My View From The Country

3 New Market Dynamics Created By Surging Bull Prices

With the cost of bulls these days, artificial insemination is becoming more economically feasible.

It’s probably not surprising that, on the heels of recent record-setting prices in all classes of cattle, prices for bulls have been setting new records this bull-sale season as well. But despite the record prices, there seems to be a lot of sentiment among producers that this is the year to purchase bulls because bull prices the next 3-4 years – especially for calving-ease bulls – are going to climb ever higher as the industry expands.

These record prices have created at least three new dynamics:

• At first glance, it appears that there is a record spread between the top 15% of bulls and the average. This is probably true from a gross-dollar standpoint, but the actual value differences might be understated at today’s prices.

For example, take bulls that are identical for every EPD but calving ease and yearling weight. Let’s assume bull A has two additional live calves and boasts 30 lbs. of additional yearling weight. Let’s assume that bull A has a yearling price of $150/cwt., and that bull A sires 100 live calves vs. 98 for bull B and that they are 30 lbs. heavier at yearling stage. That equates to a tremendous difference in value (100 x 800 x $1.50 = $120,000, 98 x 770 x 1.50 =$113,190)!

Everything else being identical, bull A is worth nearly $7,000 more than bull B. In fact, one good cattleman made the comment to me recently that he figured it was almost impossible to pay too much for a good bull, while a below-average bull would cost him money – even if it was given to him.

• Because I make my living selling bulls, the second dynamic pains me a bit. At these higher price levels for bulls, artificial insemination (AI) is becoming a more economically viable option. Don’t get me wrong; I’ve always been a huge fan of AI. However, I would always argue that the value of AI is in consistency, in getting a higher percentage of cows bred in the first 21 days of calving season, uniformity, and the lack of risk associated with proven genetics.

It’s not difficult to find yearling bulls with EPD profiles that exceed most AI sires, and to go 100% AI generally isn’t feasible. However, the economics of AI vs. purchasing a bull have improved significantly at the current price levels for bulls.

 

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The website IowaBeefCenter.org is a great resource with which to make some of these comparisons. Labor and time have always been a concern for producers looking at AI; however, if you have adequate numbers, turnkey solutions are available. Still, AI will likely play an increasing role as we move into expansion and begin to retain heifers at an aggressive rate. 

• A third interesting trend is one probably derived from the changing marketplace of higher out-weights and improving margins for additional pounds at all segments. But in addition to the premium being paid for calving ease, there appears to be a noticeable push for more power and growth in bull selection by producers. A good economist argued that the increase in carcass traits, etc., has more than kept pace with the increase in the value associated with growth, but weight is easiest to measure when the checks are written. 

It does require a pretty sharp pencil and some thought when it comes to designing a genetic program. It used to be that as long as you avoided big mistakes, you were okay. Today, avoiding mistakes is still critical but little details can equate to big differences.

 

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Discuss this Blog Entry 4

TryN2 Farms (not verified)
on Feb 7, 2014

Troy read this sentence again and see if you wouldn't want to restate that. - "It’s not difficult to find yearling bulls with EPD profiles that exceed most AI sires and to go 100% AI generally isn’t feasible. " Troy I enjoy your views on most articles and this one as well but seriously have to question the sentence above . For most operaions large and small 100% AI isn't feasable partly due to the fact you need at least 1 clean up bull. But I think you'll agree the first part of that sentance is pretty questionable. Partly due to the fact you're leaving out the ACCURACY of most if not ALL AI bulls. "not difficult to find yearling bulls...... that exceed MOST AI sires" How in he world would an AI company survive without bulls in the tank that are better than this easy to find yearling (no history/accuracy) bull .
100% AI isn't for everyone for a variety of reasons but it's NOT because you can find a better yearling bull on every street corner. It takes both to help the industry progress and I know you know that. But don't let your 'pro bull' passion cloud your judgement. :) AI is not your enemy - vegans are ! :)

Jared Decker (not verified)
on Feb 15, 2014

I have to agree with TryN2 Farms. Do a search for your favorite economic index or EPD on your favorite breed's website. It won't be yearling bulls that come to the top. Bulls enter AI studs for a reason. It will be a great favor to the entire beef industry when AI becomes more common.

Anonymous (not verified)
on Feb 7, 2014

The approach here is to try for the best of both worlds. Purchase the best possible EPD and phenotype bulls from top mothers: collect them and AI 90% of the females, then turn these bulls out with the AI'ed females as clean up- Top 10% of cows are bred via AI to outside bulls.

Anonymous (not verified)
on Feb 7, 2014

We AI'ed 850 cows and 110 heifers out of 1200 in 2013 for spring of 2014. Yes it is more work than we are use to and we did have to rethink our work schedule. But hey, we are cattlemen, cows are what we do. So we missed a few ropeings and didn't golf a couple of times and the boat didn't get to the lake till late summer. We did still use are aging bull battery as clean up. Had about 3.5% open, and 4 late aborts (which is normal). I got to say I just am having a hard time spending $7500. and up for a good bull. If they were all gentlemen and didn't try to kill each other all the time it might be different. I put a lot of bull burger in the freezer. Even when the breeder covers part of the cost it still hurts. So in short, AI is good for us and hey were cowboys, we can do anything.

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What's My View From The Country?

As a fulltime rancher, opinion contribur Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

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Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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