What Goes Up, Must Come Down

But apparently not for awhile. The cattle prices are strong. Commodity prices are strong. You see it in the news about every day, how agricultural prices are impacting this, that and the other. Last week, a coworker forwarded an article about a pair of brothers who bought 80 acres of Iowa farmland for $10,000 an acre. Yes, that’s a ‘1’ with four zeros behind it. Per acre.

Futures are high – heck – current prices are high! Live cattle are pushing $120/hundredweight, and feeders are anywhere between $120-150 and above per hundredweight depending on how big the calves are. There’s money on the table, and the demand for beef isn’t waning. How hard it must be to keep replacement heifers with prices like this!

And yet there is the big picture to look at. If you’re going to really dedicate yourself to being the best rancher you can be, then you can’t play around at it. You can’t sell off your best heifers because of high prices, and you can’t duck under the table when the pickings are slim. Ranchers spend years – decades – building a herd through genetic selection for the type of size, disposition and mothering characteristics that fit best within their targeted market and their own long-range vision. Replacement heifers are a big component of that plan.

And then the other part of the big picture: the financial side of running a ranch. I am a fiscally conservative woman. (If that doesn’t have the men beating down my door, then I don’t know what will!) I was raised with the cyclical nature of the cattle business, and the good times were used to prepare for the hard times. Dollar House I question whether some farmers and ranchers have that same philosophy. I question their ability to weather the downturn when interest rates finally go up and prices come down.

I am not an analyst. I don’t have a crystal ball, tell the future, or throw out predictions of when or how something will happen. I just know what history has taught me, and what goes up must come down.

Image courtesy scottchan

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