Amid historic-high cattle prices, producers can capture extra dollars
Source: AgriLife Today
Though cattle prices have reached historic highs, there could be potential to make extra dollars and possibly add more young cows to a herd at current prices, according to a Texas A&M AgriLife Extension Service economist. Dr. Levi Russell, AgriLife Extension economist in Corpus Christi, told attendees at the recent South Central Texas Cow-Calf Clinic in Brenham the cattle market has continued its historic price run due to supply constraints.
“Part of the reason for these high prices is low supply,” he said. “Overall, it doesn’t appear these prices are going to level off anytime soon due to the fact there are fewer beef cows out there.”
Russell said data indicates continued strong consumer demand, both domestically and for exports.
“This makes most folks think these high prices will continue to hold,” he said.
Prices for 700-pound to 800-pound steers in the first quarter of 2015 suggest $229 per hundredweight to $333 per hundredweight, according to Dr. David Anderson, AgriLife Extension livestock economist, College Station.
Those prices are expected to remain relatively steady throughout 2015 as more ranchers continue to slowly rebuild herds, Russell said.
“I want to emphasize there’s some real value in castrating your calves,” Russell said.
He said those who do not castrate will receive discounts up to 8 percent.
“Those who don’t choose to castrate would be better off selling those calves before they reach 600 pounds,” he said.
Russell also demonstrated the Bid Price Estimator for Beef Cows, a spreadsheet program that can assist beef cattle producers when deciding to buy replacement cattle. The program allows producers to input an expected rate of return against the net cash outlay for buying replacement cattle.
The spreadsheet takes into consideration annual operating costs as well as financing information.
“People are saying females are expensive to go out and buy right now,” Russell said. “But that net present value is what indicates your return on investment.”
To access the spreadsheet, visit http://bit.ly/1jOtkRj.