It has been a very busy couple of weeks for marketing calves. All of the major video marketing companies held large sales in July selling hundreds of thousands of yearlings and calves for fall delivery.
I have had the pleasure of being ringside to watch many of these calves sell. One thing I have noticed is a majority of those selling cattle are pleased with the price they are receiving when the auctioneer drops the gavel.
“The final thing I have noticed driving premiums at these sales is that the cattle are enrolled in value-added programs. …[I]t does appear that buyers are rewarding those producers by paying a premium for program cattle.” — Devin Murnin
After watching such volume of cattle sell in such a short period, there are some definite trends I have noticed when it comes to which set of cattle rings the bell. One of the most obvious things buyers are looking for is a good vaccination program. Having both spring and fall shots within a program results in a premium over those with only a single round of shots. The buyers and feedlots are demanding that herd health is in line. They want the cattle they buy to have everything in their favor to stay healthy through the feeding process.
The next major thing that brings a premium is having a solid genetic program backing those calves. This is especially evident in the replacement female market. It is not uncommon for a set of heifers with years of breeding behind them to outsell their steer mates. Feed efficiency, growth, and carcass merit data behind steers is also prevalent in the lots of steers that command high buyer demand and/or the attention of year-over-year repeat buyers.
The final thing I have noticed driving premiums at these sales is that the cattle are enrolled in value-added programs. There is no doubt that there are more hoops to jump through to get your cattle enrolled in a third party-verified program. However, it does appear that buyers are rewarding those producers by paying a premium for program cattle. More and more consumers, as well as our export markets, are demanding more information on how these cattle are raised. They are willing to pay more for the final product when this information is present.
Combining a verification program along with a solid herd health program and superior genetics will result in cattle that top any market.
Changing gears, this past week the Trump administration announced $12 billion in government aid to agriculture producers affected by tariffs and any negative trade impact from all of the recent changes resulting from Trump’s negotiations.
This was obviously welcome news for many commodities and the industries that rely on those commodities. For example, John Deere’s stock was up 3 percent on the heels of the news. The day following the announcement, many of the future commodities saw increases with significant gains noted in the wheat and corn markets.
I am not a fan of government interaction in markets and I believe that most farmers and ranchers would rather see a strong market with sound supply and demand fundamentals in place compared to a market where government aid is necessary to support producers. However, many commodities are very dependent on trade and were going to take a significant hit because of these policy changes. Reading press releases from the major agriculture trade organizations seemed to echo the same tone; thank you for the temporary relief, but let’s make sure these export markets are available and strong in the future.
I will say that it is refreshing to have an administration that understands the importance of having a strong agriculture infrastructure in place. I have been able to hear Secretary Sonny Perdue address farmers and ranchers. I can confidently say that he gets it. He understands agriculture and has a firm grasp on the issues that impact producers. I am glad we have someone at the helm of the USDA like him while we are dealing with these trade disputes.
President Donald Trump has said that at the end of the day the results of his trade negotiations will result in the U.S. being better off. We will have to wait and see if that happens, but for now there seems to be a lot of maneuvering and talk.
Hopefully this aid program is a Band-Aid to get us through these trade negotiations and we will come out of the other side with stronger markets for everyone. Time will tell, but in the meantime, I hope that the cattle market remains strong and we don’t see a negative impact as a result of winners and losers from the aid program. — DEVIN MURNIN
