This was an interesting week to watch the market. Some auction yards had some big runs, and in those runs we saw all classes of cattle of all weights. This allowed price discovery to really show us the price relationships. As I write this I have not heard what fats traded for this week so that’s the only piece of the puzzle that is missing.
The three- and four-weight cattle have a value of gain near two dollars. The value of gain hits a soft spot at 600 pounds, then picks up again to 900 pounds, and after that there essentially is no value of gain. At many sales cattle weighing over 1,000 pounds brought less dollars per head than nine-weights. This is giving your feed away.
Here’s the neat thing about price relationships. When I compared the undervalued 1,000-pound steers to the undervalued flyweight steers I see that it is possible to squeeze out a small profit (both weights are undervalued to the weights between them). If I compare a nine-weight steer to the flyweight steer there is a handsome profit. This is the kind of thing that excites me because the market showed us that we can take a profit across the board on a feeder-to-feeder trade. As undervalued as some of these feeders were I am certain there would be some profitable trades to be made in selling fats as well.
A highlight was the value-added sales. The definition of value-added at these sales means the cattle were weaned at least 45 days and had shots. At these sales, prices were $5-14 higher. Unweaned cattle were $8-12 back and bulls were $20 back. The stocker-backgrounder that took advantage of this have the world by the tail.
I didn’t see much activity in the female market. The only thing of note was that bred cows under 8 years old have some value, and cows older than that have no friends.
Some auctions were lower this week and others were higher, making it hard for me to pinpoint a market trend. To me this drives home another point, market direction is not nearly as important as price relationships.