What market should I shoot for?

[ManyHorses]

Hi Everybody... I'm new to the group and this is my first post. I'm actually a commodities trader specializing in cattle and grains but I also have some experience in raising cattle and horses.

I've been buying prime grassland in central Missouri and plan to start a new Angus or Brangus operation beginning April 1st of 2005.

Question: Given the cattle numbers and prices today, and looking forward to getting cattle on the ground about April and keeping them about 8 months... My own inclination is to buy 400# steers, but what market segment would you suggest I shoot for?

Thanks much, Richard

 

[ollie]

Is your question what market weight you should sell at?

 

[ManyHorses]

No... Given the great growing conditions I have, what kind of stock should I start with... 400# steers for sale to ranchers looking for 750# for over the next winter, cow/calf pairs to later split and send mama to slaughter and calve for replacement, registered stock, bred heifers... those kinds of considerations.

I consider myself a 'grassman' - I can't see any profitability in wintering over stock in Missouri and would rather use the time to rebuild the pastures for the next spring and have even better herd results.

Thanks again, Richard

 

[dun]

Stockers, heifers or steers doesn't matter. Rotationally grze them then ship them when the growth slump hits your grass.

dun

 

[ManyHorses]

Thanks Dun,

I'm not yet familiar with the area enough to know when the grass may get 'down'... and that time may be different than market prices dictate because everybody else is doing the same.

To extend the season when should I be buying hay - the best 'bang for the buck' in terms of TDN and weight gain?

You seem kinda close by me in the Eldon area... Thanks, Richard

 

[dun]

A lot depends on what your grasses are. I would imagine from the Eldon area that it's primarily fescue, and high endophyte at that. The summer slump is not only in the grass growth, but also the palabiity decreases and the endophyte increases in jun-jul.
Feeding hay to stockers is a suckers game. Your profits will go in the front and come out the back.
You might be better off to hay the stuff and sell it rather then putting cows on it. Or hay it once, let it grow back, (if the ph and fertility is right, and Ma Nature provides the rain) and run stockers over the winter and sell in the spring.

 

[ManyHorses]

Dun,

You're right on the fescue/endophye problem... I plan to end that the first year by grazing it down and re-seeding... any suggestions on a good grass/legume combination?

Thanks again, Richard

 

[dun]

With the fescue, over seeding (frost seeding) with clover is about all you can do. Unless, you want to spray it, burn it, spray it, plant an annual. Harvest the annual and spray and burn it again. That will weaken the fescue so you sould have a few years before it takes over again. Trying to eradicate ky31 is like trying to get rid of inlaws. About the time you think you're successful, they/it will start to take over again.
We have one field that had the spray/burn, spray/burn treatment then was rotated with sudex early and Marshall rye in the fall for 4 years. We had to disk the snot out of it and planted winter wheat this fall. The fescue is still there but only around 10% of the field and it's patchy.
Overseeding with clover will help to dilute the endophyte and the cattle will do almost as well as on the newer novel/friendly endophyte grasses. My preference is red clover, if you pm me I'll tell you something real charming about the red clovers, some people prefer the large whites. Our fields are a mixture but tending more and more to reds as the whites die out and we don;t reseed.

dun

 

[Texan]

I've been buying prime grassland in central Missouri and plan to start a new Angus or Brangus operation beginning April 1st of 2005.

Question: Given the cattle numbers and prices today, and looking forward to getting cattle on the ground about April and keeping them about 8 months... My own inclination is to buy 400# steers, but what market segment would you suggest I shoot for?

Don't know about Missouri, but down here in Texas we still do things the old fashioned way. If we wanted to start a purebred operation, either Angus or Brangus, we would be looking at some type of female. Hard to start a purebred outfit in Texas buying 400 pound steers and keeping them 8 months.

 

[mwj]

There are a lot of people that feed all black cattle and do not have a cow calf pair on the place Some people just like those black cattle above all others! No where in his post did I see where he was starting a ''purebred operation''. I am sure he can find plenty of black or brangus stockers in the area if he wants to get his feet wet in the cattle buisness.
your friend
Mike

 

[ManyHorses]

Thanks mwj... couldn't have said it better myself but I didn't want to offend anybody! Richard

 

[txag]

I didn't want to offend anybody! Richard

probably too late to worry about that now. i think you're doing a pretty good job of it by coming on here & thinkin' you're the only person with edjucatin' & learnin'.

 

[WORANCH]

I didn't want to offend anybody! Richard

probably too late to worry about that now. i think you're doing a pretty good job of it by coming on here & thinkin' you're the only person with edjucatin' & learnin'.

when he buys the 400# steers, thats when he'll get his edjucatin' & learnin'.

 

[El_Putzo]

ManyHorses,

If it's 400# calves you are looking for, you can go to Olean to the market or Kingdom City, or Vienna or Cuba. Cuba, Vienna and Kingdom City all have weekly feeder cattle sales where I'm sure you could pick up as many of what ever breed you would like.

