This was an interesting week to watch the human influence and reaction in the market. Everyone has their opinions and they are all different. Some buyers were plowing in and buying cattle, while others didn’t buy one.
It’s that time of year when we all begin to discuss the condition of the corn crop as well. Some think the crop is horrible, others think it’s outstanding. Some think we have a huge hay crop while others think it’s still under water. This thinking dictated how they felt about buying cattle. I would call this bringing emotion into their decisions.
There is a difference between reacting and responding. When we react the situation, it is in charge of us, when we respond we are still in charge of ourselves. Some buyers were so blinded by emotion they couldn’t see the profitable buys.
Some buyers had their corn locked in at a lower price than what it is now. If your corn is locked in at $3.50 and today it’s $4.00, you charge yourself the $4.00. If you can’t make a profit feeding it to cattle at $4.00 then sell it and take the profit that way.
Here’s the thing, I’ve been buying and selling cattle for 20 years, and I’ve always been able to make a profit no matter what the price of corn is. The market just has a way of adjusting. Just remain in control of yourself instead of reacting and you’ll see the way.
Here’s an example of what that looks like. A buyer was buying heavy feeders. If you sold fats last week and were replacing with those big steers you’d be replacing with a $200 per head loss. This same buyer was telling me that four-weights were way too high because they have to eat too much high-priced corn for too long of a period of time to be profitable. The four-weights were the profitable buy-back.
That buyer mentioned the “period of time.” There are two points to this: First, the longer you own the animal the more profit you need to make compared with a more rapid turnover. We all get that. Second, if you are doing buy-sell marketing your exposure to risk is the time you own the animal. If you are practicing sell-buy marketing your exposure to risk is the time between the sell and buy-back.
Another interesting human influence was when President Trump got on Twitter and got the markets all rattled. Many people reacted; they weren’t in control. Yet if you look at the cattle markets all week long there was a definite positive value of gain on all weights up to 900 pounds. A stocker/backgrounder has the world by the tail right now. And like I said, even though the fat cattle bid is an insult, there are still profitable buy-backs. So who cares what Trump tweets out?
This week there is love for bred cows, they are undervalued compared with replacement females and pairs. Unweaned cattle were $7-15 back, and bulls were $12-20 back.