? for the experts.

[a2farms]

I've been following the posts here for a while, very informative, thanks to all of you.
I'm a small cow/calf guy in Southern MB, I've hung onto my calves and getting to the point to where I have to decide, do I hang on longer or do I let them go for .90/lb. I was told by a feeder that the grasser market would help bids in a month or so... Looking for input, I know it's a pretty broad question that needs to take into account other costs & such but I guess I'm looking for bigger picture opinions & ideas.

[per]

a2, I am by no means an expert. My concern and the million $ question is will the middle class be buying beef when the cattle in question get fat. Given the economic crisis it is an unknown. I have just moved 25% of my calves and will take the rest to grass. If you have grass, the best money made here besides the direct to plate part, is grass to 950/1000lbs. That is why if you wait until the grass cattle buyers are ready to procure you might get a bump in price. I could go on and on but the bottom line is the commercial guy is a price taker and it is your job to try and figure out what you can supply for the best price in the market. You control timing, location, size, type etc., but the market controls the price.

[kato]

For a start, it wouldn't hurt to wait a bit and see how this market reacts to the MCOOL ruling. We should know pretty quick if it's going to make a difference. We're thinking that even if consumers aren't going to be big spenders, if the trade irritation drops enough, our cheap dollar is going to start to look pretty good. If that's going to happen, we should see it sooner rather than later. Prices have gone up this week already from the looks of it. Not much, but a bit, and that's refreshing to see for a change.

We were just talking around the table last night about how in the past year, just about everything that we thought was impossible to happen, did happen. This time last year it was looking much bleaker to us, economic downturn or not. At that time we were faced with the prospect of an unending upward rise in the dollar, feed, fuel, seed and fertilizer prices. The grain growers had prospects for higher returns from their crops, but we did not, and we have a lot of the same inputs. We were told that ethanol was going to make corn go through the roof and it was never ever coming down again. That was not an easy future to face. My opinion is that today's economy is more friendly to cattle producers than last year's.

If you'd have told us this time last year that we'd have $35.00 a barrel oil, $2.75 barley, and an 81 cent dollar, we'd have never believed you. But here it is. Trying to predict the next year is going to be just as tricky.

I guess the best thing is to keep a close eye on the market, know your costs and potential returns from grass, and be prepared to move if a good opportunity comes up. Do the math.

Grass isn't an option for us, but we still have most of our calves too. The big decision is when to sell. The steers aren't a tough decision, but boy, those heifers! That's another story all together.

[grassfarmer]

I guess the "real" experts (economist types)could give you tips - like how to use forward contracting, hedges etc to make better decisions. I guess most of us go on guesswork and gut instinct which maybe isn't a real good business idea? We usually sell half our "commodity" calves in late December but got caught with them this year for one reason and another. Luckily we had a rancher come by and buy a bull and some heifers off us who liked the look of the charx calves when he was here and decided to buy them too. It was a good deal all round - no commission, 4% shrink picked up in my yard. The buyer got good calves straight off farm with the economy of trucking them along with the breeding stock. Just under 600lbs shrunk weight - $1.10 on steers and $.90 on heifers. In the current climate that's a price I can live with quite comfortably so I pulled the trigger on them. The other half will go to grass and likely sell in August.
We sold the steers out of last year's intended August group on the first of May because guys were paying good money for grassers then. In retrospect it was the wrong decision - we got a good price per pound but because they were lightly backgrounded aiming to get compensatory gain on grass we lost on weight versus having kept them to sell in August as originally intended. We were $50 a head wrong in that deal but the August trade was above our expectations.
I remember asking a similar question to yours on here in December 2007 before we decided to retain the calves through till August. Best advice was that August 08 yearling steer price calculated using basis, likely dollar value etc would be $.86 for steers - we sold our heifer end in August for $.96!

[kato]

That's the trick. Sell early. We've found that the yearling market gets fired up before the yearlings actually get off the pastures. If you wait until the fall run starts you've already missed it.

We had a summer bunch of calves in 07 that we drylotted in the yard. We don't have enough of our own grass for feeders, just cows. When the orders started coming in for yearlings they were right there next to the loading chute. It was the only really profitable batch of feeders we've had for quite some time, and they were very profitable. Two weeks later we would have posted a loss on them. The difference between a profit and loss can be very very close. You've got to be ready to move.

Grassfarmer, don't underestimate the power of gut feeling. An old time cattle buyer who's been pretty successful over the years once told us that even before the experts, the first thing to listen to is that "little voice in the back of your mind". It's worked for us. In the fall of 07 the little voice in my mind said not to buy feeders at all. But of course we didn't listen. And of course, it was right. LOL

[a2farms]

Again, informative, thanks. GF I have learned the value of selling off the yard in the past couple years, less hassle, less variables, etc. One needs to spend more time shopping his/her product around though. My problem is a hay shortage, I'll have to purchase some if I am to take them to grass myself. There seems to be some around so it will probably be an option.
kato, when the little voice is the bankers it can cloud your judgment...
Thanks again.