For the most part, cattle prices go up and down as a result of supply and demand. When demand exceeds supply, prices go up – as they did in 2015. Cow-calf producers were selling 500-pound calves for an unbelievable $1500 per head. I don’t know of anyone who thought they would ever see calf prices so high.
We were living the dream – until supply exceeded demand – causing prices to start falling. Prices have been falling since early 2016. All of the projections I have seen, including the one below, indicate supply will continue to increase through 2018 and beyond. That will, more than likely, cause cattle prices to continue to fall.
The shortest bar on the bar graph below represents beef production in 2015 when prices were so high. The next bar to the right represents beef production for 2016 – followed by 2017 and 2018. The projected beef production for 2018 is above the previous high in 2002. Are you prepared to take 2002 prices for your calves? That would be just a little over half what they are worth today.
To make matters worse… as cattle prices go down, the cost of production continues to go up. The cost of producing a calf more than doubled between 2000 and 2014. Without proper management, this is the makings of a BIG financial wreck. What is your management strategy? What kind of management decisions should you be making to avert this wreck?
You do have choices. You can continue to follow the status quo herd of high-input, unprofitable agriculture – or you can break away from the status quo herd-mentality way of thinking. You can continue to purchase status quo, high-maintenance bulls that will decrease your profit per acre – or you can purchase ultra-low-maintenance PCC Solar bulls that will increase your profit per acre. Stocking rate affects profitability, or lack thereof, more than anything else.
The future belongs to those who are able to successfully transition to a low-input (high-profit) program with efficient, low-maintenance cows. If you have not already made this transition, NOW is the best time to get started. WHY WAIT? Your kids and grandkids are hoping you make the right decisions – sooner rather than later.
Quote Worth Re-Quoting –
“It is our choices… that show what we truly are, far more than our abilities.” ~ J. K. Rowling