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Farmers buy calves and markets react

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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer.
To be a better marketer, be aware of events that happen regularly and how they affect your cattle business.

I really figured this week there would be some super-hot market news to write about since the election is sort of over. Maybe the market will react when it is officially called. One thing certainly began to happen this week: When the combines park the farmers come to town and buy some cattle.

As a rule of thumb, a seed-corn hat will outbid a cowboy hat every time. It doesn’t matter if it’s a female sale or feeder auction. The farmer buyers gave five- to six-weight steers a big boost this week.

Another thing that you can count on is when the farmers start buying and weaning you see delays in feed delivery. It is always amazing to me how feed mills act surprised when they get swamped this time of year and can’t keep up with the demand. A true professional knows to plan ahead. That professional has to be you, the person ordering the feed.

One other thing that we can count on when farmers start buying and weaning is on-time delivery for feed-grade drugs. When I taught the marketing school last month I touched on drug use. When we mass-med a pen we now have an implied death loss against those cattle.

When Ann Barnhardt taught the Bud Williams marketing schools years ago she would tell a story about a backgrounder that was dealing with super-high-risk cattle. This guy had a death loss around 10-13%. With the help of a pharmaceutical rep, they came up with a new program. This guy would mass medicate everything on arrival with an injectable, and then again 10 days later. The new program cost him more than the high death loss.

Change focus

I have a point in bringing this up, and it’s not to pick on the farmer types. What if we spent some time learning stockmanship? What if we learned how to take the stress off cattle? Here’s the thing about that, we only have to learn it once and then we’ve got it. We can use it anytime we need it without having to rely on anyone else because let’s face it; when we rely on someone else they will let us down.

If we go to a stockmanship school there is a fee, of course. But if you pay attention and get it the first time, it’s a one-time cost. To me this makes more sense than buying drugs or suffering an implied death loss every time we buy cattle. The old saying is, “An investment in yourself pays the best interest.”

Here’s a great quote from Eunice Williams about stockmanship: “It’s a matter of your priorities.” What that means is if we are going to do this, we have to set aside some time to work with the animals. If we can’t set aside some time because we have to go put on anhydrous, or something of that nature, then it obviously won’t work and we may need to rely on the drugs. Here’s my opinion on that, if you don’t have the time to work with your animals why bother to buy them at all?

Here’s how this ties into marketing: If we can rely on stockmanship instead of drugs we keep our cost of gain down, giving us a competitive advantage. If stockmanship can keep cattle healthy it can also keep them alive. It is much easier to make money with healthy living stock.

Value of gain changes

With five- and six-weight steers being in high demand this week it changed the value of gain (VOG). There is plenty of VOG up to 500 pounds, but with the higher prices paid for those weights there is little VOG between 600 and 700 pounds. The cliff is still there around 900 pounds. It’s really not paying these guys to put weight on the steers they bought.

The high demand for steers kept the wide rollback in place for heifers again this week. The heifer side still has attractive VOG throughout the spectrum up to 900 pounds, making profitable feeder-to-feeder trades possible.

Unweaned cattle were $8-15 back, and the heavier the animal the heavier the discount. Feeder bulls over 500 pounds were $15-30 back, and replacement-quality heifers caught a $7 premium.

Fats got a boost this week. However feeder steers are overvalued to fats. Feeder heifers are the profitable buy-back against fats.

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

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