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Jeff_a_Caldwell
Senior Contributor

The new 'Animal Era': Buying cattle on paper?

Just saw some info from Bryan Doherty this morning and a little longer-term outlook info from Chris Hurt at Purdue about the new 'Animal Era' coming up. Cattle prices continue to stay pretty sturdy and there's just not much for bullish movement for the grains:

 

"If the years from 2007 to 2013 could be described as the 'Grain Era' in which crop sector incomes had an extraordinary run, the coming period may be described as the 'Animal Era' when producers of animal products have strong returns," Hurt says.

 

This may be a little bit of a risky strategy, but what about owning cattle on paper? Would it be worth it these days? Or, too risky? Anybody thinking about making changes to your operation based on the idea that we're moving toward an 'Animal Era' and away from a 'Grain Era?'

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5 Replies
Shaggy98
Senior Advisor

Re: The new 'Animal Era': Buying cattle on paper?

Jeff, does that come with cheese or a baked potato? How would that help rebuild the cattle industry?

Maybe I'm looking at things from a wrong or different angle than most, but I've never considered speculating a good investment. If I want something I'll go buy it, I don't want to buy an "Option" to rebuy it later.
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Shaggy98
Senior Advisor

Re: The new 'Animal Era': Buying cattle on paper?

Guess I'd better answer the second part of your post. The cattle industry will probably be my marketing strategy for the majority of my milo I harvest this fall. If it's worth $3 at the elevator, what does that make it worth in a feed ration? Already got a standing bid out to restock my cow/calf operation, I'm thinking real hard about buying some stocker calves to feed out through the winter.
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highyields
Senior Contributor

Re: The new 'Animal Era': Buying cattle on paper?

In my area the reason the grass got tore up is because people aren't willing to take care of the cattle, hogs, or any other kind of livestock, they want their weekends free, they want to go on vacation and dont' want to have to worry about cows getting in the neighbors corn fields, its a lot easier sitting in an air conditioned cab spraying roundup then fixing fence or baling hay.    So thats the attitude that we have today.   Now will that change??    I doubt it.   Sure they'll be a few guys that will expand and want to raise cows, but for the most part cows and hogs are four letter words.   Well a guy that is 58 years old today want to plant grass and hay back??  I doubt it.   How many guys are willing to go out and buy $3000/head or higher breed cows and heifers?    

 

There is also guys that have went from 12 to 16 row equipment.   Are they going to pull 100-200 acres out of corn and bean production when they have payments to make on that new equipment.    Just to have 40-50 cows,,,(talking ground east of Missouri River)   

 

Once about 15 years ago I saw a map of where this guy thought the future of cattle production was in the United States. He had a circle drawn around southeast corner of Nebraska (my play ground) southern Iowa, northern Missouri, and North eastern corner of Kansas,  His arguement was that this area had better soil then western areas, a little less drought prone area,  a good supply of crop residue for winter forage, the inability to grow huge corn yields year over year and it was a high level of private ownership.    

 

 

Only time will tell...

 

I'm holding to my cows for the time, and if ground comes up at the right price, I'm expanding acreage as well.   Just my plans.   

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Shaggy98
Senior Advisor

Re: The new 'Animal Era': Buying cattle on paper?

That's the difference between our two locations highyields. The price of wheat could reach $20, soybeans could reach $30 and corn and milo could be above $10 and I'd bet that very few (if any at all) in this area would rip out grass. The cattle industry has always been the $$$ maker in this area. Like I opened with, just a difference in location. I for one will be spending high dollars on cattle any day now, I'm just not sure how many.
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luisvieira
Senior Contributor

Re: The new 'Animal Era': Buying cattle on paper?

I heard a lot of it at the Expointer, a popular farm show here in southern Brazil (http://www.agriculture.com/news/business/stroll-a-gigtic-farm-show-down-south_5-sl44970). The advantage here is that there is not dilemma with the soybea prices. Feedlots are not very popular here, so a bunch of land can be shifted from cattle to soybean, and the cattle be confined. Brazil has an average of less than one animal per hectare - it can go to up to 4 animals per hectare. Here yet a lot of people are excited about milk prices...

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