Some thing that had not happened in a very long time!!!

JD Seller

Well-known Member
We have rented a neighboring farm since 1953. My Grand Father rented it and I took it over from him an my sons took it over from me. Good ground and fairly good barns/cattle sheds but no house. The old house burnt in the 1950s and the owners moved to town rather than rebuild at retirement age.

What is going on that is new??? We emptied out the cattle yards this afternoon. There will be no cattle in them for the foreseeable future. There is not much of a profit showing on finishing cattle with the current prices or the futures price you can get. Leaving these yards empty takes about 2 hours off chores everyday year round and 3 hours a day in the winter. When you count in travel time and these yards not being as labor friendly as the home yards. It takes more time to clean them out and rebeding them is not fun either.

I can not remember these yards ever being empty in my life time. They where split into hog and cattle yards until about the mid 1990s. I had gotten out of hogs by them and finally spent the money to rebuilt the hog yards for cattle. They will hold five hundred head of fats easy. So it has been over sixty years or more since they were empty.

So we are going to set gates by the road and lock the driveway down for the winter. It will feel funny going by and not turning in to do chores. I bet that I will slow down a few times before remembering that. LOL Old dog and old tricks.

This winter will feel different. After Jan. we will have half the cattle we have been running. We will finish our own cattle and any calves that can be bought right compared to the fat cattle market. Too many fellows are thinking to feed cheap corn to recoup their loses on the corn growing side. This is part of the reason cash prices and futures are in the dumps. Also the demand is not solid right now either. So we will focus on what we can make money on and cut back on the other stuff. We will not keep doing some thing just "because" we have always done it.
 
Told the boss today he should have sold every last one a year and a half ago, he could replace them all and be money ahead today.

And he reminded me of the taxes he'd have had to pay.
 
It will be good you have a little extra time. If you are like me its certain that something will come along to gobble that time up!
 
This is exactly the type of market where a backgrounder or feeder makes money, calves and yearlings finally are selling at margin comparable to fat cattle, that is something else that has not happened in a long time. If you can't make money now, especially with home grown feed, then you might as well shut it down. I expect to have one of my best years out of the last ten, except 2014, which case will probably not repeat in my lifetime.
 
It saddens me to drive by good building and livestock yards sitting empty. It is really the shame of our Nation, that the people who feed the World go broke doing it!............
 
Beef prices are still on the way down , and have not reached the bottom yet . No one here is in any big hurry to fill their yards with cattle either . Some young lads I know, got all excited in the spring of 2015 , and ran out and bought cows , and bred heifers, thinking they would be able to do alright in the beef business. I suggested that they should, take some time , and think their idea through. I was told that I was wrong , and that this was a new day for the beef business , and that the higher prices that we saw then , were here to stay. Ever heard that kind of talk before ? Things are not so bright now, they could now buy 2 for what they paid for one then.
 
Only the dumb and the incompetent go broke, there is a world of opportunity right now, all it takes is work and strategy.
 
It never ceases to amaze me what people tell themselves to justify keeping on at whatever stupid decision they made... Often times I think the goal post for making an exit exists somewhere around the intersection of when people start defining things as 'the new normal' and it 'will never go back to the way it used to be'. That talk always comes when the joker has the pin poised to pop the bubble....

Rod
 
LAA these yards will have cattle in them in the future, at the point there is a profit in it again. Something you need to remember is that everyone's farm is different. What will make YOU money just MIGHT work else where. We are still looking at $10-12K land here. So that is still effecting things. More cows does not work without pasture. Our pasture is at full plus capacity right now. So we will make a profit on those calves/cows. The real world numbers here do not support your contention on what will make higher profits HERE. IF we where closer to lower priced feeder cattle and had cheaper pasture then those numbers would be different.

A local fellow just sold some fat cattle he LOST $400 per head on. I am not talking about 10 head either. Just saw him filling his yards again with some more high priced feeder cattle. Looking forward to when these cattle will go to the sale barn the futures are all under a $1. HE is locked into another loss. He will keep his yards FULL just because his family always has. Three of the four bothers have sold out in the last thirty years with that kind of thinking. Not going to happen with me or mine.

