should push higher because of demand in the next two years and this will slow any growth in cow numbers because of the value of the heifers going to the feed yards. The future looks bright for some time.

I took a part time job at one of the local sale barns to keep my finger directly on the pulse of the local market. My hammer is cocked and ready when this drought breaks. Exciting times ahead in the cow business.

 

[novatech]

This report appeared today, and I would welcome OPINIONS of the report, and perhaps 'regrets' for ignoring admonitions from this corner four years ago when the subject of increasing the numbers and quality of one's breeding herd to take advantage of anticipated increased demand several years in the future was being suggested and encouraged! There were many excuses for procrastinating upgrading one's herd, but few justifiable reasons! This is another opportunity to consider the future of your business protocols! Doc, I don't think it is so much in procrastinating upgrading as it is pure ignorance. EPD's have proven to be a valuable tool yet your hear time and again about people not willing to use them. They do not take the time to learn. AI is another tool that many seem to ignore. What amazes me is that the AI school in College Station has a high percentage of South American students. They literally AI thousands of commercial cattle on a regular basis. Are we, North Americans, procrastinating or just lazy?DON'T GET ME STARTED!

DOC HARRIS


Cattle Trends
If you study price trending in the cattle markets since fall of 2010 you are aware that cattle prices are at an all-time high in all segments of the industry.

Terminal prices for fats and feeders are driving the market. This is largely due to the lack of cattle numbers throughout the country. We see this trend continuing over the next several years, as pressures on the cattle population continue. Drought, lower rentention of replacements, land development and a decline in younger generations taking over farms & ranches will continue to slow the population growth.

This is simply economics 101, Supply & Demand,. Demand for beef products remains steady with some growth in certain segments. When supply is down and demand is steady to higher, prices rise and the market becomes more stable.

The amazing part of this market structure is it is all happening when feed costs reach new highs. Historically, when feed costs rise cattle prices decline. Cattle prices rising while feed inputs rise is a trend not seen in recent history.

The more you can control your inputs the greater profits you will make in this market. Control your inputs through genetics and management. Select genetics that are capable of providing growth, muscle and milk on grass (your cheapest feed resource) and hay. Utilize the sun, rain and soil to provide the ingredients to produce more pounds of beef per acre, without or with limited use of high cost feed
Seems to me this statement should go with any market price trends.

 

[BRG]

A couple things -

First someone stated that we are ignorant for not learning or using EPD's. That may be correct, but on the same token, if they are buying bulls from progressive seedstock suppliers, they are most likely using EPD's or improving their herds and don't even realize it as the seedstock provider will be constantly trying to improve his genetics, which in turn improves their customers. For example, in our program, we replace around 25% of our cowherd every year as we bring in good heifers that should be better than their dams.

Second, I truely believe that all aspects of agriculture are in for good times. The cattle business is very low on #'s and the world population continues to grow extremely fast. Even if we get the cow #'s back up to levels they once were (which I don't think we will) the world population will have grown by several million people, which means we will still see good prices as the demand will still be there. As for the grains, we are already at a point, where we are needing record corn crops to keep the world from having empty bins.

Third, even with high prices, we all need to improve the efficiency on our programs, not just the cowherd, but everything. If you can cut a buck to make something work, then that is what you need to do. We actually planted corn for the first time ever this year, as I didn't want to buy $7 corn. But my plan has now changed, as I now plan on selling that corn and buying a cheaper source to use. (Which I just got in) Next thing we just did, was got 3 rent to own 1000 gallon fuel tanks and sold our smaller 300 gallon tanks. Now we can get a bunch of fuel in when we feel comfortable with a price, instead of getting fuel and taking what ever price they have at that time, because we need it now. These are just a couple things we are doing to make things work a little better.

 

[Jake]

A couple things -

First someone stated that we are ignorant for not learning or using EPD's. That may be correct, but on the same token, if they are buying bulls from progressive seedstock suppliers, they are most likely using EPD's or improving their herds and don't even realize it as the seedstock provider will be constantly trying to improve his genetics, which in turn improves their customers. For example, in our program, we replace around 25% of our cowherd every year as we bring in good heifers that should be better than their dams.

Second, I truely believe that all aspects of agriculture are in for good times. The cattle business is very low on #'s and the world population continues to grow extremely fast. Even if we get the cow #'s back up to levels they once were (which I don't think we will) the world population will have grown by several million people, which means we will still see good prices as the demand will still be there. As for the grains, we are already at a point, where we are needing record corn crops to keep the world from having empty bins.

Third, even with high prices, we all need to improve the efficiency on our programs, not just the cowherd, but everything. If you can cut a buck to make something work, then that is what you need to do. We actually planted corn for the first time ever this year, as I didn't want to buy $7 corn. But my plan has now changed, as I now plan on selling that corn and buying a cheaper source to use. (Which I just got in) Next thing we just did, was got 3 rent to own 1000 gallon fuel tanks and sold our smaller 300 gallon tanks. Now we can get a bunch of fuel in when we feel comfortable with a price, instead of getting fuel and taking what ever price they have at that time, because we need it now. These are just a couple things we are doing to make things work a little better.

Great post. I think the cattle industry in general needs to improve upon locking up profitability when the chances are there. Ranchers are naturally optimistic but this has proven at time detrimental to some. With the marketing options that are out there today, everybody shoudl be looking at hedging their profit. Often times it is the inputs costs are the ones that can come up and bite somebody. Locking in feed and fuel costs will do way more to improve your bottom line than genetics simply because they can be handled with more consistency and greater accuracy.

This being said I don't want to downplay the importance of genetics, but the cattle industry has large generation intervals and the rate of genetic change is quite slow. It may take a producer years to turn a herd around and improve the genetic efficieny.

The combination of improved marketing and operational excellence is what can allow for increased profitability that is truely noticable.