Cattle Today

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COMPETITION CREATES FAVORABLE ENVIRONMENT

by: Clifford Mitchell

Today's market, primarily due to decreases in available supply, has reached all time highs in about every phase in the production chain. Even as price continues to rise, there are opportunities for cattlemen to squeeze a few more dollars out of the product.

The marketing system has gone through many changes. In the days of the Old West, cattlemen had to drive their herd to town before they knew the price. More recent history shows some buyers from Kansas City, which was the packing house Mecca of a growing beef industry, would make the trip to different line shacks to bid on two- or three-year-old grass fed beef. When livestock transportation became easy for cattlemen, the local livestock auction became a gathering place for producers to sell cattle to the highest bidder.

Today, better methods of communication have allowed producers to take advantage of technology and market cattle through a video sale broadcast to buyers nationwide or sell them off the ranch. Each market scenario provides advantages to both the buyer and seller to some degree. However, cattle that top the market in every situation, just as they did in the past, will have something in common.

“Good genetics and good management will demand a higher price every time,” says John Rule, Ranchers Integrated Genetics, LLC, Newalla, Oklahoma. Ranchers Integrated Genetics, LLC, procures cattle for feedyards in Nebraska, Kansas and Colorado.

“Cattle that are managed right with good genetics bring the money. If a group of calves perform for the buyer, they will create repeat business,” says Ellington Peek, owner of Shasta Livestock and Western Video Market. Peek has been trading cattle since 1948 and currently markets cattle through country sales, on the video and public auction.

The local livestock auction has been and in some cases will continue to be the most profitable alternative for producers to cash in the calf crop. These markets, although more centralized and decreased in number, still play a prominent role in marketing cattle.

“Public auction is the best way to sell mixed cattle that are not load lots,” Peek says. “The local livestock auction is good for the small producer who doesn't have a load of calves to market.”

While the local livestock auction establishes very few guidelines for participation, to be successful marketing cattle in the country or through a video sale, producers must maintain adequate numbers to garner premiums. Load lots have become industry standard through these type of sales.

“If a producer can put together a load of calves, there are a lot of advantages to marketing cattle privately or through a video sale,” Peek says. “Country sales save a lot in commissions, but I am not sure you always get top dollar. Whether it is a public auction or a video sale, emotion gets involved in an auction environment.”

“Cattlemen need to do three things before they consider country sales. Describe the genetics and vaccination program, figure out a delivery date and figure the shrink and slide so it's fair to the buyer and the seller,” Rule says. “For the process to work there needs to be a 50,000-pound load with no more than a 250-pound variance from top to bottom. Depending on the price the cow/calf man gets in the country, not paying some commissions can work in his favor.”

In recent years, the video sales have become a more popular market alternative for both buyers and sellers. Like a lot of things that are new, this form of marketing took a while to sell itself to producers. These sales have gained momentum and afford cattlemen opportunities other markets do not.

“The video sales help establish the market and allow ranchers to sit at home and see what cattle are bringing. We'll help customers sort their cattle and we really try hard to get the cattle described right,” Peek says. “Sellers can pick and choose delivery dates and buyers can buy different size and quality of cattle. It is just an easier way for buyers and sellers to conduct business.”

Video sales allow producers who do not have a local brick and mortar auction to display their calves to a national audience. The volume of cattle available at one time usually attracts buyers who normally would not be potential outlets.

“Buyers like to go someplace where they can buy numbers. They wouldn't try as hard to put together cattle in small groups,” Peek says. “The video gets national exposure and all the major buyers compete for the cattle. In the Western region of the country there are darn few feedlots. The Midwestern feedlots used to have buyers in this part of the country. Now, they can stay home and buy calves from any location off the video.”

Both video and country sales offer flexibility to the market system not seen with a local auction. These added market alternatives allow producers to take advantage of the most favorable market scenario and spread out their risk.

“The cow/calf guys with numbers can split their calf crop and market half the calf crop as calves and hold the light end for a later marketing,” Rule says. “Producers do not put all their eggs in one basket and can take advantage of favorable shifts in price.”

“Some producers will have three different delivery dates on the cattle marketed through the video,” Peek says. “This will help classify cattle for size and weight to get the best market price. We have a lot of people who sell cattle in the spring with a fall delivery.”

Recent emphasis on health also sheds a favorable light on marketing cattle in the country or through a video sale. Increased demand for all natural cattle has also identified these two outlets as the only way to market this product.

“All natural calves are bringing a premium over commodity cattle. The video puts these cattle in front of more all natural buyers,” Peek says. “Not exposing these cattle to additional stress factors is very important. Cattle that bounce around the sale barns and are hauled an extra time have a better chance of getting sick.”

“These programs demand cattlemen follow all the guidelines and identify the cattle that have been treated and do not qualify for the all natural certification,” Rule says. “Taking this product from the ranch to the designated feedyard is the only alternative.”

While the video relies on increased exposure to help add value, producers have to do their homework to establish a value in the country. Large producers can position themselves to take advantage of country sales by identifying cattle that perform at the next level.

“Producers with numbers need to feed at least 30 head to find out carcass data on their cattle. This will give them some leverage when it comes to pricing those cattle. The cow/calf man who has a known product can garner premiums in the country he might not get at the sale barn. This is where price discovery figures in,” Rule says. “Build relationships with feeders that can help establish what the cattle are worth. Country sales allow for increased information exchange depending on the relationship. I like to keep my customers informed.”

Cattlemen looking for help marketing their calves should look to their seedstock provider first as a source of information. If this is not an option, a reputable local livestock marketing representative is usually a good source for marketing advice.

“Cow/calf men need to visit with the local guys and have them identify the best market alternative,” Rule says. “By using the local marketing representatives to help market calves, whether on the video, at the local auction or through country sales should help producers realize the most profit in their calf crop. That is the service they are paying for.”

Even though the marketing system has changed to accommodate different management programs, each avenue can add value. Profit potential is still the driving force that creates demand for the product. In today's inflated market, to garner additional premiums, it is more important than ever to establish worth and reputation will always sell.

“Good strings of reputation cattle bring a premium,” Rule says. “No matter what market fits your production system the best.”

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