5 ways to make more profitable decisions at the cattle auction house
1 Let Go of Your Bias - It is natural for every producer to come into an auction house with a game plan. You may come prepared with the type of animal you are looking for, but this could be a mistake. Instead, consider the profit opportunity on each group that comes through the ring. Don’t limit yourself to only biding on all black, uniform, 700-pound steers. The best profit opportunity might be in those 500-pound heifers. Conquer this challenge by bringing tools that quickly calculate profit risk on each group.
2 Be prepared to come home empty handed - We all feel the pressure to get our lots filled. No money can be made if we keep our feeding pens empty. If the cattle coming through the auction ring are getting bid out to the point where profits seem unlikely, it might be best to cut your losses for the day. Many people who bought cattle in the second half of 2015 are wishing they would have just kept their lots open, rather than taking that $500 per head loss.
3 Project When Each Group Will Finish - Each group that comes through the auction ring will have different starting weights, will gain at different rates, and finish at different weights. This variability will cause the groups to finish into different marketing months. Be prepared with tools that can help you quickly calculate finish date. This will give you the information you need to find your profit opportunity on each group.
4 Watch Today’s Markets - Markets can swing limit up or limit down in a heartbeat in today’s volatile market. Make sure you keep an eye on the trends that are happening outside of the auction house. Capitalize on good markets and protect your risk on bad trends.
5 Be Confident, Be Patient - Being confident in your buying decisions won’t only help you sleep at night but you will buy smarter. The best way to have the confidence you need is to know the costs it's going to take to buy, raise, and finish each group. Having an idea what the market might bring when you sell the animals. Know your crush calculations! Calculate the potential risk/reward on each group coming through the auction ring. Be more patient as you wait for that profitable group to land in your lots.
Cattle Krush (www.cattlekrush.com) is available today enabling buyers at cattle auctions to find profit opportunities. The Auction advisor is the perfect tool that allows you to calibrate the initial weight, rate of gain, cost of gain and pull the right market prices to give you the profit insights you need. Cattle Krush works on all mobile, tablet, and desktop systems. Visit www.cattlekrush.com to better protect your financial risk with better buying decisions.