Higher prices! I am sure everyone likes the sound of that. Feeder auctions this week ranged from $8-25 higher, fats were roughly $10 higher, and weigh cows were roughly $5 higher.
What I saw on the female side of things was extremely limited, and may remain that way. This week it was announced at several auctions that upcoming female sales were cancelled, but the auction barn is trying to help would-be sellers market their cattle private treaty. Weigh cows have been selling well the last couple weeks and this week they got a boost like everything else.
Here’s what really caught my attention, a weigh cow brought more dollars per head than a bred, broken-mouth cow. The weigh cow also brought the same dollars per head as open replacement heifers, which were catching a $10-25 dollar premium this week.
We should market cattle in a way to earn a profit. To me marketing is also improving your position. This female market is lending an easy opportunity to do just that. When have we ever been able to sell a cull and replace with a bred almost even across? Or for the same dollars we can sell a cull and replace with the open heifer and capture the appreciation value of breeding her.
A lot of people have been really upset with the market lately. I do not expect the scenario above to last long. The thing is, the market was trying hard to help people that were selling culls. This is why we need to pay attention and always be ready.
For the feeder part of the blog this week I am going to do something different. I am going to make a prediction and talk like an economist. That way I can’t be proven wrong later. The word prediction may have been a bit strong. These are things I am watching:
First, with many auctions being cancelled lately and light runs, people are needing cattle. Many feedlots are finding themselves with empty pens and grass-cattle buyers are needing cattle as well. Just like we saw this week when cattle do finally come to town there will be some strong bidding competition.
On the other hand, when I look at cattle charts, we left a gap at the bottom of this thing, and gaps will fill in at some point. What I can’t predict is how long bidding competition will remain strong, or how much higher it will go. Just like I can’t predict when that gap will cover.
I mention these things because I think it’s worth paying attention to. The reason it’s important is this will create more market volatility, or extended volatility. With market volatility, price relationships will change and create opportunities to make a profit. While we have something positive to look forward to, we will need to be ready because this may happen fast.
The value of gain (VOG) trend was much the same as last week, despite higher prices. Calves under 500 pounds easily have a VOG higher than the cost of gain (COG). Somewhere around 500 to 600 pounds this changes, and COG can exceed VOG. Once again the market is signaling to us this is not a weight gain business.
Another constant this week is geographical spreads. If you spot a deal in a market a few hours away I can tell you that right now it is easy to find a truck driver on short notice right now.
This week feeder bulls were $5-30 back and unweaned cattle were $6 back.
The relationship between fats and replacement feeders remained the same this week as well. Heavy steers and any weight of heifer is a profitable buy back.
Every week I find and write about opportunities to make some money. This is not difficult for me because the market always provides. This week I have seen a ton of garbage on social media. I’ve seen things about meat packers, or things this or that association said, or some legislation that’s being introduced. I don’t mention that stuff in my blogs because as you can see in my points above they didn’t matter, and we don’t have any control over them. We do have control over our trades. If your business is struggling right now and you are paying attention to, or taking part in bashing the packer, or different cattle associations you need to direct your attention to the things you can control and get your business on track. The good news is, as outlined above, the market is trying to help.
Doug Ferguson practices sell-buy cattle marketing, operates a grazing operation and a small backgrounding yard at his home near Beatrice, Neb. Where other market analysts only tell you what the market is doing, Ferguson tells you how to make money using real examples in the current market.
The opinions of the author are not necessarily those of Beef Producer or Farm Progress.