June 3, 2022
Over the weekend my family took a little road trip. There were two things that stood out to me along the way. One was how many planters were still in the field (we were headed south), and differing ways of managing grazing.
I have no idea what the planting progress reports say. I pay no attention to any reports that come from the USDA, except weighted averages because they are the only ones that have valuable, reliable real time information we can use. We have all seen crop reports come out that were bullish, only to have the next report come out saying they found a megajillion bushels they forgot we had.
It was wet and muddy the whole distance we drove, and mile after mile everything was green and looking good, from the road. And like I said the entire trip south I couldn’t help but notice all the planters parked at the edge of the fields. I guess I had it in my head that after we got so far south I wouldn’t see planters because they would be done.
This causes my cattle feeder mind to kick in and think thoughts like; if these guys are struggling to get the crop planted, and that comes out in a report, that’s all it’ll take to drive feed prices up. This is when we need to remember that many things are out of our control. What we can control is what we have in inventory and utilizing the price relationships between things to prosper ourselves.
Feed is in our inventory and we have some control over it. Remember it is at the base of our inventory triangle. This is pretty basic because without feed we will not be able to keep any livestock around.
Last weekend and during the week this week I got to take a good look at some pastures in different states. The difference in management really stood out. This is not a grazing blog so I won’t get in to details here. Thing is we saw pastures that had very little grass growing yet, and in the same area we saw pastures with abundant grass. The major contributing difference was management decisions affecting those pastures.
It is my guess that some of those ranchers may have a difficult time keeping cattle numbers through the summer while the other guys will not. If different management decisions can be made that will improve our grazing we should implement them. We need to avoid being in a situation where we are forced to sell cattle, for any reason. I write on here all the time that the market is willing and trying to help us. The market also seems to have a keen sense of when we are selling out of desperation or greed and has a funny way of punishing us for that.
Einstein taught us that we cannot solve a problem with the same level of thinking that created it. There are plenty of resources available on improving grazing management. There are seminars, books, blogs, podcasts, workshops, and even mentoring programs.
Here’s a different perspective. Many in the cattle business are concerned with vertical integration and that we will end up like the hog and chicken guys.This is a valid concern, and it has happened to some extent. The reason it hasn’t happened more than it already has is the rumen.
We all know cattle are the best up-cyclers there is, by utilizing forage off marginal land and converting it into valuable pounds. It is much cheaper to let the stock run out and harvest the forage than it is to haul the feed to the stock. We all know that it takes acres to support an animal and that acres are expensive. These are the reasons that the rumen has stifled vertical integration in the cattle business.
If we are truly concerned with vertical integration in the cattle biz it would seem to me that we should utilize our two best defenses. One is improving grazing management and pasture conditions. When we see cattle out grazing on pastures with abundant grass that is managed well we are deflecting the take-over we fear. Second, we need to market cattle in a manner we capture the full value of our grass and capture some positive cash flow as well. This is where sell/buy marketing comes in. We will not be willing to sell out so easily if we are making money.
Now that we are in the month of June some auctions will be changing their schedules. To me this becomes a guessing game because I can’t remember who’s having a sale from one week to the next. It appears this year is looking even more confusing. At some of the stockyards west of me some are going to keep selling females on a different day of the week than feeders instead of combining them like usual. And some auctions are adding female sales to their bi-weekly auctions, instead of holding the monthly special. Check the sale barn’s website or better yet call them to see what they got going on.
The reason the stockyards are running these adjusted schedules is due to some sell off still taking place due to ongoing drought. Some ranchers are having to make that hard decision to thin the herd, but it is a necessary thing to do in order to preserve the base of the inventory triangle. When it does begin to rain again on their ranch their grass will recover quicker because of the decision to cull
This week feeder markets were thin in numbers. While prices were mostly higher the spectrum was more turbulent in regards to Value of Gain (VOG). One weight could be 10 higher than last week and the weight class one hundred pounds heavier took a 30-cent slide because of that, causing a poor VOG between weights, or even setting up some leapfrog situations. The one constant from one sale to the next is the VOG was high on cattle weighing under 500 pounds.
With the price of fats getting shaved and the price of feeders going up, the buy back against fats is the heavy feeder heifers.
The female sales, in the drought area, had every class selling below their intrinsic value this week except the first calf pair. The price of these young mommas greatly exceeded everything else in the offerings. I really like the profit opportunity to sell these pairs and replace with pretty much anything else. There were some other cow trades that were possible to capture some profit. The margin on some of these swaps was thin.
Thin females were $300 back from other females of the same age and stage of production. These offer some value capture for someone to graze some flesh back onto them. As a word of caution before buying these, can you tell the difference between a thin cow and a spent cow?
The opinions of Doug Ferguson are not necessarily those of beefmagazine.com or Farm Progress.
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