 

[ManyHorses]

Right now modern business practices are being used against farmers and ranchers and most don't have a clue about how to set sales prices, forward control costs or protect profits...

I'm offering awareness and education about identifying and managing risk. If I can help just a couple of guys to a better way of life, then make room for me on the bench because I'm on the team.

So let's be friends and help and learn from each other... Richard

 

[Gale Seddon]

Richard, I'm not a frequent poster here and I am surely not a sophisticated or very experieinced cattle person (being a Dexter breeder puts me in the "lunatic fringe" to start with). It sounds as if you have some marketing knowledge, etc., to offer, but some of the "hard-core" cattle people may be slow to accept where you're coming from. I enjoy reading as much as I can on this site, learn a lot (I have a lot to learn), and laugh a lot (some great wit here)! My impression is that most of the personalities on these pages have a lot of valuable experience and are willing to share and help others; they've sure helped me on a number of occasions. I've notice that when there's a desperate plea for help, they're the first to reply; I can't think of any website that provides so much information to so many people with cattle problems and questions!

I think you may be one of the few using your personal photo as your avatar (I "assume" that's you...being that I also raise donkeys, I use "ass-u-me" quite freely, laughing). I'll read your posts and hope to learn something! Hang in there! (From your "handle," I gather that you also have horses?)

 

[brokenmouth]

Right now modern business practices are being used against farmers and ranchers and most don't have a clue about how to set sales prices, forward control costs or protect profits...

I'm offering awareness and education about identifying and managing risk. If I can help just a couple of guys to a better way of life, then make room for me on the bench because I'm on the team.

So let's be friends and help and learn from each other... Richard

Im one of them dumb ranchers. explain how i can start setting prices like you say I dont have a clue

 

[ManyHorses]

You've got to understand that your cattle are only worth what they're worth to others to make a profit on... and your cattle sale prices are at the mercy of the 'big boys'... so indirectly you've got to trade your cattle where the 'big boys' trade.

Begin by watching and learning about Live Cattle prices on the Chicago Mercantile Exchange and working with a cattle savy broker who can advise you what and when to do it - and is in the form of MANAGING YOUR RISK... NOT SPECULATING IN THE MARKET.

Right now Live Cattle prices are maybe maxed out, but assume you're not ready to sell from a finishing standpoint. YOUR RISK is in the danger of having lower prices come about the time you are ready to sell about 30 days out from now... So manage that risk by transferring it to an options contract.

My reports coming in show packers in the Texas Panhandle area paying $90/ctw so let's assume that's the local cash market price in your area.

But let's say you're not happy with that price and want to set it at $94/ctw.

Sell a February 91 Call for 3 cents/lb... For the next 43 days you've now established your price of 94 cents (91 plus 3 cents) on 40,000#. If cattle go down in price, you keep the 3 cents ($1,200.00) and the Call option expires worthless to the buyer and you go on about your business.

If cattle prices go up, you'r fat and happy 'cause the you still have your cattle at the higher prices. You buy back at a higher price (loss) the Call option you sold offsetting it with the $1,200.00 premium (profit) paid to you by the Call buyer...

End results... You still have your cattle at a lot higher prices than $90/ctw on Dec 22nd, unlimited price protection on the downside for 43 days, and it cost you nothing except the brokers commissions. YOU MANAGED YOUR RISK BY TRANSFERRING IT TO THE CALL BUYER AT 94 CENTS.

The Call buyers breakeven is 94 cents - 91 cents contract price plus his 3 cent premium paid to you. If futures price approached 91, you'd probably buy back the 91 Call and resell a 92 or higher Call to keep following the market upwards... Ultimately with good management, the market would top out and you'd be able to keep the premium and still have your cattle to sell at maximum price locally.

Anyway, as you can see, like anything else there's a lot to it... but that's how it's done.

Hope I didn't miss anything and hope this helps... Richard

 

[ollie]

If cattle prices go up, you'r fat and happy 'cause the you still have your cattle at the higher prices. You buy back at a higher price (loss) the Call option you sold offsetting it with the $1,200.00 premium (profit) paid to you by the Call buyer...

End results... You still have your cattle at a lot higher prices than $90/ctw on Dec 22nd, unlimited price protection on the downside for 43 days, and it cost you nothing except the brokers commissions. YOU MANAGED YOUR RISK BY TRANSFERRING IT TO THE CALL BUYER AT 94 CENTS.

What about the market disparity between cash cattle and the board. It never works out even.

 

[ManyHorses]

Hi Ollie,

Cash markets won't work out relative to futures any better than cash markets work out to each other.

For example a producer in Montana has a completely different crop cycle compared to a producer in Georgia; while at the same time futures prices in Chicago are doing their own thing on an international scale... they are all react relative to one another.

As an analyst my job is to open my mind to all the possiblities coexisting and make sense of the relative changes in price change and direction.

Sometimes it's only 'clear as mud'....

Thanks for asking... Richard