Predicting the markets is somewhat akin to voo doo. But, if you get a kick out of it. Go ahead.
If you run stockers, it is really simple. At the first of each grazing season, go through your comparative budgeting process. Compare 1) owning the cattle with an effective hedge using puts and 2) taking in pasture cattle. Choose the one that is most profitable for that year’s circumstances.
Then, match that to your available forage to be budgeted out (including a drought reserve) over your grazing season. If you do a good job of that, you will maximize your profits every year and never ever run out of forage.
“Simple” is not necessarily “easy.” The hard part is the grazing planning. You have to know what you are doing or you will end up SOL. We are in the business of helping people do that. Shoot me an email and we can talk about it. — jtl, 419
by Amanda Radke via Beef Daily
It may still be the middle of August, but fall is just around the corner. Over the weekend, our South Dakota ranch finally got a reprieve from the oppressive summer heat, and we’re preparing to wean calves this week in anticipation of our fall female sale.
After watching calves grow all summer, weaning day is when we finally get to see how well our mama cows did on grass, how fast the calves grew in their first months of life, and which pedigrees are sorting themselves to the top. With weaning comes the fun of backgrounding, bunk-breaking, working and getting ready for sale day. It’s definitely my favorite time of the year.
As we anticipate selling calves this fall, I’m anxious to see how prices are going to shape up for the remainder of 2015. This week’s poll at beefmagazine.com asks, “What’s your outlook for fall cattle prices?”Vote in the poll here.
So far, the votes are split between the optimistic folks who say that the fall cattle market will be great and they expect prices to remain strong through 2015, and the pessimistic who believe prices have been too good for too long. They expect negative market psychology will cause cattle prices to weaken.
I realize that what goes up must come down, and if we’ve learned one thing from corn and soybean prices, it’s wise to prepare for the bad times and not extend ourselves too far during prosperous times.
That being said, I fall in the optimistic camp, and although I don’t have a crystal ball to predict the future, I think the remainder of 2015 and the first half of 2016 will be strong for cattle prices, barring any unforeseen catastrophes, of course. However, I’m also wishing I could put my blinders on and ignore the warning signs that cattle prices will drop sooner than I would like. Here are four articles featuring expert opinions on cattle market predictions for 2015 and beyond.
1. “Earned cow herd returns in 2015 predicted second highest on record” by Harlan Hughes for BEEF
Hughes writes, “Average total costs per cow came to $947 in 2014. This is a 13% increase in costs over the 2013 average of $839 per cow. The earned net returns of $657 are the returns to unpaid labor, management and equity capital. This compares with $242 per cow in 2013. I project that the earned returns in 2015 will be the second-highest on record. Yes, these are good times for beef cow producers. The year 2015 could be the second-best year ever for beef cow producers.”
2. “Beef herd expanding quickly after false start” featured in Iowa Farmer Today
Here is an excerpt: “Higher beef supplies in coming months and the sharp increase in pork and chicken supplies likely mean peak beef prices on this cycle have already passed. Finished cattle prices dropped below year-earlier prices in late June and continued to drop to $145 by the end of July. Decreasing prices from early spring into the end of summer is the normal seasonal pattern, but the drop in prices has been larger this year, falling from a spring high of $167 in early April. Futures markets have been surprisingly negative.”
3. “Livestock-CME live cattle futures sag with initial cash prices” featured by Reuters
Here is an excerpt: “Bullish market investors remain optimistic that tight supplies and profitable margins will encourage packers to pay about the same for unsold cattle as last week. Contrarians believe processors will curb slaughters to conserve their margins, bridle cash spending and underpin cutout values.”
4. “Are feeder cattle prices on the cusp of collapse?” by Wes Ishmael for BEEF
“Look for prices to erode year-on-year rather than collapse,” say analysts with Livestock Marketing Information Center (LMIC). Analysts with USDA’s Ag Marketing Service (AMS) agree. “On a quarterly average basis, fed cattle, yearling (700- to 800-pound steer), and calf (500- to 600-pound steer) prices all cyclically peaked in the fourth quarter of 2014,” AMS analysts explain. “Still, those prices posted year-over-year gains in the first half of 2015, but are expected to be mostly below a year ago for the balance of this year and throughout 2016.”
How is your outlook for fall cattle prices? Share your thoughts in the comments section below.
The opinions of Amanda Radke are not necessarily those of beefmagazine.com or Penton Agriculture.
A Handbook for Ranch Managers. In keeping with the “holistic” idea that the land, the livestock, the people and the money should be viewed as a single integrated whole: Part I deals with the management of the natural resources. Part II covers livestock production and Part III deals with the people and the money. Not only would this book make an excellent basic text for a university program in Ranch Management, no professional ranch manager’s reference bookshelf should be without it. It is a comprehensive reference manual for managing the working ranch. The information in the appendices and extensive bibliography alone is worth the price of the book.
You might also be interested in the supplement to this Handbook: Planned Grazing: A Study Guide and Reference Manual.