Halloween is approaching faster than we think: Tricks and treats were upon us at cattle auctions this week.
At one auction buyers sat on their hands like they had no interest in even being there that day, which gave a willing buyer a great opportunity to buy cattle at a great price. The next auction buyers were bidding like they were looking at the last cattle on earth, which gave the sellers a great price.
I was hoping to never get into this next topic on this blog, however I feel a moral obligation to do so. This week at two auctions I attended it was abundantly clear that the barn was working with, and maybe even for, a specific buyer. One deal was legit, as the buyer was helping keep a floor under the market. The other was not. It became clear right away the auctioneer was pulling bids – meaning he was acting like he took a bid when no one actually bid. When buyers catch on to this they stop bidding altogether.
The best thing to do in this situation is to respect yourself enough to leave and not waste your time there. This caused the market to be extremely soft, and the favored buyer got some great buys. Some may wonder why I suggest leaving. When we know they are pulling bids, the first rule is not to bid against the house (the sale barn), because you won’t win. Then when the market softens and you try running them a bit you’ll get caught with your hand in the cookie jar, and end up paying more than you’d really have to.
If you are a seller in this situation and the market drops, you must hold your agent accountable. When buying or selling, at the bottom of your paper work it states the stockyard acts as agent only. So, your agent cost you money, but they will still take out their commission. This is why you must be there to represent your cattle. With the spike in COVID-19 positive tests some barns have gone back to the buyers-only protocol. In that case, be on the phone when the cattle sell, or watching on the internet. At the one auction this cost the seller well over $6,000. That means they did all that work all year just to have the auction barn waste away the work and value of seven head.
The bottom line is, learn how to read the room.
Know your customer
As sellers we must know the market we are selling into and have an idea of who our customers are and what our customers want. The customer is not the consumer, it is the person who signs his name to the check when buying your cattle.
This week I saw some southern cattle sell in the flint hills and they took a hard beating on price. I have nothing against southern cattle, I’ve bought a bunch, but there was a better way or place to market them. The type of cattle these were didn’t show well against the flint hills quality cattle. That can play with a buyer’s mind and they end up discounted more than they should be.
For the last month I have been busy running around to auctions. I gotta say the quality of calves coming to town this fall has been outstanding. I want to reemphasize a point here: We have great quality calves that aren’t weaned and they are taking a $4-16 discount again this week. Maybe the sellers can’t wean calves and they recognize that. If so, that’s great that they do, as it keeps them away from problems. The thing is, these people have clearly spent money on bulls and thought their program through to produce these calves, yet they leave money on the table when selling them. For the buyers who can handle these calves it’s a great buy.
I mentioned being able to handle these unweaned calves. Some people refer to October as “International dead calf month.” These people can’t handle them. It’s the stress we put on these calves that makes them sick. It is our job to take the stress off them by using great stockmanship. Weaning is a natural process; it will take place without our intervention. It’s how we go about managing it that messes things up. The people that have the skill can easily take advantage of the discounts and have these calves off and running, gaining weight in no time. Easy money, with a bit of effort.
This week I already mentioned auctions were spotty. One was high, the next one down the road was not. Some buyers still can’t get a calf order, which is setting up the discounts on bawlers.
In the plains markets there was some strong interest in owning flyweight calves. With the spottiness the value of gain (VOG) on a three-weight could be 40 cents to $1.30. The VOG the rest of the way through the spectrum, up to 900 pounds easily covers cost of gain (COG). It is paying to put weight on, and setting up some nice feeder-to-feeder trades. There is a spike in VOG around the seven-weights; they are a hot ticket right now. The cliff around the nine-weights isn’t as steep this week. But we all know people who think weight is money so the market is full of cliff divers selling these cattle. With the spottiness, some of these nine-weights are a great buy-back against fats.
Southern markets were sharply undervalued this week. The VOG there was high on the light calves, low on the middle weights and came back up on the heavier weights. Push your pencils and run those cattle squares if you know how.
Feeder bulls were $12-27 back this week on those under 600 pounds. I saw some heavier feeder bulls sell for half the price of a steer. I’m pretty sure those sellers will change next year.
I mentioned the spottiness between sales. It pays to shop around. I tell people shopping is free, its buying that costs money.