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

Are you marketing or guessing?

Cattle markets are telling us now they’ll pay for weight gain and management.

“Guess what?” is one of my daughter’s favorite lines when she wants to tell me something, although I really don’t like guessing games. In fact, guessing is one thing I don’t like about the summer scheduling some sale barns use. It feels like a guessing game whether they are having a sale this week or not.

We all are playing guessing games right now. Is school going to start as scheduled or be delayed? And with these COVID-19-related management tiers that our local schools will be using, it’s going to be a guessing game what time school is out, since different grades will be released at different times of the day. Then there’s the guessing game of whether we even have school on a certain day if the official COVID-19 meter changes.

The start of school is 12 days away and already I am frustrated with the whole mess. I really wish they’d call it off like they did last spring, but only for the reason my daughter learned more being with me than she could learn in school. She learned how math and reading apply to real life. She learned job skills too.

There are certain things the cattle market does every year. Anyone who has spoken with me this week can tell you my favorite phrase right now is “most years.” Being in a coronavirus world/market right now I do not know for certain that these things will happen: Now hold that thought for a moment.

Market preparation

When I was a kid I was told to go to college, get the degree, land the good job, and cattle would be something I do on evenings and weekends. I didn’t buy into this line of thought. I didn’t think people would be in the cattle business unless they could make money at it. I had to figure out how to do that.

As I have mentioned before, I am a big believer in the Law of Attraction. Looking back, I had to go to college to meet my best friend. I eventually got a sideline job buying cattle for his dad. When I started doing that they told me I had to read Ann Barnhardt’s blog. At that time she was teaching the Bud Williams Marketing schools. I got curious about it one day and called her to see what it was about. She told me “I will teach you what they wouldn’t and couldn’t teach you in college.”

That line was enough to get me to go. It cost $500 back then. That was a lot of money for me at the time. I had to buy propane to heat the house, and groceries, and gas. Now add tuition and travel expenses to that! One of the best decisions I ever made was to go.

Today looking back I agree with Ann’s statement. I will add this, there is no amount of reading or studying that will make you a success. It is the understanding and application of wise thought that counts.

Now go back to the part about guessing. Nothing has ever been certain for any generation. Yet ever since the time of Cain and Abel some people have managed to make good money with livestock. Some of that may have been just dumb luck, but to do it consistently over a lifetime takes the application of wise thought.

There are many resources today on how to actually make money on cattle. Yet they are ignored by the masses. These people are like some of the girls on my 9-year-old daughter’s basketball team. They will not pass the ball to the open girl if she is not in their circle of friends. They will make this decision time and again, even if it’s the difference between winning and losing the game. They’d rather lose than pass it to a girl that isn’t in their click.

Cattlemen are no different. Instead of playing the game to win, too many would rather lose and blame it on someone else. I have been a part of the collusion game so I understand some things just ain’t right. The thing is, we still have to play the game to win. When that one packer passed me the ball with a bid that could have been much better I figured out a way to score and make a profit. I could only do this because I could apply the things I was taught.

The marketing game

This cattle and marketing deal is like basketball. We have game-day players and practice players. Game day players think they are too good for practice. Practice players show up to practice and work hard. Most people in the cattle biz are game-day players. That is why they lose consistently and when they do win its dumb luck. Practice players can win consistently.

I am going to invite you all to come to practice. Wally Olson spent a great amount of time learning from Bud Williams, and now teaches marketing schools. He has reached out to me and we are teaming up to teach one in October. If this does not fit your schedule check his website for other dates and more information: http://olsonranchllc.com/calendar/

Another resource to check out is Hand in Hand Livestock Solutions for their school schedule: http://www.handnhandlivestocksolutions.com/calendar/

Also check out the resources that Eunice Williams, Bud’s widow, has worked so diligently to put together: https://stockmanship.com/?page_id=341

We have been in the process of finding out who the practice players are for the last several months, and we will continue to figure out who they are in the coming months. There is no guessing game about that.

The markets

Last week the value of gain (VOG) was all over the place on flyweight cattle. I take that as a signal the market didn’t know how to respond to that many showing up. This week the VOG on flyweights evened out but they still carry the highest VOG throughout the weight spectrum.

The feeder markets signaled that it is a weight-gain business for the third week in a row now. This is setting up a great opportunity to make some profitable feeder to feeder trades. The thing to be careful of is how the VOG drops off at some auctions between seven and nine hundred pounds. With this fluctuation it may or may not pay you to continue to put weight on them. Know your cost of gain (COG) and how it compares to the VOG before making marketing decisions.

This week we saw big strings of cattle coming off grass and the buyers signaled they appreciated seeing the big groups. Unweaned cattle were $7-13 back. The heavier the bawler the bigger the discount. Here’s the math, some of those heavy bawlers were on sale at $100 off per head. Feeder bulls were $15-22 back. And good healthy thin-fleshed cattle were getting a $7-10 premium.

The geographic spreads remained in place this week. Southern markets were undervalued to plains markets. Here lies some good news for the guys holding fats, it’s the southern markets that are providing the profitable buy back opportunity.

The opinions of this author are not necessarily those of Beef Producer or Farm Progress.

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