This was just a very strange week. With everything going on in politics in the United States, to the commodity markets people are feeling the stained. The corn market put in a big rally this week which has gotten a lot of attention from cattle producers. This is changing the cost of gain, which in turn is putting negative pressure on cattle prices and more importantly the value of gain.
This week I've seen this pressure hit its boiling point. More than once this week I saw buyers more interested in arguing with each other than bidding on cattle, and the auctioneers acted like they’d rather be anywhere than on that block. There is another market column out there that routinely says feeders have been making money week after week.
If you can turn a seven weight into a fat animal for $300 like their math suggests then sure, they’re probably making money. Thing is we don’t even need the math to figure it out, people don’t act like this if they’re making money. And they don’t act like this over one rough week, it takes much more time than that. And just to be clear not every auction was like that. I changed my travel patterns up a bit this week and the atmosphere at the auctions I don’t usually go to was much more pleasant.
I have written about the difference between React and Respond before and this is a good time to revisit that. When we react we are letting outside circumstance control us. When we respond we remain in control of ourselves.
The value of hitting the brakes
This week I caught a bad bounce due to other people being angry. This in turn made me angry. We must know and understand ourselves and chose our response. I hit the brakes on everything I had going on. I cancelled my trucks and put down my bidder cards. I know anger causes us to do stupid things, so to avoid doing stupid things I simply just stop. This gives me time to calm down.
Everything in this world is made of energy, and they are on a vibration. Everything is made of atoms that move at a certain vibration. We can change the form of things by changing the vibration. Take water for example: at a low vibration it is ice, and at a higher vibration it is steam.
We are the same way. A low vibration for a human would be depression, and a high one would be joy. The tough part is learning how to change these vibrations. Our attitude is a combination of our thoughts, feelings, and actions. Thoughts control our feelings, and feelings in turn control our actions. So, we must control our thoughts. That’s why I hit the brakes on everything. I needed time to get my head right.
Our mind can’t entertain two thoughts at the same time. If profit is positive and anger is negative they can’t both be in my head at the same time, much like you can’t have light and dark in the same room at the same time.
Controlling our thoughts can sometimes be difficult in these situations, especially with a bunch of money on the line. I try to make it simple and easy. I set a goal to get the five best buys at a sale. It doesn’t matter if it’s groups or singles. Just get the best buys. This will make anyone feel good.
I also believe in affirmations. Come up with one and repeat it to yourself. My favorite is “I don’t always know how I’m going to win. I just know I ain't going to lose”. This keeps me focused on profit when I’ve been dealt a bad hand. It reminds me to utilize the market and let things happen. That’s the tough part, letting it happen. The times we try to force things to happen is when bad things happen to us.
When tempers boil over like they did this week it causes the market to take a hard drop. This is when you need to remember what’s written at the bottom of all the paperwork: “We act as agents only.”. Hold the stockyard accountable. You hired them to sell your cattle for the highest amount possible, so they darn sure better try.
A look at this week's trade
This week the VOG had a trough effect once again. It’s higher on light cattle, dips in the middle, then comes back up on the eight weights. Even though the markets were 5 to 20 lower this week the VOG was very similar to last week’s. This underscores the point that it is not absolute price that matters, its price relationships that matter. There are relationships in place right now that are still profitable, despite the downward pressure.
The cattle being marketed right now consumed the cheaper feed, so the VOG covers the COG on the overvalued weights. With the price of feed going up the COG will be higher than the current VOG. The prices of cattle will adjust and the VOG will change quickly, changing overvalued/undervalued relationships right along with it.
This week I didn’t see enough unweaned cattle to make a comparison. The ones I did see were heavily discounted simply because there was only a handful of them. Feeder bulls were 30 back. Another thing of note this week is that it mattered if the cattle had shots or not. The discount for unvaccinated cattle made vaccinating look like a cheap thing to do.