There is little doubt that there is plenty to be excited about in the beef cattle industry. Nearly every class of beef animals is receiving historically high prices. The portion of the country experiencing drought has reduced significantly over the past 12 months. Forage production has been good this year as the USDA forecast for hay production, excluding alfalfa, is for the largest production since 2004. Feed costs are trending downward on the expectations of a large corn crop that is starting to be harvested.
Nearly all the market signals are in place for cattle producers to expand their herds. Yet, the U.S. beef cow producer fully realizes that expanding the herd is a long-term investment and commitment. This fact has translated to a fairly conservative approach to expanding the nation's cow herd. There are many factors that have contributed to a slow rate of rebuilding which include strong feeder calf prices, high feed costs, drought, and the advancing age of the average cow-calf producer to name a few.
CattleFax reports that demand for bred and/or open females is as good as it has been in several years. In some locations, there are reports that above average quality heifer calves are selling equal to above their steer mates at similar weights. As always, there is debate as to whether one should raise or buy replacement females. Some believe they cannot buy genetics as good as they can raise while others need to buy outside genetics to improve their herd. Financial considerations usually dictate the approach taken as ultimately, one must decide if it is more cost-effective to produce their own replacements or to purchase them.
One must also consider the long-term nature of cow-calf production when making the decision of how to add females to the herd. If you breed a cow today with the intention of raising a replacement female to add to the herd, it will take over 1,200 days for that heifer calf to be born, developed as a replacement heifer, bred, calved out and wean her first calf. Will you be able to capitalize on the strong prices received for feeder calves today and forecast for the near term? The purchase of bred replacement females may create a larger window of opportunity to sell calves in a favorable supply-demand situation.
Conversely, there are real opportunities for those producers wanting to sell females in these times of strong demand. Industry figures show that the nation's cow herd numbers are at 60 year lows. Prices for bred females continue to improve as supplies tighten. A savvy marketer may want to take advantage of the current market.