Profiting from the drought

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Ruark

Ruark

Well-known member
Joined
Feb 16, 2011
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282
City & State/Province
Evant, TX
I'm already starting to meet some ranchers who are positioning to profit from the drought. With everybody selling out their herds, the market for replacement livestock next spring is going to be intense. Talked to a guy today (pretty big time local guy, has over 1100 head of Angus/Black Baldy), who has 120 newly bred Angus cows. By next spring they'll be pretty well along, and will easily sell for $2000+ each. He's chomping at the bit.
 
Ruark":jj6kitrj said:
I'm already starting to meet some ranchers who are positioning to profit from the drought. With everybody selling out their herds, the market for replacement livestock next spring is going to be intense. Talked to a guy today (pretty big time local guy, has over 1100 head of Angus/Black Baldy), who has 120 newly bred Angus cows. By next spring they'll be pretty well along, and will easily sell for $2000+ each. He's chomping at the bit.
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He may not fare quite so well. Last time this happened they trucked in all those angus. That is the most popular breed everywhere. There won't be a shortage there. We will be able to buy all we want.
 
By next spring they'll be pretty well along, and will easily sell for $2000+ each
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I'll believe it when I see it.

On the off chance that it does happen, all that one needs to do is wait a month, or two, or six and buy at half that price.
 
jack1234":35l0zxqa said:
By next spring they'll be pretty well along, and will easily sell for $2000+ each
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I'll believe it when I see it.

On the off chance that it does happen, all that one needs to do is wait a month, or two, or six and buy at half that price.
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I was at a TAMU forage workshop a couple months ago and they are predicting replacements to be that high or higher.
I don't think you can buy at half that price when they are not there to buy. A lot of cow's went to slaughter. I wish I had a lot full of Hereford bulls this spring, I wish I had not reduced the herd by 2/3's, I wish that all the herf cows are carrying baldie heifers. If again if it start's raining people are going to be rebuilding any heifer or cow that is worth a pinch of dried up monkey shyt is going to be retained. My neighbor is reducing his herd by 90% he got 29 rolls of hay off 70 acre hay field this year. Mine has been reduced by 66% and I am selling out in january if we don't get substantial rains.
I don't know if I will buy back might just lease the place for hay field. Most in the Southwestern Cattlemens survey said they are going to restock.
 
With the futures giving $1.50 for 8wts, I doubt you'll see any good stock selling for $1,000. I would like to buy a cow for that and sell her calf for $1200, but it ain't gonna' happen. I would think if someone is restocking, early may be better than waiting. Around here they're gonna' be worth 1500 now, and the demand hasn't started yet. Fall calving junk is bringing $1100. gs
 
The drought will not end in one season it will be a slow recovery ,may go on for years a lot of people will not buy back because of age . The ranchers who are selling out is having to pay off debts and will not have the money to buy back in, the people that are holding their cattle in the drought area will have all their profit invested in feed. It is not enough profit in cows and calves to borrow money and pay $2000 for a cow, never will pay off :2cents:
 
I haven't been to a cow sale in ages but read market reports. Take one he77of a cow to even brin $1000 n this neck of the woods. Only time will tell if you're friend hits a lick or takes a lick.
 
cowboy43":2qb97h1u said:
The drought will not end in one season it will be a slow recovery ,may go on for years a lot of people will not buy back because of age . The ranchers who are selling out is having to pay off debts and will not have the money to buy back in, the people that are holding their cattle in the drought area will have all their profit invested in feed. It is not enough profit in cows and calves to borrow money and pay $2000 for a cow, never will pay off :2cents:
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It would take ten years to pay off a 1000 dollar cow if you are one he!! of a cowman.
People will still buy them, most people that own cow's are not turning a profit anyway.
In Texas alone 92% of all cattlemen own less than 50 head and most of them are subsidized cow's.
 
TexasBred":4gy3648g said:
I haven't been to a cow sale in ages but read market reports. Take one he77of a cow to even brin $1000 n this neck of the woods. Only time will tell if you're friend hits a lick or takes a lick.
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TB everybody has been reducing herd size for two years now, summer before last is wasn't uncommon for tiger's to bring 1400 to 1500 at Crockett. I would be scared to speculate the price on Tigers and Brangus type cattle next spring if we have a wet winter. It will be high. There is a lot of doctor's, lawyer's and indian chief's that don't care what they have to pay for a cow. There is going to be a shortage of quality cattle next year prices will be high.
 
Very true but so many of the hobby farmers like myself (small guys) probably won't go back in. Bet the traders will be busy. Every cow coming thru the ring will have a half dozen bald spots where the tags from yesterday's sale and the sale the day before were removed and all the hide wore off the hips and pins. And some fool will pay a premium for her. Around here it seems all the "1%" is investing in property and throwing up high fences and populating with deer....scientific breeding they call it. Really nothing but a good tax right off and a nice place for a weekend of partying. They do know how to put it on the top shelf tho.
 
packer cows are bringing .65, 1300# is 845.00.
even now that we are still in a drought nice young black bred cows are bringing a 1000.00 or more.
1.50 calves will bring some ranchers back in, but the drought will be the biggest factor.
this thing is far from over, even if it started raining today we have a long ways to go.
 
By January, about 12 percent of Texas' roughly 5 million head of cattle will have disappeared since last year — shipped, slaughtered or sold, according to David Anderson, an economist with the Texas AgriLife Extension Service, an agriculture education agency based at Texas A&M University.
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Source: http://seattletimes.nwsource.com/html/n ... tle16.html

OK, it says 12% of 5 million will disappear by either shipped, slaughtered or sold, out of Texas.
Logic: those “shipped” and “sold” are not being taken out of service as are those “slaughtered”.
Logic: The actual % being taken out of service is actually less then 12%.
My best guess would be more like 6% were actually slaughtered, which equates to only 300,000 head of cows, which is a drop in the bucket and can easily be replaced.

If I take it one step further, of those 300,000 about half were probably ear tagged as culls before the drought and replacements are already in the pipeline.
So that only leaves 150,000 to be replaced because of the drought, and that is chump change.
Now subtract those that will not be replaced due to cattlemen reducing their herd size or getting out of the business altogether and you are probably down around 100,000 head to be replaced..
And that is nothing to worry about when it comes to replacements!

Good luck
SL
 
Sir Loin":2l0fdfs2 said:
By January, about 12 percent of Texas' roughly 5 million head of cattle will have disappeared since last year — shipped, slaughtered or sold, according to David Anderson, an economist with the Texas AgriLife Extension Service, an agriculture education agency based at Texas A&M University.
Click to expand...
Source: http://seattletimes.nwsource.com/html/n ... tle16.html

OK, it says 12% of 5 million will disappear by either shipped, slaughtered or sold, out of Texas.
Logic: those “shipped” and “sold” are not being taken out of service as are those “slaughtered”.
Logic: The actual % being taken out of service is actually less then 12%.
My best guess would be more like 6% were actually slaughtered, which equates to only 300,000 head of cows, which is a drop in the bucket and can easily be replaced.

If I take it one step further, of those 300,000 about half were probably ear tagged as culls before the drought and replacements are already in the pipeline.
So that only leaves 150,000 to be replaced because of the drought, and that is chump change.
Now subtract those that will not be replaced due to cattlemen reducing their herd size or getting out of the business altogether and you are probably down around 100,000 head to be replaced..
And that is nothing to worry about when it comes to replacements!

Good luck
SL
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The herds around here have been reduced by a lot more than 12% you have to look hard to find a cow standing in a pasture now. I don't know about your source but mine the county agent says 60% of the Texas herd has been liquidated.
Articles in several papers were quoteing several months ago that 50% of the Texas herd was gone. That is a lot of cows.
Our local auctions were liquidating 30,000 a month that was 20,000 above normal.
 
The numbers will come back faster than you can imagine. All this so called doom and gloom is just not true. For every person who sold out and is not getting back in there is one with a bag of money waiting to take there place. Not every one is in debt. Not every one will burn their profit on feed. Some people are doing just fine and will capitalize on the high demand as we come out of this.
 
Sir Loin":3kr48whv said:
By January, about 12 percent of Texas' roughly 5 million head of cattle will have disappeared since last year — shipped, slaughtered or sold, according to David Anderson, an economist with the Texas AgriLife Extension Service, an agriculture education agency based at Texas A&M University.
Click to expand...
Source: http://seattletimes.nwsource.com/html/n ... tle16.html

OK, it says 12% of 5 million will disappear by either shipped, slaughtered or sold, out of Texas.
Logic: those “shipped” and “sold” are not being taken out of service as are those “slaughtered”.
Logic: The actual % being taken out of service is actually less then 12%.
My best guess would be more like 6% were actually slaughtered, which equates to only 300,000 head of cows, which is a drop in the bucket and can easily be replaced.

If I take it one step further, of those 300,000 about half were probably ear tagged as culls before the drought and replacements are already in the pipeline.
So that only leaves 150,000 to be replaced because of the drought, and that is chump change.
Now subtract those that will not be replaced due to cattlemen reducing their herd size or getting out of the business altogether and you are probably down around 100,000 head to be replaced..
And that is nothing to worry about when it comes to replacements!

Good luck
SL
Click to expand...
Sir Loin, I read the same figures that you quoted, BUT they didn't jive with what I was seeing at the sales here in East Texas. The percentahe of cows in the runs were nearly double what we normally saw. We shipped a lot of cows out of state to packers who do not ordinarily participate in our markets sothose cows show up in other regions kill figures when you look at USDA numbers.. Some of the packers bought some cows and put them on feed to upgrade the carcass yield. My guess is that we have sold 25 to 30% of the cows.

I feel that replacements will be higher, but not near as highj as some people are predicting. My gut feeling is producers are going to be skeptical that the high replacement cows won't be able to pay for themselves before they are used up and that will hold down prices. The other factor is a lot of land that had cattle in Texas is being bought for its recreational value.
 

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