There are a few indescribable feelings a cattleman gets to experience through his/her hard-earned, trying times. You can try to explain that gut-wrenching feeling, as you take a deep breath to hold back your emotions. But until someone has personally walked through the turmoil to see the sunshine, it's hard for that individual to understand.
Honestly, is there anything better than hearing the cattle pot's gate slam shut on your first entire load of steer calves sold? Is there anything better than buying a set of fancy -- and I do mean fancy, "make the banker wonder what you were thinking" kind of fancy -- set of first calf heifers? Is there anything better than kicking out your cows and calves after branding to fresh grass and seeing your brand glisten across the hills? If you think so, I beg to differ.
In order to see those dreams come to fruition, producers must be smart -- smarter than the market kind of smart! Unfortunately, there isn't a road map that shows us when to buy heifers, when to market our cull cows and how/when we should market our calves.
But when the market flashes an obvious opportunity before our eyes, we must be ready to jump on it.
If you've been watching the markets this fall, you've noticed the drastic decline in bred-cow prices. A month ago, it wasn't hard to sell commercial bred heifers for $1,400 to $1,600, but during the last 10 days the market has been flooded with cows and calves, and now radically favors buyers.
Every coin has two sides, and so does every market outcome. For the producers that are culling down with no intention of rebuilding their herds, we share their heartache and understand how difficult this past year has been. However, for the producers that have been keenly waiting for an opportunity to buy cheap cows with low interest rates, there is something to look forward to.
Pinpointing how much one should pay for bred females is difficult. We can't just flip a coin for the answer.
Weighing out factors of type and kind, genetics, mature weight, docility and mothering ability is tedious, but we often have a banker to answer to and we must be able to validate our decisions. For most cow-calf operations, there's a golden rule that applies to buying bulls and bred heifers: Old-timers often say that you can pay four-times the amount of one steer-calf for a bull and two-times the amount of one steer-calf for a bred heifer. So, for example, if John Doe's ranch sold 625-pound steers for $1.48 per pound, he averaged $925 per steer. When buying bulls, he could consider paying upwards of $3,700 per bull ($925 X 4). When buying bred heifers, John Doe could consider paying upwards of $1,850 for bred heifers ($925 X 2).
Knowing where the market sits and what other like-minded operations are paying for cattle is comforting, but let me be the first to remind you that not all cow-calf operations run similar financial structures and not all seed-stock operations can look one another in the eye. If you're looking at buying more females, put your pen to paper and avoid incurring any costly surprises down the road. How much additional feed/hay will those new females require through the winter? Do you have the labor resources around to calve out more females? And next spring, do you have enough grass to house those additional cows?
When the market shines an opportunity -- and if you're financially able to jump at the chance -- there's no better time to buy cows than when the markets are crying. This is a prime example that perfectly illustrates the saying, "you make your money the day you buy, not the day you sell."
ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com
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