Trying something new

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Trying something new

Sep 23, 2017 | 09:25 1 Normally we background our calves through the winter and run them on grass the following summer until they are sold sometime from September to December. They weigh 900-1000 lbs at this point and we like it since it allows us to calve less cows (least favourite part of the year unless the sun is shining and no mud/snow) and still gross the same total dollars.

The past two years have allowed us to build quite a stockpile of silage since the weather wasn't conducive to making hay. We would like to turn some of this feed into cash and are thinking of buying a bunch of calves this fall that would be similar to ours and backgrounding and grass them as well. We know what our costs are to do this and now have a good idea what the purchase price will be which is a bit higher than expected. That's ok since we haven't sold our yearlings yet.

It's been 35 years (before I was born😉) since we've bought anything besides bulls hence the title. Just curious what everyone's crystal ball thinks market prices will be like a year from now ( barring unforeseen events that we all know can happen)?

Do you think they'll be steady, lower, or higher in September 2018??

I would like to think higher 👍though we can still turn a profit if they drift a little lower. Realistically I think they'll be steady which would be fine with me.

Just curious. TIA

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Sep 23, 2017 | 21:22 2 My crystal ball is usually kind of fogged but here goes, the cow herd expansion in Canada is non existent in the US it seems to be on hold, beef demand is good especially export markets. On this alone I would expect the the market one year out to be at least steady. Reply With Quote
Sep 23, 2017 | 21:27 3 Don't know about you but I wouldn't take that kind of gamble, have done it in the past but feel it is too risky now with the lack of market transparency/futures manipulation. I read one commentary that feeders are expected to drop significantly next spring due to growing US inventory. If you buy calves this fall it might be smart to sell them in the spring and spread your risk so not everything is heading for the fall market. Another downside is bringing in auction cattle to what is essentially a closed herd. That's one reason we no longer do it.

When we have done this in years gone by the most profit has been buying discounted cattle either bulls or horned, doing the work on them and finishing up with non-discounted cattle. It gives you a bit extra wiggle room on margins.

A far more secure venture would be custom feeding cattle for someone - maybe some in the dry areas need some cows wintered until just before calving time? That way you know your margin up front and less cattle will move more silage if they are cows versus weaned calves. Simple to manage winter feeding cows too versus weaned/backgrounding calves of unknown genetic and health potential. Reply With Quote
Sep 23, 2017 | 21:49 4
Quote Originally Posted by grassfarmer View Post
Don't know about you but I wouldn't take that kind of gamble, have done it in the past but feel it is too risky now with the lack of market transparency/futures manipulation. I read one commentary that feeders are expected to drop significantly next spring due to growing US inventory. If you buy calves this fall it might be smart to sell them in the spring and spread your risk so not everything is heading for the fall market. Another downside is bringing in auction cattle to what is essentially a closed herd. That's one reason we no longer do it.

When we have done this in years gone by the most profit has been buying discounted cattle either bulls or horned, doing the work on them and finishing up with non-discounted cattle. It gives you a bit extra wiggle room on margins.

A far more secure venture would be custom feeding cattle for someone - maybe some in the dry areas need some cows wintered until just before calving time? That way you know your margin up front and less cattle will move more silage if they are cows versus weaned calves. Simple to manage winter feeding cows too versus weaned/backgrounding calves of unknown genetic and health potential.
What about raising horses for meat? Steal Tar Tar👍 Reply With Quote
Sep 24, 2017 | 21:08 5
Quote Originally Posted by DaneG View Post
My crystal ball is usually kind of fogged but here goes, the cow herd expansion in Canada is non existent in the US it seems to be on hold, beef demand is good especially export markets. On this alone I would expect the the market one year out to be at least steady.
That's the same logic I was thinking of. Let's hope it goes that way. 😉 Reply With Quote
Sep 24, 2017 | 22:28 6
Quote Originally Posted by grassfarmer View Post
Don't know about you but I wouldn't take that kind of gamble, have done it in the past but feel it is too risky now with the lack of market transparency/futures manipulation. I read one commentary that feeders are expected to drop significantly next spring due to growing US inventory. If you buy calves this fall it might be smart to sell them in the spring and spread your risk so not everything is heading for the fall market. Another downside is bringing in auction cattle to what is essentially a closed herd. That's one reason we no longer do it.
Just curious why you think the market is functioning any different than in previous years? I don't think a few years ago next to any market "analysts" were thinking we'd get $2.63/lb for 950 lb steers. I never imagined that either or understood the reasoning for it but made the best of it. 😉

