Those Cows are Too Expensive

In my opinion, the cattle market is still pretty hot. Depending on what market report you are looking at, it may have flattened out recently, but there is still money to be made. Many ranches are showing some impressive gross margins on their cattle enterprises. Cow-calf is probably the strongest right now, and stockers have slimmer margins but still pencils okay with the current market. One common thing we hear at Ranching for Profit schools is “those cows are too expensive to buy”. I am going to let Wally Olson explain the Intrinsic Cow Value to challenge that thought:

Here are some key points to take away from this video:

• Use today’s prices – We know today’s markets. Guessing on future markets is no different than gambling. We need to make the best decision we can with the information we have at hand.
• The relationship is more important than the per head value – Yes, we are handling more dollars per head than ever before. But don’t let that distract you from focusing on the relationship between cattle classes and where you can capture that value to cash in on the next trade.
• Know your costs – Every operation will have a different cost structure, and that’s okay. Nothing can bomb a projection more than uninformed numbers. Make an educated guess, record the actuals, and use that information to make your future projections more realistic.
• Know yourself – Your mindset and skills dictate everything. We can always control our attitude, behavior, and response. When it comes to making decisions don’t forget to check in with yourself.

One of our Executive Link members sold some young bred cows this spring and told me “those cows were too expensive to keep.” Let that comment sink in. If you own cattle today that you aren’t willing to sell for market price, you have essentially bought them for that price. 

I encourage you to set aside some office time right now to age and inventory your cattle and see what you are buying. Then ask yourself if you would buy that same herd again?