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April 8, 2022
There is an overabundance of things to write about this week. Sometimes the hardest part of writing this column is to narrow it down. There is a difference between being active in the market and actually having a feel for what’s going on and just looking at market reports and getting an idea of what’s happening from black and white numbers
First thing I should mention is I am finally on an episode of Working Cows podcast. In this episode Clay and I discuss the power of mindset. I share some stories how a negative thought screwed me out of achieving success, and how a positive thought lead me to success
I begin every one of my marketing schools with a short psychology lesson. It is always fun for me to read the room while I do this. A room full of cattle producers don’t necessarily care to hear a talk about their paradigms, feelings, and thoughts. As I continue, I give real life examples of how this transfers directly into our everyday professional lives, and how it leads to success.
The body language changes from slumping down in their chairs with arms folded to leaning forward listening with intent. There is always a fairly high percentage of people that have been through my classes that will email or call later and tell me that the psych lesson may have been the most important part.
Speaking of past marketing school participants, I have heard from quite a few this week. The energy in those calls was very high. Every conversation had one thing in common reflective of what I experienced this week. There is an overabundance of negativity surrounding the cattle markets. I asked them if the guys complaining bought any cattle. The answers ranged from none, to not very many.
These past students of mine were in a great mood. They have been selling some cattle and replacing at a profit. Markets are fun when you’re making money. Maybe a more accurate statement would be: Markets are fun when you know how to generate positive cash flow.
The trades these people successfully executed were in many different states, with different weights and types of cattle. I heard of selling and replacing different types of breeding stock. Some sold five to six weight cattle and bought back flyweight calves. Some sold mid-weight feeders and did a leapfrog trade, where they got paid to take weight home from the auction. Some of these operations are quite large, and one guy that called only has 11 head.
To be clear sell/buy marketing is working all around the country, on all kinds of stock, on operations of all sizes. It just works, but as a word of caution you have to learn it from someone who really understands it and does it.
One story I heard this week was a good one. Two buddies were sitting at a female auction together. One has been to my school the other has not. The one that came to my school was seeing relationships between the animals, therefore he was seeing opportunities, and got some good buys. The other one that has not been to my school thought everything that sold there was selling too high, and didn’t buy anything, until later in the sale.
After watching all these other females walk by him, he got concerned because there were not many cattle left to bid on and he ended up buying an over-valued set of females. Worry, doubt, fear, and greed all played with his thoughts that day, and in the end caused him to do something he shouldn’t have done. He doesn’t have market literacy and the confidence that comes with it, at least not yet. The good news is with marketing skill, owning these over-valued females can be turned into a positive. That is another great thing about sell/buy skills, they can get you out of a jam
This week looking at the feeder markets there continues to be a big roll back on flyweight steers and heifers. The Value of Gain is good on both sexes until the cattle weigh around 600-700-pounds. Then it falls off sharply.
I want to discuss this price cliff and tie it into a statement from above. When we look at market reports all we get is an idea of what may be possible. When we look at these reports it would appear to be mathematically impossible to sell an eight weight and replace it with anything else.
People that own cattle and do the marketing know better. Part of my psych lesson is having a higher level of awareness. We look at the entire market, that means the cattle that are not on market reports. This is the difference between having a feel and an idea of what the market is doing. A participant in the last marketing school just pulled off a successful sell/buy trade where the sell animal was an eight weight heifer, and the replacement buy was heifers of a lighter weight. This person earned all their tuition money, and travel expense back on that one trade. The use value from the school should be more than what it costs to attend.
This week feeder bulls were up to 30 back and unweaned cattle were up to 15 back. I saw way too many short-weaned cattle in the offerings, and it didn’t take long to run out of gamblers willing to bid on them. Market reports won’t share that information with you, so now the idea of what the market is doing is skewed.
Geographical spreads are in play and have adjusted for the price of fuel and mileage costs going up. I saw where some agriculture advocates were praising the price of fuel going up, comparing it to the cost of diabetic medicine and baby formula. I guess they haven’t sold cattle recently and felt the sting of their cattle check getting shorted.
In the female markets I still like the one and done as a buy. Pairs of any age are over-valued and fall calving cows were selling greatly over their intrinsic value.
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