Oct 14, 2011

Down, but not out

I spent last week in West Texas going to several seedstock production sales. The bull and female sales were much better than many folks expected.

Along with the great sales, it finally rained through much of the state, with many areas receiving several inches of much needed moisture. The country started to show some signs of life and was starting to get a hint of green just over the few days I was there.

Ranchers and farmers in the area were pleased with the moisture but have also paid attention to the long-term weather forecast and were not expecting much to change dramatically over the next year.

However, it was good to slog through some mud and see everyone’s attitude improving. Many pastures we drove by were completely maxed out, and other areas showed the devastation of the massive fires that burned them. Some ranchers saved a little pasture for drought situations, and many were in the process of sowing wheat, and purchasing some insurance before the deadline. There was even a hint of green in some of the wheat ground.

At the sales, many of the cattle, especially female offerings, were sold to out-of-state buyers. One rancher told me he hasn’t seen pasture conditions this poor since the 1950s. Texas agriculture has no doubt endured an extremely tough year and the few inches of rain was welcomed, but doesn’t seem to provide much confidence to save many heifers or restock anytime soon.

Many cattlemen are getting very creative on feed stuffs, using bailed cotton and soybean plants that were hammered by the drought. One cattleman told me that sugar cane from Louisiana was processed and the spent stalks shipped up the Mississippi River on barges just to provide some roughage so they can keep some of their cattle together.

One seedstock breeder from northeast Texas said the only silver lining he can see in this current drought is that the Texas cattle business will make several years of genetic progress when they start building herds in the years to come. Many folks speculated that some cattlemen may not return to the business because of age or the funding they might need to rebuild herds. This could take out much of the production of the cattle business, that is if the part-timers with the 35-head herds don’t come back.

Ironically, commercial bred females were selling for $1,300 to $1,400 per head and many were being shipped out of the state to the east, with some trades going as far west as California. I was told the volume of cows going through local auction markets has slowed down quite a bit and any cows that are showing up are the better end of the herd.

Over the long, hot summer, there were over 3.2 million acres of pasture and rangeland that vanished with the many fires that came about through various means this summer. Some ranches that had burned pastures early in summer seemed to get a jump on moving cows to leased pasture before those who just dried out.

The question in the back of everyone’s mind is, what will it cost to replace and restock the herds in two years. With the continued decline of the U.S. cow herd, they will be expensive, but relative. I still can’t get over the fact that August 2012 feeder cattle are priced on the board at $145 or more. That puts an 800-pound steer at around $1,150 a head, a record price that can be secured now.

Cattlemen can get hay, mostly from the northern Plains, and can buy it for less than $100 a ton for cow hay, but they have to put a 1,000-mile truck ride under it to utilize it. A 20-ton load of hay at 1,000 miles at $4 a mile puts an extra $200 onto each ton of hay, pushing the price towards $300 a ton delivered. Those don’t appear to be good economics for keeping a cow herd together, but replacing them could be as much as $1,800 to 2,000 a head in a few years. You have to admit that these cowboys are resourceful.

But despite the drought, there is still a good market for top genetics. R.A. Brown ranch offered 500 bulls at auction last Wednesday and found an exceptionally good market. Angus bulls sold for $3,800. Their Red Angus sold for $4,500, and their SimAngus bulls sold for $3,600. That was an impressive statement about the benefits and confidence in their breeding program. Powell Herefords averaged over $3,200 on their long yearling bulls. The sale results exceeded all these seedstock breeders’ expectations by a wide margin. The southern Plains may be down, but never consider them out. — PETE CROW