- Jun 3, 2002
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We are in a severe drought here in Montana. The county I hunted this year got less than 2 inches of rain for the year! One rancher friend has sold off most of his herd for lack of feed. If we have another dry year you may see the market flooded with cattle.Yes I understand that but as I said that is probably true with softwoods but hardwoods are a bit different. The lumber I was mentioning is all softwoods and I have no doubt the mills have not passed the price increases on to the seller.
As for this area it is all hardwood so it is a lot different. The standing price has went up significantly (on specific species). Take for example Oak going back awhile ago there was zero market for red or white. When Walnut jumped up about 12-15 years ago no one would touch Oak. I just confirmed today some standing Oak (Red and White) prices and they are about 500% above 4 years ago. Still not good but better than what they were. I see no reason to post specific prices as that just leads to issues. I can say that the retail price today of 4/4 FAS RO is about 30% higher than it was a couple years ago but the stump price has significantly increased more.
As for beef that is a whole other issue with a lot of factors influencing it. All my cows left 4 years ago and I am contemplating what to do. I have to go talk to my banker Friday afternoon and get his opinion. I am extremely optimistic about beef prices in 2022-23. We will see if I am right. History is a good teacher if we allow it. Think about what happened to cattle prices the last time corn skyrocketed to $6-$7 a bushel. Guys could not tear out fences and plow pastures fast enough. Well as corn went back down a bit cattle jumped dramatically as the cow inventory numbers had dropped due to the converting of pasture to row-crop production. The simple fact is to produce beef you must have cows. Although there are some expensive options the most cost efficient method of producing calves is pasturing cows. If all the pasture is being row-cropped then where are the cows going to be ? We cannot stack them like chickens or confine them like hogs. to The simple fact is we will see. Last year was a record year in row-crops and even more of what precious pasture was left got plowed. Now grain prices are down and inputs have skyrocketed, we will see if history repeats
For another example take a look at hogs. Remember in 1996 when corn hit $5.21. We kept feeding hogs and did not sell the corn. Well hogs went to 7 cents a pound and that was it they were gone! Most all small hog producers got out of the business at that point and that was exactly what the large scale feeders and feed companies wanted. After that corn went back down and hog prices went back up. The big boys were making money in the drivers seat. On a side note in 1996 when corn went up and hogs went down there was a locally feed dealer that had a 1200 sow unit producing 14 day wean pigs. They sold them under contract to local independent finishers at $30-$35 a head. My wife was working in their farrowing/breeding unit at the time while she was pregnant with our first son. Well they help the local farmers to the contract price and quantity when corn went over $5 and finished hogs were $0.07/lb. Let's do the math. I do not remember the price of SBM but for simple sake lets just look at corn. If you had to buy the pig at $30 then feed 12 bushel of corn at $5/bushel ($60) you had $90 in that pig without all other costs especially SBM/protein. You marketed (what a joke, marketed) it at 250lbs at $0.07/lb for a gross revenue of $17.50. Seems a bit upside down.
I know I have COMPLETELY digressed but I tend to get on a roll.