Part of the reason for grassing them next summer is we could graze most of our hayland which would make life easier than fighting the weather to make bales and selling them.

We've custom fed calves, cows, and bred heifers and calves them too in the past. We've been in a community pasture as well so it's not really a "closed"herd either. Reply With Quote
Sep 24, 2017 | 22:41 7
Quote Originally Posted by grassfarmer View Post
When we have done this in years gone by the most profit has been buying discounted cattle either bulls or horned, doing the work on them and finishing up with non-discounted cattle. It gives you a bit extra wiggle room on margins.

A far more secure venture would be custom feeding cattle for someone - maybe some in the dry areas need some cows wintered until just before calving time? That way you know your margin up front and less cattle will move more silage if they are cows versus weaned calves. Simple to manage winter feeding cows too versus weaned/backgrounding calves of unknown genetic and health potential.
The calves with horns and nuts are ok with us as long as the discount is enough. Already talked to our agent and that's what he recommends as well.

When we've custom fed there's always issues that come out of the blue as well. This was with local guys so a solution was easier to figure out than someone 400 miles away. Mom also said if we're doing a bunch more work (feeding) than we might as well buy the critters and gamble since nobody goes to the casino from here anyways. Reply With Quote
Sep 24, 2017 | 22:47 8
Quote Originally Posted by sumdumguy View Post
What about raising horses for meat? Steal Tar Tar👍
The only "horses" we buy are Japanese quarter horses (Yamaha). Usually buy a new one every three years and run 'em till they die.

Steak tartare???

You're obviously impatient if you can wait for your food to cook. I've been in the back of XL foods and seen what goes on there. I'll wait the extra ten minutes gladly. 😎 Reply With Quote
Sep 25, 2017 | 06:40 9
Quote Originally Posted by woodland View Post
Just curious why you think the market is functioning any different than in previous years? I don't think a few years ago next to any market "analysts" were thinking we'd get $2.63/lb for 950 lb steers. I never imagined that either or understood the reasoning for it but made the best of it. 😉
Go back and read this article I posted from the US last winter.
http://http://www.agriville.com/threads/32794-bluegrass-stockards
That's the way I see it - not the real opportunities that we used to see when things were simpler.
I look at the scenarios often and it doesn't tempt me any longer - the potential margins are so small relative to the capital risk. I certainly wouldn't be laying out huge sums buying cattle on the "hope" or "gamble" that the market might be good or better next year. You can decide the risk you are comfortable with though. Reply With Quote
Sep 25, 2017 | 09:17 10 Then there is the Trump/NAFTA fear factor. Surprised R-CALF haven't been chirping more about getting the border closed again. Wouldn't put anything past the current regime to the south. Reply With Quote
Blaithin's Avatar Sep 26, 2017 | 13:44 11 If you've got the feed sitting around and need to utilize it, I don't see an issue. While the markets don't look like they're going to skyrocket any time soon, I agree that they should at least be steady and similar next year. Barring any catastrophes like TB, BSE, NAFTA... acronyms seem to love the beef industry.

