This was one of those weeks that makes me recall the message that was pushed on me when I was a kid.  They told me there isn’t any money to be made in raising cattle.  Get a degree and secure job.  I was told that it wasn’t possible to make money buying someone else’s cattle. 

Thank goodness for being a teenager with a “bad attitude,” since I wouldn’t listen. It made no sense to me. We have a multi-billion-dollar industry and everyone in it is doing it for giggles? If people can’t make money buying other people’s cattle, then why was someone buying the cattle that were raised by the man who told me that?

Knowledge and training

We can’t accomplish what we want without a little knowledge and some training. Awareness is knowledge of a particular subject.  The best mentor I ever had was always talking about raising my level of awareness.  When I learned sell/buy marketing I raised my level of awareness.  This level of awareness enables me to see opportunities.  Opportunities, that I was told didn’t exist.

I am going to share how liquid the market was, and every example I am going to show is from Wednesday.  I took some time that day to gather examples for my school coming up later this month.

Opportunities abound

Before I get into the examples, I saw an auctioneer struggle to auction off a nice set of five-year-old bred cows.  After they were sold, he said that he would never believe anything he sees about cattle auctions on Facebook, or what the experts say about depreciation ever again.  This was a paradigm changing moment because right then he realized everything he thought he knew was wrong.  He just raised his level of awareness.  Based off the words he used, I know he reads this blog.  Thank you for reading sir. When an auctioneer reaches this level of awareness, that makes him the person you want assistance from when marketing your cattle.

Hints of the fall run were in the market this week.  Leap-frogs, heifer to male, and a 12-dollar discount for bawlers, and a discount up to 60 on feeder bulls, were all available to cash in on.

Consider a switch?

In the state of Georgia, a young cow/calf pair and 10 goat pairs, some with twins, sold for even money.  If someone wanted to switch species this could be a way, and I like it because when the kids are fat they will be worth a 10-weight feeder calf, but they will get there much sooner, and their Value of Gain (VOG) is higher than feeder cattle.

One open cull cow could be replaced with 10 bred nannies and still have $400 left over.

Heifers vs. steers

In Missouri it was possible to sell seven weight heifers and replace with three weight steers.  Some people don’t like the idea of buying heifers because they are concerned, they won’t be able to get back into steers.  It is possible in the fall, and replacing with feeder bulls is an even better trade right now. Just be sure the bulls are discounted enough to reach under one, which in a lot of places they were. And of course, the seven weight could be replaced with another heifer

That same seven weight heifer could be replaced with feeder goats, and that would be a good trade, since the Return on the Gain (ROG) which is ratio of dollars to pounds on the swap is in our favor being higher than the Cost of Gain (COG).  The heifer to steer trade above had a better ROG. That seven-weight heifer gives us options.

Open cows

In New Mexico, it was possible to sell an open cull cow and replace with a bred five-year-old in the first period and still have $150 after the swap.  That helps alleviate the sting of a cow coming up open.

Capture value

In the state of Kentucky selling a load lot of eight weight steers and replacing with five weight bulls has a ROG that is almost double the COG! Remember, value added marketing is only value added if you capture the added value.  The folks that have the skills to handle the feeder bulls can earn money hand over fist.

As outstanding as the KY. trade is, the Holstein trades that were possible in Idaho had a ROG that blew the doors off it.  I have no clue what the COG is on a black diamond right now, since I haven’t owned any in a few years, but I know it’s nowhere close to the ROG on the trades that were possible.

Feed isn’t cheap

In Nebraska it was possible to sell an eight weight off grass and replace it with a nine weight that was back-grounded and have to pay $60 per head more for the heavier animal.  The replacement is almost 140 pounds heavier.  That increase in weight only costs a little over 40 cents a pound.  We can’t feed it on that cheap.

Or better yet sell a nine weight off grass and replace with a nine-weight coming out of a back-grounding yard and have $200 per head on the swap.  We could still have the weight and the cash too.  These heavy feeders were under-valued to fats.

Money on the table

The runs were light at these sales, 200-500 pounds per head.  Still, it was possible to easily have four figures positive cash flow and not even fill a 20-foot gooseneck. Look at how liquid the markets were and remember this was just on Wednesday. People have no clue what they are doing when it comes to marketing. Just look at all the money that was left on the table. All of this was possible while the only thing we heard on the news was this is the beginning of a crash. Maybe it is, I don’t know about that. The thing is, if it is, we now could have some cash in inventory and the under-valued animals that were bought will become over-valued in time and we can do it again, generating cash-flow at that point in the future.

To my younger readers, don’t listen to the dream crushers. Don’t accept their self-imposed limitations as your own.  Raise your level of awareness. The opportunities are there.

The opinions of Doug Ferguson are not necessarily those of beefproducer.com, beefmagazine.com or Farm Progress.