How Long Will This Market Last?

[TexasShooter]

First off I would like to say that I respect many of the opinions and information that I receive on this website…I have for many years. It has saved me time, money and given me peace of mind. For this, thank you and I am very appreciative of your time. I hope am able to return the favor and knowledge to help others on this site and around my community.

I am not what you consider a full time rancher. I hope to one day leave my job and do what I truly enjoy. Currently, I have a day job in Dallas, TX where I practice as a software consultant. I grew up on a farm and raised cattle all my life. I currently run 30+ cows with the intention of doubling or tripling my herd. This last year I have made some big investments in land, my operation and the management of it. I am ready to buy heifers, or bred heifers, or bred cows.

I don't have the funds to do this now unless I take out a loan. I don't want to take 5-10 years to double or triple my herd because I want to take advantage of the market now. In being in the corporate world and the cow business I know the importance of timing and taking advantage of it. My thinking is if I take out a loan I would use the majority of the money from the calves, etc. to pay back the loan in a year or two. So hence my questions, in your opinion…

1. How long will this market continue?
2. Will it decrease, stay as is, or increase?
3. And how long do you see trend lasting?
4. If you took out a loan, which choice would you make in buying open heifers? Or bred heifers? Or bred cows? And why?

I know many of you have had prior experiences and some of you have this knowledge/background in your day job or know someone that does. Again…thanks in advance for your responses.

 

[Jake]

1. How long will this market continue?
2. Will it decrease, stay as is, or increase?
3. And how long do you see trend lasting?
4. If you took out a loan, which choice would you make in buying open heifers? Or bred heifers? Or bred cows? And why?

1. The market will cycle lower again but it will take the southern herd rebuilding to have a feeder calf supply. I'm not saying we will see $.75 calves again but we will come off of these highs at some point. If any of us could guess when to short this thing we wouldn't be worrying about running the actual cows.

2. See #1. But to add I think there is some short term upward availability in the market especially in the bred cow market as they remain in demand.

3. Within 5 years we will see to what extent the national herd will be rebuilt and the cycle should take a turn at that point depending on what the herd looks like.

4. I never suggest spending money on replacement heifers on a loan as your are a long ways from seeing return on the investment. Cows or heifers doesn't really matter. I personally prefer buying pairs to breds. Usually comparable money and you already have a live calf.

 

[denvermartinfarms]

1. I think it will be pretty consistent for atleast 3 years.

2. When it changes it will decrease, but not to the point that we won't be able to make money.

3. I see everything staying pretty consistent for 3 years, then a slight decline that stabilizes for 3 to 5 years then another climb to record prices.

4. I would never borrow money for any open cattle, pairs or bred cows preferably not bred heifers. When borrowing money I like to go with little risk. Trying to breed heifers or calving out heifers has alot more risk than pairs or 4 to 6 year old bred cows.

 

[dun]

The way things usually work it will go down next week since that's when we're selling the calves

 

[cross_7]

Late 80's and early 90 I thought I'd never see another poor day. Then in 95 I was as busted as I have ever been.
Calves that were bringing a dollar were bringing .65
It was a long time digging out of that one, but it sure makes a man smarter
I think this is a different deal now though, but like Denver said I wouldn't take on a lot of debt and a lot of risk both.
Good solid bred cows would help me sleep better at night

 

[Dave]

I think it will stay up for a while yet. It will really depend on how long it takes to rebuild the herd size. So there are several factors there which are unpredictable.

I wouldn't buy heifers to make cows out of. That is too long of a proposition. I believe the time to do that is when the market is down and heifers are cheap. Mid age to older cows that have 3-4 years left are what I would go with now. Even older short term cows. Take advantage of this up market but not over invested so when it does swing down you are left holding the bag.

All that said this last year I bought yearling heifers. Bred them and sold as bred heifers. I did well enough that I plan to do it again this next year.

 

[TennesseeTuxedo]

The rate at which the older guys are retiring makes me tend to believe prices will remain strong for the brave souls who continue to make their living in the cattle business. I don't see demand falling off in the future.

 

[highgrit]

I think it will stay up for awhile. That is as long as corn stays above $3.00 a bu. Low corn prices are good for the rancher, but if they get to low I can see more pasture coming. It seems like everything in the cow business takes for ever, so I don't see the herds growing very fast.

 

[bigbull338]

you really shouldnt be worried about how long calf prices will be high.right now bred cow an pair prices are way to high.an you should be worring about that because that will tell you how quick you can pay off the new cows.with the high prices now itll take 3 calves to pay each cow off you buy.an depending on the cows age when you buy her 3 calves or less maybe all you get out of her.example i buy my cows 3 to 4yrs old.well now im lucky if i got 4 or 5 calves from them.as they are 8 to 10yrs old now.an they really need tobe culled.an ill be lucky if i can replace them for $2500 a hd.an that means ill be at 3yrs to pay for a cow.

 

[denvermartinfarms]

Just think how great it would be if any of us really knew what the long term market was going to do.

 

[ohiobeef]

Just think how great it would be if any of us really knew what the long term market was going to do.

