Buying Bred Cows?

[Stocker Steve]

Still - early bred cow for $650+$150 (for feed to get to calving) + $150 feed to get to weaning = $950. $950-$550 (slaughter cow value if the bred sold for $650) = $400 price of 500 lb calf. Add 30% (??) risk for buying an early bred salebarn cow and you're about $520 for a 500 lb calf and had to wait a year to get there.

You are right about the risk. No 100% calf crop with cheap short bred sales barn cows. Don't ask me how I know.

Dispersal cows sell for $100 to $300 per head more here.

 

[robertwhite]

Again, some interesting info, BUT, from a lot of the points, it seems that a good portion of the sales are only monthly.The local auction by me is every week. That makes me even more leery of the sellers reason.

 

[dun]

Again, some interesting info, BUT, from a lot of the points, it seems that a good portion of the sales are only monthly.The local auction by me is every week. That makes me even more leery of the sellers reason.

Around here there a frequently some decent bred cows at thw weekly sales but all of the barns run a special stock cow sale (bred cows) every month or so. It boild down to one about every other week when you look at the 4 closest barns

 

[fit2btied]

Again, some interesting info, BUT, from a lot of the points, it seems that a good portion of the sales are only monthly.The local auction by me is every week. That makes me even more leery of the sellers reason.

Our local barn has a weekly sale but from October through March has a 1st Saturday of the month 'Special Cow Sale' also. Dispersals, estates, cutbacks, etc., are more likely to run through the Special sales and typically bring higher prices. The barn owner has an excellent reputation and if he knows of any problems with an animal, he calls it and/or sells them as 'weigh' cows. You can also tell him if you are looking for something in particular and he will point them out to you before the sale and holler at you when they come into the ring. Most of the order buyers will gladly help you as well, even though they may be bidding against you. Helps take a lot of the risk out for a hobby guy like me.

 

[MF135]

Those prices all look low to me. I sold slaughter cows for $700+. That said, I wouldn't want anything I sent to the sale barn - though I realize that's not how the ALL end up there.

Still - early bred cow for $650+$150 (for feed to get to calving) + $150 feed to get to weaning = $950. $950-$550 (slaughter cow value if the bred sold for $650) = $400 price of 500 lb calf. Add 30% (??) risk for buying an early bred salebarn cow and you're about $520 for a 500 lb calf and had to wait a year to get there. For me, it seems like the only way to save on that would be free feed - which you may have in pasture.

Does anyone know of an established discount rate to apply here? Ive been searching for a beta coefficient to apply to different ag ventures and I cannot find anything??

 

[dun]

Those prices all look low to me. I sold slaughter cows for $700+. That said, I wouldn't want anything I sent to the sale barn - though I realize that's not how the ALL end up there.

Still - early bred cow for $650+$150 (for feed to get to calving) + $150 feed to get to weaning = $950. $950-$550 (slaughter cow value if the bred sold for $650) = $400 price of 500 lb calf. Add 30% (??) risk for buying an early bred salebarn cow and you're about $520 for a 500 lb calf and had to wait a year to get there. For me, it seems like the only way to save on that would be free feed - which you may have in pasture.

Does anyone know of an established discount rate to apply here? Ive been searching for a beta coefficient to apply to different ag ventures and I cannot find anything??

It's more of a premium. For something you really want, the premium is one bid more then the other guy.

 

[Stocker Steve]

Does anyone know of an established discount rate to apply here? Ive been searching for a beta coefficient to apply to different ag ventures and I cannot find anything??

Not to sure the any alfa beta stuff.
I am sure all the discounts are local. For here:
- Color discount is $50 to $100 per head.
- Short bred discount is $50 to $100
- Out of season breeding seems to be less than $50.
- Oddest thing is most folks will pay the same money for a pair and a heavy bred cow...

 

[jtbakv]

Thats all I do is buy bred cows that are in 3rd stage (6-9 months bred) and sell calves and keep the best cows and cull the others. pretty good profit in doing this. but I'm cheap when it comes to buying. I try to buy at $400-$600 so the calves pay for the cow and I still have the cow to sell or breed back. either way I double my money or almost. You might say I have been really lucky so far no real problems yet. I do usually get older cows though. 8+ years it works for me.

Wow, using that price range for this area you wouldn't have been able to buy anything but a few long horns for several years.

I have been lucky I have bought a couple this year for 350 I have 1 cow that I bought for 1000 but she was a bred back cow with a calf on her side also I bought her last year and keeping her for a while. but like I said I'm kinda cheap and I also get the older cows I have char, angus,simmental and crosses. this area is really good for buying bred cows you can get some really good cows for 700-800 almost anytime. but thats at sale barns and you get what you pay for.

