Rising Calf Prices Spell Opportunity to Reinvest
Exciting times are ahead for the cattle industry. Historically high calf prices are predicted this fall, fueled largely by the smallest cow herd in more than 70 years, with only 28.2 million beef cows.1
Unlike most cattle cycles that typically include 1-2 years of high prices before returning to low margins, these high prices are anticipated to remain for the next 3-4 years. Analysts at CattleFax predict the market will peak in 2026 and still have higher prices in 2027 than today.2
Capitalizing on this momentum by maximizing your profitability in current markets and making strategic investments for the future may help you sustain your business when margins inevitably tighten again.
Here are five ways you can reinvest earnings from high calf prices for possible long-term impact:
For example, in tighter margin years, the difference between profit and loss can be the ability to efficiently wean calves and start them in a value-added program. Investing in weaning facilities now when profit margins are high can help prepare your business to better maintain profitability when market conditions shift.
Weather can also be a driving factor. Depending on your regional climate, building a barn to protect animals from winter weather or shade structures for summer heat can help shelter cattle from extreme weather impacts, including stress, weight loss or even death.
Finally, water is the most essential nutrient for livestock, and water intake drives feed intake. Because of the persistent drought that plagued much of the country, many producers dealt with low pond water levels, driving issues with blue-green algae or sulfur toxicity. Cleaning or expanding your ponds, extending the piping around them to add well sites and investing in technology to monitor water lines and pumps can help you prepare for future drought conditions.
Start by identifying what strengths you need to complement your cow herd and defining your breeding objectives. With fall bull sales coming up, you may need to pay a premium to get the bulls that will accomplish your goals, but the desired payoff is increased genetic progress. CattleFax data shows that cow-calf producers who increased their investment from a $2,500 bull to a $7,500 bull added approximately $150 in profit per calf.3
Another avenue to explore is artificial insemination (AI), particularly if you already have the facilities for it. AI allows you to invest in breeding your cows to some of the best bulls in the world that may be out of your price range to purchase outright.
A good cattle nutrition program should include a vitamin and mineral supplement. One ranch I work with switched their 1,200-head herd to a mineral supplement that met their operation’s needs. After changing, they improved conception rates on a 60-day breeding window by 12%. The biggest gain was moving up their average calving date by 19 days, with 40% of their cows calving in the first 21 days of their breeding window. With calves gaining 2 pounds per day on average and today’s market prices, moving up their average calving date provided a significant value on weaning weight.
Forage quality also plays a vital role in getting cows to a body condition score (BCS) of 6, which gives cows the best opportunity to breed back in a 60- to 90-day breeding window. Testing your forages and supplementing energy and protein to fill the gaps may help your cows reach that body condition score target.
Consider investing in technology, equipment and facilities that can help make employees’ jobs easier, such as ATVs, tractors, working facilities, corrals, etc. In a year with historic profit projections, consider sharing some of those profits with employees to show that you appreciate them as key components of your success.
Another great option is to send employees and yourself to industry conferences and tradeshows to network with other producers and bring back new ideas that can help generate even more value for your operation.
For example, a seedstock producer I worked with invested in a scale and started weighing all his cows and calves. He then used the weight data to make decisions on genetics, nutrition and more based on which cows were weaning off a higher percentage of body weight. With the data from the scale, his cow herd has improved year over year for the past five years.
It’s also important to sit down with your team of advisors, such as your veterinarian or nutritionist, to evaluate your options and decide how you will seize the opportunity of high calf prices. Having a plan on where to invest your money can help ensure you maximize revenue today and sustain your business for the future.
Connect with your Purina nutritionist to brainstorm additional strategies on how to maximize potential opportunities for historically high calf prices this fall.
Does your cattle nutrition program stack up? Find out with a Proof Pays trial.
Unlike most cattle cycles that typically include 1-2 years of high prices before returning to low margins, these high prices are anticipated to remain for the next 3-4 years. Analysts at CattleFax predict the market will peak in 2026 and still have higher prices in 2027 than today.2
Capitalizing on this momentum by maximizing your profitability in current markets and making strategic investments for the future may help you sustain your business when margins inevitably tighten again.
