Our family calendar is full of dates to remember during the month of May. We celebrate quite a few anniversaries and birthday, and cap it off with a holiday at the end of the month. While these dates may be worthy of observation and time for reflection others are not.
I am talking about target dates to sell cattle. I sometimes wonder if people even know why they sell on certain dates. Most do it because that is when their family usually sells their cattle, and that’s it. That is all there is to it. I don’t think that’s all there is to it.
I’ve been sitting in local sale barns long enough to remember how it happened for one family. Mom and dad both had full time jobs in town, they also were taking care of grandma. They ran over 100 momma cows and the farm ground was rented out or custom farmed. They were the kind of hard working people that didn’t take vacations.
Vacation-plan and sales
One year mom and dad planned a vacation after the first of the year, without thinking it through. I say without thinking it through because they always sold calves after the first of the year (so they didn’t have to claim income until that tax year). As the time drew closer to go on vacation it set off almost full blown panic, they made up their mind to cancel their vacation. They didn’t think their adult children could take care of the cattle, and they certainly didn’t think they could handle getting the cattle to the auction.
The sale barn owner came up with a solution. The market was good that year in December so he convinced them to sell their calves, defer the payment until after the first of the year, and still go on vacation with no worries. It was a great idea, and worked out fantastically well for this couple.
This plan worked so well that they continued doing it for well over a decade. Every mid to late December they sell cattle and defer the payment no matter how good or poor the market is at the time. They have hit more poor markets than good ones over time.
The kids have taken over the cattle operation and they sell mid to late December and defer the payment just like mom and dad did. I would be willing to bet dollar to donuts they have no idea that vacation plans from nearly twenty years ago dictate their marketing plan today.
As we all take time to reflect and remember this weekend, maybe we should reflect on our marketing plans, or lack thereof, and decide for ourselves if they are as silly as the one above.
Target dates should not dictate when we sell our cattle, market conditions should do that.
This week the feeder markets were higher. This has caused a little shake up in the value of gain in the feeder spectrum. While fly weight cattle continue to show the highest VOG it’s not as good as it once was. There were some spots in among the heavier feeders where the VOG would be equal to or slightly above the cost of gain. This has opened the door for some profitable feeder to feeder trades that didn’t exist the last few weeks.
The bad news in all this is that the rise in feeder prices mostly shut out feed yards from profitably replacing animals. The big feeder heifer is pretty much the only possible buy back, and even that is a slim margin.
This week feeder bulls were 12 to 20 back. After adjusting the price for freight and commission some weights of southern cattle were overvalued to the plains markets.