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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer.

The things we teach our children can be lifelong

Feedlots are sending clear messages about what they want through the markets.

We all agree the future of the cattle biz lies in the hands of our children. It’s our job to be sure they are well equipped between the ears. It is my strong opinion that as parents we are responsible for our kid’s education, the teacher is only there to help with the process.

This week we sold some cattle; some of them were my daughter’s. We pulled her out of school so she could be there to represent them. My wife was driving and I was checking my daughter’s homework. She was doing multiple-digit multiplication, and she was being taught to use bubble gaps.

I was furious to see her using this method, and here’s why. That is only practical in a classroom. There is no use or place for it in a real-world setting that is required to keep up with the pace of commerce. I explained this to my daughter and gave her an example.

For the example I told her let’s suppose the salebarn’s computer crashed so there is no way to get a recap on the cattle she’s been buying. Her phone battery is dead so she can’t use its calculator. There is a load lot of 52,575# in the ring and the auctioneer is asking her if she wants back in at $140.50.

If she had to use the bubble gap process the sale would have to stop for 7 to 10 minutes for her to come up with an answer to see if she could make that load work. For those of you who are not familiar with this garbage there is 31 bubble gaps that have to be solved (this requires the use of 159 zeros). Then the next step is to add 6 sets of numbers to come up with the answer.

As you can see a cattle buyer has no use for this method. It is to labor intensive and takes entirely to long. To solve it the way we were all taught it would take a little over a minute. For those of us who have learned how to round to easy, familiar numbers we could easily come up with the answer in a few seconds and be within a few hundred dollars.

Here’s why I am making such a big deal over this: 95% of our behavior is a result of our paradigms. A paradigm is a multitude of thinking habits. The problem is our paradigms are given to us when we are young. We get them from the people around us, like parents and other relatives, teachers, and day-care providers. It can be extremely hard to change a paradigm. The cattle buyers of the future will not be able to function at an auctioneer’s pace if their thinking pattern revolves around the bubble gap method. It is common sense that if we start them right, they will be able to get along much easier in life.

Unweaned calves

Next I want to talk about the spring calves that have been coming to town. For the last couple weeks the unweaned calves have been taking a significant discount, and this week was no different.

I have also noticed this year their ears are full of tags (in my local area at least). Some of these calves have two ranch tags, two fly tags, a program tag and an EID tag. I am not sure if an alliance fell apart, or if a breed rep or salesperson did a really good job this year. Either way that’s $13 per head of tags, and if they don’t go into the program they were intended to go into they get tossed in the blender with all the other commodity cattle and those tags get cut out.

Here’s why I bring this up. The average size cow herd in my area is 40-50 head. Let’s say 50 head. If we add the cost of the tags with the discount for not being weaned (at five-weight price) then divide that by the discounted price per head (averaged between steers and heifers) this operation ends up giving away 6.25 head of their calves. Guys, the price of all those tags on a 50-head bunch costs almost as much as one five-weight calf.

I think it’s safe to assume that if this operation is leaving that much money on the table between only two management decisions that there is even more money being left on the table with other decisions.

When making those decisions, stop for a second and ask: “Why am I doing this? Will it pay me back?” I have nothing against tagging cattle and putting them in a program if you capture the added value. If you’re just going to sell them at the local cross-roads sale barn, then you probably don’t need to spend the time or money on all those tags. Know who your customer is.

This week in the markets, I already mentioned the discount for unweaned calves ran $4-15. The bigger the calf, the bigger the discount. This can result in a loss of 26 cents value of gain (VOG) between 300 and 600 pounds.

Feeder bulls were $15-25 back. Southern markets were undervalued again, and the VOG throughout the spectrum was erratic.

The VOG was much more stable throughout the spectrum in the plains. VOG takes a hard dive around the 900-pound range, dropping below the cost of gain (COG) at a lot of auctions. On weights under that, VOG will easily cover COG making profitable feeder-to-feeder trades possible.

Geographical spreads remained in play again this week.

Another noteworthy thing is the buyers favored load lots this week, and favored load lots of black cattle over loads of colored cattle.

Feedyards are telling us they have no interest in weaning, they don’t want to comingle if they can help it, and they would rather feed the weight on than buy heavy feeders. When you’re selling cattle know who your customers are and what they want. The signals are clear.

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

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