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Shrink is eternal, but manageable

Heifers offered more this week than steers, cow prices jumped all around once again.

Doug Ferguson

July 3, 2020

5 Min Read
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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer and BEEF magazine.vectorbomb-ThinkstockPhotos

Yesterday I posted a picture on Twitter of me shoveling out my cattle trailer and mentioning something about shrink. This pic got a lot of likes compared to the other stuff I post on Twitter, so I thought I’d write about shrink today.

I have had many people tell me their cattle don’t shrink. They usually back that statement up with comments pertaining to gentle handling or short hauls. If their cattle don’t shrink, then they never have to shovel out their cattle trailers like I do.

A couple years ago I kept track of the shrink on all my loads. Having the trucks weigh in and weigh out at a co-op scale was a pain in the butt for the drivers, and I am grateful they did this for me. For the point of this posting today I am going to compare two sale barns where I sell. One will be called the West barn, the other the East barn.

The West barn is 190 miles away and the East one is 80 miles. Shrink at the West barn ran 3% to 9% on the loads I sent there, with most loads shrinking around 3% to 5%. The shrink at the East barn was 1% to 4%, with most loads shrinking around 2%.

Those cattle shrinking costs me money, and I was wanting to know how much and to try and figure out what I can do about it, if anything. I haven’t figured out how to prevent shrink, but I did figure out when it may be beneficial to ship cattle to either barn.

Since the West barn is more miles, I obviously have a higher shipping cost. I ship the cattle the day before the sale, so I have a feed cost, along with the other sales expenses. The West barn has an added expense of brand inspection that the East barn does not. With the East barn being closer I ship on sale day, so I avoid the feed cost there. I ship later in the morning so when they get there they come right off the truck and go right through the sale ring. There is no standing around, shrinking even more.

When I compared the shrinks and associated expenses, I figured out I need $4 more at the West barn than the East barn is selling cattle for, just to net the same as I’d get at the East barn. So with a $4 spread it doesn’t matter which way I go. If West is more than $4 higher I know to go west. If East if within $4 of the west barn I go east.

Better trades

Knowing how much the cattle are shrinking on average has also helped me to better negotiate private treaty sales. Sometimes a pencil shrink of 2.5% isn’t so bad, even though that’s a deal breaker for most people. I also do not have the sales expenses of selling at the sale barns, so I can offer my buyer a little better deal on price. This helps him a bit and I can still net more dollars on my check as well.

Make no mistake: Shrink is a real cost. If you have 3% shrink on a 55,000-pound load with a sale price of $1.35, it adds up to a sizeable chunk of change.

Shrink is not always a bad thing. A few years ago a buddy weighed his cattle while hauling them to auction. They weighed a bit over 600 pounds. He was getting furious that it was taking so long for the barn to sell them. I pointed out to him that there was a big price drop-off on steers weighing over 600, and that he’s better off if the cattle stand around and drop a few pounds. When his steers were run into the ring they were weighing in the 590-pound range, and he got more money than he would’ve if they weighed up around that 610-pound range.

We do not know exactly what our cattle will weigh, or exactly how much they will shrink, but being aware of these things can help us make a little better decision when selling.

An ongoing discussion is the value of excellent stockmanship. I once read that for every 15 minutes we spend stirring our cattle around they shrink 1%. If selling at home this makes it super important to be able to quickly and quietly gather cattle to ship. I am sure we’ve all been there with a group of cattle that just ran circles around the pen, and were too stupid to go out the open gate. That running around, shrinking, cost money. This also will happen at auction, if they have to do a bunch of sorting, or if the cattle stand in the alley a long time waiting for their turn to go through then ring.

Mediocre week

There were no fireworks in the feeder markets this week. While there were a few positive feeder-to-feeder trades to be made on the steer side, they did not come with a sizeable margin. Value of gain (VOG) on steers simply continues to be lackluster. Heifers once again continued to show better VOG than steers, opening up better and more, feeder-to-feeder trade possibilities.

The one bright spot this week is the geographical spreads, especially on the lighter-weight cattle, for both heifers and steers.

This week unweaned cattle were $5 back, feeder bulls were $20 back. Fats continued to be undervalued this week.

Female switcharoo

The female sales have been really interesting to watch from week to week, because they change so much. This week young pairs and young breds in the third trimester sold really strong, setting up a $100 depreciation per year of age slide. But here’s the interesting part this week. Weigh cows are selling pretty well. Some sold so good this week they almost brought the same dollars per head as a bred six year old.

Another hot ticket was the three-in-one package (a pair where the cow is bred back already). Again, age was a factor. The young ones sold really strong, while on the older cows it didn’t matter that they were bred back.

In the recent past, pairs with small calves have been selling better than pairs with big calves. This week that flip-flopped.

Another trend this week in the female markets was color. Black-hided cattle just sold better

I want to wish everyone an enjoyable and safe weekend.

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