 

[TexasBred]

Again, some interesting info, BUT, from a lot of the points, it seems that a good portion of the sales are only monthly.The local auction by me is every week. That makes me even more leery of the sellers reason.

robert, I've decided that there is no rhyme nor reason to the selling strategies of some. Some sell when they need cash, some when calves get to a certain size or age...seldom is the seller really aware of the market other than some barbershop talk....the same for cattle...often see some really sharp cattle come thru a sale and you wonder what the story is behind them. I guess they all have a story and they're not all bad. A good buyer can buy good cattle at a sale barn but there are others that will also recognize the quality so they won't be cheap.

 

[jtbakv]

Thats all I do is buy bred cows that are in 3rd stage (6-9 months bred) and sell calves and keep the best cows and cull the others. pretty good profit in doing this. but I'm cheap when it comes to buying.

This is the lowest capital approach for stocking up some pasture with your own cattle, but it takes a lot of skill and time in the sales barn. I have gotten much better at resisting cheap cows but I still have a weak spot for colored or out of season heifers... :help:

But cheap cows is not the most "profitable" approach in most markets since your stocking rate is low. Right now I can make much more gross margin per acre running stockers or replacements. Less maintenance grass and a high value of gain.

when you talk stockers are you buying young calves and raising them to breding age and selling them after you breed them. or are you breeding your own calves and then selling them?what do you have to do to run this type of program how do you go about it? trying to learn more

 

[Stocker Steve]

when you talk stockers are you buying young calves and raising them to breding age and selling them after you breed them. or are you breeding your own calves and then selling them?what do you have to do to run this type of program how do you go about it? trying to learn more[/quote]

Type of stocker program varies with the local forage and your facilities.
Here we mostly buy light calves during the fall run,
graze about 1.25 head/acre the next summer,
and then sell yearlings in August before the sucking calves hit the market.

 

[jtbakv]

what weight of calves r u buying?
what are you feeding during the winter?
I feed a mix of commodity and staleys now along with hay for my bred cows
what is your average cost per pound of gain
thanks for the info

 

[Caustic Burno]

Just one price. a bread cow is 1 head, and a cow/calf pair is 1 head.

So, in my thinking, that makes pretty good sense, money wise. If I was going to auction to pick up a couple of 500-600lb calves, for the same money I could get 2 mommas with the unborn calves. I know there is a risk to that, but if the momma's are of sound confirmation, and the calves turned out nice, it could be like getting a 4 for 2 deal, no?

Anyone buy that way?

Risks vs advantages?

Biggest question to me is why a farmer/rancher would bring a bred cow to the sale if he only stands to make half the money? Are they just culling the herd to get the junk out?

This is not for a novice, take you a mentor that has bought cows through the barn.
This can be a costly lesson or turn a nice profit, timing is everything as well. Through the years I have bought quite a few especially this time a year when people see they are going to be short on hay. I picked up a 5 and 6 year old heavies last winter for 1050 sold the calves for more than paid for the cows. Both are still in the pasture heavy breed again one was a brangus the other baldie. That being said I have done this a lot of years and still get burned from time to time. It takes a discerning eye to pick a cow out of a sale ring.

 

[plumber_greg]

Just one price. a bread cow is 1 head, and a cow/calf pair is 1 head.

So, in my thinking, that makes pretty good sense, money wise. If I was going to auction to pick up a couple of 500-600lb calves, for the same money I could get 2 mommas with the unborn calves. I know there is a risk to that, but if the momma's are of sound confirmation, and the calves turned out nice, it could be like getting a 4 for 2 deal, no?

Anyone buy that way?

Risks vs advantages?

Biggest question to me is why a farmer/rancher would bring a bred cow to the sale if he only stands to make half the money? Are they just culling the herd to get the junk out?

This is not for a novice, take you a mentor that has bought cows through the barn.
This can be a costly lesson or turn a nice profit, timing is everything as well. Through the years I have bought quite a few especially this time a year when people see they are going to be short on hay. I picked up a 5 and 6 year old heavies last winter for 1050 sold the calves for more than paid for the cows. Both are still in the pasture heavy breed again one was a brangus the other baldie. That being said I have done this a lot of years and still get burned from time to time. It takes a discerning eye to pick a cow out of a sale ring.