We have other things we are doing that are currently generating a better profit with less labor/time. I think your doing much the same just your local business model is working with the current cattle market when ours does not.
 
jd ,,we sold 400 pound feeders in sonora ky , 3 weeks ago ,,..8 head brought 2800 ,.. my neighbor did worse at Irvington ky,,. I also sold a old 900 lb cow that brought 47 cents ,.. not bad really considering the feeder market tanking ,,..ibet you can make durn good money with 350 corn attrhose prices ,,, but,, I understand ,the futures for selling are no good ,,. , talkin with a old fella at Sonora ky , he kinda thought the banks mite be titening the screws on feedlots borrowing money to fill their lots til after the outcome of the election ,,.; everyoneis fearing billery will win by voter fraud like the last 2 prez elections ,,.. at Sonora ky I watched" what in the world is everybody thinking "800 lb heifers sell for 700 each while momma cows of all ages were selling for 900 -1300 bux ,, aint no way I wouldbuy an old momma , when I can get 2 fresh ready to breed new heifers for the same price,.. I am down to 18 mommas ,,, I usually like tohavfew 25 or 30nrunning ,.. so the market is in my favor to ship old cowsand replace them with new young stock ,.
 
JD, your neighbor is stupid, that does not mean you have to be, you told me a year or so ago that you had access to cheap feeders from South Dakota and that you "booked" all of your fats, I replied at the time that I had never heard of locking in money on the fats but I took you'd word. So now you are admitting that you are at the mercy of the market like the rest of us? Buy 90 cent steers if you have corn, you won't go broke.

.
 
LAA: It is more of what a difference a year makes. The real issue is not that there is not the gross money in the cattle market for fats. It is that the feeders around here are sure not in the 90 cent range or at least the calves that will work in the markets I have been selling to and our corn is not $3 either. We sold enough of our corn on rallies in June this year that our cash corn value is still over $4. We have a solid base for good corn prices next year too. We can make better money right now by NOT marketing all of our corn through the cattle.

I still do not get when your talking about being surprised by locking in the base price of fats. I have done this for over 20 years. I am not going to gamble on the market price of fats when they are ready and hoping that it "works" with the calf price you have to give. The most common type of contract we use is grade and yield contract. It has a base price. Then premiums or discounts based on the grade and yield of the cattle. We know what our cattle usually grade and yield so you can have a real good idea of what your going to receive. This leaves death loss and rate of gain as the major issues that you have to contend with not doing able to control them. There is a delivery window that is usually not hard to hit.
 
I should have worded "good corn prices" differently. I can lock in a better return with the corn prices we have been able to contract or options for, than the current cattle market is showing.
 
it makes me think of late 70s into 80s when to farming world went upside down. i worked for 2 different men that got shoved out of farming because of low prices and high interest rates.
i think gov. keeping lid on interest rates is the only thing keeping the house of cards from falling apart.
our local banker can't understand what is holding things together.
i am a township trustee where we live our township just renewed a cd for 1% interest
i think after election the lid is going to go sky high
 
Too many people buy into the myth of profiting on cheap corn by feeding it out. They don't do their math right. Corn looks like the important element in feeding because you use such a large volume. If you put pencil to paper your corn is actually not your big expense. I've mostly fed Holstein bulls bought at a week old and marketed as corn fed red veal at 700 lbs. I remember working the numbers in the 90's and realizing I could feed 8.00 corn then on a zero roughage diet. Feeder cost,protein cost and death loss are the more important costs.

For rough figures I used to expect to feed one bag each of milk replacer and sweetened calf starter,along with 2200 lbs of corn and 450-500 lbs of protein supplement. When I ran the numbers I was always working against the price of supplement and milk powder and death loss. Corn and that "expensive" calf starter were really much smaller expenses than they were assumed to be.

I never fed a lot of heavy cattle but I do know that buying feeders as with bottle calves is not the place to cheap out either. My experience has shown consistently that the right calf bought right is a good calf. Lower quality calves at bargain prices are better left at the salesbarn. They will be expensive calves before you are done with them.
 

