August 25, 2023
If you are one of those who relies on social media for market information you would sure think the only thing hotter than the weather this week was the breeding stock market. If you are one of those who actually pays attention to market, you would know that some of those sky-high prices were for registered and some special sets of fancy females.
The bred heifers got a much-needed boost in price. The market was willing to pay more for them than what people have in them, but that was only if they weighed close to 1,000 pounds. First trimester nine-weight bred heifers still brought $200 less than an open seven weight feeder heifer.
Stage of gestation, frame size and muscle scores had a lot to do with what females were worth. Large frame number ones were bringing noticeably more than large and medium frame ones and twos. It feels good to see price relationships return to somewhat normal.
These relationship shifts opened up a world of opportunity for the skilled marketer with market literacy. It was possible to sell an old spring pair and replace with a spring bred heifer, under 1,000 pounds, and put four figures in your pocket. Another neat thing about that swap is the bred heifer will appreciate in value as a second and third calver.
It is these second and third calving mommas that are the most over-valued at the moment. From there the females depreciate $40-$60 per year of age.
Think about what you just read. We are finally barely able to get more for bred heifers than we have in them, but only if they hit a specific weight. After they breed back they increase in value, but after that they lose relatively little value. A broken mouth bred cow is worth slightly less than a bred heifer. The five-year-old and out plan has fallen on its face and can’t get up.
5 years and out = value loss
Some people have noticed I repeatedly bring up this failure of the five-year-old and out program. Here’s why. Years ago, on this blog I wrote about it. I deeply regret it. I sincerely hope no one implemented it based off what I posted here. I have tried to rationalize it by telling myself I gave the person that pushed it on to me credit. In my sell/buy marketing schools I teach that rationalizing is just rationing lies to the mind. I can’t hold the people that attend my schools accountable unless I hold myself accountable. I messed up, and when we are talking about marketing and making money I can’t mess up. The way to market these females is to examine the relationships between them. That is what sell/buy marketing is all about. The five year old and out program thumbs its nose at relationships. In fact, I have never seen the cozener that pushed the five year old and out plan on me compare relationships between females.
Some may ask about the bell curve. The bell curve is only a visual aid, and a great one, to see if we need to look more closely and examine relationships. It is a great teaching tool. I use it in my schools and I give the person who came up with this visual aid credit for it. The reason the bell curve is only a visual aid, is because if we market according to what we see from it we may end up selling more value into the market than we are getting paid for that value. If we repeatedly do this we will end up in a bad situation, and some have.
Feeder markets canceled
The hot weather cancelled many feeder cattle sales this week, not giving me much to write about on that front. I am going to take a little space here and share some thoughts on the bad situation I mentioned above.
2023: A year of change
I deeply wanted 2023 to be the year I taught schools to people who wanted to quit their off-farm jobs and be able to raise cattle full time. On December 28 last year I got a call from a person who was in a horrible position. He was polite and asked me for help. After that call there was a 10 week stretch of readers calling me and they were furious with me.
The call went something like this. “I was winning some and losing some. Now I just lose. I want you to know that sell/buy is not what you say it is on your blog and the only reason I became interested in it is because of your blog.” I later find out during that conversation that they went to someone else’s school, not mine. There is a big difference. I have gotten some serious butt chewings from readers. I was seriously thinking about quitting teaching schools and quitting this blog at the end of the year.
After I called for the boycott of the other school taking place in Nebraska, I have received an outpouring of support. I have so many red bubbles on my phone right now I don’t know how to process it all. Thank you all so very much. I am grateful for the compassion you have shown me recently.
Compassion is what we all want. We think we need it because it is what we want. Sometimes people do need compassion. As a marketing school instructor, I am struggling with finding the balance between compassion and compression. The thing is, compression is where the growth happens, and that is what we really need.
I am going to share a story of my first sell/buy trade. I had this group of black heifers. They were the first load lot I ever had. These girls were diamond cutters, meaning they could just walk by the bunk and throw on a pound. For this reason, their cost of gain was low. I was holding on to the old paradigm of getting all the good out of them I could since the COG was low. I took these girls right over a price cliff before I sold them. That means I sold them when they were undervalued. I called Ann Barnhardt since she was the one who taught sell/buy to me and asked her what I should do. She asked how I got into this situation, and when I confessed what I had done and why, she chewed me out royally. That is compression. I never made that mistake again. I didn’t call her for over a year after that either. Thing is Ann loved me enough to bust on me.
I took these butt chewings personally. It is one of the reasons I stopped plugging the cozener’s schools on this platform. I know the flaws in some of their material; it’s simple to see. Some people explained their situation to me, and I couldn’t figure it out. I have spoken on the phone with three people in the last ten days, and they each said something that ignited a spark in my mind.
Down market means an ugly side
I have several of the cozener’s books- he gave them to me-- and I went back through them. I also suffered through a webinar earlier this year too, trying to figure it out. Recently I wrote to pay attention to what it is you are really looking at, and I finally found it. The flaw is there and very subtle, making it easy to miss. It will not show itself right now since the market is going up. The market going up has put an end to the ugly phone calls. When the market goes down it will show itself. That’s when I was getting the phone calls- the market was trading up and down.
It took the compression I put on myself to find this. It resulted from the compression of angry readers that went to someone else’s school, not mine, to get me there. Compression is what makes us better. I am now grateful for the angry calls I received, because I am equipped to help the next ones. The reason I put this compression on myself to figure it out is because I love cattle business, and I love sell/buy marketing. Both have blessed me abundantly. The law of divine oneness says we are all connected; we are not in this deal alone. For those two reasons, I am still willing to share what I’ve learned.
The opinions of Doug Ferguson are not necessarily those of beefmagazine.com or Farm Progress.
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