I understand where you're coming from in wanting to carry them over the summer to use up grass instead of having to hay, however if it were me I would be keeping in mind the grass market next spring. Pick up some cheaper animals this December when the market does it's pre Christmas dip. Nut them, dehorn them, or just look at all their pretty spots that allowed you to buy them cheap, then feed them up for a few months. Generally the market to get grass animals is high enough to be tempting, even if you only sell half and keep the rest to deal with your grass and risk whatever fall prices might do. Not huge profit margins by any means, but will handle your excess silage and grass issues. Although the profits are also going to depend on how you think you're going to manage them. Antibiotics, vaccinations, implants, handling, etc. If you've got a good set up for the handling then that would make things so much easier. Reply With Quote
Sep 26, 2017 | 20:34 12 If you know your costs, then I would look ahead at the WLPIP program as an option to secure a profit. If you can't do it on there, then I would probably steer away from buying feeders. There is sometimes money if you can buy cattle similar to your own and put together bigger lots, or if you can buy tail end cattle and clean them up. Reply With Quote
Sep 29, 2017 | 23:01 13 Blaithin

I have kept track of what we could have sold our calves for at weaning vs what they sold for 10-12 months later and the only year we worked for a "break even" scenario was last year. We got enough to cover all the expenses so at least we didn't lose on the deal.

You mentioned possibly selling some in the spring as grass calves and we always keep that in mind in case we are dry or lose some pasture at the last minute (has happened a few times).

We've got a decent working system and are planning on rebuilding it after harvest and trenching 3 miles of water line in this fall. Hopefully the weather cooperates better than last year...

Thanks for the ideas. Reply With Quote
Sep 29, 2017 | 23:19 14
Quote Originally Posted by grassfarmer View Post
Go back and read this article I posted from the US last winter.
http://http://www.agriville.com/threads/32794-bluegrass-stockards
That's the way I see it - not the real opportunities that we used to see when things were simpler.
I look at the scenarios often and it doesn't tempt me any longer - the potential margins are so small relative to the capital risk. I certainly wouldn't be laying out huge sums buying cattle on the "hope" or "gamble" that the market might be good or better next year. You can decide the risk you are comfortable with though.
Grassfarmer what is the difference between buying calves and keeping them for a year and hoping you make a profit above your expenses vs keeping a cow for a year and selling a calf for hopefully more than your expense of raising it? Unless your cows, land, and equipment is all paid for and free labor is available there is definitely a "break even price" on those calves which the market may or may not pay.

Just curious since most guys around here have no idea on their cost of raising a calf. They gauge success on if they got a higher price than last year. Reply With Quote
Sep 29, 2017 | 23:28 15
Quote Originally Posted by smcgrath76 View Post
If you know your costs, then I would look ahead at the WLPIP program as an option to secure a profit. If you can't do it on there, then I would probably steer away from buying feeders. There is sometimes money if you can buy cattle similar to your own and put together bigger lots, or if you can buy tail end cattle and clean them up.
A fellow not far from here buys 3,000 scruffy light calves from the local auction marts every winter and sorts them into decent packages to go out to custom graziers. He then sells them when the grass runs out and repeats it again. He does quite well at it.

We would be aiming to buy ones similar to our own to run and sell as bigger packages and to make management easier. We only run herds for the winter. Cows and bulls on a quarter and calves and bred heifers on another quarter. Makes chores simpler. Reply With Quote
Oct 5, 2017 | 06:42 16
Quote Originally Posted by woodland View Post
Grassfarmer what is the difference between buying calves and keeping them for a year and hoping you make a profit above your expenses vs keeping a cow for a year and selling a calf for hopefully more than your expense of raising it? Unless your cows, land, and equipment is all paid for and free labor is available there is definitely a "break even price" on those calves which the market may or may not pay.

Just curious since most guys around here have no idea on their cost of raising a calf. They gauge success on if they got a higher price than last year.
I've always found it easier to make money with cows than any of the "add on operations" like backgrounding or fattening as you are producing #s of new cattle each year rather than just trying to take a margin off cattle that already exist. Saying that we market unconventionally in that we set the price on most of the cattle we sell. By setting the price we want on breeding bulls, breeding females and grass fat cattle it leaves us with only a proportion of our calf crop entering the lottery of the commodity auction ring. Reply With Quote