By Larry Stalcup Contributing Editor
After about eight years of seeing reduced numbers of beef replacement heifers, more replacements are projected for 2025, says CattleFax analyst Mike Murphy. However, with high feeder heifer prices, will producers keep sending more heifers to feedlots rather than retain them for replacements? Will they be able to buy replacements back and at what price?
Murphy made the higher replacement projections at last fall’s Texas Cattle Feeders Association meeting. Since then, prices have rallied to place even more “sell” pressure on cow-calf operators. Each producer’s production and financial situation will determine if replacements should be purchased or raised from within the herd, says Lee Schulz, Iowa State University Extension economist. (Schulz is currently on leave from ISU, serving as chief economist at Ever.Ag.)
“Although most producers raise their own, purchasing replacements sometimes can be an attractive alternative,” Schulz says. “Selecting the most economical source of replacement heifers has major implications for effectively using resources, controlling costs and sustaining business vitality.”
Schulz lists factors to consider when determining an optimal herd replacement strategy. They include interest rates on savings or other alternative uses of capital; interest rates on borrowed capital; cash flow needs; feed costs; labor availability and costs; the relative price difference between cull cows and heifer calves; reproductive rates; and forced (or involuntary) culling rates.
Also, bear in mind environmental restrictions on growth to weaning, genetic improvement potential and/or maintaining a desired genetic base, ensuring the heifer population will thrive in the given environment, price and availability of bred replacement heifers and tax implications.
“Although most producers raise their own, purchasing replacements sometimes can be an attractive alternative”
– Lee Schulz
Many variables are difficult to predict, yet they are important to the analysis. They include the sale price of heifer calves, price of purchased replacement females, feed costs, and production performance of purchased replacement females relative to raised heifers.
“Bred heifer prices are higher than a year ago,” Schulz says. “They’re already about double the price they were in 2019.” For instance, he notes the Show-Me-Select replacement heifer sale in December at F&T Livestock Market in Palmyra, Mo., had 249 medium and large frame, 1-2 muscle score, bred heifers that were expected to calve from mid-January thru mid-April. The majority were due in February and March.
The top lot sold for $4,100 per head. The low end of the range was $3,200 per head. The average price was $3,600 per head. With those prices, replacement heifers appear to be reasonably priced for now, Schulz adds. That might not be the case in a year or two when industry-wide expansion begins.
He says producers with resources may want to retain heifers to help expand their herds. “However, producers wanting to sell heifers also have good marketing opportunities,” Schulz points out. “Retaining heifers offers flexibility to sell them later as open heifers, to breed and sell them as bred heifers, or to calve and sell them as pairs. Or, maybe just keep them if the operation has room for more cows.”
Cow-calf producers who are analyzing the profitability of buying vs. raising replacements should base their analysis on the most likely assumptions during the future heifer development period, Schulz says.
ISU’s Ag Decision Maker website has further details on buying or retaining replacement heifers. Visit extension.iastate.edu/agdm/livestock/html/b1-73.html to learn more about how a producer’s specific production and financial situation can help guide the decisions to be made on herd growth.
