Analyzing trades, but first a rant

Ever consider what the ‘pink tax’ might mean to agriculture? Meanwhile, in the market there are some interesting trade opportunities.

Doug Ferguson

June 10, 2022

5 Min Read
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I am going to use, maybe abuse, my station on this platform and start with a rant this week. Anyone who has a little girl is familiar with the “pink tax.” That is where you will have to pay more for merchandise just because it is pink. A John Deere hoodie or a .22 rifle will cost more if they are pink. I get it. Pink merchandise is targeting a smaller market, and maybe more importantly the “daddy’s little girl” market.

Here is where I have a problem. My daughter is 11 now, and she is quite tall. She is spending more time working alongside me this summer and I bought her a pair of work gloves. I grabbed a pair for me, noticing the price, then I went to the women’s section to get a pair for her. Women’s gloves cost 140% more than men’s! Needless to say, I went back to the men’s section and got her a small pair

I don’t know if it is the manufacturer or the retailer that is responsible for this outrageous price difference. To me it doesn’t matter. The thing that matters is the message being sent to young people. It’s hard to get into agriculture but we’re going to make it that much harder for you if you’re female.

Some of the best bull haulers and stockman I know are women. When tuition checks come in for my marketing schools, most of them are sent in by the wife. If the wife has the job of looking over the finances, we probably better not price gouge her for something like gloves, based on her gender. Talk about a poor job of marketing, and disrespect.

If anyone is curious women have made up 20 to 40% of the class at each of my past marketing schools, with only a couple of them being single. The rest attended with their husbands, which I strongly encourage. That is why I offer a sliding fee.

Digging into this week’s cattle trades

Meanwhile in the cattle trade, looking at the female market it reconfirmed that summer calving cows are under-valued. The thing I have been curious about is the value of fall calving cows. This week we got to see a good test of their value. Fall calvers are greatly over-valued when compared to their intrinsic value and to other females, including pairs.

The general state of the female market is over-valued. The only thing I saw sell under its IV was older pairs. Just because the market is generally over-valued doesn’t mean there isn’t opportunity to generate some positive cash flow. Females of different stages are selling over/under-valued to each other.

An interesting trade possible this week was selling a bred fall calving heifer and replacing her with a heifer pair. That sounds backwards. Here’s the rub, they are both selling a few hundred dollars over their IV, and the breds are selling for several hundred more than pairs.

I not only like that trade because it is positive cash flow right now, it also gives us a chance to double it. If we keep the bred and calve her out, we did nothing to generate cash flow. We may or may not sell her later this year, this is unknown. What I do know is if we sell her we generated cash flow and the pair we bought has a calf that will be weaned in the fall. Again, it is unknown if we will sell it in the fall, but the point is we could sell it which would double our cash flow.

With breeding heifers there is production lag. That is the time it takes to develop her, breeding and gestation stage, then the time required to raise the calf before we strip it off of her. That is a long time she stands around the place just eating before she gives us anything to sell. By doing the swap above we doubled our cash flow beating the heck out of production lag.

There were other good trades that were more conventional. Selling the older pair and replacing with the older bred cow was a good swap for those who don’t like to mess with heifers.

A view from the markets

With fats and feeders getting a boost this week, we saw Value of Gain get a boost too. VOG is starting to get higher in the heavier weights of cattle. It’s starting to look more like a weight gain business again. However, the price cliff is still there, so we need to be aware of when it is no longer paying us to put on weight. Here is a funny thing I can’t recall ever seeing. The further west you go the heavier the cattle can be before falling over that price cliff. I’ve seen it in a northerly direction or in a region-specific manner. I just don’t recall seeing it set up east to west like this before.

Heavy feeder heifers are a great buy back to fats again this week, right along with ten weight steers. When we examine relationships between feeders to feeders and fats to feeders, there is an abundance of good trades, including leapfrog trades.

Here is the thing to keep in mind before doing a leapfrog with heavy feeders, these cattle will reach the terminus sooner limiting the amount of time we have. A lot of people are feeling strongly bullish about fall, I am not sharing that feeling.

This week feeder bulls were 20-30 back and replacement heifers caught a $12 premium. This week I saw some load lots of fresh bawling, fancy calves bring 2 dollars more than plain weaned cattle. Small lots of unweaned calves were discounted up to $12.

The opinions of Doug Ferguson are not necessarily those of or Farm Progress.

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