The Cattle Business

Livestock Update, June 2000

Bill R. McKinnon, Extension Animal Scientist, Marketing, Virginia Tech

It is not too early to begin studying late summer and fall feeder cattle marketing options. The high priced feeder cattle market continues to be driven by an industry-wide shortage of feeder cattle. In many cases, the prices that might be offered by the first order buyer or dealer that comes down the driveway may sound great. The 2000 bid price should be higher than the price that you received last year and may be the highest you have ever been offered for a similar set of cattle. That high sounding bid may still be under the market.

Virginia has a 60-year plus history of success in conducting commingled graded feeder cattle sales. These sales are the envy of many other states. Certainly there is a graded feeder cattle sale located somewhere near your operation. In recent years, there has been a proliferation of sales conducted over an expanded number of months. Over the last several years, a number of sales groups have dropped or reduced the number of presale vaccinations required to appeal to a larger number of sellers.

Of course, the local graded sales also serve as a basis to price a large number of cattle traded on a private treaty basis. The secret to the better prices historically garnered through the graded sales has been the large numbers of uniform cattle offered. As some producers circumvent the graded sales to sell direct based upon prices in the local sale, they weaken the local sale price by reducing the attractiveness of the in-barn offering. Producers should contact their local sale barn or extension office to find out sale dates and marketing guidelines ahead of time.

The telo-auction and board field sales of load lots of cattle continue to bring some of the strongest prices for groups of uniform, quality feeder cattle. Both methods require a little forethought by targeting the desired marketing date and then a couple of weeks earlier, contacting the Virginia Cattlemen's Association, local sale barn, VDACS, or local extension agent to arrange to have the cattle evaluated by a VDACS grader. Telo-auction loads are sold at least every other Monday night while board sales are conducted in conjunction with a local graded feeder cattle sale. History has shown that these load lot sales average bringing $2 to $5 per hundredweight over similar cattle in an in-barn graded sale. Neighbors with less than load lots of similar cattle might want to explore the potential of putting their cattle together to make a load of 48,000 to 50,00 pounds.

Feeder cattle producers who are committed to making a value-added feeder cattle product may want to explore the Virginia Quality Assured feeder cattle program. The VQA program is Virginia's health and genetic certified feeder cattle program. Details of the specific vaccination requirements and genetic guidelines are available by contacting the Virginia Cattlemen's Association or the local extension office. It is important once cattle are VQA certified that they be placed in a marketing arena that recognizes the VQA designation and facilitates putting together load lots of the cattle. The Fredericksburg feeder cattle association will conduct their third VQA sale this fall. The Dublin association will conduct a special performance feeder cattle sale this fall with genetic thresholds identical to the VQA purple tag, but with a slightly different health program. Several area associations also plan to put together load lots of VQA certified feeder cattle and offer them through telo-auction and/or board sales. These groups include the Amelia, Buckingham, Bath-Highland, and Pittsylvania associations. The Front Royal, Harrisonburg and Blue Ridge(Winchester/Front Royal) also have marketed VQA cattle in the past. The VQA program has three years of price advantage history.

With the increasing growth and importance of retained ownership and beef alliances as production/marketing options, more Virginia producers may want to explore the post weaning performance of their cattle. The Virginia Retained Ownership Program offers producers the opportunity to ship as few as five steers or heifers as part of a load to a Kansas feedlot. Participants maintain ownership on their cattle until they are marketed on a carcass value grid. Feed yard costs are deducted from the final sale price. Participants receive individual feedlot and carcass performance information. To make an informed decision regarding retained ownership or alliance participation, cattle owners must have knowledge of how their cattle will perform beyond the borders of Virginia. Shipments of weaned cattle as part of the Va. ROP program are schedule for September 22 and November 29. There are also currently at least three local groups that routinely put together loads of feeder cattle to send to western feed yards for finishing. Contact the local extension office for more information. Individuals considering retaining ownership in their cattle may want to work through the numbers using a breakeven analysis spreadsheet (ROBE) available by contacting local animal science extension agents.

Occasionally we hear the comment from a producer, "Well, I do everything you folks suggest. I have used good bulls and a planned presale vaccination program. The guy who has been buying my cattle in the field for several years won't pay me any extra for the better job I have done." The response I want to make is, "Well, duh! What did you expect." Producers cannot expect a higher price unless cattle are put in a competitive marketing environment

Probably too many feeder cattle producers put off planning a marketing strategy. Far too many operators market out of convenience and fail to realize the high price of that convenience.

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