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Bull Market For Bred Heifers?

Want to know how much they are asking for bred heifers?

Better sit down first.

Morgan Moore is taking orders for 1,500 AI-bred, red and black Angus and Charolais-cross commercial heifers this fall.

It s kind of volume dependent, but we re looking for $1,600 to $1,700, depending on how many they take, said Moore, co-owner of Cloverleaf Cattle Company, a family operation that calves 1,600 cows near Elgin.

There are plenty of committed buyers at that price, said Moore, adding he expects prices to push even higher by November, when bred heifers traditionally start moving in earnest.

They re strong. In Alberta, they are going for over $2,000 already. This thing is on fire, said Moore.

Cloverleaf Cattle is developing about 2,500 heifers this year, and Moore said he figures there s at least another year left before the cattle cycle reaches its peak. He said he s optimistic that a breakthrough in cattle prices is in the works.

When the 10-year cycle rolls around, we always end up higher than we were the last time, he said. I think it will bust through again and take us to a new level.

But Lionel Kaskiw, a MAFRI farm production adviser based in Souris, is less bullish.

I haven t heard of any big sales yet, said Kaskiw. Usually, bred heifer sales start happening around the end of November.

Ranchers he knows are talking about prices around $1,200 to $1,400 per head, and there s a logic to those numbers, he said. MAFRI staff has crunched the production cost numbers based on long-term averages. They estimate keeping a heifer costs about $500, although penny-pinchers may push that down to $400.

If her calf fetches that or more, the rancher breaks even.

Given current production costs for fuel, equipment, land and interest payments, and long-term average calf prices, a heifer bought for $1,200 would take a minimum of four years to pay for herself. At $1,400, it would take five years.

(Calf ) prices are going to have to stay in the $700 to $800 range for you to pay her off in five years, Kaskiw said.

But what about the reported shortage of cattle in North America, and the old adage, No guts, no glory?

Kaskiw urges caution.

Despite short-term bullish factors, a lot of things could go wrong over the longer term, and the shortage of cattle can be remedied fairly quickly, he said.

It wouldn t take us that long to build the herd up again. In five years time, we could be back to high numbers again, he said.

Kaskiw said he sympathizes with sellers of bred heifers who have ridden out the rough patches, such as two years ago when bred heifers only fetched around $900 each. But the cattle business has always been volatile, and producers need to avoid getting caught at the wrong end of the cattle cycle, he said.

For somebody to go out and borrow a whole bunch of money, and buy heifers at $1,400, you re getting in probably at the high, he said. It s probably better to get in at the low and then sell at the highs.

Wayne Williams, a lending rep for Manitoba Ag Services Corp (MASC) based in Virden, said that there are rules for his organization when extending credit for beef cattle.

MASC pegs the maximum value of a beef cow at $1,100, and can lend up to 90 per cent of that, or $990, under the Young Farmer Loan criteria. Other lenders, such as credit unions or banks, might have different guidelines, he added.

A rancher looking to buy high-priced heifers would either have to come up with the difference, or offer up other assets as collateral, such as the rest of their cowherd or land.

That s the trouble. I don t know what they should be, said Williams. Calves are looking better, but you can get burned paying too much for them.

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They re strong. In Alberta, they are going forover $2,000 already. This thing is on fire.


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