This week I finally got to take in a female auction and since I haven’t gotten to write much about females lately, I thought I’d just jump right into that.

The first-calf-heifer to 4-year-old pair caught the highest dollars in the female market this week. When comparing the value of those animals to that of an open replacement heifer, there is not enough appreciation value to offset the cost of breeding a heifer right now.

To be clear on how I am calculating that, I am using the expense the extension service says it costs to run a cow in my area for a year. That cost ranges from $700 to $1,000 per cow per year. The appreciation value from an open heifer to a bred heifer was $475, and the market added another $250 to that for the heifer pair.

This means the status quo producer can’t capitalize on selling the highest-dollar animal and replace at a profit with an open heifer. However, the least-cost producers can. This is why it is so important to get your expenses in check.

The female market gave me a perfect example to write about this week. When studying the prices paid for each age of cow there was a near-perfect depreciation of $100 per year of age. If we take the average of the extension service report of $700-$1,000 per year for cow expenses, that would be $850. That amount by itself is already difficult to recover since the cow is unlikely to wean off a calf worth that much. Then when we add that $100 worth of depreciation, it simply means we need $2 feeders just to barely get above breakeven.

There are only two ways to navigate this and make a profit. I already mentioned becoming a least-cost producer. The other is to delve into that unconceivable thought for cow calf producers: Increase turnover. Yes, I am talking about selling cows again. While the bell curve didn’t offer much opportunity to sell a cow and replace it at a profit this week, that will change. I recall back to 2014 when bred heifers were sky high. If a producer bought them, and still has them, the money he invested in them is gone. The whole idea that a cow has 10 years to pay for herself was a complete failure in business philosophy. However, those very same females were overvalued for the first half of their lives. Had they been sold and replaced with undervalued females instead of kept through to old age, that producer had a great chance to make some money with them.

More cow thoughts

Two other things stood out to me in the female market this week. First, broken and short-solid-bred cows brought weigh-up price. To me that is a good opportunity to get that last calf out of her, feed and sell the cow, leaving us with a calf that will easily cover the costs.

The second thing I noticed is that the reputation herds caught a $600 premium on their pairs. To quote a Canadian buddy of mine “fat is a pretty color on cows.” Black seemed to be a pretty color too, as they sold just a bit better than the reds. I am not sure how these guys plan to get that premium back. When those calves come to auction later this year the feeder cattle buyers won’t care where the factory came from.

When the gate opens into the auction ring and the cattle run in a buyer only has a very small amount of time to evaluate the cattle. We are looking at type and condition, and for any blemishes. Then we look at the screen to get the weight, and after that we’re watching what the bid call is. While it is clear some buyers will pay more for fancy, most will not. I have never once seen an auctioneer knock off a set of cattle and then turn to the buyer and say “those cattle have great genetics, so we’re going to add three bucks to your bid.” While getting the $600 premium is a great sell and that reputation took years to build, I am just not certain how the buyer will recover it.

Tight feeder markets

On the feeder side of things, the story remained much the same again this week. For steers the value of gain (VOG) simply went lower and lower as the weights got heavier. Some weights, once again, even brought fewer dollars per head than a lighter weight. On the heifer side the VOG was all over the place: It varied from weight to weight and place to place. With this much variance it’s difficult to pinpoint a weight that is overvalued. A weight that is over valued at one auction was undervalued at another. Here’s the saving grace that will make money, geographical spreads are in play. If we sold in one area and say we didn’t hit the best sell, we can go a few hours down the road and buy back something even more undervalued to replace at a profit. (This is possible with steers and heifers.)

This week unweaned cattle were $4 back, feeder bulls were $6-15 back, and replacement quality heifers caught a $10 premium.

While the fat cattle market continues to be a bummer, and full of drama for most folks, there is opportunity to sell fats and replace at a profit with heavy feeders, with the most opportunity to buy replacement feeders being on the heifer side. From the sound of things, getting fats sold and getting them delivered to the packer are two different things right now.

My closing thought this week is about the drama and rumors going around the cattle biz. Before I began writing this commentary I didn’t pay any attention to that stuff. I paid attention to the market because really that is all pertinent information we need. What I find interesting is that even though these stories spread like a wildfire the market flat ignored them, not responding to them at all. If the market doesn’t care why do we?

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