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

Holiday market offers new opportunities

Feeder cattle gained value this week, and the replacement cow market is showing illogical variations.

This week the feeder market was higher. Quite a bit higher in some places.

Lightweight calves seemed to get the biggest boost in the market. This price bump finally took the value of gain well below the cost of gain in some plains markets. A question I was asked a lot this week is why?

First of all I want to say this: It doesn’t matter why the market does things. It only matters how we utilize what’s happening. However, the reason the feeder market swung up is that after Thanksgiving some grass-calf buyers start buying their calves. They buy up these fly-weights and cheaply take them through winter, rather than try to compete with the green grass fever market in the early spring. And some of it is due to harvest being over and the farmer buyers are showing up.

Even though the value of gain dropped below cost of gain in some places on fly-weights the rest of the weight spectrum saw values of gain solidly over a dollar. With that market signal it makes sense to feed some weight on. The only thing to be cautious of right now is the value of gain drops off around 900 pounds in some places.

The past few weeks heifers have had a significant rollback compared to steers. In some regions of the country heifers started to gain a little ground on their steer brothers. In some areas this rollback is still in place, providing a buying opportunity.

With fats getting a boost, its finally opening up some opportunity to replace at a profit, mostly with feeder heifers though. Most steers are still over-valued to fats. Profitable heifer buys can be found anywhere on the weight spectrum.

Unweaned cattle remained $4-12 back. Load lot groups have the smallest discount. Small groups that have to be comingled to make a load are making up the larger discount. Feeder bulls were $20 or more back this week. I did see some replacement heifers sell at a $15 premium, outselling their steer brothers.

Female sales remained interesting. I watched some sales on the internet and there is a trend across the country. If you have anything bred to a Hereford it's going to sell at a discount. But then the F1 baldies bred to anything black will sell at a premium. It seems like a no brainer to me; buy the discounted Hereford-bred females and turn around down the road and sell the desirable baldies.

Females carrying condition -- borderline fat -- are selling better than girls in their working clothes. Heifers weighing over 1,100 pounds are selling a bit stronger. There is also a premium for AI-bred females.

Pairs are under-valued compared to breds. That means is if you buy a bred and figure in the cost to keep, you will have more in her by the time she has a 200-pound calf than what a pair cost right now. The only overvalued pairs I saw were pairs where the cow was already bred back.

When I compare the value of AI-bred heifers to bred cows there is a some depreciation due to the premium being paid. When comparing bull-bred heifers to the value of bred cows there is very little depreciation.

I spoke with a couple friends this week and they both told me that in western Nebraska, Wyoming, and South Dakota they are still selling off big strings of open cows. Open cows seem to be a problem everywhere. Here’s the interesting thing about that: I have noticed that in areas southeast of Nebraska that bred females are selling higher than bred females in Nebraska. I find that interesting because Nebraska has higher feeder markets. So, what I am wondering is if there is some herd rebuilding beginning to take place is some regions, while other regions are still culling cows. We’ll just have to see how this continues to play out the next couple months.

It seems to me the market movement we saw this week tends to happen with holidays. There were some fantastic opportunities to make some good profitable trades. The thing is you have to be ready at any moment to capitalize on them. This means knowing your cost to keep, and what you have for animals in inventory.

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