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Jeff_a_Caldwell
Senior Contributor

Herd expansion -- from Chris Hurt

Chris Hurt at Purdue says last week's USDA Cattle Inventory report shows we're in the "very early stages" of beef herd expansion. But, per-head profits will probably remain at pretty healthy levels:

 

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The first signs of expansion do little to change the bullish cattle price forecasts. Look for finished cattle prices to push into the higher $120s this spring, moderate to the mid-$120s this summer, and finish the year near $130. Spring highs in 2013 could climb to the low $130s.

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So, are you part of this herd expansion, or are you staying on the sidelines for a while to see how it plays out? Here's a little more from Hurt on some of the specifics.



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11 Replies
jrsiajdranch
Veteran Advisor

Re: Herd expansion -- from Chris Hurt

Here is the thing about this expansion. First it is assuming that we willnot have another drought. (which is highly unlikely right now)  SO if we have a moisture deficiet year even if it is not fullblown drought those heifers will be kept but that old cow will go!  So to look at heifer retention as the claim that herd expansion is underway may be premature.

 

I am thinking that culls stay high and we reduce the age of the cowherd as well as the size going forward.

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k-289
Senior Advisor

Re: Herd expansion -- from Chris Hurt

Excellant points  jr  along with  $$$  involved  with expansion cycle---interesting story will unwind when it comes to the consumer side of retaining market share--- Seems the word  "bullish"  has entered into the production auctions in Nebraska---lack of moisture will be the driver this spring ---   

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Nebrfarmr
Veteran Advisor

Re: Herd expansion -- from Chris Hurt

One thing I am seeing, at least here locally in Nebraska, is the strong cull cow prices.  You can sell an old cow for 60+ cents a pound, which gives you $700+ value for her, sell the baby calf off of her for another $200-$300, and get over $1000 for her.  Then, you just keep back an extra heifer to replace her, which would have sold for probably $900-$1000, and you just replaced an old cow with a heifer.  Yes, you don't get a calf the first year, but you now have a cow with 10 years of productivity left, instead of one or two, with no real loss of income.

We were pretty lucky, as the last couple years, we kept more older cows, and sold more heifers.  At the time, you'd get maybe $300-400 for the cow.  Now, the old cow is worth $300 more, but the heifers are up only $100 or so from last year.  Wound up 'lucking' ourselves into another $200 per old cow, that we had to sell anyway.

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Artifice
Senior Contributor

Re: Herd expansion -- from Chris Hurt

I think he is early.

 

so many don't trust this price boom.

 

which is bullish.

 

wait til, cow slaughter is way down and heifers are being retained.

 

lives will be ?  160- 180>?

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rightone
Senior Contributor

Re: Cow numbers need to show stabilization 1st, then Herd expansion may be possible later.,

5.14 million hiefers retained in 011.

29.9 million beef cows left as of end 011.

It takes 20+% hiefer retention to expand cow numbers, OR right at 6 million hd of hiefers retained.

 

FI weekly harvest mix runs a continuous 39 to 47% hiefers in the mix.

That means we're harvesting most and have not saved any really.

 

USA beef cow numbers have declined for 14 of the past 16 years.

Also they have declined for each of the past 6 yrs strait.

 

Smallest calf crop in the past 60 years was in 2011.

The largest annual decline ever in usa cattle numbers was in 011.

( 1985 had a big decline too, but was a dairy buyout year ) 

 

Annual calf crops will now be lower for at LEAST 3 more years, and more likely 4 to 5 more years.

It's perhaps statistically impossible to stabilize the annual usa trend of declining beef cow #s for at LEAST 2 more years.

 

Gotta stabilize cow numbers before they expand. 

It's that simple.

 

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k-289
Senior Advisor

Re: Cow numbers need to show stabilization 1st, then Herd expansion may be possible later.,

Young black cows bringing  $1850  to as high as $2000 really good stock---

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rightone
Senior Contributor

Re: More reasonable here

been getting plenty of good young breds and pairs in the $900 to $1,500 range.

That 1250 to $1,500 range cow has a big calf w her ( 180 to 325 lb calves on em )

Still plenty dry so plenty of cows will keep moving out of here.

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rightone
Senior Contributor

Re: JR, probably take 2 more years

to stabilize beef cow numbers @ say the 29 to 29.2  / .3 million hd range.

 

Current number is 29.9 million as of usda semi annual year end cattle inventory 011.

 

Next inventory is end of June 012 ( likely to reflect another 250,000 to 500,000 less beef cows ).

 

Keep in mind there are Native areas of the usa with non reported cattle numbers.

Also some of the "white" or anglo so to speak count areas, the cattle are double to quadruple counted.

 

Irregardless the usda numbers are a reliable trend indication.

 

 

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Artifice
Senior Contributor

Re: Cow numbers need to show stabilization 1st, then Herd expansion may be possible later.,

It has been so long since we had a full swing cattle I don’t think most realize what it takes.

It sure aint’ ok lets hold heifers and cull cows and bingo in a yr, feeder supply is restored.

 

2) I think been demand is more inelastic than most realize. Beef % of grocery budget is way down vs say 74-79. Way down. People love beef.

 

3) At some point leg one up is done, but when we really get FC prices where cow/calf really cuts culling and holds heifers, I think we will see wild blow off prices.

 

Now, ag-land feels dead economically, which effects industry psychology. Ie ‘better take 88 on older cows while it lasts”, same in dairy and tht will lead to an even smaller cow herd.

 

It is really shaping up. Filet = lobster prices?

 

Artifice

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