What Cattle Buyers Want

August 30, 2009 07:00 PM
 
Quality genetics will always catch a buyer's eye, says Jack Frost, part owner of Springfield Livestock Marketing Center.

What do buyers want? You don't need to be hit by lightning to know the inner thoughts of a cattle buyer. All you need is his cell phone number and a dose of patience.

Still, it's tough to catch order buyers. They travel to two, three, sometimes four sales per week, are in constant communication with multiple clients and often making farm visits at clients' request. Cattle buyers' customers—the next owner of your cattle (backgrounders, feeders and packing plants)—put their trust in them to deliver the type and quality of cattle they expect from the farm level.

"Anything that helps my customers helps me,” says Larry Wagner, a cattle buyer located in central Missouri. His customers range from farmers and backgrounders in Missouri, Iowa and Nebraska to commercial feedlots in Iowa, Nebraska and Kansas.

"Customers pretty much tell you what they want,” Wagner says. "There might be a difference from what a farmer-customer and a feedlot-customer want, but there may be no difference at all.

"Most of my customers I've been dealing with for a number of years. If they change their program, they tell me,” he says.

Balance sheet. Like any commodity, cattle markets are based on numbers—dollars per hundredweight, profit margins and death loss. Producers are continually working to improve their cattle through better genetics and animal management. Even with the popularity of preconditioning programs, genetics are still key.

"In Missouri, our cowherds are still rather small,” Wagner says. "Our quality of animals has really improved, and producers are trying to get better genetics. In the next few years, better genetics will be mandatory. It will be hard for lower quality cattle to find a home.”

Jack Frost, part owner of Springfield Livestock Marketing Center in Springfield, Mo., agrees. Genetics should be at the top of producers' to-do list. "I personally think it's the genetics of the cattle that brings the most value. It always has. Your good cattle will always bring a premium price, whether they are weaned or unweaned.”

Frost says a majority of Springfield Livestock's 3,000-plus customers are adding more value to their calves at the farm through extra production measures or preconditioning programs. "But those factors can only build on the value of the animal itself,” he adds.

Color and condition. Farther north, in Kingdom City, Mo., Jack Harrison, part owner of Callaway Livestock Center, breaks it down simply: "After price and weight, the color and condition of the animal are keys to selling price. Then, our buyers will ask if the animals have had shots, been weaned, etc. We try to do a good job of communicating what has been done to the animal up to that point.”

For a buyer, many of the factors beyond the basics rest on his customers' preferences. "Some customers insist on their cattle being a strong, if not 100%, black-base. Others want a high percentage of blacks and others prefer crossbreds,” Wagner says. "We are black orientated now in this section of the country—maybe too much so. But if you look to what has spurred the cattle industry, it's Certified Angus Beef. The acceptance from the consumer has been excellent. It has done as much to promote beef products as anything.”

"There are lots of good cattle of every color, but black cattle owners have done a good job of promoting their product. Good genetics are going to be good genetics, no matter what color it is,” Frost says.

Black and black-based feeder cattle may be popular in central Missouri, but current market prices have really narrowed the gap in the economic value of calf color.
Better management.
Progress has been made at the farm level throughout the 30 years Wagner has been involved in the cattle industry. Genetics, handling facilities causing less stress on animals, more effective medications and feeding balanced rations have raised the quality of beef dramatically. However, there are still ways producers can improve calf value, he says.

"In the state of Missouri, it's hard to believe you can see cattle that you have to break to eat,” Wagner says. "Calves headed to a feedlot are going to a strange facility and for the most part they've been on grass, maybe fed on grass a bit, but their surroundings are so different. It's important cattle arrive at the feedlot ready to eat. Anything does better on a full stomach.”

Bunk-broke cattle is just one area producers can capitalize on. "Basic health programs are so important. Working calves and adding fly tags to prevent white eyes are needed, especially in summer and early fall,” says Ed Ford, a part owner of Springfield Livestock.

"Weaning is more important than ever,” Frost explains. "Many order buyers have their own protocol of vaccinating before they are shipped. Next to genetics, weaning is important, and then add shots if you want to do it.”

For Ken Jordan, part owner of Jordan Cattle Auction in Mason and San Saba, Texas, weaning has a slightly different meaning than it does in Missouri. He often recommends that Texas ranchers wean at the ranch on pasture, as feedstocks other than grass are not as plentiful. This lets cattle recover more easily in familiar surroundings and utilizes the facilities and feed that producers have access to.

"It is always important to castrate bull calves, but when the market is soft, you really see the value. Lately, here in Texas, there is a $10 to $12 per cwt. difference between heavier bull and steer prices,” Jordan says. "Don't cut your basic vaccination or mineral programs to save money. That will just set you up for a storm later on.”

Good management is even more important during the fall months, when weather, demand and economics come together. "Genetics and management practices are most important when you are in a tough market,” Jordan says. "Buyers can be choosier on the animals they buy. That's why producers do the best management practices in the good times—because when the down times come, you'll still be sitting in the front row.”

A round of shots, or two. At Callaway Livestock, Harrison says the number of cow–calf producers who are using preconditioning programs is growing. He estimates that nearly 70% of Callaway Livestock's 2,000 customers use a preconditioning program of some kind, and that most of the calves that go through the barn are headed to feedlots in Nebraska, Kansas and Iowa.

It's a trend that buyers have had to factor into the price of cattle. Wagner says feedlots are watching their bottom lines closer than ever. "All those programs are good, and every one of them has some excellent things they are involved with,” he says. "These programs are not for naught. Hopefully, if not now, soon they will get paid for doing all that. But I can assure you that for the most part they are all worth what the producers go through.

