Thursday, November 11, 2010
I know I'm getting away from my mob grazing posts, but it's kinda boring right now at the ranch (thank God)...nothing is dying, no scours to report on, life is pretty good. So I thought I would try to share some of my thoughts on other ranching related issues. I really enjoy following the price of corn. Beef producers love to complain about ethanol subsidies and the related high price of corn. But the truth is that higher grain prices makes your grass much more valuable, and that what we really are, grass farmers. For that reason, if you believe that high corn prices are here to stay (which I do), now is the time to lock in your leases long term...I will not sign a lease less than 7 years long. First, I can't afford to make the necessary improvements usually needed only to be gone the next year, and secondly, just like farm rents must go up with corn, grass rents will follow. Locking in your lease rates now will save you lots of $$$$ in the future and will allow you to make decisions to improve your place that you can't make with short term leases.
Monday, November 1, 2010
Despite what you might read in Drovers or Beef, high corn prices are actually good for the cattle industry for a number of reasons. First, our two big competitors (chicken and pork) are much more reliant on corn for gain than we are...true they are more efficient gainers, but unlike cattle, they can't substitute grass gain for grain gain. And that's the key. Stop thinking about yourself as a beef producer and start thinking of yourself as a grass producer...the cattle are simply your combine. Since grass can be a direct substitute for grain, the higher the price of grain, the higher the value of grass...it's really as simple as that. I love high corn prices. I hope corn goes to $8 and stays there. Cow/calf producers will see some downward pressure on calf prices, but it will be temporary...as the price of competing meats goes higher, the value of beef will go higher, that will bring calf prices back up. For grass stocker operators, high corn is a beautiful thing. If feedlots cost of gain is $1, they will be willing to pay something close to that $1 for grass/forage gain. The future looks bright.