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Understanding a few basic tenets of marketing can put money on your bottom line.

Doug Ferguson

December 10, 2021

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

This morning all of us at the Ferguson house are exhausted. Yesterday we finished up marketing our most recent marketing school. It takes a ton of effort to make these go well and I get a bunch of help from my wife and daughter. Without them these schools would not go as smoothly.

Sell/buy marketing has been around longer than any other method of marketing. For that reason and that reason alone we know it is the proven method to being able to prosper ourselves in the cattle business. There is a little philosophy behind it, but it is firmly anchored on math. Math is fundamental, and it does not change.

Over my years of studying successful people and how our minds work I have discovered there are seven natural laws of the universe that sell/buy marketing is perfectly in harmony with. I share these seven laws on the first day of my schools.

One law is the Law of Relativity. Nothing is big or small until we compare it to something else, or to relate it to cattle marketing nothing is over-valued or under-valued until we compare it to something else. Another law is the Law of Cause and Effect. Money is the effect so if we want to make money we need to work on our cause. Both of these laws require us to have market literacy, and that we know how to do and understand the math.

During my school I used examples of profitable trades from all over the United States. I also throw in some trades that lose money. This is to illustrate that if we work within these seven universal laws and implement sell/buy properly we can prosper ourselves. It is also to show if we make decisions that go outside of these guidelines we can lose money.

Profit in any location

Here’s the neat deal about it. This takes away the idea that it will not work in a certain area. Our ability to make money is all based on if we go about doing things in a certain way. This means that people in the same area, with the same set of circumstances can make money, while their neighbors are losing money.

All that is required is a higher level of awareness, some new knowledge, and a better mental model and people can be very successful in the cattle business. Now I get it, many ranchers don’t believe they need this type of coaching. The best quarterbacks in the NFL have coaches, they have several. Are we as good at cattle marketing as they are a quarterbacking their team?

At the end of the school yesterday the energy was high among the participants. Some need a while to think about what they just learned, while most are ready to get home and begin doing things in a certain way and prosper themselves.

The philosopher Confucius said “Knowledge without practice is useless. Practice without knowledge is dangerous”

A look at the markets

This week the Value of Gain remains above the Cost of Gain. Which is right where we need it to be for this to be a weight gain business. With that being the structure of the market it leaves the door wide open to make some trades that will generate some positive cash flow. One of the participants shared a great quote with me at the end of the school “Profit is the cost of staying in business”. Right now, if we do things in a certain way, we can easily cover the cost of staying in business.

It appears we took a little off fats this week. Even with that being the case there are still profitable buy backs against them, on the heifer side. Feeder steers are over-valued. Right there we just utilized the Law of Relativity to make a comparison, but we also needed to do the math and have the market literacy to understand what the math told us.

So if we sold fats and replaced them with over-valued feeder steers we are losing money. Whose fault is that? Hint: you will find the guilty party in the mirror.

Geographical spreads are in play in a big way again this week. A bull hauler is well worth the chips for doing his job.

Feeder bulls were steadily 15-18 back this week. Unweaned calves were 2-16 back. The bigger the bawler; the bigger the discount. The not-so-implied hint here is those heavier weaning weights did not put more money in your pocket.

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