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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer.

New year: Value of gain erodes for some cattle

Buyers this week liked and paid for heavy steers, heavy-bred females, steers instead of bulls.

With a full week of markets we have all kinds of new information. As is typical with a break like we just experienced the market has moved.

Many of the strong values of gain we were enjoying have eroded away, and the female markets saw a definite spread.

The theme for most of 2019 was that flyweight calves were undervalued. That is not how 2020 is starting. Flyweight males landed in the overvalued category this week, as demand for these guys really picked up. The flyweight females remained soft. At one auction there was a $55 per hundred difference between a three-weight steer and a three-weight female.

The values of gain were what I’d call a bit spotty in cattle weighing 300-600; spotty meaning that at one auction the value of gain was clearly above the cost of gain and at another auction it was clearly below. The value of gain was strongly favorable for the heavier cattle, weighing 600-900. The market was clearly signaling that they want them heavier. This change in VOG is probably due to grass-cattle buyers.

When I compare markets in differing regions there are some significant spreads. It doesn’t take a lot of miles to find these spreads. And they are definitely worth paying a truck driver to haul them, whether you’re selling or buying.

Southern cattle were undervalued compared to the Plains markets. Unweaned cattle were $2-13 back. Flyweight bulls were $3-20 back, and eight-weight bulls were $28-36 back. At nearly $250 back per head, on the eight-weights, I think we just witnessed the value of castrating.

I heard that fats may have traded at $124. If that’s the case fats are undervalued to most everything except females 700 pounds and lighter. I penciled in a $100 per head profit to determine this: After all, if you’re going to feed something for five months you need to make a good margin since the turn over is slow.

Female markets were much like the feeder markets -- it pays to shop around. The only female sales I was able to take in were in Nebraska. There was a $250-$500 spread between the east half of the state and the west half. This could easily save five figures on a load, making freight cost look like a bargain. Many of the cattle I saw sell in the east were of western origin. Recalling what heifer prices were a year ago it made the heifer development business look like it’s a tough one to be in. But this doesn’t seem to deter many people as open replacements caught a $12 premium this week. Weight had a lot to do with price, buyers are showing favor to heifers weighing over 1,150 pounds.

 Females that are 8-9 months bred were in high demand, while females that are in first and second trimester sold at a $300-700 discount. I guess people forgot how bad the weather was here last year. Heifers weighing under 1,000 pounds were heavily discounted as well. Cows sold at prices that were reflective of depreciation. A good, fleshy cow sold well. If you are thinking of selling some bred cows, it looks like it may be worth it to feed them and put some flesh on, as the sell price seems to more than offset the cost of feed.

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