AUCTION MARKETS ALLOW PRODUCERS TO MARKET CALVES WITH CONFIDENCE

by: Clifford Mitchell

Many challenges face livestock producers. Lack of available credit and Mother Nature refusing to cooperate, in some areas, could be at the top of the list. Health outbreaks, calving problems or the bull being in the neighbor's pasture have caused more than one sleepless night. Changes in the beef industry have also added producer questions when it comes time to market the calf crop.

These questions often begin as to “when and where” and finish with what method should calves be sold. Options are many for today's producer; however, the “Brick and Mortar” auction barns are still a favorable place to trade for a variety of producers.

“The first marketing decision most producers make is when they put the bull out. Calves are marketed based on when they're born and most producers realize they need to match production to fit the market,” says J. D. “Bubba” Sartwelle, Jr., Port City Stockyards, Sealy, Texas.

“We can service a large number of producers, who bring cattle to a central location, looking for true price discovery based on competitive bidding,” says Ken Jordan, Jordan Cattle Auction, San Saba, Texas.

Livestock producers, maybe more than any other group, take pride in knowing who they are doing business with. A certain comfort level helps producer's take advantage of the opportunities local livestock auctions may offer.

“We merchandise cattle, we don't just sell them. We can sort calves into more uniform groups and market them to the buyers who attend the weekly sales,” Jordan says. “We can also serve as a “go between”, the producer and buyer, to add credibility to that transaction. We take pride in being a marketing representative and still like doing business on a handshake.”

“That smaller producer who markets cattle more frequently during the year can really take advantage of the local auction market. We handle a lot of cattle in a regional area, which works well for buyers and sellers,” Sartwelle says. “Smaller producers aren't going to go very far from home to market a few head. The order buying firms still have buyers that are looking to fill orders to make load lots and really put some wheels under them.”

Most in the livestock business are always looking for an advantage. The role of educator in the cow community is often a by product of the local auction barn. Traditionally, these venues have been a gathering place for local producers to visit and learn. Demands on time have changed this somewhat, but livestock enthusiasts still view weekly sales as an opportunity to gain knowledge.

“The best cattle classroom is the weekly livestock market. If a producer could spend a couple hours there every week, he'd learn a lot. We're all educators in this business. The more knowledgeable the seller is, the easier it is to work with them,” Sartwelle says. “There are so many demands on time for most producers; they just can't do that on a weekly basis. We're going back to hosting a variety of producer meetings. A lot of people are more comfortable learning when they go to the local livestock auction.”

“It is our responsibility to educate producers. They need to know where the trends are and where there is an opportunity to gain an advantage in the market,” Jordan says. “It still seems like it's a weekly get together. People may not stay all day, but they might stay a couple hours. One thing we have seen is more cattle are coming in the night before the weekly sale. This has changed dramatically over the last 25 years because more and more producers have a full time job away from the ranch.”

Information or the data trail has become increasingly important in marketing livestock, no matter what method producers use to sell calves. Livestock auctions have changed the way they do business to accommodate buyers and sellers. Customer relationships help markets retrieve opportunity costs for producers who take advantage of extra management.

“We started our first weaned calf sales about 10 years ago to help promote this type of animal. We have sales to sell large drafts of totally Vac 45 type cattle. We try to announce and emphasize what producers have done to help capture value,” Jordan says. “Buyers know on a weekly basis what time we are going to sell these cattle. We have to offer the small producers an opportunity to get paid for their management.”

“When we know calves have been backgrounded or given shots that offer some form of extra protection, we'll tell the buyers. The key to this is we have to know what the seller has done to the calves,” Sartwelle says. “When people want to get $500 or $600 per calf, we need to make sure these cattle will perform for the buyer.”

The marketplace has provided its own system of “checks and balances.” Producers are always looking to get the most money for the calf crop; however, this may entail avoiding some discounts built into the price structure, rather than reaching for the premiums.

“Successful marketing incorporates many factors. If you're looking to sell some heavier calves, they probably need to be castrated with a knife. If you castrate that bull calf at a young age, you can take advantage of the market,” Sartwelle says. “If you leave him a bull you lose some of your flexibility. Getting the most for your calves could be something as simple as not letting the calves sit out in the sun all day while you work your cows. Gather in the morning, sort the calves and get them to town. The cow man has a lot more flexibility today than he did years ago.”

“We've had good reception for the different programs we offer. From castration to shot programs, producers have come a long way in the last 10 years preparing their cattle for the marketplace,” Jordan says. “We're in the market every day and see trends that are happening. We try to adjust our programs to fit market demand. There is more opportunity in the market today than there has ever been.”

Special sales have become a common thread that links some of these auctions. During certain times of the year buyers and sellers know when certain classes of livestock will be featured. Buying and selling decisions often hinge on these dates for local cattlemen.

“Throughout the year we have a lot of replacement sales where we can merchandise cattle in uniform groups. This appeals to a lot of producers whether they need 20 head or 5 loads,” Jordan says. “Bull sales have also been successful. People may not have time to drive all over the country to purchase herd sires and we bring potential herd bulls to a convenient location for them. This has improved the genetics tremendously over the years. We can send a lot more cattle to different locations.”

“We have always been oriented to put on five to seven special sales a year,” Sartwelle says. “It is a good way to encourage people to come to the auction. We can plan activities around these sales. I have always thought any time we can get more people to come to the auction, we have done well.”

Building confidence and reputation is the key to most business transactions. Local livestock auctions offer the theory that cattlemen should be able to get a fair price for cattle, any day of the week. Compared to other forms of marketing, this could be the one distinct advantage livestock auctions offer.

“Any transaction has about five potential elements producers have to overcome to find true price discovery. Sellers still have to gather and sort their calves. Be knowledgeable enough in the market to accurately price calves, weigh and sell them,” Sartwelle says. “At the local livestock auction, producers don't have to invest much time in knowing the market. They don't have to worry about selling calves to only one bidder, just the last bidder. Time is money. All producers have to do is figure out which day is convenient and we'll do the rest. Most livestock auctions can convert cattle to cash six days a week.”

“With local livestock auctions there is a flow of cattle and a buyer can purchase cattle six days a week throughout the year,” Jordan says. “The market is established and most days a producer is going to get paid for what he's selling.”

The more options a producer has to market calves, obviously, is a good thing for the beef industry. Some outfits, due to size or other constraints, simply are not equipped to take advantage of every opportunity the marketplace has to offer.

Utilizing a known form of marketing may not be the most “en vogue” concept, but could be the right decision for that firm. “Brick and Mortar” livestock auctions have stood the test of time. These operations have built a following through hard work and the ability to provide customer service.

“To do direct trade or other forms of marketing, producers need load lots to take advantage of these opportunities. Some markets have fell victim to consolidation or decreased livestock flow to cover the fixed costs of operation,” Jordan says. “Guys without load lots can come to the livestock auction for true price discovery. Some smaller producers have just as good of a product as larger firms. A satisfied customer is our best advertisement and it's my duty to do everything I can to help them get top dollar for their calves.”

“The biggest question facing most producers is how to mate that environmentally adapted cow to get a quality calf. The local livestock auction can offer a competitively priced environment for that day. The market is volatile, but we don't often look up and see drastic shifts in price,” Sartwelle says. “The seller needs to at least be knowledgeable enough to know when to sell his calves. Don't get it in your head to try and put a square peg into a round hole. If that's the case, then you'll suffer the consequences of the market.”







Google
  Web CattleToday.com

Don't forget to BOOKMARK  
Cattle Today Online!