There are many different opinions about the weather and the markets this week. My opinion is there are opportunities to be had with both. The hot dry weather has allowed many of us to kind of catch up on haying. The markets also gave us many different opportunities, depending on how you look at it and what your situation is.
I find it difficult to call a market direction this week. Some auctions were higher, while some were steady with a lower undertone. The important thing is that the value of gain on cattle weighing under 900 pounds was solid again this week. And by solid I mean it was higher than the cost of gain. For a stocker/back-grounder this allows all kinds of possible trades. One of those possible trades is to sell a heifer and buy back a feeder bull which can be quickly upgraded to a steer.
The real damper in the market this week was in the fat cattle trade. Many feeder cattle are over-valued to fats, but not all of them. There is an opportunity to sell fats this week and replace at a profit. With the rollback between steers and heifers, a feeder may have to sell fat steers and replace with feeder heifers to make a profit.
Unweaned cattle were $5 back and bulls were $10 to $20 back.
In the female market I’m looking at fall-calving cows. Where you live and your cost to keep is going to affect how you view this segment of the market. For me, living in Nebraska, the open replacement female is the most overvalued critter. When I compare what she costs and add in the cost to keep to make her a bred heifer it becomes clear real quick that I can purchase bred cattle cheaper than I can raise them. When I compare the cost to keep a bred to the value of a 500-pound calf and the slaughter value of the cow, the bred female is overvalued.
I have a friend who lives in Oklahoma, and we often compare cost to keep. His costs are cheaper than they are here. So for him the open female would be the most undervalued, and the pair with the 500-pound calf would be the most overvalued. We both have opportunities to profit in the female market, it’s just our opportunities will be completely opposite as a result of our cost to keep.