Bigfoot":27zigo5u said:
The price of concentrates should enter in to the equation somewhere. When grain is high, who wants to take a 500 pound calf to 1225? The incentive would be to buy a larger calf. Haven't really seen that mentality unfold in a while.
The last time we did see that enter the equation, it led to commodity cattle be killed at 1,250lbs. opposed to being taken to 1,400lbs.
I also agree with Dave about the 6 weights too. Toughest commodity to trade out there at the moment is a 6wt. heifer. Heifers in general have a steep discount right now. I bought some heifers in the 4's last week over $40/cwt. cheaper than their brothers.
To my logic, the middle 6wt. is the most volatile class out there right now because it's the one with the narrowest opportunity for seeing a profit. Doesn't mean they won't, it just means the prudent operator needs to price said risk into what they'll give.
We are also seeing that on grass leases right now too for stocker cattle. Lots of good ranches have had to be a bit more reasonable or at least not raise their prices on what they want for a gain deal or outright lease on steer ground. Corn being so cheap, you can feed good cattle in MidWest yards in the 60's pretty handy. With such economical COG, it's hard to get excited for a grass gain deal much over 50 cents once freight and other costs are added in, it's hitting the tipping point where for any more you might as well just send them straight to the yard.
We run our stockers in Wyoming and California (only mother cows in Nevada) on a combination of ground we own, private ground we lease and in Wyoming, 1 grazing allotment and a membership in a grazing association.
California we have 3 separate ranches leased for stockers above the ranches we own and of them, 2 stayed the same rate wise and 1 lowered the guarantee component of the gain and lowered the rate on a heifer by 2 cents.
In Wyoming we only have one private lease above our deeded ground and allotments but it is a large one. We run 6,500 steers on the one ranch and it's directly across the highway from our Wyoming HQ, so its pretty valuable to us. We didn't ask to make any adjustments to the rate paid there either but the owners are a great ranch family and have always priced very reasonable as they appreciate the job we do treating their ranch as if it were our own, putting good ranch families in the employee housing on site etc. We've leased the ranch since 1990 and based on their family trust having it setup to not sell this generation at least, we plan on continuing to lease it another 25-30 years at least. Ranches like that are always going to get top dollar but a lesser ranch, less capacity, less water, lesser facilities, further from deeded ground etc,. etc., etc. is going to feel some resistance if they price stocker ground in a fashion that works out to over about 50-52 cents COG this coming season.