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What A Fall

Written by Dennis Sun

It has been quite a fall this year, hasn’t it? This fall, following a summer to remember for most of us, has been one to remember, too. Some of us had spring in March – a wet, cold spring and early summer that put us all behind, but we realized what overshoes and muck boots were for and why they build overflows in reservoir dikes. We even learned, for a couple of weeks with all the moisture, that driving around the ranch in a pickup was an impossible task. Irrigating was easy. We just opened everything up and watched. After all that, some said, “We’re going to pay for all of this moisture,” but so far, the paybacks haven’t struck.

Some say we haven’t had a fall like this since the fall of 1948, just before the winter of 1949. But we’ll take whatever God gives us, and the nice weather we have had this fall has helped us to “catch up” with what we couldn’t get done last spring. The calves are fat, and for the most part lambs have done well. Pregnancy rates are good, and if the range managers want litter or leftover grass, we got it.

It hasn’t been all roses. It has been dry this fall, and of course that means dust and the threat of fire. 

Lamb and wool prices have been good. Calf and yearling prices were good for the first half of the summer, but then the bottom dropped out. 

The CattleFax weekly average fed steer price declined 29 percent from the high – this year in January at $170 – to the low a couple of weeks ago near $120. According to CattleFax, that represents the largest decline in history from a first-half high to the second-half low.  CattleFax says, “Then, to follow up the historic decline in fed prices, the cash market increased from $120 to last week’s average near $126 – a five percent increase, which is historically one of the biggest increases in fed prices in one week.”

The feeders bought some high-priced calves and yearlings late spring and early summer. With high beef prices, demand went down and so did the fat market. The feeders did the only thing they could and that was to keep feeding cheap grain. The bad part for ranchers in the hills is that the feeders shut their phones off and didn’t want to buy anything. We can’t blame them. 

DTN Livestock Analyst John Harrington said, “Cattle feeders were set to lose money in the last third of 2015 even if the market had followed its normal seasonal pattern of a midsummer low leading into a late-year high. So when the fed cattle market imploded in late August and September, profit potential went from poor to ‘train wreck,’ feeders are now mired in red ink as deep as $400 to $500 per head. It’s the worst market mess seen in at least a decade.” 

Harrington said the silver lining for feedlot managers is that future breakevens have dropped hard over the last six weeks or so.

We’ve even seen a few prices drop at the meat counter, so maybe demand will pick up for the holidays. It has been tough in the beef business this fall, and in the meantime we have all misplaced our winter coats with this mild fall weather. 

Experience is what you get when you don’t get what you want.