Roughly six years ago, when my daughter was four, we were feeding cattle and when we got to the end of the bunk, I turned the tractor around and just sat there for a while. Of course, she grew impatient and asked what we were doing. I told her we were looking. She asked what I was looking at. I told her that sometimes you just need to stop and pay attention to what it is you are looking at.
I pointed out a heifer that was lined in at the bunk but was not eating. That is easy to miss if you are not paying attention to detail. We went back later, after the cattle had some time to eat, and we pulled that heifer and all we gave her was a probiotic. The next morning, she was at the bunk eating. I am certain if we had not noticed and taken the action we did that she would have been getting an expensive dose of drugs the next morning.
Sitting through feeder auctions several times a week one thing is clear to me, some of these cattle buyers need to learn that same lesson. I get that people are really feeling pressure to get grass calves bought, but forsaking health, quality, and condition for numbers does not help the cause.
We have eyes to judge the cattle. There is a difference between shrunk and gaunt. At certain times of the year we must wonder why some cattle haven’t slicked off, and at other times of year wonder why they are slicked off. Do the cattle cover their tracks? If not, we must be able to diagnose why not. How are they holding their head? We must look at their eyes and their hair coat.
We have ears. Yesterday I heard cattle wheezing in a group. If you were chatting with your buddy, you probably missed it. There is also a difference between coughs.
We have a sense of smell. At that same sale yesterday, there were some cattle that had a foul smell to them. In my experience that smell is often connected to fever. Sometimes there is a smell after cattle have been handled too roughly on concrete that is a warning sign that they will develop toe problems.
God gave us the gift of the five senses for a reason and that is simply to use them. He also gave us six other gifts, the faculties of the mind. One of which is intuition. Prayer is when we talk to God, intuition is when God speaks to us. Here’s the thing about intuition, it takes some experience and time to calibrate our ability to hear it.
The experience of cattle buyers
It's my opinion that some buyers need to have some cattle at home where they have to feed them daily and look at them. And of course, I am also suggesting that they put their own money at risk. This will help hone their skills to evaluate cattle. There’s a big difference when you buy with your own money or someone else’s.
Here’s why I bring this up. A good buyer is your first line of defense against problems. Weaning in my local area seems to have gone off the rails for a lot of people. A 500-pound steer is not worth $1.80 just because he is 500 pounds. Health, condition, and quality should affect the price. How the cattle look on paper should reflect how they really look. The cattle with health issues I’ve been seeing lately will expose themselves eventually. In the end they will not be the same size or condition as the others and that will affect their resale price.
I am all in favor of buying what some people call junk. The thing is we must be able to quickly evaluate what their issue is and if we can fix it. Good stockmanship skills are a must for this, and with a little experience these kinds of upgrades can be super profitable. When we buy cattle of lesser quality, we must understand that they usually will not resell at the top of the market, so we must hammer them on price when we buy them.
On the female side of the business this week I was a little surprised to see fall bred cows selling for the same price as spring calvers that are 8 months along. Normally when they are close to calving, they are worth more. With the mud and weather pattern we are in here I take this as a signal not many people want to deal with it anymore.
Pairs were only worth $200 more if the cow was young, and $100 more for the older pairs. This seems undervalued to me since bottle calves are bringing $300 to $400 dollars.
On both breds and pairs the younger cows took the biggest depreciation hit losing $100 per year of age. After they are 5 years old, they only lost $35 per year of age in depreciation. This is the first time in a year we’ve seen cows depreciate all the way through the spectrum, instead of appreciating up to four or five years of age. It's also the narrowest margin of depreciation we’ve seen in a while.
Demand for replacement heifers remains steady and strong. This week they caught a $6 to $10 premium. When we compare their price and factor in the cost to carry to the value of a bred heifer the math simply tells us open replacements are over-valued.
In the feeder markets fly weight cattle had the greatest value of gain again this week and from there it dwindled downward. Five- and six-weight cattle to go to grass were the hot ticket. So hot in fact they’ll burn cash. For $50 per head more you could buy 200#. Right now the cost of gain greatly exceeds the VOG.
This week a friend showed me a tweet where the guy was upset that podcasts he listens to don’t talk about how to be profitable with livestock. They suggest other enterprises. With some market literacy it's very clear that the thing to do is sell 5-6 weights. With a 25-cent VOG if we make them any bigger we are making them undervalued and giving our feed and time away. If we have flyweights, we need to hold them a bit longer, because it's paying to put weight on them.
Answering to readers
Since I’ve been writing this blog, I have gotten quite a bit of feedback. The two biggest complaints I get are when I suggest selling a certain set of cows. This week I wouldn’t suggest selling cows. The other thing I get is that I am not sympathetic to people losing money. I’m not and I won’t be. The goal is to make money and it's our decisions that knock us off track of that goal.
First thing that gets us off track is what I outlined above, paying too much for certain types of cattle or buying the overvalued. We have complete control over this, all we have to do is simply stop our bidding hand from moving. This week I came home from a sale with an empty trailer. This was the best thing I could do. I will not lose money just to have enough cattle to cover my grass and I will not devalue my feed by feeding it to over-priced stock.
The other reason I’m not sympathetic is we need to know the market and what we are selling into it. This week I saw a bunch of big cattle that weighed over 1000 pounds. Their sell price was close to or less than fat price. Some of these were a great buy for feedyards and all were a horrible sell. These big cattle only brought $150 to $300 a head more than a five-weight steer. Those people gave away their time and feed. It's their fault they held them so long.
I have not mentioned this before on here. Every day we wake up and we don’t sell our inventory we just bought it at that day’s price. One way to make it simple for people who don’t understand VOG and the relationships I write about is to ask yourself this “would I buy these cattle for this price? Could I make it work?” and if the answer is no then sell them.
Unweaned cattle were 5-15 back, feeder bulls were 20 back, fleshy cattle 5 back, and southern markets were undervalued to plains markets.