"When feeders have a death loss that exceeds 1½% to 2%, that cuts into the profitability for the people trying to feed cattle,” Wagner explains. "In future years, I think it's going to be mandatory for the people on the feeder end that the cattle go through one of these types of programs.

"To take to market an animal which, because of genetics or breeding, is still relatively young is quite a stress. If they've had the series of shots through health programs, it builds up their immune system,” he adds.

"You can buy the bigger bunches—say, two or three groups—and have a semi-load of cattle. Those cattle are probably going to cost more than buying the groups of two, five or ten and putting them together. But you will have a lot more problems with putting smaller cattle bunches together than larger drafts. If cattle are coming from 30 different homes, it is more of a management problem on the other end.

"Some of my farmer-customers who background cattle contend that they will sacrifice this additional work because you can buy them cheaper. Some even have records to show that they bought a group of cattle $6 per cwt. or $7 per cwt. cheaper and didn't have much additional expense,” Wagner says. "But there is also the time of the year and weather to consider. It makes putting cattle together very difficult.”

Some caretakers are good at handling these animals, and good caretakers can spot an animal before it gets sick, Wagner adds. "But eventually, I think, a health program is going to be mandatory in order to sell cattle to many feedlots. It's a cost situation for the guy on the other end. Lowering the chance of health issues is a benefit to feedlots. When an animal dies and it costs $600, that is $600 you won't recover.”

Even though the cost is high, new antibiotic sources have helped in transportation of unworked cattle, says Carey Jones of Marshall, Mo.
Economy starts to take a toll.
For other buyers, such as Carey Jones, owner and operator of Marshall Livestock Auction in Marshall, Mo., the economy has changed his customers' purchases.

Jones, who travels to five or six sales across Missouri each week, may be looking for a different group of cattle than Wagner, depending on the customer he has in mind. Most of the cattle he purchases in southern Missouri go to customers in Iowa, where western calves might be more expensive. Several of his customers are backgrounders, and many of those are willing to take a chance on nonprogram cattle if the price is lower on the front end. "I often look for the cattle that have no added value, such as weaning or preconditioning, and group them together at my facility and then deliver them two to five weeks later,” he says.

"I actually look to buy the smaller three- to five-head bunches. And I have customers who would rather buy bulls because they have another 30 days' worth of robust growth after they are castrated, versus calves that have been steers since a young age,” Jones says.

Because of higher feed prices and lower fat cattle prices, Jones adds, some of his customer-feeders are doing more of their own work to add value. This has caused some role reversal in the cow–calf production, backgrounding and finishing segments.

"The cattle business has changed in the past two years or so. Profitability for cattle owners has changed. When profits are high, everyone wants the best cattle with the most added value because they take the least amount of work. When profits are diminished, they will take lower-cost animals and add the extra value themselves—even if it takes more work,” Jones says.

"Many people are looking for a cheaper way to get into the feeder cattle business. Value-added, backgrounded cattle cost more to buy, but profit for the next owner might be diminished in this low-profit-potential situation the market has been in for the past 18 months or so.”

For many of Jones' customers, and the cattle he buys for himself, it has worked, depending on the value of the fat cattle market and ability to manage each group. "The new antibiotic sources have really helped us prevent death losses during transportation of unworked cattle. We have less health problems than we did 10 years ago. The medicine is high, but our experience is that we get enough additional gain in the seven-day hard weaning of our cattle that customers are actually gaining by spending that extra money.”

Jones, who has been involved in the cattle industry most of his life and order buying for 10 years, believes there will be a market for both preconditioned and non-worked cattle in the future, as not every cow–calf producer is going to go to the added expense of incorporating additional health programs. "Our calf numbers being down is really narrowing the gap between the worked and not-worked cattle. We just need a higher fat market.”

Cattle for every buyer. The type of cattle Wagner and Jones buy may be very different or much the same, depending on their customers. A perfect group of cattle, "if there is such a thing, regardless of price, would be a single load, bought as one draft, bunk-broke to eat or weaned, with a double round of respiratory shots, light-fleshed and uniform weight,” Wagner says.

Each of those factors brings value to calves, Jones says. It just depends which level of the production chain is willing to take that extra step. It's the price factor that will keep each of these segments working toward providing quality beef products.
Market to market, one factor holds true, Wagner adds. "If sale barn operators are well-received by producers and if buyers can believe what they say, that goes a long way.” BT



Top 3 Ways To Add Value To Calves

1. Build better genetics.

Before you change anything this year, look at the basic bones of your cattle operation: your genetics. Work to get your calf crop as uniform as possible in shape, size and weight, and then think about color. "A good colored calf will bring as much now as a black calf,” says Jack Harrison, part owner of Callaway Livestock Center, located in Kingdom City, Mo.

2. Step up animal management.

"Cut bulls and do one round of shots,” Harrison advises. Producers should also look to add fly tags to prevent pinkeye in the summer and separate heifers to ensure open status.

3. Market the package.

Investigate if preconditioning programs are effective in your area. Pencil out the cost and value of a second round of shots. Wean calves and train them to be ready to eat. Clearly state any additional production measures to the livestock market's check-in official and write it on the ticket.



Bonus Content:
See photos and read more about Springfield Livestock Marketing Center in Sara Brown's July 24th Livestock Today blog,"Feeder Prices Up in Springfield, Mo.”


To contact Sara Brown, e-mail sbrown@farmjournal.com.

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Brad
Sedalia, MO
6/8/2016 02:46 PM
 

  Great Read, really enjoyed it, good information!

 
 
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