Texas/New Mexico Stateline | I listened to a beef economist a while back and he made an interesting point. Cow/calf guys make a mistake when they think they are operating to increase margin. i.e. buying low to sell high. That may work for a few guys that buy cull cows and improve them for slaughter, but the real beef cow herds are operating to increase equity. Which is harder to get a good feel on. Or it is harder to monitor your progress.
Cow guys should always be working to increase the value of their herd, by improved genetics, selective culling, increasing numbers gradually, and of course decreasing the debt against them if any. Also increasing land acres and infrastructure. If they are solely focused on margin, they will always be jumping in and out when prices are up and down, won't make good long term decisions, etc.
Cow calf is more like farmers in that farmers are increasing equity in their operation with better equipment and land. They don't jump in and out of the business when prices tank.
Feeders and backgrounders are strictly margin motivated. Margin isn't there, it is somewhat easier to scale back, let pens sit empty. When margin is good increase numbers quickly.
It was an interesting perspective I had not really thought about before.
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My thoughts on cow-calf prices / future
