This isn’t a fairy tale

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

This isn’t a fairy tale

Goldilocks walked into this week’s female sales and here was her take. These females are too young. These females are too old. These females calve to early, while these calve too late. But these other females are just right.

I wrote in a past column that the Thanksgiving time sales were going to be the real test of demand for females. I had been eagerly anticipating what we were going to learn. A fairy tale may be a cute summary, but it doesn’t cover what I really want to unpack here.

Since I have been writing this column and especially since I began teaching legit sell/buy marketing, I have kept records of sales. These records are not just averages; I have the actual drafts that sell from Kentucky to Nevada (my name is Doug, and I am a hoarder).

I am going to break the rule of only dealing with today, and I have a point in doing so. The reason I am doing this is because we all heard about “the good times to come” from the cozeners. Some of you may have even paid for the webinars and the subscription newsletters to be informed of how to capture this fortune. I have warned about siphon hoses in the past. That is what it looks like; they siphon money from your account to theirs. Let’s see if anyone got their money’s worth.

Bred heifers were up 17%, five-year-old cows in second trimester were up 16%, seven-year-old in first trimester were up 7%, short solids in third trimester were up 26%, five-year-old pairs were up 25% and five-weight heifers up 45% (don’t forget how much they’ve dropped in price recently).

It is well documented that the cozeners have posted that the good times are here while showing off these higher prices. Don’t get too carried away patting yourselves on the back just yet. We have another number to look at.

When we sell an animal, it has a value, and it has a selling price. They are not always the same. When we buy an animal, it has a value, and it has a price. The difference between values and the difference between prices is the relationship, and with legit sell/buy marketing this is where we exercise our control to prosper ourselves.

The relationship range from most over-valued to most under-valued decreased by 6%.

It was difficult to get more out of bred heifers than what a producer had in them last year. At sales that auctioned off a lot of them this week, the same held true. Some people are still holding on to the belief that these young soon-to-be mommas have their whole life to pay for themselves and bid a premium into them for the privilege of pulling calves. These people are not volume buyers, and when they were done running their sprint, meaning they got enough to fill their gooseneck, the price dropped. This made sale order extremely important if you were the seller. It didn’t take long and bred heifers were selling for less than a person would have in them.

Open females may mean production lags even further

Herd rebuilding is a hot topic right now. At these female sales, some may have noticed that they didn’t sell as many breds as were advertised. Those of us that paid attention to the weigh up sale know why. A scary amount of the females that were consigned came up open. There has also been quite a bit of chatter about cows coming up open during pregnany checks at the ranch. This suggests that the production lag may be more than we expected. This will certainly lead to entertaining predictions.

My definition of value-added marketing: value added is only value added if you capture the added value. The Show-Me-Select bred heifer sales did just that. I looked up what it takes to be on a Show-Me-Select sale. To summarize, there is a long list of boxes to check off.

While on Missouri Extension’s website, I clicked on another button and found their 2024 cow/calf budget. This is from a budget with assumptions that were based on price forecasts as of September 2023. The bottom line is the total cost to run a cow is over $1,700. Stripping and shipping calves right now in Missouri will get a producer around $1,300 (average price of a five-weight steer and heifer).

I have broken character long enough. Guessing games are for kids, and costs skyrocketing beyond the value of calves produced is not my normal optimistic outlook. In the first paragraph, Goldilocks said these are just right, these are too young or don’t calve at the right time. Bingo! The relationships to prosper are still there. Develop a one-track mind and focus only on relationships. I am updating slides for my December marketing school and looking at some of the relationships that exist. They could produce enough cashflow to overcome the forecasted $1,700 yearly expenses, but it will also require some turnover.

We all know that during the year the relationships will change. I prove that in my marketing schools. This knowledge scares some people because they are worried that if they buy this undervalued animal today, they can’t see how they will resell it as an over-valued animal tomorrow. The beauty of legit sell/buy is that it shows us the relationships in real time. Maybe we don’t resell it tomorrow, maybe we will resell it the day after tomorrow. We don’t skip out on a trip across the country because we can’t see our destination from where we are. We don’t stop and go home at the first detour. We press on and find our way to our desired destination. If the desired destination is to be profitable, we need to generate positive cash flow. Sell/buy shows us how to do this in real time. It is the things we do today that create the opportunities tomorrow.

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