Winning by a hair’s breadth

SpringCalvesMrktOct17Way back a few posts ago we were thinking about November for the farm’s fall calf sale. Well so, things changed, as more and more calves were born (that means more mouths to feed in the same environment), prices looked to be at least stable, and some mother cows were getting a little thin feeding calves almost as big as they were.

We pulled the trigger on the sale this week — calves looking good on one of the first cold mornings heading into winter. We loaded them up, sent them down the road, and I met them at the sale barn — me (and a few other producers) and a gallery of potential buyers. Calves still looked mighty good in the auction ring compared to other offerings that afternoon.

The very beginning of the channel getting beef to your grocery store is often this kind of sale. People who feed calves on grass and those who feed calves in lots are both buying, all with knowledge of prices, out there in the ether, driven by packers published stats (supposedly based on demand) and speculators (who often know little about ranching). Everyone has to make a profit — and this is the first tier.

This particular year prices stayed remarkably strong all through the summer — and much deeper into the fall than expected. Market experts assigned it to strong export demand at packer end — I think packers had to manage more domestic beef because the arguably largest of the main packers was in trouble for shady practices in the U.S. and Brazil. (Many domestic producers suspect the U.S. beef market is diluted with imports to keep prices down, but that’s another story…)

Upshot for the cow-calf, producer end of the beef complex in the U.S. is that we were paid enough for our calves to cover production costs well into what the industry calls the “October run”– when many operations sell calves born last spring. This time of year should exhibit classic supply and demand, or when high animal traffic to stockyard sales depresses prices — the system becomes a buyer’s market.

This year we hit the second week of a down trend that started midweek the previous week, when the buyer’s market of the “October run” finally kicked in. Good news for us is that we did win in a down market because our calves look so good in the ring — and they are all natural, meaning we hit a niche market where auction buyers will stretch a bit. That’s the strategy, and the only one we can control — work on a value-added product that consistently brings a premium.

We probably would have made more if we had gone to market three weeks ago, but we’re alright.

Realize that often the “premium” is not enough to pay for our efforts to grow excellent calves — like last year’s fall market. We did well this year so maybe can get a barn roof fixed by next spring as we raise the next group of calves. I hope to tell you more about them soon — they are all little ones now — very cute and fun to watch as they discover the world around them.