Evaluating Cattle Auction Results

DCC Ranch eNews #165 - 3-29-2019

by: Darol Dickinson

Shortly after each of the continuous bombastic Texas Longhorn Auction Sales, quickly people are on Facebook asking what were the sale prices? Some comment the prices are up and some think the prices are down. With close evaluation the sale prices are affected by numerous things, not always about the demand for cattle consigned, the breed of cattle, nor about long term values. Here are some things to consider when deciding if the prices have tanked, exploded or just none of the above.

Cattle Auction
  1. Sale catalogs: Are they on line, well done with valid data, detailed breeding and pedigree info. Is there a three generation pedigree? Were catalogs mailed early enough buyers could have time to plan attendance?
  2. The weather: Some sales are at risk. It may be 105 or -10 degrees. Weather affects attendance -- attendance affects prices. Is the sale at a good time of year for the weather? August in Mississippi or February in North Dakota are not well thought out event/weather opportunities for a strong sale.
  3. Free bar: If major buyers appreciate the "spirits" they are known to be more confident with their bidding. Two sales were going weak and the auctioneer encouraged buyers to get some stiff drinks - it might boost the bidding. It affects the sale prices with some people if they have "optimistic" attitudes.
  4. Conflicts: If no other sale is conducted for that month the competition for buyers and their strong investments will increase. If there are sales every weekend or even more than one, it divides the people and their investing power. The more sales the more the pie is divided -- everyone loses.
  5. Advertising: One sale recently only sent out one post card to promote their sale. Others like the Hudson/Valentine sale in Fort Worth worked the news papers with front page coverage and national TV news. Which, might one guess, had the best sale average?
  6. Facilities: Some sales are held in dusty, stinky, spit-bucket, old sale barns. Some are held in Grand Ball Rooms with great lighting, and a clean environment. There will be a difference in consignment costs which also is parallel to the sale prices in some cases.
  7. Personal calls: Last week I received a call inviting me to buy at an upcoming sale. The sale manager had made over 250 calls. An affiliate sale recently did not have anyone making calls to encourage friends and known buyers to participate. Successful sales will have people, or many people on the phone.
  8. Sale sponsors: Sales with a name attached like the McCombs, Bowman, Hudson/Valentine, Searle or Fey have a reputation to uphold. Sales with the name of the promoter work harder -- it is proven they have better sales. The sale owners will normally bid on numerous cattle themselves to help the consignors -- to help the average sale price. Not always so with most affiliate/consignment sales, as more than often, those working hard to produce the sale are volunteers and do not have a budget to help with strengthen bids.
  9. Reputation: Some sale managers work to screen consignments and only allow cattle who are assumed to sell high. Others will allow any consignment that will pay the entry fee. Each sale develops a reputation for the quality of cattle available and attracts buyers accordingly. History tells which category sales fall into year after year.
  10. No-sales: When an auction has 15 to 30% no-sale lots, or pass-outs, it can mean some really great cattle were in the sale above the audience budget, or it can mean the owner is over rating their stock and making a mistake to no sale. What does this mean? Who knows? One reason to sell by auction is that some people do not know the true value of their cattle. They trust the attendees to tell them value.
  11. Guard the floor: Some sales don't have a commercial buyer bidding for meat cattle -- cattle can sell below meat prices and that floor buyer is not in attendance. One sale has been known to move semi loads of meat cattle - they dehorn all cattle before loading on the truck. If a sale has a reputation for prices at meat going rate, a buyer or two need to be invited to the sale to cover the floor. I went to a sale two years with a trailer -- I was in the market for really good cows that would improve my herd or else a dozen good sized cattle that were at meat prices for our hamburger business. I went home empty - the best cattle were not that good and the meat priced cattle were all too small, or a couple hundred dollars over meat prices.
  12. Win or Lose: Some affiliate TL sales are happy to have a simple profit when the sale is over -- just a few hundred bucks, among friends. Some sale managers really work the sponsorships and the consignors to bring in thousands in profits. Others may have some deep-pocket "sponsors" who find some reason to invest $100,000 in consignment fees, just to make a really glamours, in-your-face event. Most of the time prices are a lot different -- but not always. If the sale management hasn't worked to bring in buyers it can go bust.
  13. Cost of Consignment: Some consignment fees are high and some low. Before consigning, take last year's sale average and determine what the cost of consignment and commissions were in relation to the average sale price. Some may be as low at 13% and some as high as 70%. Cost of sales causes people to consign or not consign. It is about business. If a sale historically is a flop, why would one assume it would change.
  14. On line bidding: This can be a high tech tool bringing bidders from distant parts. The Hudson-Valentine sale had a very professional video company with 3  cameras moving around the event. It was sharp, professional and no doubt increased prices. The visual was excellent. The other side of on-line video bidding has some skepticism. If one camera is placed in an area that is not presenting the cattle well, distant buyers may not bid. If on-line bidding is available it will reduce attendance, as bidders can participate, and not have to attend the sale. The reduced numbers of live bodies at the sale is a psychological negative. If the attendance is low and the on-line bidders are not getting a good picture, the bids are more cautions. On-line viewers miss-out on the camaraderie, education, personal eye-ball evaluation, great food and fellowship of the sale. That is big.

Understand there are exceptions, but these are some of the reasons the list of sale prices may not be indicative of the current up or down market. Take a long look at values, private sales, and all the elements during the whole year.

One feather don't make a duck.