Calling LAA and other cattle guys!!!

[JD Seller]

Is there going to be a profit in cattle this year???? Yes corn is cheaper BUT the fat market is 30-40% down too. The futures are not looking great either. Cull cows are in the dumps so I think that will limit replacements being held back. Many guys will try and get another calf or two out of that old cow that will hardly bring $400-500 at the sale barn.

What leads me to thinking that the cattle market is NOT going to recover much if any is the supply and demand picture. There is a wave of MEAT in the pipe line/stores right now. Pork and chicken are beating the heck out of the market share due to price. Pork loins at $1.50 a lbs., retail price, is hard to compete with. Chicken can be bought in the $1 a pound range pretty easily too.

On the production side the pig confinement barns are popping up like weeds here in Iowa. They are Full right now too. So that is another wave of meat that will be competing with beef next year. Also there are many farmers harvesting corn as silage and high moisture corn at volumes not seen in many years. Many of them are thinking that cheap corn will work being feed out over selling it at market. This pressures profitability in two ways. One, the demand for feeder cattle will be brisk. So much or all of the lower feed savings is going into buying the feeder calf. Two, the increased production just adds more meat to the market place putting more down ward pressure on prices.

Then add in the likely hood of an economic recession in the next 12-18 months and you have tough times looking at us. The general economy is not good. The election is causing some wariness but I feel it is deeper than just that. We never really recovered from the recession of 2008. The numbers have been cooked to make it look like we have but in reality we have not. This current economy of the US is vastly different than it was in the past. We do not create as much "NEW" wealth as we used to. Much of the current economy is just handling the same dollar many times in a "service" economy. This difference makes things much different as there is not much of a cushion in this structure of jobs/economy.

So I just do not see anything that points to anything pushing any of the economy up wards very fast. I think it is a time to be very conservative in financial dealings.

What do you fellows think???

 

[NEKS]

You hit the nail on the head.

 

[s,mac]

Feeder calf prices in Calif. are in the tank. There is no green feed yet but we are getting some good rains weekend in the north state. I understand the banks are not lending because of loses from years past. At these prices we will not cover costs. We sell our calves in June so we came out ok this year. Next year will not be good.
Your right this is a good year to hang on to your cash. Steve

 

[Frankmn]

When I travel around, I see cattle in almost every farm yard or pasture. Leads me to believe beef prices will be even lower in the near future. It will be really tough if you cant make money with low priced corn by feeding it through animals.

 

[Brown Swiss]

Someone was drinking something hard when they came up with the saying "low prices cure low prices", or they just didn't live in today's world!

 

[dzc3]

Low profit margins in the farm economy trickle all the way down main street, this beast has a long tail and it may take awhile to recover. I do not see anything bright on the horizon. Interest rates are low now, but mainly do to a politicized Federal Reserve. That being said why is Japan looking at buying poultry from Russia and are trade delegation is doing what? JD do you remember when cattle 1st went over $1.00? That was caused in part with a trade deal with Japan. We gave them an unlimited access to our Ag products. In exchange we allowed them to import their cars. We allow China to refuse our Ag products but still allow their imports. We need to revisit some of these trade agreements. Your comment on "New Wealth" well we have just about dumbed down the generation that should be creating this to a point, most can't think for themselves and lack initiative to "try something new" Just my 2 cents.

 

[Traditional Farmer]

You ought to know farm product prices as well as other things run in cycles,cattle were up for a good while now they'll be down for a spell just the way it works.Once about the time all the
'experts' agree that prices won't fall or go up they'll do just the opposite.Remember all the folks that said grain prices could never fall and had a dozen reasons to support their claims?
One thing for sure to always be right when prices are high predict they'll drop and when prices are low predict they'll go up.Prices usually go up over a long period of time and fall very quickly with most farm commodities and things like the stocks too for that matter.One thing I can predict is those folks that listened to the 'experts' and bought the high priced cattle and financed machinery and land based on high prices will be having a lot of auction sales in the next year.

 

[Pair-a-dice farm]

The short answer is no, there won't be a profit this year and possibly the next 2-3 years. I've been around cattle all my life and raised them for over 50 years. When there is an election year, especially when there will definitely be a new president, the markets suffer.

In my opinion this is the time to cull your herd. When the market was good, I sold all my heifers and kept the productive older cows. Now that feeders are low, I'm keeping my heifers and culling my older cows. I sold 10 aged cows last week and may sell a few more. They haven't dropped in price as much as feeders, percentage wise. When prices recover, I'll have younger cows.

I don't think I'll ever see the bubble that we had a couple of years ago again in my life. In the long run, a market bubble is seldom a good thing for any commodity.

