I finally saw a good number of females sell this week. The bred heifer is the most overvalued female. I took note that a first-calf heifer pair was $250 cheaper. My knee-jerk reaction is this: The work is all done and she lost value?!
In full disclosure I have never bought pairs at auction. I know people who have, and they have all told me that sometimes you can expect problems with a little calf when you get them home. So that may explain the price drop. The confusing thing to me is pairs with calves weighing over 300 pounds dropped another $250. These big pairs brought weigh-up value (value of a three-weight calf, plus the weigh-up value of cull cow). The bred heifers were due to calve in January.
I’m looking at this thinking I’d sell those January-calving heifers since someone wants the privilege of pulling calves in horrible winter weather, and replace with the big-calf pairs. I’d have $500, plus a pair that I don’t have to worry about through the winter. I’d also have more options with what to do with the pair, like cull the cow and keep the calf, or rebreed the cow and capture some appreciation value on her.
The older cows dropped in value by $300. This is what real cow depreciation looks like. That depreciation should be charged against producing the calf. If I average the value of five-weight feeder heifers and steers at that barn’s weekly auction they were $750. Take $300 off that price for depreciation cost.
I’m going to share a difference of opinion here: I realize some people place a value on cow longevity. I do not, because at some time in her long life she was over-valued compared to something else. It’s my opinion she should’ve been sold and replaced with the under-valued animal that will capture appreciation and this also deflects the depreciation expense.
An open replacement heifer was worth $100 more compared to what I call a party girl. For those who don’t know, a party girl is that young feeder heifer that accidentally got bred. I have bought party girls in the past and have gotten along well with them. The party girls in this case were not far along, due to calve in May. If they gained 1.5 pounds per day they’d easily be big enough to handle calving, plus the weather would be much more favorable compared to calving in January. And speaking of May calvers, they carried a discount. It’s also been my experience that these party girls are highly fertile and will rebreed with no problem.
I know some cow-calf operators may be a little freaked out that I’m suggesting being a "cow trader." This is a marketing blog and I’m looking for profit-generating opportunities. When we market cattle we should be improving our position. In order to do this we must know our "cost to keep." Don’t guess.
I am going to make a real-world comparison here for illustration. Rancher A is a traditional cow-calf operator. His paradigm is that of only producing calves to sell, and if he can’t make any money doing it he needs to get bigger and run more cows. Rancher B is a "trader" who is always looking for value relationships and is willing to sell anything at any time, and replace with just about anything that he can add value to.
This fall, rancher A was one of those that I mentioned last week who was "forced" to sell calves. He needed more for them than they were worth. He sold those under-valued calves instead of selling over-valued bred females. He is now looking to purchase over-valued bred females with borrowed money because he needs to get bigger.
Rancher B sold over-valued feeder heifers and bought back open wet-bag cows last spring. He then bought a bull to rebreed those cows, in order to capture some appreciation value. Rancher B still owns those cows yet today and they weigh more. Here’s the thing: If he sold those cows today as weigh-ups he’d get more for them than he has in them. Had he sold them as weigh-ups a week or two ago he could’ve replaced them with rancher A’s undervalued calves that he sold, and walked away with a little profit. Rancher B would still have cattle in inventory, and a little more cash. That’s what I mean when I talk about improving your position.
Here’s another hard lesson I learned. Years ago I had a "good" commercial cow herd. They bred back on time and gave me a calf every year. I fed them good through the winter time and they got a lot of protein tubs. When I made them eat what was attached to the ground all winter and quit supplementing them so well I ended up with cows that didn’t breed back. I also fed the calves out and so I had close-out data and carcass data to prove mine were better than anyone else’s. Then I bought some calves in the sale barn, comingled them with my home-raised cattle, and I got my feelings hurt. The sale barn cattle outperformed my home-raised cattle.
My point is you may be able to buy better cattle than you currently have. Cow-calf guys, listen, I understand the pain of swallowing your ego and getting your feelings hurt, so get over it. It's better to trade cattle and be profitable than to have pride/ego and be broke.
As for fat cattle: Well, it's hard to replace them with anything this week that will provide a good profit.
On the feeder side of things the value of gains were highest between 500 and 800 pounds. Some of the fly-weight cattle picked up some friends in places this week and that eroded their value of gain a bit. The problem is, it's still higher than the cost of gain. The value of gain falls off when the cattle get over 800 pounds.
Unweaned cattle were $4-9 back and feeder bulls were $12-40 back. Southern cattle were greatly under-valued compared to Plains cattle. There is also a big rollback between steers and heifers on lightweight cattle under 500 pounds.