Mixed results in two auctions and some sharply lower Hereford and Hereford-Angus heifer prices aggravated the market uncertainty already rippling through purebred and other seed-stock cattle raisers at the Fort Worth Stock Show & Rodeo over the weekend.
On the positive side here, the Cowtown Invitational auction for seed-stock cattle – both polled (bred hornless) and horned Herefords – brought higher average prices from a year earlier, up about 5 percent for bulls, cows, heifers, embryos and one embryo-flush of a prized cow.
But at the 47th annual Premium Whiteface Replacement Heifer Show & Sale, the auction in a crowd-overflowing West Arena brought an average of $2,227 per heifer, down nearly $600 from the $2,700-$2,800 average range at the 2015 event.
The 293 head sold included Hereford purebred and “black baldy” Hereford-Angus heifers – many pregnant, some already with newborn calves and some not yet bred. Sale total: $652,350, down from $850,000-plus in 2015 on comparable numbers of similarly high quality herd-replacement heifers.
“I know the market is a little soft,” said Jack Chastain, executive secretary-manager and trade magazine editor for the Texas Hereford Association, as he encouraged auction bidders to go higher on the heifer show’s reserve grand champion pen of 10 Herefords.
The 10 heifers, bred to Hereford bulls and produced by Dalhart-based Summerour Ranch, sold at $2,650 per head to Charles and Ward Smith, father-son 3rd and 4th generation owner/operators of a George West-area ranch with roots dating to the late 1800s. That meant a perennial show exhibitor in the Panhandle sold to a deep South Texas buyer.
The grand champion pen of 10 heifers, produced and sold by Miami, TX-based B&C Cattle Co., brought $3,000 per head from Morgan-based W4 Ranch, owned by 92-year-old James M. Walker. The founder of Walker Construction Co. and his family were honored by the Texas Hereford Association for their long ranching commitment, since1963, to improving the Hereford breed.
With prices on slaughter-bound cattle, oil and gas and most major farm crops down sharply in recent months, the market outlook for purebred and other seed-stock cattle was at best uncertain as producers headed to Stock Show this year.
Oil and gas royalties, down with the prices, figure prominently in many Texas ranches’ balance sheets, often contributing to producers’ willingness to expand and improve their herds with replacements like those auctioned here.
From Channing-based H Ranch, the top-selling pen of 10 in the Premium Whiteface auction went for $3,100 per head, all white-faced “black baldies” or Hereford-Angus crossbred heifers. The buyer was GKB Cattle Co. of Waxhachie. Last year’s top-selling pen brought $4,500 per head.
Near the end of the auction, one pen of 10 heifers sold for $1,250 per head, close to the $1,200 auction low. Pampa, TX-based Brainard Cattle Co. was the exhibitor/seller.
“It was satisfactory to us,” said Sally Brainard Wicker, a member of the ranching company; her family’s ranching roots date to 1882. “It reflects the marketplace.”
Wicker and others had hoped the U.S. bear market for cattle would still be a few months away from purebred and other seed-stock cattle prices. Typically the impact does lag about six months behind market trends for beef-bound cattle, including feeders. The lag time was cut by two-three months.
After U.S. cattle prices had generally doubled during a six-year rally, feedlot-bound cattle prices had plunged by about 40 percent from an October 2014 high to the recent low in December. Cattle futures prices had dropped by 20-25 percent.
“We took a huge hit,” Chastain said.
But since December, the markets had been rebounding modestly. And prices have remained relatively strong on grain-fed cattle going to slaughter, Stock Show veterans said.
“The wave hasn’t caught us, yet. . . . 2015 was phenomenal,” cattleman and Stock Show-regular John Dudley said ahead of Sunday’s auctions. He’s a co-owner/operator of Dudley Bros., a Comanche-based family ranching operation producing registered purebred and herd replacement bulls and heifers, with roots dating to 1885 in that West Central Texas area.
Dudley and other seed-stock/purebred cattle ranchers expected some level of a market slump. But it’s complicated, he said.
After the long drought, which ended over the past year, the U.S. herd population was down sharply, and ranchers have begun to rebuild their herds while surges in production of pork and poultry are putting downward price pressure on all meats, said Joe Scott, a Castle Herefords partner with his wife Brook Castle Scott and her parents, Jackie and Curtis Castle, of Crawford, Okla.
Now after commercial cattle market prices having fallen by almost half and maybe lingering at low levels, Scott said, the price impact will surely hit producers of bulls and heifers for use on commercial ranches.
“That’s where it’s going to hurt us in the long run,” Scott said.
However, he added, the wise ranchers – those who were mostly frugal and socked away cash reserves through the six years of record-setting cattle prices — will likely use the lower seed-stock market prices to continue rebuilding their herds.
With hay and feed grain prices also down sharply – lower input costs – the market trends are even hazier to predict, said Iowa corn farmer and beef/seed-stock cattleman Charlie Obrecht, now partnering with his wife Judy and grandchildren in showing their purebred shorthorn cattle, also at the Stock Show. Obrecht showed steers here in 1959.
Hereford producer Dudley expected a downturn coming either at the Stock Show or sometime soon. “How much and how long, those are the big questions,” Dudley said.