WORTH EVERY PENNY: Ceiling for bred female market remains to be seen
December 3, 2014
When replacement heifer calves left the sale ring last spring valued at $1,500 per head, some in the cattle business were a little nervous. First and foremost, probably the buyers.
For now at least, their nerves can settle.
Many ranchers who bought yearling heifers to develop and breed have hit a "home run" this fall, many adding $1,000 or more per head to the value of those heifers.
Don Stange with Mitchell Livestock Auction said bred heifers are worth around $3,000 per head, with young bred cows valued around $2,600 to $2,800, with the price dropping as the age goes up.
"There is real good demand for the cattle, a lot of buyers," he added, referencing a special bred female sale last Tuesday. Many of the cows are staying in the local area.
Others in the industry agree.
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"It's amazing. It's unprecedented," Irv Bard, lending officer with Farm Credit Services of America, Wyoming, said of the current market.
While initial sale reports are showing strength in the market, the true test is yet to come, many industry experts believe.
"It doesn't seem to really get going until about December. It's still trying to find its legs, establishing where it's going to be," he said of the bred cow and heifer market.
Bard said many of his customers
Many of his customers are finishing up fall work including weaning and pregnancy testing, and in the coming weeks will be heading to town or getting on the phone to find replacement females for their herds.
Bard said his clients are "cautiously optimistic" about buying females. But the drought disaster relief, coupled with high calf prices gives them some flexibility to buy bred stock if they want to. Many are also buying machinery and other things. "They are paying cash for a lot of stuff," he said. "I don't see a lot of massive craziness going on out there, jumping out and spending a lot of money." While he hears some clients toying with the idea of developing heifers this year, there is no massive expansion going on as far as herd size goes, Bard said.
Bard said his policy is not to instruct his clients on their management or marketing decisions. "What one individual is capable of, is different than someone else. You know what you can do and you take care of it."
More of his clients than usual are considering developing heifers this coming year, due to the impressive profits being shown on bred heifers this fall.
But those heifers won't come cheap.
Buffalo, Wyoming, Superior Livestock Auction representative said he is seeing an unprecedented number of heifer calves outselling their steer mates this year. He expects the bred market to stay strong, too, adding that most of his customers are very price conscious.
Bard agrees, saying there is no massive expansion going on. "A lot of parts of the country did get more moisture and they could run more cattle and I do see them expanding and retaining heifers but not a massive thing."
Bred heifer and cow sales are all the rage this season, with Ft. Pierre Livestock hosting one they day this paper publishes, and most Saturdays in December and January.
Ft. Pierre Livestock owner Dennis Hanson said that while he believes the bred female market is lagging behind the feeder calf market, it will catch up. "Whether it's going up or down, it always takes a while to catch up to the calf market, but it always does," he said.
Hanson added that some people go by the rule of thumb that a young bred cow should be worth twice that of a replacement heifer calf.
Both Hanson and Gordon Livestock Auction Market owner Dick Minor say that even corn prices going up won't affect the bred female market. They also agree that their customers tend to be looking for the same kind of female they have purchased in previous years; trends aren't changing significantly.
"I sure didn't think a year ago that we'd see prices like this," Minor said.
He added that he expects the market to stay about the same through the spring, but that supplies could run short in the spring. "I think we'll be short on numbers. I think they'll move fast and they'll be gone," he said.
Shiffer said moisture and hay prices will direct the bred market more than corn prices will. "We've still got some dry places. If we get rain in southwest Colorado, New Mexico or California, this could get wild." But if the drought spreads, the market will be dampened, he added.
The bull-buying season will be "fun," adds Bard. His customers are receiving record prices for cull bulls, giving them the opportunity to freshen up their genetics.
"I hope people that are buying the high priced cows, I hope it works wonderful for everybody. It's a gamble but this whole darn business is a gamble anyway," Minor said.