 

[Traditional Farmer]

As far as "Its time to be very conservative in financial dealings" I'm from the old school when ALWAYS is the time to be conservative in financial dealings.Guess I'm ready to do some
Winter repairs on my hay equipment just bought another $50 parts baler yesterday(LOL)Might not be fancy but but the Repo man ain't coming for my equipment either.I can turn a profit whether prices or high or low just make more when they are high,anyway meat goats are still selling very strong.

 

[coonie minnie]

This has been coming for some time... last year it seemed like EVERYONE was looking to buy bull calves- some who had never raised a calf before. It reminded me a bit of the stock market it in about '98 or '99.

This too shall pass. Wasn't it Joseph in the old testament who interpreted pharoh's dream- one of 7 fat cows, and 7 thin cows??? I think ag is about 2 years into the thin cow part.

I don't completely agree with your economy view... to me, it seems like those with money the past 8 years haven't been the service part of the economy; instead, that was more the late 90's early 2000s. Since 2008 it is production industries, ag and oil (or just energy) to name two that drove the economy since 2008. Now both of those are sucking wind for a while. Prior to that, in the early 2000's, the only production industry making good money was home building- witness the rise of Home Depot, Lowes, etc. It turned out to be a somewhat false economy, as many of those homes weren't financed with earnings, but debt. And we know where that got us.

either way, if we want to be one of the survivors, we need to buckle down. I'm curious, will you put less cattle on feed???

 

[coonie minnie]

On the other side of ag, those new hog barns you spoke of- those equal growing demand for corn. Not necessarily a bad thing...

 

[farmerwithmutt]

Yes and no for the big guys yes for the little guys in niche marketing there is a shortage . There importing beef from Australia and Ireland now because we are not producing what the costumers want . If you listen to the buyers and do things correctly you can open a market that is profitable . I know of several farmers that have waiting list of people that are wanting there product. That also leaves open a market that doesn't have to use much imput .

 

[rrlund]

I think it's a good thing I replaced some equipment while times were good. If we can buy groceries,that's gonna be about the best we can hope for. I was ticked off every time any of these boneheads from NCBA or other organizations said we NEED to expand the herd when times were good. They must have been just spokesmen whos livelihood depended on collecting dollars on a per head basis.

 

[Traditional Farmer]

Nothing new about farmers not wanting to produce what consumers want,they're too busy calling the consumers stupid,dumb etc because the consumers won't buy what farmers want to produce.Sooner or later though the buyer(consumer) always wins the battle and someone will produce what the consumers want to buy.

 

[1370pwr in ne]

Just thinking out loud but what if Texas and Nebraska went into a severe drought like 2011 and 2012.All kinds of cows went to market those years. Old ,young it did'nt matter. Hay price was 150 to 200 dollars a ton then. Thats what brought on the extremely high cattle prices to begin with. I don't want the drought back but some what stable prices would be nice.This will bring the pasture rent prices back down to reality again. There are cow calf guys that are paying 500 to 600 dollars for 150 days of pasture.[crazy high]The election year is against us thats for sure but mother nature can change things real fast too.

 

[rrlund]

Some of us want repeat customers,not fad buyer who don't know what they're actually getting until it's too late.

 

[ss55]

Look at the demand for beef. Beef exports have been keeping cattle prices high in US grocery stores. For most US consumers, beef prices have been high for the last ten to fifteen years. US consumers have lost their taste for beef. Beef prices may have to drop considerably more to generate much interest from turned off US consumers.

 

[gene bender]

Goes all the way back to jobs get people to work and they will buy it our exports seem to be gowing fast.

 

[farmerwithmutt]

I have seen these fads come and go . The problem is when it catches on everybody gets in and then there is the guy trying to make a fast buck and starts selling lower quality products. The big trick with niche marketing is get in early get a good customer base and sell by word of mouth. Grass fed beef is nothing new and I've been at it over 40 years unfortunately I had to get rid of the cattle last spring so I'm done but the guys I got started have people waiting to buy. One of the greatest selling tools I have is to tell someone to go to McDonald's and look at what comes out the door now granted we worked harder back then but look what shape people were back in the day .

 

[Spook]

The US has a ageing population, maybe folks are eating less red meat? I know I eat at most a 12 oz steak anymore, the 16 or 20 oz steaks are too much.

 

[notjustair]

I've said it before - I'll say it again. The 80's are coming. The one difference (at least for us) was that animal prices were high enough to keep us afloat. There will be little profit on anything, so you have to be a dabbler in everything and smart with funds. My 20 year old combine isn't such a bad idea now days. No matter what happens with that election it isn't going to be pretty for us.

 

[dhermesc]

Cattle are going down. If nothing else because hog prices will drive them down. Over the next 6 months more fat hogs are going to hit the market than there are slaughter capacity to process. The last time that happen hogs went down to $8 per hundred weight - back in 1998. Cattle will follow them down - just like 1998.

