No one knows the future — especially in the cattle markets

Last winter silver price wasn’t doing much. If we look at the price chart it had small and regular ups and downs with no real up or downward direction. The price of gold at the same time began to trend upwards. When two commodities are correlated, they will eventually find each other again and reestablish their relationship. Silver finally took off in an attempt to do that.

The silver market

When it did all the gold and silver bugs were predicting it would hit $50 by the end of this year, and $100 by the end of this decade. Then this week turn-around Tuesday happened, and that very evening most of them changed their tune to one warning of the biggest crash of all time. Looking at the YTD silver chart there are double tops, triple tops, necklines, and head and shoulders. Silver has been busy, but it hasn’t done anything alarming. The Chicken Littles that were sounding the alarm of the biggest crash of all time lost credibility, especially after what silver has done the last two days. Will it put in another triple or a shoulder? We’ll find out soon enough.

Ever since feeders put in a 52-week low, we are getting bombarded with predictions, talk of seasonality, and market timing. The uneasiness people are feeling is easy to pick up on. This is why we are hearing this pointless chatter now instead of around the new year which would be normal. There are people coming up with siphon hose gimmicks, meaning they are trying to take money out of the producer’s wallet and siphon into their own wallet, or they are trying to give us hope while leaving their analysis open ended, just in case.

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It’s not dynamic

I came across a release from the smart people in Denver yesterday. They called the breeding stock market “not very dynamic” and were unimpressed with how the cycle is performing this year. The lack of a summer slump left them without any drama to stir up and discuss. That is odd to me because normally they despise market volatility, and yet they had no issue when the breeding stock market didn’t follow the pattern of seasonality last year. Probably because it just went up and up. Two years in a row now breeding stock thumbed its nose at the seasonality trend.

This week I have been thinking about how I would address all this noise. I begin my days reading a chapter from the Bible and this week I read Ecclesiastes chapter 9, which says that no one knows the future. One of the daily Mass readings this week is when Jesus taught us how to pray, and in that prayer is “give us this day our daily bread.” That is all we need since relationships between cattle exist in the present. For those of you who are not believers there is the time and space continuum which simply means, we remember the past, we exist in the present and the future is unknown. For a so-called sell/buy marketer to get caught up and even produce some of the meaningless noise about the future is a clear admission they don’t believe in sell/buy marketing.

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The cull market

I’m going to take a dive into another article I came across about seasonality of cull cows. The author presented a chart showing the seasonality of it. The cull market is currently following the trend. The author suggested holding onto the cows and feeding them until next spring. However, in his last paragraph he told us, without coming out and telling us directly he has no clue. This is the open-ended prediction I mentioned.

I ran some of my own numbers, since I have a cow that lost a calf, to figure out what I should do with her. If I keep her and feed her until I can sell her on the seasonal high, as he suggests, I will need the cull market to go up 35% just to recover my feed costs. Now we know why he left it open-ended. That is the problem with predictions, we need the market to come to us to bail us out of how we placed our bet.

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Marketing skills

The book of Proverbs tells us that in all our getting get understanding. In this case it would be marketing skill, which is great because skills can never be taken from us. For that reason let’s take a look at what the market is telling us.

If I keep my cow that lost her calf and feed her until the seasonal high I run the risk of not being able to recover my feed costs and there is the risk that something my happen like it did in 2020 when the market tanked hard when it should have been peaking. So, I know I don’t want to do this. However, looking at female sales this week if I breed her back and sell her as a bred I can add value to her over her feed bill. Even if the market goes down this will establish a better relationship compared to what she is now, which is the most undervalued animal in the spectrum.

Females in the market

Females sold over their Intrinsic Value (IV) this week, except for broken mouth cows. This makes the one and dones a great buy. Some of the cozeners say they can’t see the value in old cows but once again the market shows us the value.

The relationship comparisons tell us we can get paid much more than the value we sell into the market than it is worth by selling pairs where the cow is still open and replacing with breds. The three in ones fail to establish a positive relationship at the moment.

Looking at what breds sold for by age and of similar type and body condition, the female market thumbed its nose once again at what most people think they know about cow depreciation. If we only compare bred heifers to short solids it looks like there is a steady $100 per year of age. Looking at it by age and breaking down the relationships 33% of the depreciation happens between age 4 and 5, and then there is another big drop between 7-year-olds and the short solids. We’ve seen this trend for a long time now and it destroys the noise of the concept of the no depreciation cow herd, which has gotten people into trouble.

It is also worth noting that there is no love for females in the first.

Not the recipe

Sell/buy marketing is not a recipe, it gives us a means of boiling the market down to analyze our current situation and figure out what we can do to prosper ourselves at the moment. Just as importantly it tells us what we cannot do at the moment. This makes fortune telling useless to the skilled marketer.

Value of gain

The Value of Gain (VOG) held steadily in positive territory this week on feeders. Feeder bulls were up to 40 back and unweaned calves were up to 20 back. There is currently an overabundance of misrepresented cattle and selling blunders taking place. This is one of the easiest things for a buyer to add monetary value to. I also repeat on here that the sale barn works as the seller’s agent and that we need to hold them accountable for their job. The thing of it is the seller also needs to help themselves and help their agent out, by passing on information about the cattle, and making sure the cattle will show well. If there is one thing some of us learned in 4-H or FFA it should have been that.

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