We are all familiar with the saying, "You've got to make hay while the sun is shining," and there's a market takeaway in that catchy phrase for us to utilize now. The cattle cycle is consistent in operating in a 10-year window where, historically, only two years out of that span offer tight feeder cattle supplies because of a reduced cow herd that garnishes higher prices for cow-calf producers. For the other eight years, cow-calf producers hope to break even but are also familiar with negative net returns, as they consistently buy their inputs at retail value and sell at wholesale prices.
So, I ask you: Is it time to start rebuilding? If you've had to cull down on your cow herd because of drought or a lack of profitability, is it time you start keeping back replacement females and slowly adding numbers back into your herd?
In most cases, I'd highly advise against it right now. How can you look at the prices that heifer calves are bringing right now and pass them up? Nationwide, it's pretty safe to assume that you can expect $1,500 to $1,800 out of calves this fall, which is a pretty penny to pass up in any market.
Yes, there are some vulnerabilities to this market strategy, as it's also a poor business plan to think that you can buy $3,000 to $3,200 bred heifers at the market's high and that they'll pay you back over the years when the market is at its weakest for the current cycle. However, if you have a relatively young cow herd, or if you can wait to buy females when bred cow prices get soft again, it seems nearly unfathomable to me to miss the opportunity to make hay while the sun is shining and forgo these strong feeder cattle prices.
ShayLe Stewart can be reached firstname.lastname@example.org
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