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Is your perception crimping opportunity?

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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer and BEEF magazine.
How you 'see' things at auction may be shutting you out of profit opportunities

Recently my aunt loaned me a photo album full of pictures of the ranch my grandparents had. I was looking through it with my 10-year-old daughter and her reactions to the photos was interesting.

Some of these photos were from six decades ago. As we were turning pages, she asked me if they raised minis. Based on the size of cows today I can see why she thought those Herefords were mini Herefords.

As we turn ahead a couple decades it was clear to me grandpa chased fads. The look of the cattle changed from ground sow Herefords to the short ribbed type standing on stilts with the introduction of Simmental. My daughter was appalled by the look of those cattle.

Here is what is interesting to me. I liquidated my cow calf herd when she was one year old, so she didn’t grow up around cows and calves or being subjected to my philosophies. Yet somehow, she has created the ideal looking cow in her mind and none of the cattle in those old photos fit her model. This model is her perception of what a cow should be

We all know how perception works. We can sit at the same auction all afternoon long and walk away with a completely differing viewpoint of that auction. That is because our perception is a way of expressing our beliefs, habits, and limitations.

Every auction offers opportunity

Here’s the truth about cattle auctions. There are opportunities to make a profit at every auction, and there are opportunities to lose money at every auction. Buyers will take advantage of both opportunities, and so do the sellers.

The difference is how they are looking at and going about things. We can get what we want out of life but that means we will have to change the way we look at things. When we change our perception our whole world changes. I have read many stories about people who became millionaires and the key to their success was changing their perception. We can create the environment we want by using our perception and other mental faculties.

This is such an important life skill it amazes me that it isn’t taught in school. It is also a difficult task to accomplish. Every once in a while, during a conversation with someone the topic of my marketing school will come up, and sometimes the other person will ask “what can you teach me about marketing that I don’t already know?” With that one question this person, without realizing it, has just disclosed their perceptions and paradigms to me. I can ask this person a list of questions and without fail they will answer yes to one question. If they answer yes, then I know something about marketing they do not. And without fail this person will leave the same auction I was at feeling much differently about it than I do.

Here are my thoughts on people who think they know all there is to know about cattle marketing. It takes 10,000 hours of studying a subject to become an expert. I know very few people who have spent that kind of time studying cattle marketing. The people I know who have put in those kinds of hours are still learning. Remember I wrote above perception is an expression of our limitations. Those of us who have 10,000 hours under our belt believe we can still learn and get better, so we continue to study and improve. The person who thinks they know it all already has closed the door and therefore has much lower limitations.

Perception can be a funny thing at times. Some so called experts try to convince us that cattle marketing has changed and evolved and continues to do so. We have video sales, branded programs, and grids to sell cattle on. My grandfather didn’t have those things decades ago. No matter how we decide to sell our cattle they are weighed and shipped on wheels. Going back even farther than my grandfather’s time cattle were weighed on shipped on trains, which have wheels. It appears to me that it really hasn’t changed, and the math to calculate return on the gain is fundamentally the same too.

I have a different perception of market direction this week than a lot of USDA reporters. The prices paid for some weights were higher this week, but most were lower. In their comments the reporters called the markets 3 higher. The market reporters have the most important job within USDA, let’s get that right. As long as the weights and prices reported are accurate (and the footnotes help) we can make sound marketing decisions. As far as the comments, it doesn’t matter if they write a movie review. We need the numbers correct to calculate algebraic equations.

Even though most weights were lower this week the Value of Gain showed some improvement, and that is what is important if we’re going to make money. Most people think they need a higher price to make a profit. It does help sometimes, but if your cost of gain is higher than what the weight gain is worth, we will have a hard time making a profit.

This is one of those small perception changes that is so important, we need to get the absolute price monkey off our back. You see VOG was higher across more weights this week, even though prices were down. This opens the door to make some profitable trades across more of the weight spectrum than last week.

This is what I am talking about when I say we can sit at the same auction and see different things. I see more opportunity, while the other guy is upset the prices have dropped.

Cattle market update

Fly weight cattle still have the highest VOG. Heifers had a higher VOG across the spectrum than steers. The best buy back against fats is still the heavy feeder heifers.

This week unweaned cattle were anywhere from 15 back to 5 higher than weaned cattle. While it may not make sense that they are higher to some it makes sense to the guy that bought them. He probably has the perception that no one else has had a chance to screw them up so they are fresh.

Southern markets remained undervalued to plains markets, and feeder bulls were 10-20 back.

I have noticed on twitter this week that folks are baling their wheat. As dry conditions persist people are getting concerned about having enough hay. I checked the local wheat price this morning and it was $6.16. I do not know if the wheat is filling or not, that information is left out. Assuming that it is filling, the act of baling it speaks volumes to the emotional attachment people have to their cows that they are willing to throw away a potentially good cash crop.

TAGS: Beef
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