 

[rrlund]

The problem is when it catches on everybody gets in and then there is the guy trying to make a fast buck and starts selling lower quality products.

You nailed it right there. If you're doing a good job and have a following,great. Trouble is,some wannabe will buy a couple of Jersey calves and turn them loose on canary grass and sumac that wouldn't support a goat,then convince some unsuspecting "foodie" that it's the best. Then it becomes just like bison. Folks will pay a premium price to try it once,then they go back to what they know and like and say "never again".

 

[Greg1959]

Bison, Beefalo, Ostrich, Emu, Alpaca, etc. I remeber many people getting stuck with a bunch of them. They thought they could jump in and make a fortune 'While the the market was HOT'. They are still trying to dump those critters, if they haven't died off already.

 

[LonM]

I think you all have summed it up pretty well. I do not believe we are close to the bottom yet in the fed cattle market or with feeder calves. The next couple years will be recovery years for cattle feeders, who lost a lot of equity in the recent downturn, so they will be reluctant to bid up feeder calves. I think more heifer calves are still being held back to breed, only adding to the over supply of cattle. Coupled with high numbers of cheaper hogs and chicken, it would take a large shift in beef demand to turn things around in the short term. China will be buying more of our beef, which helps, but we still are in the downward swing of the cattle cycle, and that takes several years to move the other way. I look at it as a positive thing to a point, as I can add more replacement heifers to my herd at a much lower cost than a few years ago. I envision $0.75-0.80 fat cattle and 500# calves around $1.10-1.25 for a little while anyway...

 

[farmerwithmutt]

I always got a kick out of the real Angus trend if I remember correctly 80% of u.s beef is Angus that translates to 8 pieces out 10 is angus. We have a doctor near me that sells a certain variety of pig to a national chain restaurant I wouldn't eat it same with pasture raised chicken I've got a guy in the neighborhood who sells eggs to national company. All I've got to do is crack open there eggs and one of mine you can see the difference. I think to get beef prices up we have to make the customer more knowledgeable about the product there buying.

 

[MN Scott]

Historically cattle have followed a 10 year boom bust cycle. The last 10 plus years before this year or so we have been for the most part up every year. The last few years people that never had cows started their own small herds because of the prices. That made this bust much more severe. I'm afraid that cattle prices will halve again in the next year or so. This bust is especially painful because of the calving capacity we have built up mainly because of weather driven prices. Its going to take a few years to weed out the jump in speculators and get the herd down to a sustainable number. The lackluster economy, that's here to stay I'm afraid and peoples losing the taste for beef, cheap competitive meats, also compound things making it hard for beef to ever prosper again. The future is small markets, branded, grass fed, local sales, ect.

 

[rrlund]

I remember the first time I got 95 for a fat steer,not all that long ago. A cousin told me that was probably the most I'd ever get for one. I had a guy who used to buy two or three from me every fall and he'd give his full time employees each a half. I thought I was on top of the world getting prices like that. Things sure look different when you're watching it on the way down. I honestly think fuel prices are lower now than they were then. Not true of all inputs,but with all commodities down,inputs will have to continue to moderate.

 

[JD Seller]

YEs We did not put near as much corn up as cattle feed. I was able to forward contract cash grains sales for over $4 in May/June. We will be under half capacity by the spring.

 

[Traditional Farmer]

Yea people told me the same thing about 20 years ago when I got into meat goats,meat goat market has gotten better and bigger and it hasn't gone down with cattle.Organic market continues to get bigger and bigger when it hits places like Walmart like it has its going to be around awhile.I don't hear any of the organic growers crying the blues about low prices either BTW.

 

[Tx Jim]

(quoted from post at 11:59:30 10/16/16) Bison, Beefalo,

American Bison & beefalo is some darn good eating if not over cooked. I've had 2 beefalo processed & I've eaten the meat plus eaten several #s of American Bison

 

[Greg1959]

Traditional Farmer- I agree about goat prices and how they keep increasing. Thing is, I have never in my lifetime known anyone that eats goat meat.

Maybe, the price increase is due to a larger/growing ethnic group/s that prefer goat meat versus other meats.

 

[Al Baker(pumpman)]

