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

Opportunity: Weather market swelled, then faded

Also, beware the conventional wisdom that bigger calves always make more money.

The market may have seemed like it was playing a trick this week, but those who know how to capitalize on it should have gotten some sweet treats.

At the start of the week, with snow falling and more in the forecast, the market reacted like people didn’t want any new cattle ahead of the bad weather. After the snow wasn’t as bad as forecast the market rebounded.

As I watched a few auctions and looked at markets reports from the week it was clear that the slide was fading. It was really obvious when looking at the weighted averages from the week. The price difference between a four-weight animal and a seven-weight was anywhere from 2 to 11 cents. You don’t need a calculator to figure out that the value of gain on those weights was going to be well over a dollar. If you are a stocker/backgrounder this gives the sweet treat of replacing cattle with $100 profits.

If you are replacing fat cattle it's much the same as last week, the profitable buys are in the lighter-weight cattle.

This week unweaned cattle were $9-12 back and feeder bulls were $8-17 back.

Conventional wisdom tells us weaning a bigger calf is more profitable. Look at these numbers from a Kansas auction. These are groups of black steers.

  • 720 pounds at $154.75 weaned
  • 725 pounds at $132.10 unweaned
  • 580 pounds at $159 weaned

The five-weights brought almost the same dollars per head as the unweaned seven-weights. The weaned seven weights brought $150 per head more than the unweaned ones.

Last year I saw the same thing. I asked two guys who feed out a lot of cattle why they had no interest in bidding on them. Both agreed they had no idea what to do with a bawling seven-weight. This type of thing happens a lot in the cattle business: Selling something our customer doesn’t want. These easily define undervalued cattle. And to rub more salt in that wound, it cost that producer to put those pounds on those calves, and then it cost him even more at auction. This is proof that we do not need a cow to wean 50% of her body weight, we just need her to produce the calf.

The market played a bad trick on the guy selling those unweaned seven-weights. The thing is, he should’ve known better. The market has been signaling for a while that unweaned cattle sell at a bit of a discount and the bigger the cattle are, the bigger the discount. It only takes a few moments to look at market reports and get this valuable information. With technology today we can access that info from our phones, either by calling the sale barn or using the internet.

Staying on that same note, I’m going to close with this thought. I get that people dislike taking the time for marketing or running their business. We all like to do the day-to-day tasks like feeding the cows. There are so many things that go into running a livestock operation. Business mechanics, range management, stockmanship, marketing, and the list goes on. The good news is today there are many things that can help educate us and improve our skills. There are schools, conferences, books and podcasts that we can listen to while feeding the cows.

If you took an hour a day to study these things it would add up to nine, 40-hour work weeks in one year. Imagine what could be accomplished with that knowledge and skill. That little bit of extra effort is all it would take to reach expert status. More importantly, it would keep you from making those kind of marketing blunders.

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