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Marketing lesson learned in silence

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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer.
Pairs selling high, feeder auctions wildly varied, big difference this week between steer and heifer prices.

When I feed cattle in the mornings and evenings I like to listen to the local radio station. They do a fantastic job on getting the word out about what’s going on in our local area. They still did that this week but all the noise about what is going on around the world was overbearing. I am sure you all heard it too.

I finally had to just turn it off, and decided to unplug this week. In was then that two things hit me in the silence. First was what I wasn’t hearing in the news: I didn’t hear anything about flu. Usually about this time of year we will be hearing about the flu trend. I got on the CDC website and what I found shocked me. Last week there were 1,763% more people tested for flu than the same time a year ago. Why isn’t that being reported and why such a sharp increase? Maybe it’s because last year they found 9% of those tested had a strain of the flu. But this year only .3% of those tested had a strain of flu.

I am sure you all have heard about skyrocketing cases of COVID-19. How can we have such a huge spike in one virus, yet the other seasonal virus that usually shows up around now is actually too slow to trend right now?

This brought several points to mind for me. One is that people like me, who are backgrounders and stocker operators, deal with herd immunity for a living. Those of us who have had a PI (persistently infected BVD) calf would handle this thing differently. Second, in my experience it’s been rare to have one virus spike without seeing other bugs pop up as well. Third and most important, a ton of money is spent all the time in order to direct your attention and your thinking. This applies to politics, economics, education, market news and even your checkoff dollars.

We need to unplug from time to time and think about what it is we are hearing, or not hearing. We need to pay attention to exactly what it is we are looking at. We need to learn how to think and draw our own conclusions.

Self-directed thinking

In order to draw our own conclusions we have to do our own research and use factual resources. When that applies to marketing we need to know for certain our information is correct. I have sat through auctions only to turn around later and look at the sale barn’s website and noticed their market report was wrong. They add a little extra to the sale prices, sometimes as much as a whole dime. Another one will only report on the best tickets. I trust USDA market reports, but lately I have noticed the local USDA reports are being done by someone different and he doesn’t include much for footnotes. He isn’t reporting if the cattle were unweaned, fleshy, or replacement-quality heifers.

It’s my opinion that people should take their job seriously, and do a good job of it without an agenda or just halfway doing it. That is not reality, however, so we need to dig into things ourselves and find accurate information in order to make sound decisions. At the end of the day accountability falls on our own shoulders.

Changeable markets

Last week there was not enough appreciation value in breeding an open heifer to cover the expense of running her for a year. This week the bred heifer was the ticket that moved up in value the most. The least-cost producers can certainly capture some value on breeding open replacements now. The 3- to 4-year-old pairs were the top of the cow bell curve. Pairs brought $400-600 more than the same age bred cow. People are placing a lot of value on such a small calf. Depreciation seems to be pretty steady at $100 per year of age until around the age of 7. There is takes a sharp dive, then it drops to weigh-up value for short solids.

The feeder auctions were all over the board. Some were steady, some lower or higher, and some were mixed with some weights lower and other weights higher. Sounds like the news broadcasts, a mess. Unlike the news, which doesn’t make any sense to me, the markets still do.

The value of gain (VOG) was still good enough to allow for some profitable feeder-to-feeder trades. The backgrounders are still making money. But they need to be careful not to put too much weight on because the cliff is back once again around 900 pounds. This week there was also a significant rollback between steers and heifers.

This week unweaned cattle were $4-14 back, lightweight feeder bulls were $20 back, big feeder bulls were half the price of similar weight steers. Put another way an eight-weight feeder bull is worth as much as a weaned four-weight steer. Southern markets were undervalued compared to plains markets.

The fat-feeder relationship changed again this week, making it very difficult to profitably replace fats in the plains.

Just in case anyone is wondering what the second thing that hit me in the news-free silence was, I learned something about myself. What do you think will benefit and serve me better, the racket on the news or a higher level of self awareness?

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

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