You bought cows last winter for $1050 , and sold the calves ,that would be less than yearlings, that more than paid the price of the cows? And still have the cows? Not that good around here. gs

 

[dcara]

About 8 years ago one of my neighbors bought 3 bred angus cross cows. 4 months later he lost all 3 in calving within 2 weeks. The vet's postmortem said it looked like they had been bred to a beefmaster and the calves were to big for the momas.

 

[Caustic Burno]

Plumber I go to the salebarn just about every Sat. the day I bought those I mentioned a guy was dumping a load of brangus. I bought one a 5x5 for 560 and she was one of the higher priced ones. There was no hay to be had over here last year. I had extra so I picked up a couple and should have picked up a couple more. If I had what I normally cut in a year, I would have stuffed the trailer. I had already given my neighbor 20 rolls so I had a little crap in my neck. Man has to be willing to pull the trailer to the salebarn and come home empty as well.

 

[plumber_greg]

Oh, I thought you gave 1050 apiece for them. gs

 

[bhedrick]

Does anyone know of an established discount rate to apply here? Ive been searching for a beta coefficient to apply to different ag ventures and I cannot find anything??

Answer:
I would like to begin by saying that I am new to the board. While I have little experience in the cattle business, I do have some experience with financial matters. I will attempt to provide a little background here. I think this is a really great question, and it is one that I ponder frequently. There a people much more suited than me to answer this question.

I would think you could apply the market discount rate. While I don't think it is anywhere near 10%, as that predates to 1920s and 30s, I think the market discount rate since 1985 that averages from 5-6% is much more appropriate. You could also look at AG Stock returns over any given period.

As far as establishing a beta coefficient, I would compare the return on AG stocks to the return on the market. If you suspect the returns to be less volatile than the market, your beta would be less than one. You can actually run a statistical analysis for the change in returns of a stock compared to the market to obtain your variance and covariance. Some finance stocks will list a beta for that specific stock compared to the market. In theory, it really doesn't matter from private industry to public industry.

I think the only problem with using that coefficient is economies of scale; in that, these are very specific situations of buying and selling cattle at individual sale barns. If you were dealing with buying bred cows 10,000 at a time all over the country, you could probably use this Beta. Otherwise, you can compare the co-variance return on capital in your (or someone else's) personal (smaller) operations to that of the Market, with an overall market variance to establish your beta coefficient.

Overall, you can adjust each of these factors and have a wide-range of difference in your solution. I think you would be much better off just to consider auction prices as comparable and adjust your expectations through them.

 

[MF135]

Does anyone know of an established discount rate to apply here? Ive been searching for a beta coefficient to apply to different ag ventures and I cannot find anything??

Answer:
I would like to begin by saying that I am new to the board. While I have little experience in the cattle business, I do have some experience with financial matters. I will attempt to provide a little background here. I think this is a really great question, and it is one that I ponder frequently. There a people much more suited than me to answer this question.

I would think you could apply the market discount rate. While I don't think it is anywhere near 10%, as that predates to 1920s and 30s, I think the market discount rate since 1985 that averages from 5-6% is much more appropriate. You could also look at AG Stock returns over any given period.

As far as establishing a beta coefficient, I would compare the return on AG stocks to the return on the market. If you suspect the returns to be less volatile than the market, your beta would be less than one. You can actually run a statistical analysis for the change in returns of a stock compared to the market to obtain your variance and covariance. Some finance stocks will list a beta for that specific stock compared to the market. In theory, it really doesn't matter from private industry to public industry.

I think the only problem with using that coefficient is economies of scale; in that, these are very specific situations of buying and selling cattle at individual sale barns. If you were dealing with buying bred cows 10,000 at a time all over the country, you could probably use this Beta. Otherwise, you can compare the co-variance return on capital in your (or someone else's) personal (smaller) operations to that of the Market, with an overall market variance to establish your beta coefficient.

Overall, you can adjust each of these factors and have a wide-range of difference in your solution. I think you would be much better off just to consider auction prices as comparable and adjust your expectations through them.

Thanks for you reply. I almost think that which as much variation in each cow (security), that each would have to be priced separately and an appropriately applied discount rate to each. Packaged securities may be enough alike to stamp them all the same but with as many variables as leads to a cows production, an individual rate must be applied to each. I agee that a trend analysis to determine changes in returns might be your best tool.

 

[backhoeboogie]

My brother-in-law will tell you that I am "lucky" when it comes to buying cows.

There were times I was not feeling so lucky. Such as the time I had to catch a fence jumper and haul her back to the sale.

I don't have an excellent eye so I get there early and look hard. At times I am slow and miss a buy too.