emerald has raised the point on a different thread that "serious" producers in her area are actually expanding right now which, as cowman has pointed out, would go against logic if calves are going to .80 over the next few years as I have predicted.
In my area the serious producer has just flat-out quit--I'm the last one left. And, in my opinion, people who are buying bred cows at $1,200 per have not done the numbers. But that's what makes a market-different opinions.
Now cowman on a different thread has said his costs to keep a cow each year are $340. rkaiser's costs this year are $465 per cow and farmers_son's costs are $360.32. I think there are costs missing from each of these guys, like taxes and transportation, but let's not quibble on the numbers and just take the average of the three which is $388.43.
Now, for a 100-head herd, the stats show that the average weaning percentage is 90 per cent based on cows exposed to a bull. You can argue with these figures but that's what the ag records show. If you have a 10% cull rate you have to keep 10 heifers back. So your revenues are 80 calves plus 10 cull cows. Your costs are $388.43 times 100 cows equals $38,843. If we assume that you receive $300 for each of your cull cows than you must get $35,843 from your 80 calves to break-even. That means your average revenue per calf must be $448.03 to break even.
I think calf prices (500 lbs)this fall will be around $1.20 (average of heifers and steers). That would give you $600 before check-off, auction mart fees, etc. or about $570 net per calf so this year your 100-head herd will make you about $9,757 in total.
Of course, you have to replace your bull sometime so take that off the total. But, if we ignore that, than consider that if I'm correct than we have two or three more years of declining prices from here, then two or three years of prices going up from the trough but still below where we are right now. And, if you buy a $1,200 cow and she has nine calves for you, you have to add $100 per calf per year to depricate the cost of the cow to her final cull value. Ouch.
However, let's say I'm wrong and prices stay where they are right now and you average $1.20 per pound for your weaned calves. Can anyone live on $9,757 (remember you've got to buy or steal a bull somewhere too) per year? How about a 300-head herd which will give you $29,271?
I can say, for sure, that $29,271 for a 300-head herd does not support my large family and their hockey habits for a year. And if calves go to $1 a pound that number goes to $5,271 annual income. I think at the trough of the current cycle, prices will be lower than $1 per pound.
As I said before, different opinions are what creates a market. The people who are buying breds right now must think prices are going to go back up from here. Like farmers_son, they don't believe in the cattle cycle. As for me, I've lost and made money before in the cycle and like to think I've learned a little. So my cows will go this fall and I'll try to keep things low-cost around here until I can buy again in a few years.
kpb
In my area the serious producer has just flat-out quit--I'm the last one left. And, in my opinion, people who are buying bred cows at $1,200 per have not done the numbers. But that's what makes a market-different opinions.
Now cowman on a different thread has said his costs to keep a cow each year are $340. rkaiser's costs this year are $465 per cow and farmers_son's costs are $360.32. I think there are costs missing from each of these guys, like taxes and transportation, but let's not quibble on the numbers and just take the average of the three which is $388.43.
Now, for a 100-head herd, the stats show that the average weaning percentage is 90 per cent based on cows exposed to a bull. You can argue with these figures but that's what the ag records show. If you have a 10% cull rate you have to keep 10 heifers back. So your revenues are 80 calves plus 10 cull cows. Your costs are $388.43 times 100 cows equals $38,843. If we assume that you receive $300 for each of your cull cows than you must get $35,843 from your 80 calves to break-even. That means your average revenue per calf must be $448.03 to break even.
I think calf prices (500 lbs)this fall will be around $1.20 (average of heifers and steers). That would give you $600 before check-off, auction mart fees, etc. or about $570 net per calf so this year your 100-head herd will make you about $9,757 in total.
Of course, you have to replace your bull sometime so take that off the total. But, if we ignore that, than consider that if I'm correct than we have two or three more years of declining prices from here, then two or three years of prices going up from the trough but still below where we are right now. And, if you buy a $1,200 cow and she has nine calves for you, you have to add $100 per calf per year to depricate the cost of the cow to her final cull value. Ouch.
However, let's say I'm wrong and prices stay where they are right now and you average $1.20 per pound for your weaned calves. Can anyone live on $9,757 (remember you've got to buy or steal a bull somewhere too) per year? How about a 300-head herd which will give you $29,271?
I can say, for sure, that $29,271 for a 300-head herd does not support my large family and their hockey habits for a year. And if calves go to $1 a pound that number goes to $5,271 annual income. I think at the trough of the current cycle, prices will be lower than $1 per pound.
As I said before, different opinions are what creates a market. The people who are buying breds right now must think prices are going to go back up from here. Like farmers_son, they don't believe in the cattle cycle. As for me, I've lost and made money before in the cycle and like to think I've learned a little. So my cows will go this fall and I'll try to keep things low-cost around here until I can buy again in a few years.
kpb
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