Don't let fear and greed drive those decisions and you'll find value in this market.

Doug Ferguson

February 18, 2022

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

The last couple weeks I’ve talked to more cow/calf people than normal. This only happens when they are very anxious, and not feeling too secure in their situation. With the dry conditions and the female market losing a few hundred dollars per head compared to where it was several months ago two emotions take control – fear and greed.

These emotions are so strong they can move a market in a big way. Some people were afraid the market was going to go lower. Its dry and if it got this low it can go lower, is what they think. The greedy people are thinking that they should buy bred heifers since they’ve dropped in value. Their thinking is that if it rains they can double their money by selling their new pairs.

There is another factor strong enough to move a market. The Old Farmer’s Almanac. That book says that March is to go out like a lion. That comes up in any conversation right now, and just this week the market added a few hundred dollars back on to the female market.

Walking through some trades

Last week a bred heifer was only a few hundred dollars more than an open heifer. This week the bred heifer market improved enough that you could sell a bred and replace with an open replacement, which is catching up to a $25 premium this week by the way and get your feed value back. But that is all you’ll get and that is only if the bred heifer weighs over 1,100 pounds and is 8 months bred.

A sale barn vet reaches in and calls her 7 months bred, not only are you getting charged the vet fee, but he just devalued your heifer by $200. There were some bred heifers that sold that were under 1,000-pounds and were only 5 months bred. These girls were the same price as the open replacements. When I compare it that way it sounds bad, but their intrinsic value was equal to their actual value. There will be a better time to cash in on the late-bred heifers.

The cow also got a bump up in price. The other surprise, to me anyway, was the depreciation slide was only about $75 per year of age. That is until that sale barn vet called them short solids or broken mouth. This call caused them to lose around $150 for SS and up to another $150 on top of that for a BM. Those teeth got expensive to the seller in a hurry. The intrinsic value of those SS and BM cows was higher than their actual value.

The guys that buy those old depreciated out cows look smart right now, since they got more value than they paid for. I want to point out something else I have seen change the last couple months. Registered cattle breeders are now showing these guys some respect. For many years they have been condescending towards these “junk traders”. To me this speaks volumes to the actual value of championship banners.

When we get into the pairs is where things get good. Being able to understand how to compare IV and AV can lead to some good pay days. That little coupon running alongside the factory has some great value. What we have seen the last 8 months is amazing if we know what we are looking at. If we bought cows that were close-up, calved them and resold them as pairs and did this every quarter we could make a full time income on 25 head!

A view from the market

Markets are always changing. In early January the female market looked attractive. Then the last couple weeks it looked dead. When we are in these periods where it doesn’t look to whoopee, remember it shall pass. And this week it passed, and the female markets look pretty good again. Especially if you like calving them out.

The feeder markets were fully mixed. Some weights were higher some were lower, and then the next day at the next auction the opposite happened. This tampered with the Value of Gain for sure. One thing remained constant and that is the huge slide around six weights. It creates a barrier that is almost impossible to cross, meaning if you sell an animal over 600-pounds you most likely are not going to be buying an animal under 600-pounds at a profit. The VOG is high on animals under 60-pounds making it easy to replace with a lighter animal than the one sold and capture some handsome margins.

Southern markets have been a little different than plains market the last few weeks. One notable thing in the south is that leap frogs are popping up regularly. And they are the kind that pay us to take the weight home.

This week feeder bulls were 5-25 back and unweaned cattle were 4-14 back.

Fat cattle continue to be good property. The relationship between them and a lot of feeders is a good swap.

Registrations for my marketing school are coming in daily. If you want to learn more about the things I wrote about go to my website to get the registration form.

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