Since the new year began the markets seem to be searching for equilibrium, which is not uncommon. It appears to me that this is being created by buyers having two different mindsets.
One type of buyer is focused on numbers. They must buy thousands of cattle in a time frame and are overanxious about getting them. Type, condition, quality, and even the health of the cattle do not matter to these people. They are making it a seller’s market as they keep bidding until the other guy quits. How the cattle look on paper is how the cattle should actually look, and these guys are overspending for some of the cattle they are getting.
The other type of buyer is focused more on quality and the prices paid for cattle reflect that. This is because the first type of buyer wasn’t at that auction.
This kind of dynamic makes it difficult for me to call a trend that I am seeing during the week because it creates more of a roller coaster. At one auction the heavier feeders were higher, and at the next one they were lower. This changes up the Value of Gain, and relationships between weights from one sale to the next.
With this circumstance both buyers and sellers need to pay attention to auctions in their area and communicate with the sale barn. As a buyer we need to shop around and find a good place to buy. If we do end up at a sale with one of those buyers willing to pay the same price for cattle of a certain weight no matter how they look we will probably get skunked at that sale. It is better to go home with an empty trailer than a load of overpriced cattle.
As a seller it will pay to shop around as well. Fancy cattle sell well wherever they are, but not all of us have fancy stock. Those of us who do not have fancy stock need to find out where these careless volume buyers are and sell our cattle there. It will also pay to call the stockyard and find out what weight of cattle they have the highest demand for. It will also be worth taking the time to ask what can be expected for discounts and premiums, as the price swing is getting pretty wide in some places.
Making sense of the price swing
Here is what I mean by price swing. A buddy tells me in his local area there is pretty much no discount for bawling calves. Not too far away from him there is a twelve dollar discount for bawling calves. As a seller this makes it worth it …….
Source: https://www.beefmagazine.com/marketing/two-types-beef-buyers-work
