The Market Report

May 11, 2021

  

This week there are several issues that I want to talk about. First, NHTC cattle and other program cattle are here to stay. They pay big premiums for anyone that runs Angus Bulls on their cows and follows a Vaccination Program 2.

Second, this has been a long-time effort here that started back in 2000. We have always been on the leading edge of these new opportunities so of course they don’t all materialize as fast as we think they should, and the premiums aren’t always there. However, in the past two years, that is just not the case. This is a consumer driven market and it’s not going away any time soon. The demand is there, the price premiums are there, and all the effort over the years is paying big dividends.

Third, we do a lot of work to capture these markets and haven’t charged a penny for the work.

Fourth, because the technology used to EID identify these cattle is old and out of date and the USDA is dragging their feet to approve new tags and approve one technology, we are stuck individually reading every animal through the chute. It is a labor-intensive job that requires special expertise and equipment most would never attempt to do.

Fifth, in the future these cattle must be at our yard before 12:00pm on Sunday prior to any sale. It is just too hard on our crew to do everything that is required on Sale day to keep the approval intact as the cattle change hands.

Sixth, it’s all about the premiums. It’s been $15/cwt to $20/cwt over commercial cattle. On a 600# calf it is $120/head. If you sell 100 calves its $12,000 extra money in your pocket and you spend about $1050 to get approved. The tags are $3.25, and the vaccinations are $12.50 so if you put all your cost against 100 calves it adds up to be approximately $26/head if you subtract the $26 from the $120 you end up with $94/head net profit for the effort. It’s well worth the time spent.

I want to take a minute to thank all those that have chosen to sell NHTC cattle.  We sold six loads of NHTC cattle and shipped them out right after the sale and it was the easiest part of the sale if you just look at it from the auctioneer’s point of view. By the way, these cattle have been going to Texas and Nebraska. It’s the effort in vaccinations that has made this program work. Vaccinations are something we all should be doing. Without the vaccinations the cattle are hard to sell. Another issue is the economics of quality.  When corn went over $7.50/bushel the feed lots can’t afford to feed poor quality cattle expensive corn. As a result, that makes the marginal cattle very hard to sell.

The life saver in this market is years and years of selling Topline Leachman bulls. Yesterday the quality of the program cattle was just awesome, and it gives us a place to sell cattle that would never have been possible in the old days. The handwriting is on the wall from here on its QUALITY, VACCINATIONS, QUALITY ASSURANCE, and PROGRAM cattle that will lead the way to higher prices in the future.

This next week it should be easier to sell cattle because the rain in the Mid-West has forced the corn to move lower.  The demand as Covid restraints start to reopen and the worldwide demand for beef has pushed the boxed beef prices to nearly $3.00.  A second all-time high in our history. I think it’s important to keep in mind the current corn prices might not drop as much as we think because the supplies are very short for the current time and the new crop won’t show up on the market until late in the year. Three-dollar boxed beef relates to fat cattle over $150/cwt, but the packer is once again making all the money because he’s paying $119/cwt for fat cattle in Texas and $121/cwt in the Mid-West.

The market was a lot better this week cows and bulls were steady to strong, the feeder cattle were in short supply, but the calves were surely higher in very active trading. Next week will be more of the same as our numbers start to pick up.
Jim Warren

831-320-3698

 

 

Special Sales Dates     

 

Monday, May 24 at 10AM

Feeders

 

NO SALE ON MONDAY MAY 31ST IN OBSERVANCE OF MEMORIAL DAY

 

Monday, June 7 at 10AM

Feeders