The Cattle Business - Planning Yearling Cattle Marketing

Livestock Update, June 2001

Bill R. McKinnon, Extension Specialist, Marketing, VA Tech

It is not too early to begin planning the marketing of stocker cattle for this summer and fall. The continuing shrinkage in available feeder cattle supplies nationwide gives the bargaining advantage to the seller. Given the relatively high costs invested in most stocker cattle this year, operators will need to use that advantage and others to net a few more dollars.

In the past, yearling cattle operators were limited in their marketing options. If they wanted to market their cattle before the traditional September-October rush, the cattle had to be traded "in the field" or hauled to a local weekly sale. In recent years there has been growth in the number of options available every month of the year and to sellers of all sizes. There are currently graded, in-barn feeder cattle sales located across the state during every month of the year. Additionally, telo-auction and board sales give operators flexibility to market their cattle any time of the year.

One of Virginia's best tools in marketing feeder cattle has been the telo-auction field sales and its closely related cousin the "board sale." The telo-auction field sales do an excellent job of marketing the load lots (48,000- 50,000 lb.) of similar feeder cattle as the data in Table 1below suggests. In many areas, neighbors with smaller groups of cattle have found it advantageous to pool their cattle that are similar into load lots. Several larger operators with superior cattle have found that the telo-auction has allowed them to develop a reputation for their cattle.

Table 1.

Potential sellers intending to use the telo-auction method should contact a representative of the Virginia Cattlemen's Association, VDACS, or the Extension Service at least two weeks ahead of the planned sale date. A VDACS livestock grader will come to the farm to evaluate the cattle and collect production information from the seller. As a result of the farm visit, information similar to that below on each lot of cattle will be mailed to list of potential buyers.

The sale of the cattle is conducted on designated Monday nights via a conference telephone call. Potential buyers from all over the country are able to bid on the cattle while the cattle are still on the farm. The buyer has up to seven days to work out take-up and hauling arrangements with the seller. Since the cattle are not individually weighed and sorted, marketing and commission costs at approximately $7.75 per head are lower than with traditional in-barn sales. Yet, the seller has the safety of the funds being handled by a local livestock market. Board sales are very similar except that the auction of the cattle coincides with a scheduled in-barn graded sale.

Given the marketing and timing flexibility that Virginia cattle operators have available, it is up to the manager to select the optimal time to market his yearlings. Certainly, several issues impact the timing decision such as current cattle weight, weight and price per pound relationships, seasonal price trends, pasture conditions, opportunity costs of the pasture, expected cattle performance, immediate market expectations, cattle carrying costs, etc.

The graphs above illustrate the trends during the last ten years for price per pound to drift lower from early summer into fall. As long as forage is adequate cattle should be expected to gain at least modestly throughout the period. The combination of effective forage and cattle management can dramatically improve the cattle performance.

Table 2 below examines the value added to yearlings each month taking into account the interaction of rate of gain and historical seasonal price movement. The table uses seasonal price trends for the last ten years to calculate a value per head each month with differing rates of gain for both steers and heifers. The projections illustrate that the impact of lower rates of gain and seasonally decreasing prices per pound can result in as little as $4 to $12 per month added to the value of the cattle.

When price and weight interactions result in adding as little as $10 per head per month to the value of the cattle, the cattle owner may be going backwards economically by holding them longer. The costs of interest, salt/minerals, labor, pasture opportunity costs, etc. can easily run over $10-$15 per month.

Table 2.

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