Two dogs walk into a room. A few minutes later they walk out. One walks out happy and wagging its tail, the other growling and nasty. What is in that room that would make one dog happy and the other upset? It is a room full of mirrors.

What we see in the outside world is a reflection of what we see in ourselves. Some people were really upset how the markets reacted after the Holcomb packing plant fire. Those same people are even more upset today, and complaining even louder. This time they even have more people complaining along with them. Some of these people won’t be selling any cattle until late summer or fall, and they routinely sell overvalued feeders at the auction, they never sell any fat cattle, so I’m left scratching my head why they are joining in the ruckus. They should be happy, but they are allowing other toxic people to convince them to be upset over things that have nothing to do with them.

In 2014 an auctioneer friend of mine told me the story of an old man. According to the auctioneer, this guy started out years ago buying a few calves. He made some money and used it to build up his numbers. He repeated this process for half a century. He owned a lot of cattle by that time. In 2014 he looked at the market prices and took his age into consideration and decided to liquidate some of his cattle. He went out on top. He kept a few hundred and was planning on continuing to trade. I am sure he’s done well, because he’d been through these kinds of things before and was clearly a success.

Like the story about the dogs, it’s not hard to tell who would walk into a room full of mirrors and walk out either happy or upset. In times like these we don’t hear stories like the one about this old man. We hear those when things are good, and we hear stories about how bad things are when things are bad. Friend and mentor Wally Olson from Oklahoma told me a few weeks ago that times like these are when empires are born. Times like these are when we cannot afford to lose sight of that vision. I’ll bet that old cattleman never let other people’s opinions of things upset him.

Waiting costs

Here’s what happens when you let others’ opinions affect you. One producer I know of has been consigning his cattle to an auction every week for a month, but he didn’t bring them until this week. Most would say he picked a good week to do it. After details of the bail-out were released it was a no-brainer the market would be higher this week. Here’s the thing, if he had sold a month ago, which was one of those really ugly weeks, he’d have gotten $1,020 per head for his cattle. By selling this week he got $1,025 per head.

In truth, reacting to market direction and the opinions of others cost this producer money. It may not look like it since the dollars are the same. But he fed those cattle for a month just to end up in the same place. He gave away his feed. There was no value in the extra time he fed them or in the weight they gained during that time.

A lot of people think that because they raise their own feed that it doesn’t cost them to feed their cattle for the extra month while waiting on the market to go up. Yet there is the cost of growing it and putting it up. There is also the opportunity cost, where it could be sold or if the land is owned it could be rented to someone else.

The topic of expenses is one I get asked about most often, and it seems to be greatly misunderstood. This week I stumbled upon a blog that was talking about similar things that I write here. Only he was way off on the expense thing.

Let’s take a pickup and trailer for example. We have fuel, filters, oil, other fluids, belts, tires, insurance, depreciation, batteries that die, pumps that quit and so on. All these things need to be factored in to accurately calculate what it costs to drive a mile. How many times a year do we sit down and figure this up? If we don’t figure this up how do we even know what it’s costing to run to the auction, buy some cattle and then haul them home. And we need to figure things the same way with yardage.

I often hear of profit as being what’s left over after the replacement calf is bought and expenses are paid. If profit isn’t figured as an expense before the replacement is bought how do you even know how much you can really pay for a replacement?

This week

This week I’m calling the markets mixed. Some weights were higher, and others were lower. While value of gain (VOG) on steers didn’t change much this week from the previous weeks, heifers had VOG that was higher, providing an easy opportunity for some positive margins up to 700 pounds on feeder-to-feeder trades.

The weighted average shows fats around $1. This leaves slim pickings to make a profitable buy-back. The best opportunity to do so is on heifers weighing over 800 pounds.

Unweaned cattle were $4-12 back, feeder bulls were $10-30 back, and fleshy cattle were $9 back. Replacement heifers caught a $10-17 dollar premium. Southern cattle weighing over 500 pounds were undervalued compared to the plains markets.

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