Inventory pyramid will pay off for cattle business

Source: Farm Progress. The original article is posted here.

Inventory pyramid will pay off for cattle business

Monday morning people were eagerly waiting for the board to open hoping it would go up. The beauty of sell/buy marketing is we do not need to concern ourselves with the board. If someone accidentally tripped a breaker in Chicago and the board failed to open the only reason, I would know is everyone else would be panicking. The auction markets responded in a healthy manner this week and that is what matters. Some were a bit higher while others were fully mixed.

Feeder cattle weights

With the markets being mixed like this, people that have been taught legit sell/buy can find more relationships than all the dating apps combined. The Value of Gain (VOG) varied from one auction to another so I can’t call a trend this week except one. It just isn’t paying to make feeder cattle weight over 900 pounds. This also sets the stage for some sweet buybacks against fats. There was also an abundance of leapfrog opportunities where the market paid preconditioners to take weight home.

This week feeder bulls were up to 45 back and unweaned calves were up to 20 back.

Devalue feed and subsidize the buyer

At a sale I was at this week I saw eight weight steers bring $2,025 per head. Ten weight steers brought $2,100 per head. The VOG here is only 40 cents. That means the only way this works is if you can feed a pound on it for less than 40 cents. This is what it looks like to devalue feed and subsidize the buyer. This is also why we need to know our cost of gain and what the market signals are, so that we don’t end up marketing our cattle like this.

Pasture conditions do matter

This week I couldn’t help but notice how nice and green all the rye looks here. Soon most of it will be sprayed and corn planted in its place. Then I couldn’t help but notice how poor all the over grazed pastures look. The grass is thin and short. I also noticed more weeds are starting to come on already. Some localized areas around where I live received up to three inches of rain midweek and there was a lot of water running off those dirt pastures. There were also new gullies beginning to form.

Staying in business

I don’t even know where to begin with that. It underscores the point of it isn’t how much rain you get it is how much you can keep in your soil. It has been a while since I wrote about the inventory pyramid and the importance of having feed, and money as a solid base, in order to stay in business. The base has been eroded here both figuratively and literally.

Take care of the pastures

Readers that have been following this column for a while will recall I improved the inventory pyramid and added people as the foundation. It is the people that oversee the pastures that damaged them. The foundation is weak and so is the base right above the foundation.

The good news is their ponds appear to be full, only half of it is probably silt. With the price of cattle and especially the prices that the ground is bringing right now I would think folks would do a better job. The best way to summarize it this is what a local real estate agent told me once, “some people have just had to much given to them.”

To be fair not everything in southeast Nebraska is run that way. I did see some cow/calf pairs and sheep pairs running out on some cover crops or pastures. It was a beautiful sight to behold. There was an abundance of feed available, and the animals looked content and healthy. A little time planning some grazing and following through with it is better on so many different levels.

Soil health, water capture, the animals are in better condition, reduced labor, and even from the economic standpoint of not having to feed expensive hay. We are all aware of doing these things, so it is not knowledge that gets the result, it is the paradigm that gets the result. I tell this to every one of my marketing school classes, “you think your thoughts are private, but all I have to do is look at your results and I can tell what you have been thinking.”

Keep in mind

This week I had the privilege of being interviewed on the Grazing Grass Podcast. e107. Sell/Buy Marketing with Doug Ferguson ( Or you can find it on iTunes.

We finally have released the dates for our marketing schools for the rest of 2024 Marketing Schools – Mr Cattlemaster We are in the process of updating our policies but at least you will have the when and where.

Bird flu

To bring this one in for a landing I couldn’t help but notice that some people are using bird flu to push for mandatory ID. Those of us on the state lines that have fed Holstein steers have dealt with that for almost a decade. A number of years ago I bought some of my neighbor’s Holstein steers that he sold on the Kansas side of the line. It is 14 miles as a crow flies from that sale barn to my yard. I had to pay the sale barn vet to put ID clips in them to bring them back into Nebraska. These kinds of things only make life hard for those of us on state lines.

Today we get to see how well their ID program has worked out. I can’t help but notice the people that are in favor of EID are also opposed to brand inspection. Some of you may not know this but there is copper wire in those tags and copper has had an impressive bull run so far this year.

Systemic thinking problem

I read last week that some states are not allowing dairy cattle from states that have a known case to come into their state. How does this affect commerce? What about getting those animals to kill? And if that is the case should dairy animals even be in the same sale barns as the beef animals? It sure appears to me we have a systemic thinking problem. The good news is that can be easily fixed by getting the right people in place and that will make the foundation solid again.

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

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