One thing about this drought is that producers are testing out a lot of different theories. One producer told me he’d heard you can’t feed your way out of a drought, but that he was sure going to give it a try. Another sold his problem cows, then his older cows, then his heifer calves, then his later-calving cows. Now, he’s planning to have a one-day, synchronized breeding season, and cull any females open 30 days later.
With limited and expensive feed, producers are challenging their cows in some areas – testing the old rules of thumb about body condition score (BCS) and breed-back rates. Interestingly, we have a lot of good science, but not any good answers.
The reproductive physiologists can tell us we will gain 10% in breed up by going from a BCS 4 to a 5, and the nutritionists can tell us what it will cost to improve our cows a BCS through the winter. But they let producers decide whether the extra 10% in conception is worth the extra $300 (ton of hay).
It becomes even more complicated as you add in other factors. I’m amazed at how many different answers based on individual circumstances producers have devised, and how much thought has gone into those decisions.
A Closer Look: Consider The Invisible Costs Of Your Drought Strategy
Of course, to keep as many cows and maintain as much equity as one can till the rain comes is the simple answer, but there are a multitude of ways to get there. Once this whole thing plays out, it will be interesting to see who ended up making the right decision.
At least the market fundamentals seem to be so well-entrenched that producers can make some pretty good decisions. Weather is the big unknown and the big driver. The long-term forecasters seem to have less confidence than usual, and consensus seems to be that the moisture situation will be quite a bit better than last year, but still dry. That’s probably a good bet.
The prognosticators are predicting corn yields 10-25 bu. below trend line, with a record acreage being put into grain production, especially corn. Hay prices should be significantly lower next fall, but also historically tight and high until the new crop is in the barn.
Beef prices will be high, supplies tight and tightening, export demand strong, and domestic demand weak as disposable income shrinks for the first time in recent memory. Long-term demand continues to be bullish, as we can count on an additional 78 million new potential customers annually on a global basis.
The truth is that our industry’s growth, as well as its future, rests on growing global demand. That doesn’t mean, however, that we can neglect the domestic beef-demand front. All in all, we know we’re looking at record prices and high input prices for the relative short term, we are just trying to make those strong fundamentals come in line with the cards that Mother Nature elects to deal us.