Yes it would ,because we could all get RICH !!! :clap: :nod: :cowboy:

 

[cross_7]

Just think how great it would be if any of us really knew what the long term market was going to do.

I can tell whats going to happen
With cattle prices where they are everyone that can will have cattle.
There is big ranch west of here and when cattle got cheap they down sized and focused more on hunting.
The owner said when cattle get to where they're worth something we'll get back in the cattle business and they have.
There are lots folks just like them

Now the question is whats the weather going to do ?
This drought may not be over.
We see another 2011/2012 and all bets are off

 

[Kscattle]

My theory is that most guys around here plowed up ground that has been in pasture for a hundred years to plant corn. When corn prices start to tank, they'll sow it back to grass and buy cows again. Your good for at least three years if you buy now. Don't wait till spring cause they'll be higher, then prices will decline slightly. I bought cows 5 years ago for $1300/pr and the next year my banker said I was upside down on them. I reminded him of that the other day, and laughed.
On the subject of heifers vs older cows, the younger you buy them the longer they stay alive to pay them off, but stay away from heifers. Why not keep your own replacements and buy a few more bred cows or pairs to keep cash flow? If you keep a few heifers back every year, its easier to maintain a young herd.

 

[Caustic Burno]

Late 80's and early 90 I thought I'd never see another poor day. Then in 95 I was as busted as I have ever been.
Calves that were bringing a dollar were bringing .65
It was a long time digging out of that one, but it sure makes a man smarter
I think this is a different deal now though, but like Denver said I wouldn't take on a lot of debt and a lot of risk both.
Good solid bred cows would help me sleep better at night

Heck in the 70's I sold gave away some for 10 cents a pound.
The market could crash tomorrow or go even higher.All it takes is one event to send it reeling in one direction or the other.
The market has always been cyclic as others have stated over the years. One public scare, embargo, or environmental event can blow it up.

 

[JWBrahman]

One thing you can count on is that the market will last until the big contract beef guys like Tyson and Cargill decide to short all of the small time operations who are retaining too much because of the good rain we have had this fall. It could be a bloodbath as soon as this spring if we have rainfall issues. Sell em if you got em and look for bargains in two years.

 

[snake67]

The market will last long enough to get a pile of new people deep into this new get rich business - who in turn will wonder what the heck happened when the prices start to fall.

Which they will.

Bez

 

[back2dfuture]

Please explain to my how & why Beef prices will decrease.. If we are (U.S.A.) is projected to increase it's export of beef, but the amount of cattle being raised is decreasing. And we are also improt more beef... I'm not argueing.. just want to know what I'm missing?

 

[Tim/South]

Please explain to my how & why Beef prices will decrease.. If we are (U.S.A.) is projected to increase it's export of beef, but the amount of cattle being raised is decreasing. And we are also improt more beef... I'm not argueing.. just want to know what I'm missing?

The cattle market can be volatile.
Cattle have competition from other meats,mostly pork and chicken. Box beef prices vary from week to week. The consumer may tire of paying for beef and develop a taste for the other two meats.
Both imports and exports are fickle.
COOL has kept a lot of live cattle in Mexico. Our falling dollar has kept a lot of cattle in Canada. Exports increase when our dollar falls and makes beef more affordable. When our economy is good, exports decrease.
Australia has moved on on the Korean market in a major way. Korea is always looking for a way to stop U.S. imports.
Brazil has moved into the European market.
Our only consistent buyer of U.S. beef is Japan.
The greatest outcome of the cattle shortage has been to give leverage to the producers. Cow/calf, stocker and feed lot operations have always lived off the leftovers. Packers and retailers have pretty much dictated what would be paid for live cattle.
I do not believe cattle prices are high. I believe they are where they should have been for a long time. We are actually making money now rather than taking it from one pocket and putting in the other.
Will the American consumer adjust their shrinking dollar purchase power to buy more expensive beef? Who knows, new ground being plowed.

With falling corn prices it is not far fetched to expect the packers and retailers to ask us to produce a cheaper product. In theory we should have less input cost if corn continues to decline.
To our advantage is the shortage of what we produce. Pork and chicken can rebuild quickly. Beef, not so.
The bottom line is that we do not consume all of what we produce We depend on others to finish, process, sell, then purchase what came off our farm. That is a lot of fingers in the pie. As long as each works together then life is good.

 

[Texas PaPaw]

Please explain to my how & why Beef prices will decrease.. If we are (U.S.A.) is projected to increase it's export of beef, but the amount of cattle being raised is decreasing. And we are also improt more beef... I'm not argueing.. just want to know what I'm missing?

Japan/Korea/you name it import ban. A unforseen black swan/mad cow type event. Another economic recession.

That's all I can think of at the moment.

If none of the above happen, think calf prices could stay high for 3-4 years as we can't rebuild the cow herd much faster. After a few years, better have your house in order. When you see doctors, lawyers, pharmacists, and others who don't know the difference between an implant and a supplement start getting into the business better batten down the hatches as it is about to get ugly. Have seen it happen before and sure it will happen again.

Those who fail to learn history are doomed to repeat it.

 

[tncattle]

Well, I'm hoping 25-35 years but most likely it will go down when I have a new crop of calves to sell :cboy: