Upside Down Cattle

[apical meristem]

At $80 a roll for hay and feeding 8-10 bales until grass starts growing, you are upside down on your cattle. And on the prospects of high replacement prices when the drought ends, I am not counting on that. I haven't worked out the numbers myself, but I understand cow slaughter is actually pretty much even with last year. Texas will need at least a year to recover pasture and range, first. Next, at the age of most ranchers, they are probably not looking to take more risk by scaling back up: raising cattle in Texas is getting riskier than paper assets. Most aren't making a living off of them anyway, so why bother? Third, exports are helping prices now, and I want to say the dollar is resisting making new lows, but that really is more dependent on the action of the Fed. They will likely do something soon.

 

[SRBeef]

I really feel for those of you in the drought areas, if that is where you are.

As far as your post, I don't really see your point.

My thoughts:

Droughts do end, at some point.
Some may not get back into cattle when the drought does end, but I think cattle get in your blood and most will get back in cattle at some time and level.

"Paper Assets" such as CD's etc are not anywhere near break-even with inflation at today's ridiculously low interest rates. Unless you are into Greek notes!

Quality USA beef is a bargain yet in many other currencies. Dollar may not continue down but it sure is not going up much in the forseable future. With the rate of population growth in many other countries and the increase in wealth in many of those and demand for a better diet I don't think world wide demand for quality beef will go away any time soon.

When the drought ends, what are we going to do with all that Texas rangeland? IMO someone will have cattle out there before too long.

A lot of folks are "upside down" on a lot of other things than just cattle. If I were in Texas I would hold on to my best stock as long as I could and gradually sell the rest, poorest to better stock, as required to feed the best.

jmho. Good luck.

Jim

 

[apical meristem]

I have sold over half the cow herd; the older girls that were not going to breed back. I am still grazing the rest. The others I will test to see if they are open pretty soon. Biopryn has been wonderful for this.

I am hoping to be able to graze sheep all the way through and keep all of my replacements. It will be an epic year for lamb weaning weights. Not so much for calf weaning weights. It will be really interesting to see what lamb prices do later this fall and winter. Maybe everything that "baas" will end up with a $2 handle.

As for paper assets, if the Fed comes in and Europe gets its act together I can short volatility which should be good for >20%. If Europe doesn't get its act together, it should create some opportunities anyway. The yen and the won are the currencies to watch. Japan hasn't been able to stop the yen.

 

[Jim62]

............" CD's etc are not anywhere near break-even ".......

At least with CDs, you're not likely to lose your ENTIRE a$$........................ :hide:

 

[TexasBred]

At $80 a roll for hay and feeding 8-10 bales until grass starts growing, you are upside down on your cattle. And on the prospects of high replacement prices when the drought ends, I am not counting on that. I haven't worked out the numbers myself, but I understand cow slaughter is actually pretty much even with last year. Texas will need at least a year to recover pasture and range, first. Next, at the age of most ranchers, they are probably not looking to take more risk by scaling back up: raising cattle in Texas is getting riskier than paper assets. Most aren't making a living off of them anyway, so why bother? Third, exports are helping prices now, and I want to say the dollar is resisting making new lows, but that really is more dependent on the action of the Fed. They will likely do something soon.

Read palms or tea leaves??

 

[shaz]

I have to agree with SE Beef. I don't see anything driving the stock market and the uncertainty hurts the market. I can't find a stock that's got more upside than cows.
Plus, you can do all the research in the world but you never REALLY know what the boys in the boardroom are up to.

 

[spinandslide]

you cant eat the paper your CD's are written on when "the big one" hits..

 

[bigbull338]

your right on some of your thinking.an thats the age of the cattlemen are pushing retirement age.an over half that sells out completely wont buy back,thus lowering US cow #s even more.most years you stay upside down in the cow business.ill prolly stay in,but i dont want to think about the cost.i know i wont be buying hay when i run out.because its cheaper to feed them out of the sack.a bale of hay lasts 1 day.feed equal to hay cost will give you 3 days worth of feed for 25 cows.

 

[slick4591]

Being that I just bought my heifers last November and a bull since then, I'm really upside down with them. All I've had so far is vet bills and feed. I'd loose my shirt selling them. I feel like I've gotta hang in just to have a chance to ride that long road to potential profit.

 

[bigbull338]

Being that I just bought my heifers last November and a bull since then, I'm really upside down with them. All I've had so far is vet bills and feed. I'd loose my shirt selling them. I feel like I've gotta hang in just to have a chance to ride that long road to potential profit.

see your like me you cant afford to cut back or sellout.have you found any feed that will take the place of hay.

 

[slick4591]

I'm going to feed hay and keep liquid feed out. I also throw out some 14% creep, but I'll be cutting back on that probably.

 

[BC]

Have you looked into buying soy hulls and substituting them for part of the hay. That was an option the last two dry spells.