Cash Flow Considerations THEN and NOW

As I travel in cow calf regions and visit with cattlemen, I have noticed a distinct shift in their plans for retaining heifers.Last year at weaning, a heifer calf was more valuable as a feeder than a breeding animal.  On many farms and ranches cash was tight due to increasing input cost.  Generating some cash and paying bills by selling the heifer calf had very little risk.  If a cow in the herd needed to be replaced a young cow could be purchased for about the same or less money.

This year the economic considerations for retaining heifers for replacements have shifted.Input costs have increased, most notably forage cost, but we are seeing record prices for feeder calves and replacement heifers.  Projections are the nation’s cow herd will be smaller due to the prolonged drought in the southwest.

Another difference between this year and today is related to the value of ground for row crops versus pasture. People that had to decide between planting more acres verses keeping cows and pasture made their choice last fall.  Those cows are not on the market today.  These and other factors have pushed the value of breeding animals to the point where cash flow is not the only consideration in deciding to keep heifers for breeding stock.  We now have more questions to discuss at meetings, coffee shops and sales barns.

1. What will replacement heifers and cows cost in the future?
2. Will raising your own replacements be less expensive?
3. Is there more income potential in selling replacement heifer?

Below is a summary of some recent bred heifer sales.* 

  *Sales results should not be considered “official” and were taken from posted sales data and radio market reports