by I sat in a crazy-long sale barn last weekend, amid the rush to sell cattle in drought conditions here in upper East Texas. Here is what I sold the cows in my trailer for… These cows were bred, but old (I’m guessing around 7-8 yrs) and 10 productive years is about what you can expect from a good cow. They bred late our off season which is why they were the first to go in my drought destocking process. Here are some photos and videos of those cows for reference. These cows brought an average of $720.38 each or 69 cents per pound. By the way, if you follow cattle prices in your area, please take to the comments section and let us know how they are holding out this week.
Despite the fact that cattle receipts were up 2 and 3 times at nearly every local sale barn, live cattle prices were not hit too hard. In fact, after paralleling cattle prices for this very same weekend at this very same auction in 2020-2022 some categories of cattle were actually bringing more than in previous years, despite the glut of inventory. For example a 500 lb steer brought $638/hd in 2020, $625/hd in 2021, and $700/hd in 2022. So there is an apparent increase in live cattle prices here in 2022.
But is this price increase really a price increase? The unfortunate answer is no. We have seen a whopping 14.5% (cumulative rate) inflation since 2020. If you adjust 2020’s prices for that 14.5% inflationthat steer would be $715.56 in 2022 dollars… meaning that adjusting for inflation those steers are bringing $15 less per head than in 2020.
“There are 11.85 million head of cattle on feed as of June 1, 2022. This is the highest on record for any June 1st since the series began in 1996 (since the “cattle on Feed” record keeping series began in 1996).”
Another disaster currently brewing is that breeding stock is being pulled from production and put on feed lots for the food supply chain. Feed lot numbers are at their highest since 1996, while Cattle inventories are at their lowest since 2016. In fact an article by Beef Magazine reports that a record number of heifer calfs (which are young female cows that would typically be put into breeding programs) are being put on feedlots for freezer camp instead of out to pasture for breeding.
In fact to quote beef magazine directly:
“…an increase in heifers in the feedlot mix means higher feedlot totals now but fewer replacements to produce calves later.” -beefmagazine.com
https://www.beefmagazine.com/beef/feedlot-inventories-another-monthly-record-high
What this means is that if the Lord does restore rain to our ranges, we will see a surge in live cattle prices in coming years. The natural resources necessary to support beef cattle at a lower cost will have ranchers increasing their herd size to increase the ranches revenue.
I believe in 2024, the buyers will be searching the market for the heifers that were (unfortunately) put on feedlots and into freezers back in 2022… as the laws of supply in demand dictate: if demand outweighs supply, prices will be better for the supplier.
Unfortunately, I don’t believe live cattle prices will go up enough to amend for the current rate of inflation… not to mention the increased input costs. Stocking rates required to make a conventional ranching operation profitable relies on pasture yields produced by fertilizer inputs and diesel machinery. Historically, chemical fertilizer costs have been relatively inexpensive compared to the yield increase. However, 2022 pricing makes the cost of fertilizer less justifiable… unfortunately most ranches have become dependent on higher yields to support the stocking rate necessary to turn a profit in ranching.
Despite the dismal outlook for the conventional market, I am fighting to keep a small amount of cattle in my diversified ranching operation for two reasons.
#1. In the book Quality Pasture, Allan Nation makes the statement that at the commodity level, beef and sheep as a diversified operations is economically a smart move. The sheep market tends to run in 5-7 year cycles, and the beef in 10 year cycles. A cycle refers to the time it takes for market prices to ascend from their low to reach a high, and vice versa. According to Allan Nation, these two species rarely hit their lows at the same time. In 2022, sheep may be hitting a peak, and cattle a valley. In the coming years the sheep market may soften a little while cattle strengthens a little. Running both species makes you less vulnerable to the highs and lows that each one experiences.
#2. Despite using my local sale barns to escape a drought-induced crunch: I believe that the real money in beef cattle lies solely in direct to consumer marketing: Selling beef small-scale, straight to consumers, straight off farm. And that is simply a model I want to continue to build out on my farm. It is slower going to develop a customer base for beef, but for me, as a small scale rancher, starting with 3 or 5 head the time I can spend time marketing and building a customer base: things like building my website, growing my newsletter, building a social media following, is way up here. If you are intimidated by the marketing I have outlining a 6-step marketing formula for selling products that I would love to send you if you click on the link below.
By the grace of God and with the help of a local rancher I was able to locate the round bales I need to overwinter what remains of my small beef herd. So long as I have the resources, I will be running a small amount of cattle alongside my sheep flock.
-the Shepherdess
To us folks in the City, your content provides so much information to the layperson who’s interested in farming and the industry (+ trends).
Happy to connect directly if you’re open.
God Bless!
I had cattle during the early 70’s. These prices are about the same they were then.
These prices are about the same as they were in the early 70’s.
Sounds like you are controlling the things you can control by managing your paddock resources and controlling herd size. Excellent work! The modern conventional cattle farmer has always been squeezed between increased input costs and feed lot consolidation. But in all this you are doing God’s work! To quote Wendell Barry, “The care of the Earth is our most ancient and most worthy, and after all our most pleasing responsibility. To cherish what remains of it and to foster its renewal is our only hope.” – The Unsettling of America
I quit letting my dad give away cattle at the stockyard (sale barn) back in 2015 when I started managing his herd. I’ve been only letting cattle leave the farm if they are going to the butcher (then a customer who will eat the meat himself) or to give to a friend or neighbor if one is injured (and has to be put down–I had a bull with a broken leg and I couldn’t just let him isolate and die in the woods to feed vultures and flies). If I give to a friend or neighbor, at least I build good will. But giving away to the stockyard so that the grocery stores and supply chain gets rich doesn’t help. I’m going to suffer through exorbitant hay prices and hopefully wait for the higher prices coming after the drought impacts wear off. I’m all in for direct sales to the end consumer.
Your comments and observations are both timely and correct from my perspective as a Virginia farmer.
Though the drought in the west has made your situation critical and worse in many ways than ours here in the east, many small cow/ calf producers here have also found their situations untenable for the long term under the existing market structure.
My personal experience of 2022 is making the decision to down size my herd by over 50 percent. I have gone from a 75 cow to a 30 cow operation in the last six months. I will spare the details of what has been a wrenching decision for this 35 year farmer, but will speak to why this decision was made.
It seems most everything has had the reward of inflation adjustments except for the selling price of cattle. Inflation adjusted prices for our end of the beef industry are much worse than they were 2 years ago. If selling prices were properly indexed against increased input prices, (fertilizer, fuel, fence posts, property taxes, etc.) we should have backrounder ready three dollar plus beef instead of dollar fifty beef. Beef sales up; producer prices level or down. What should be a bull market for us has turned in to a bullcrap market.
This lack of selling price inflation adjustment has come out of the pockets of every cow /calf producer in the country. That much has been democratic.
Farming is a business model with little to no control over input costs or selling prices. I am extremely lucky to have income from a business that I can set my selling price, and will for the time being concentrate my efforts there.
I simply can’t afford to farm right now.
When I do regroup my cattle operation, it will be based on direct marketing where I will have some level of control of my selling price.
Until then, good luck to all that endeavor to stay in this business at any level and hats off to the same that are some of the strongest and most resilient men and women that this country has to offer.