I had that discussion with a young guy a couple of years ago. He was buying pairs for over $3000 and bred heifers for $2600. He said that the market would be good for many years and I was just old fashioned.....The bank is selling him out next week.
 
My uncle always wanted me to buy Cows,,, I knew I did not know enough about raising them to start,,, after reading this whole post I Really know that my choice to just grow hay for them was the right choice,, way to many factors in it I have no clue about,, I will stick to what I know raising hay and small grains my hat is off to you guys who make it work,, a interesting post for sure for me to read
cnt
 
Asking because I just don't know.

"So we will focus on what we can make money on and cut back on the other stuff"

After cattle - what now is your farming focus?
 
One thing that comes to mind is that it might be more profitable to change from one segment to another on paper but it can also mean a complete change in facilities. Like in JD's post about changing from part hogs to all beef. That change can work but it's not something that you do every year.
 

Well, to me the obvious next question here is when is the time to be breeding in order to have fats for soon after the next upswing starts?
 
Cows are pretty simple really,get in when they're cheap when everyone else is getting out,sell and cull hard when prices are high and everyone else is trying to buy.I sold about half my herd
about 2 years ago now I'm keeping about all my females this year so I'll have a mostly young bunch of cattle in a year or two when prices start going back up.The people that predict that prices won't go up are always just as wrong as those that say prices won't come down.
 
Beef has a long way to go before it returns to profitability and we have not seen the low yet. For the next 6 months there are more fat hogs on feed than there is production to butcher them. The last time that happen (1998?) hogs got down to $8 a hundred weight. What will beef do with hogs that cheap?
 
I remember two years ago people were saying that after the droughts in Texas and Oklahoma had wiped out cattle herds. Doesn't seem to make a difference.
 
Well, time will tell if it is the right decision. I spoke to the owner of a local restaurant last night, he is a good friend. They have a wide variety of foods... it is called "The IRish Pub" so plenty of Irish dishes, but many American dishes, too. I commented on beef coming down in price, and he is starting to see it, but commented on how he had removed a lot of steaks from the menu as they were not selling, he felt mostly due to price compared to his pork or chicken and lamb selections. He was also kind of stir crazy on fuel surcharges on food service deliveries... "when was diesel this cheap??" He does purchase a lot of meat locally though, so that may help.

I have to admit I had the stuffed chicken breast last night... the second choice was the filet. I didn't pick chicken because it was cheaper, but because it was on the "specials" menu, and sounded good. It was. Given this discussion though, it might be back to filet next time!

It is always interesting to see how the food world looks through his eyes. We have to be glad of one thing- in the farming area, there is always a market. We may not like a price, but we can always sell corn, beans, cattle, etc. In his world, he can set the price, but has no gaurantee on how many will come through the door.
 
What gets me is places like Farm Credit lending the money for over priced cattle in the first place knowing darn well the guys borrowing the money won't be able to pay it off.Couple nice young fellows here were buying cattle with borrowed money the last 5 years or so,I'm looking for their sale to come up any time,too bad really.
 
Were you able to adjust your harvest plans to combine the corn on that farm instead of chopping it as silage, or are the silos full ready for the next batch of feeder cattle?
 
Bill the custom farming/harvesting business has been growing. The boys are concentrating on expanding that business. There are fellows that do not want to spend the money buying newer/bigger equipment. Unless they have a enough acres they can hire the work done cheaper than they can afford to do it themselves.

Another sideline is my one son took night classes to get his ASAE certification. He now is not only working on farm equipment but also cars/pickups. So he is utilizing the shop we already have. So as the farm repair business ( Larger farmers with "new" equipment) has slowed down he is picking up other business.

We might get back into the feed hauling business. This is a big maybe as the rules and regulations are worse now that when we quit.

The point being you can not just keep doing the same old things and hope to make money when the market is just not there.

Many guys planted fence row to fence row in corn. So the price is down. Now many of those same guys are jumping on feeding cattle to use "cheap" corn. So they have held the price of feeders up and will drive the value of fats down in the months to come.
 

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