I am all for low prices. Yes I will loose,, or just break even for a year or two. Never seen anything different in raising beef. I have never lived any other way than to be frugal. Buy older/broken equipment the big boys throw away and bring it home and that's my "new" tractor, rake, baler ect. I lost Over 250 hundred acres of rented ground in a three year period. One piece at a time to big shot, big rollers who had the banker man in their back pocket. Time for them to bleed out and make room for some smaller guys who kept their financial house in order. When times a rough this is the time for little guys to make improvements. Maybe a good deal at an auction. Maybe a land lord sick of no rent payment. Maybe a guy down on his luck willing to work a few hours on the farm up the road for a few bucks. I got my start in farming in the early 80s when you could buy iron for pennies on a dollar, and idle land was everywhere. I feel there is positively no need for beef farmers with 1000 head of cattle in a feed lot, but a large need for ten guys with 100. Same for hogs. Each small guy would need repairs and parts from local dealers. Each guy would need a pickup and lawn mower. More money would stay local. If one guy falls he doesn't pull someone else down with him. "Hay MR. BTO,, parties over," time for the hangover. Time for the fella who the others laughed at, or was told to get out of way to start smiling. It was NEVER a good time for debt. When did beef farmers ever have good times for more than a season or two? Sometimes you eat steak, sometimes its the bones n feathers. Tighten your belt,, this going to be one heck of a ride!! When the smoke clears lets see who still standing. Being big sure didn't help the dinosaurs. Grass fed, organic,all natural? Who cares as long as it turns a buck. If your neighbor sells something and it helps him stay afloat why kick him? If He can find a home for organic tobacco that someone else smokes and still gets cancer, more power to him. If someone likes chicken that eats grass n bugs, great sell it to them. Sure beats raising corn and beans at below production cost and crying while in line at the elevator. I support anyone who can think on his own outside of the box. Conventional farmers as a whole have cut our own throats. We have learned how to double our yields while not having more money to spend. When I first started to farm with my Dad we were getting 75-85 bu average on our corn. Same ground now yields 150-160 bu. easy. Double the money,but triple the costs. Who's making the money now? So how did we tackle this problem? We add 1000 acres. Now we need bigger sheller, bigger planter, bigger everything. Just to sell corn for a loss. Time for a good old fashioned blood bath. The pendulum swung way to the positive side with beef prices. Now it must swing back. Its going to suck for a while. Sorry, I did not intend to aim these statements directly at anyone on this board. I hope each of you are able to have a safe and successful season. I hope all works out well for seasons to come ,,, Al

 

[rrlund]

Nobody would say it's bad,just not something that consumers will pay a premium price for over and over.

 

[CenTex Farmall]

I'm getting the same price I got last year and year before for direct market grass fed animals. I have repeat customers and get more by word of mouth.

The failure of COOL helped me out as my customers don't want to buy food that came from who knows where and was sprayed or injected with who knows what. Frankly, I don't either.

I also did not burn my customers when beef prices shot up. I didn't need to. I only use the market for culls and salvage.

Like the other posts, I never borrowed one cent for equipment or operation.

Around here the small guys and big guys are doing OK. The mid-size guys seem to be the ones getting crushed.

Land prices in our area have started moving up in the last 18 months and are well beyond a reasonable ROI for agricultural Operations. I'm not sure what's driving it other than boomer retirees who got a lump sum payment and can now buy the "dream farm" they always wanted.

 

[Eldon (WA)]

(quoted from post at 10:00:29 10/16/16) Traditional Farmer- I agree about goat prices and how they keep increasing. Thing is, I have never in my lifetime known anyone that eats goat meat.

Maybe, the price increase is due to a larger/growing ethnic group/s that prefer goat meat versus other meats.

With the latest round of refugees there will probably be a shortage...smart farmers should jump on it!

 

[Traditional Farmer]

Yep ethnic folks from all over the World and I'm on the South end of the best market area in the USA.$2.50- $3.00 lb is going to look pretty good against what I get for calves this Fall and Winter.And considering the goats keep the fence rows clean and the bushes and weeds down in the pastures so I don't have to brush hog them they're a good deal for me all around.

 

[T in NE]

Decatur county beef has almost 2 million bushel of wet corn in a pile, rumor is they paid cash for another 2 million to the one large co-op. North of Oberlin, KS, they own every animal there, and that's only the finishing lot.

Timmerman bought another lot out to McDonald.

Someone else recently went to the bank about buying another feed lot, and was told he could sell the ones he had.

My boss says he doesn't know why everyone is crying, his calves will bring as much as last year.
"But I've got twice as many."

He weaned early and had them fed, which might make him another $8 each.
"If I don't pay the feed bill."

 

[T in NE]

And freight rates are so low, rather than try to run a truck back to Pennsylvania to visit, then try to load back home in a timely fashion, he just bought Amtrak tickets for me.

 

[Traditional Farmer]

With most any enterprise when a whole lot of companies or individuals start producing the same thing the profit margins usually get very slim and sooner or later there is a financial shakeout.Find a niche market where there is demand for a product and there is limited supply for whatever reason you generally have a good profit margin.Lots of good markets exist now for various farm products that can't be easily massed produced like corn and beans can.Every local vegetable grower I know sells about everything they can produce for instance.Funny how the guys that
are crying the blues about losing money on cattle,corn and beans are insisting there isn't any money in other farm products,well to hear them tell it there isn't any money in
cattle,beans and corn either.Many farmers hate to change with the times and consumer's tastes.