As cattle prices reach uncharted highs, the demand for Wyoming cattle ranches has increased dramatically over the past 6-12 months. Analysts are suggesting that cattle prices may climb 5-8% higher throughout 2012. I have spent a lot of time showing property to some much respected cattlemen and cattlewomen from all over the U.S. the past six months and they all are telling me the same thing across the board, these buyers feel that we will see a strong run in the cattle market for the next 3-5 years before the market peaks and starts its downward trend.
As I research a little data, statistics show cattle numbers at a 20 year low and this, along with a strong export market are driving these cattle prices through the roof. This is great if you are a ranch broker selling cattle ranches, but raises a little caution in me when looking through the eyes of someone looking to buy a cattle ranch. There are still some really good buying opportunities out in the market place, but with the demand increasing for these types of properties, the expectation of sellers has also risen and we are seeing an increase in the selling price of production cattle ranches.
It is common knowledge to anyone that has spent much time in the cattle industry that the cattle market is a somewhat predictable and highly cyclical market. Historically, after several years of increasing prices, beef producers start keeping more and more replacement females, growing their herd size until the cattle numbers exceed the demand and then the downward price trends begin. The beef industry is like all commodity markets, it is ultimately controlled by supply and demand.
My advice to someone short on experience and looking to buy a cattle ranch is this: project cash flows very conservatively, understand expenses will increase, and foremost have a solid business plan in place and know how you will get your beef commodity raised and sold in the marketplace. It really does not matter if you are looking to own a cow/calf pair operation, a yearling stocker business, or are going to sell purebred bulls and heifers. Cattle have to be raised affordably and sold efficiently. To a buyer that just wants to invest and enjoy owning a cattle ranch, there are a lot of highly educated and capable people in the industry that love to manage cattle ranches. So don’t let the complexity of owning and operating a cattle ranch keep you from investing in a quality operation. There are people out there that can run, manage and make your next purchase a profitable experience.
I am a firm believer that buying and owning land is the best long-term investment available. I have devoted my life and career to this belief. I also think it is a good investment to buy land that produces cash flow. I recently listed the Thorbardin Ranch and this particular ranch is a great opportunity for someone looking to investment in an operation that runs efficiently and produces significant cash flow. This is one of the most solid cattle ranches that I know of in the marketplace. Currently, someone can buy this ranch and the cattle on it, and have a viable operation the minute the closing is over.
Mike Fraley, Fay Ranch Broker in Wyoming, has been involved in agriculture and the beef industry his entire life. Mike was raised on a cattle and haying ranch in Wyoming and graduating from Texas Tech with an agricultural, animal production degree and loves all aspects of ranching, land, and the outdoor lifestyle.