Trowbridge: Cattle marketing considerations are important for producers
At the start of fall, many producers are starting to market their spring calf crop, and when it comes to marketing decisions, producers may have questions about what to do.
The National Cattlemen’s Beef Association (NCBA) presented a webinar, titled “Strategic Considerations for Cattle Marketing,” to provide producers with up-to-date information on cattle marketing and marketing trends.
Program marketing
From a cow/calf producer’s perspective, there are factors that can be controlled and add value to calves, commented David Trowbridge, Iowa Cattlemen’s Association president-elect.
He said the more factors producers can document, the better they can market their programs.
“I always preach about the importance of being able to not just sell calves but also market the program,” Trowbridge stated.
When buyers are looking at calves, a combination of inputs is assessed, but past performance is the ultimate factor of calf value, according to Trowbridge.
“The program details make all the difference,” he added.
At Gregory Feedlots, where Trowbridge is the manager, a retained ownership program business model is used. The retained ownership model tries to analyze several factors that affect individual producer’s herd profitability by using the Gregory Performance Management Program (GPMP).
“We collect data on every individual calf in the feedlot and analyze the data to define which practices improve profitability within that individual producer’s herd,” he explained.
GPMP looks at management practices, like vaccination programs and creep feeding, to evaluate what affects those have on cattle in the feedlot.
“All measurable factors make a difference in the feedlot if the information is available,” Trowbridge stated.
Trowbridge insisted cow/calf producers need to analyze and document genetic selection, carcass data and feedlot performance on their operation and then market those programs.
“Past performance records and feedlot data are great marketing tools that add value to a program from a buyer’s perspective,” he said, adding documentation is the future of the cattle business.
Price slides
According to Superior Livestock President Danny Jones, price slides are a subject of considerable confusion, but producers need to consider them when making marketing decisions.
“If producers deal with slides daily, it becomes second nature, but if they deal with them once or twice a year, it can be confusing,” he said.
A price slide is a defined price adjustment mechanism designed to equitably deal with variances and weight, Jones explained.
“Slides allow buyers and sellers to take advantage of forward marketing opportunities by reducing the uncertainty of weight at delivery,” Jones commented.
He added, in the last two years selling spring-born calves in the summer for fall delivery has been a significant advantage for producers.
Slide types
The three types of slides, Jones mentioned, are the conventional slide, Superior Right slide and the two-way slide.
The conventional slide is the most common, he said. If the average weight is over the base weight, the price per hundredweight is adjusted, Jones explained.
“The heavier the cattle are, the more they yield, even though the price moves backwards,” he stated.
Superior Right Slide was developed when prices reached record highs faster than ever before, and conventional slides were inadequate at the time.
“Producers get paid the exact contract price all the way up to the base weight, and if the cattle are heavy, the producer gets a fixed price for every pound over,” Jones explained.
Two-way slides have been around for a long time, Jones said, explaining that under the system, prices increase if cattle are light and decrease for cattle heavier than the base weight, within a 50-pound window.
He advised producers, to not be afraid to offer attractive slides to buyers because it pays to have valuable slides associated with a program in the marketplace.
Heather Loraas is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net
