By Chad Hobbs
John Gibson is the facility manager for United Producers, Inc. stockyards in Irvington, KY and also at Little York, IN. He solicits, bids on and ships cattle for those facilities. He has spent most of his life doing this and raising a herd on his cattle farm. He set down this past week to talk about the success of the Yellow Tag sale held recently and the state of the cattle market.
As was reported last week, around 1,200 head of cattle were sold at this special sale. Gibson said he felt it went great, averaging around a ten cent per pound premium over market prices. With fat cattle prices stagnant, this offered incentive for the extra steps that must be taken for producers’ feeder cattle to qualify for this special sale.
“The main focus of this program is for the small producers because we take those people who have ten to one hundred head that will get put in five different sizes that won’t make a semi load (if sold by themselves),” explained Gibson. “They’ve all had the same vaccinations and same weaning program and make load lots to ship.”
By comingling all the producers cattle in the larger load lots by weight, bigger buyers attend the sale than what would often be found at just a normal auction day. In fact, many of the cattle sold at the yellow tag sale were bought by farmer feeders to go to their feedlots in Iowa, Nebraska and Illinois.
The majority of these feeder cattle were between 400-800 pounds with several outliers. Farmer feeders will take those cattle and market their grain and silage “on the hoof” by using it to fatten these cattle out to about 1,400 pounds, which they then sell to packers as fat cattle.
“I think the market (for feeder cattle) is pretty good compared to the way that the fat cattle are selling,” stated Gibson when asked about the state of the current market. “I don’t think you can pencil profit in if you bought the feeder cattle now. You’re just hoping the market comes to you as far as what the fats are selling for.”
Gibson said that fats were selling for about $95 per hundred pounds last week. He gave a broad generalization to show the point. If you take the prices that were paid for feeder cattle, then multiply about 60-70 cents per pound of gain needed to reach 1,400 pounds for feed costs, a farmer feeder can quickly approach somewhere between $1,500 to $1,600 a head invested in a fat steer ready to sell for slaughter not even factoring freight or dead ones. With fats at $95, a feeder is looking at only getting $1,300 per head for the finished animal. The farmer feeders are losing right now with the current market where it is at.
Currently, UPI’s Irvington facility only has two Yellow Tag sales per year, but Gibson stated that they are more than likely going to add at least a third, if not a fourth sale to the yearly rotation. He said that the sales were set up for a January and June sale to attract farmers who have fall or spring calving rotations.
“It’s been really good for our producers and added value,” stated Gibson about adding more of these type sales. “There’s a lot of people it just doesn’t fit in for them good (Jan. or June) so any way we can help the producers get some added value out of their livestock we are going to try it.”
Gibson said that anyone interested in knowing more about the Yellow Tag Program; selling cattle at their regular Monday Auctions; or bred cows, slaughter cows and bull sales on the first Thursday of each month can give him a call at (270) 547-4021 for the office or on his cell at (812) 968-4097. Anyone looking to work a day or two a week at the stockyards can also give him a call.
This article will continue next week, as we continue to take a look at different aspects affecting the prices beef producers and consumers are receiving and paying, respectfully, along with a look at some of the impacts the pandemic has had on the meat industry from farm to table.