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| Of course, a reason has been the lack of profit. I don't think I ever said that wasn't a reason. I'm just pointing out that, after a very prolonged period of low profitability, cow/calf operators would take a wait and see attitude before holding back heifers - or for sure - getting back in. But as I said, persistent drought has taken a toll too. This is not a minor part of it. We all know about the southern plains, but what is often ignored is how many cows historically have been located in the SE US. (If someone from there can correct me, or add to this, it would be great.) The third part, again, IMHO, is the conversion of grassland to cropland. As I said, out here in W SD, pastures are stocked - rents show this clearly. There are people who work in town who always want to be cowboys and run a few cows, and I have heard pasture rates as high as $60/pair/month. (The banker said he doesn't like to see that, because those guys don't come back to borrow money the next year.) So, maybe these guys are part of the numbers in your chart, but they sure wouldn't be in the Cattle-Fax data. So, in addition to profitability, I think we have had weather problems, and land conversion in this grain bull market. Prairie land that is suitable for growing wheat here can be rented for about $30/acre, but if it was left in pasture, it would be about $10/acre.
Sure, weather goes back to profit, but I think that makes operators even more cautious about holding back heifers. Especially when the weather problems seem to be persistent.
As for what numbers are accurate in any chart - just personal, but as much as I detest government bureaucrats, I would for sure doubt the accuracy of those. (BG - but, again, that's just me and my opinion of government.) But, I do think there is something to the idea that the more successful operators might be the ones subscribing and contributing to Cattle-Fax data, so I would agree that overall, there would be questions about accuracy. Looking at the chart I posted, it appears like there have only been 4 years of $150/hd profits - all recent years. An overall average would be pretty low, even on this chart. And, if you look at profits pre-2003, rarely did they even get close to $100/hd. Just doing a visual average, pre-2003, it doesn't look like profits averaged close to $50/hd. So, I'll go with Cattle-Fax as being pretty good, but I will give you that most likely the least profitable producers probably did not get into their data.
I'm glad that you toughed it out and that now it is worth it. I also don't mind at all having my opinions challenged. If I can't defend them, I need to dig deeper and possibly change them. Good luck with the cattle - if the economy doesn't implode, they should be good for awhile. | |
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Have packers beat the dog so much it won't come when they call
