Last week at this time I was anxious about the forecast because of the amount of snow that was predicted to fall here. Fortunately, the heavy amounts narrowly missed us. Not everyone was as fortunate as we were and areas close by got 16 to 20 inches.

Quitters Day

When that much snow falls things get much harder. I am sure the thought of quitting and selling the cows has run through people’s minds, which seems to fit since today is “Quitters Day,” the day people give up on New Years Resolutions. These are the moments we find out what people are made of. These moments also underscore the importance of getting paid for raising livestock. That is too much work to barely scrape by.

Unfortunately, windfall profits are not owed to us, we must market livestock in a certain way to be sure we get our share, and this responsibility falls squarely on our shoulders just like caring for animals in this harsh weather.

Cattle can make opportunities

A huge wave of people reached out this week, and I have had some outstanding conversations. One stood out that I have to share. A guy came through my sell/buy marketing school a couple years ago and went home and implemented the material.

 He had a full-time job off the farm and that enabled him to reinvest all his profits from cattle to expand his operation. The week of Labor Day employees were informed there were changes coming and if they needed time off for job interviews that time would be granted. Other people were laid off that week, and this guy was unfortunate to be told he was being kept on, but his workload and responsibilities were going to increase. Along with that increase he was going to receive a small raise.

Related:Plan now to maximize cow profits in 2025

The raise he was getting didn’t match the new job description, so he quit. Quitters Day can be a good thing. Because of the success he has had with his cattle he could walk away from a situation he did not like.

Now that the holidays are over, we finally have some market information.

Value of gain

Fats hitting $2 has created excitement. The Value of Gain (VOG) is signaling that it is currently a weight gain business. I do not get excited about high prices because it does not guarantee a profit. I ran some cattle squares with those $2 fats and what the math told me it was possible to replace them at a profit.

Cost of gain

If the Cost of Gain (COG) is cheap enough fats could be replaced with the front-end heavy weight feeder steers (in Nebraska), but at a slim margin. Taking advantage of geographical spreads would increase this margin to a more attractive level.

Related:Stick to the facts and sell/buy

Breeding stock

This week feeder bulls were up to 30 back, fleshy cattle took a discount of $15, and unweaned calves were up to 7 back. Given the prices paid this week for breeding stock, I am surprised that replacement quality heifers didn’t receive any kind of premium. I am sure that will change soon.

Sell/buy marketing

I said last month that the 10-year trend line would change now that 2014 fell out of the average. With that year now excluded the curve flattened due to the rise in prices we saw that year not being included in the average. The beauty of sell/buy marketing is that it exists in the present. There is no looking back to predict the future. The national weather service revised their forecast last weekend as the storm was approaching and they realized their model was wrong. They wrote in the revised forecast that predicting the future is hard and sometimes impossible. The same thing goes for markets.

The female sales I was at this week told two different tales. At one sale 5 and 6-year-old cows sold 25 percent back of 3- and 4-year-old cows, which were the top of the bell curve, just edging out bred heifers. The rest of the solid mouth and short solids were only 6.5 percent back of the 5-year-olds, with broken mouth cows being 9 percent back of them.

Related:Why trend spotting breaks your cattle marketing strategy

At the other sale young solids sold just slightly under what the young cows sold for. This was due to people getting out bid on the younger females, so they bid up the older ones. The other major difference at this sale was that short solid to smooth mouth cows were discounted even more than at the previous sale.

Intrinsic value

At both sales anything younger than a short solid was selling well over its Intrinsic Value (IV). The older cows sold below their IV. Given the prices currently being paid for calves this makes the short-term cows a great buy.

Corn country

Living in corn farmer country, planting date affects the prices of females. The cows that are due to calve before the sprayer and planter rolls outsold the “late” calving cows. This buyer desire creates the price relationships needed to prosper. For the producer that is thinking to themselves that they don’t want to calve cows in these snowbanks they could market their “on time” cows and replace them with the late cows and make a few hundred dollars per head. If they took advantage of geographical spreads, they could easily make close to $800 per head.

Geographical spreads

These geographical spreads also created the opportunity to market older cows and replace them with younger ones at a profit. Again, repeating this topic I am not interested in deflecting depreciation I am focused on profit. This trade also pays the producer to take value home. The thing that enabled myself and the testimonial above to grow our operations into a full-time endeavor was positive cashflow. Listen to good podcasts that interview billion-dollar investors, and they will spend most of that interview discussing cash flow.

It is way past due to let go of old paradigms and replace them with a mental model equipped to deal with the present, especially since the market exists in the present. Using these outdated mental models in the present is trying to fight the market.

Female >acre of land

The prices I seen paid for females this week blew the doors off what we saw ten years ago during that rise in prices. I remember talking to a local banker at a female sale back then and he told me he just approved a loan for pasture at a record high price. He was wondering if he did the right thing. I asked him if he ever saw a time where the female was worth as much as an acre of pasture (Keep in mind I am comparing prices where we live).

Now I am wondering if there was ever a time where the female was worth more than an acre of farm ground. This may be an opportunity to sell cows, buy land and rent the land out to another producer. My point is this market may be creating opportunities we don’t generally get and keeping the blinders on my cause us to miss out.

Commercial vs. registered cattle

Another opportunity I am seeing is taking advantage of registered production sales. Some of these commercial females are selling at the same prices as the registered ones. While there is not a profit margin per head in doing this trade the value is in the operation raising its own herd bulls. These bulls can be raised much cheaper than buying them at a production sale. That profit that I say I am always after shows later in cost savings.

Unconventional opportunities

While we’re looking at unconventional opportunities right now, I would be doing a disservice to readers if I didn’t remind you all of the lessons from the 2015 market crash. When that day comes it will be necessary to know how to generate positive cash flow in that situation.

We witnessed some people lose massive amounts of money with stockers at the end of 2024 because they didn’t know how to market cattle when the market fell. What will people do when the price of these $3,600+ females drop, and calf prices drop too?

Legit sell/buy can navigate that situation when it comes. Trying to learn it when it happens is too late. I have two schools coming up in February and March. Registrations are coming in every day, reserve your spot soon. Marketing Schools – Mr Cattlemaster  Also there is Ann Barnhard’t DVD Ann Barnhardt’s Cattle Marketing DVD Set | Barnhardt  Don’t gamble in this market, or with disproven outdated theories.