Producer 'Decision Time' for Cattle Restocking

Before spending money, Texas ranchers eager to restock cattle herds should think of profitability before they jump into rebuilding

Published on: Aug 31, 2012

Some have had a few thunderstorms in recent weeks in Texas at certain locations. This has some ranchers in such fortunate areas thinking about rebuilding cattle herds.

Texas ranchers considering restocking options should think about profitability first and foremost before writing a check, according to a Texas A&M AgriLife Extension Service economist.

Stan Bevers, AgriLife Extension economist at Vernon, told producers at the Texas A&M Beef Cattle Short Course in College Station that the outlook for beef cattle prices is positive given current supply and demand.

BEEF UP. Stan Bevers, Texas AgriLife Exension Service economist, discusses strategies beef producers can consider when rebuilding herds at the 2012 Texas A&M Beef Cattle Short Course in College Station.
BEEF UP. Stan Bevers, Texas AgriLife Exension Service economist, discusses strategies beef producers can consider when rebuilding herds at the 2012 Texas A&M Beef Cattle Short Course in College Station.

"The U.S. calf crop is at 34 million compared with 46 million during the 1981 period," Bevers said. "The next couple of years the calf crop, including dairy calves, is projected to be at 32 to 33 million. What's feedlot capacity in this country? That's a hard number to come up with, it's not recorded anyway. Making some assumptions, you'll come up with 38 to 42 million head."

"Feedlots are going to have to chase calves that are fewer and fewer, and now deal with higher prices for corn and roughages," Bevers noted. "Do what you can do to hold onto what you've got as best you can because you will be rewarded."

That, added with a positive outlook for cattle prices over the next couple of years due to supply and demand, should aid the decision-making process.

"If I choose to restock, I want some assurance of high probability of that female giving me a calf each of the next two years," Bevers said. "I think we will have pretty good prices for the next 2 to 3 years. I want to be in the game."

Looking at Food and Agriculture Research Policy Institute projections, beef cattle prices are forecast to continue a steady climb upward near $170 per hundredweight by 2014. Bevers said cattle prices have seen some softness lately in price due to the uncertainty of the current corn crop. However, there will be a larger corn crop in the future, and national cattle inventory levels are at their lowest levels since the 1950s, which signals high prices for the next couple of years.

Bevers says consider annual cow costs of replacement cows, which according to the Standardized Performance Analysis average $588.22. Also weaning percentage and weaning weights. The analysis data base averages are 82.1% and 525 pounds. And consider the future calf market prices.

Bevers has several spreadsheets that producers can use to evaluate their options. You can go online and visit agrisk.tamu.edu for this and other information.