Here are five ways you can reinvest earnings from high calf prices for possible long-term impact:
1. Facilities
Anytime you consider investing in new or upgraded facilities, it’s essential to have a game plan. Evaluate whether improvements to your current facilities will do more than increase operator comfort and ease. Ask yourself, how will I return a profit from this facility investment?For example, in tighter margin years, the difference between profit and loss can be the ability to efficiently wean calves and start them in a value-added program. Investing in weaning facilities now when profit margins are high can help prepare your business to better maintain profitability when market conditions shift.
Weather can also be a driving factor. Depending on your regional climate, building a barn to protect animals from winter weather or shade structures for summer heat can help shelter cattle from extreme weather impacts, including stress, weight loss or even death.
Finally, water is the most essential nutrient for livestock, and water intake drives feed intake. Because of the persistent drought that plagued much of the country, many producers dealt with low pond water levels, driving issues with blue-green algae or sulfur toxicity. Cleaning or expanding your ponds, extending the piping around them to add well sites and investing in technology to monitor water lines and pumps can help you prepare for future drought conditions.
2. Genetics
When cattle prices rise, cattle producers are generally more apt to invest in a high-quality bull to help improve the genetics of their herd. But it’s not just about buying a more expensive bull. Investing in a bull that aligns with your breeding objectives may add tremendous value for years to come.Start by identifying what strengths you need to complement your cow herd and defining your breeding objectives. With fall bull sales coming up, you may need to pay a premium to get the bulls that will accomplish your goals, but the desired payoff is increased genetic progress. CattleFax data shows that cow-calf producers who increased their investment from a $2,500 bull to a $7,500 bull added approximately $150 in profit per calf.3
Another avenue to explore is artificial insemination (AI), particularly if you already have the facilities for it. AI allows you to invest in breeding your cows to some of the best bulls in the world that may be out of your price range to purchase outright.
3. Nutrition
No matter the calf prices, it’s tough to remain profitable if you have a less-than-ideal calf crop due to cows not getting bred or not calving within the defined calving window. Providing the right protein, energy, vitamins and minerals to your cows can help increase profit in good years and help protect your margins in bad years.A good cattle nutrition program should include a vitamin and mineral supplement. One ranch I work with switched their 1,200-head herd to a mineral supplement that met their operation’s needs. After changing, they improved conception rates on a 60-day breeding window by 12%. The biggest gain was moving up their average calving date by 19 days, with 40% of their cows calving in the first 21 days of their breeding window. With calves gaining 2 pounds per day on average and today’s market prices, moving up their average calving date provided a significant value on weaning weight.
Forage quality also plays a vital role in getting cows to a body condition score (BCS) of 6, which gives cows the best opportunity to breed back in a 60- to 90-day breeding window. Testing your forages and supplementing energy and protein to fill the gaps may help your cows reach that body condition score target.
4. Employees
Labor is a persistent issue for cattle producers, regardless of market conditions. Making investments to attract and retain reliable employees may help save you many headaches down the road.Consider investing in technology, equipment and facilities that can help make employees’ jobs easier, such as ATVs, tractors, working facilities, corrals, etc. In a year with historic profit projections, consider sharing some of those profits with employees to show that you appreciate them as key components of your success.
Another great option is to send employees and yourself to industry conferences and tradeshows to network with other producers and bring back new ideas that can help generate even more value for your operation.
Measuring progress and planning for the future
While all the above ideas are great avenues to invest profits from historically high calf prices, how do you know what’s right for your operation? It can be challenging to prioritize or justify expenses without being able to measure results. Investing in tools that help you gather data and track progress can help validate that you made the right choice and may give you direction on where to spend funds in the future.For example, a seedstock producer I worked with invested in a scale and started weighing all his cows and calves. He then used the weight data to make decisions on genetics, nutrition and more based on which cows were weaning off a higher percentage of body weight. With the data from the scale, his cow herd has improved year over year for the past five years.
It’s also important to sit down with your team of advisors, such as your veterinarian or nutritionist, to evaluate your options and decide how you will seize the opportunity of high calf prices. Having a plan on where to invest your money can help ensure you maximize revenue today and sustain your business for the future.
Connect with your Purina nutritionist to brainstorm additional strategies on how to maximize potential opportunities for historically high calf prices this fall.
Does your cattle nutrition program stack up? Find out with a Proof Pays trial.
[1] Cattle Inventory. National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA). January 31, 2024.
[2] 2024 Industry Outlook. CattleFax. February 2024.
[3] CattleFax Cow-Calf Survey. CattleFax. 2023.
