Cattle prices on the rise as ranchers rebuild stock

By RAMIT PLUSHNICK-MASTI Published: May 10, 2012
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A cow runs circles in a small pen, her calf close by her side. Ranchers, their brows wrinkled, scribble in a glossy catalog while high on a podium the auctioneer slams his gavel, taking bids as the price of the pair rises rapidly.

The high-profile auction at the Neches River Ranch gave cattlemen a good indication of how long it might take to rebuild after Texas' devastating drought and what it might cost them.

A quality cow that sold last year for no more than $1,800 now fetches about $3,000. The average price for a bull is up $500. And a cow with a 300-pound to 400-pound calf by her side is selling for about $2,800, sometimes more than $3,000 — almost double the $1,700 they commanded two years ago.

“Since we've gotten rain and everything, the price has really jumped up,” said John Dixon, a rancher near Elkhart, who with a slight nod of his head bought a $7,000 cow.

Last year's historic drought forced ranchers to cut their herds because they had no grass and couldn't afford high hay prices. Hundreds of thousands of cattle were slaughtered or sent out of the state, leaving Texas, the largest livestock producer in the nation, with its smallest herd since the 1950s.

Then, after a year of record-breaking heat and an almost complete lack of rain, winter rains broke records. Ponds filled. The grass turned green. Ranchers began looking for cattle, and many kept a close eye on the GeneTrust auction held in East Texas on a ranch owned by the Cavenders, a family more often known for selling boots and hats in western stores than cattle genetics.

“The big question looming in everybody's mind now is: Are we going to have another summer like we had last summer?” explained Doak Lambert, the auctioneer. “If I go and invest all this money and buy these cattle and pay a premium for them, and then we end up in a drought situation again this summer and I have to liquidate them, where do I sit financially? So there's a lot of risk involved right now.”

Yet “the mood is good,” Lambert added. “The American cattleman is, I guess, the biggest risk-taker I know, and he's also the biggest optimist I know.”

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