Call it voodoo economics or lucky happenstance, but during the last decade private treaty bull sales in the yards of Denver's National Western Stock Show - usually a fair barometer of the bull season to follow - predicted sub-cyclical peaks in the calf market 80% of the time (Figure 1).
In other words, most times when bulls in the Denver yards sold for a higher average than the trough preceding it, calf prices ended up doing the same. Rather than wait for calves to hit a new peak and then fuel the market, it seems that informed optimism weighs heavier in genetic buying decisions than revenues generated the previous year.
Although there's plenty of hide left to burn in 2000, this layman's index likely will prove right again this year. Bulls in the Denver yards averaged $3,287 this year, the highest since 1996. At the same time, most economists predict great prices for calves sniffing their first grass this year.
As an example, Cattle-Fax expects all classes of cattle to average above 1999 levels. Specifically, they peg average calf prices (500 lbs.) at $95/cwt., average feeder prices (750 lbs.) at $81/cwt., and average fed cattle prices at $69/cwt. Those would be the loftiest levels since 1994.
The point is: while supply and demand will always bend and shape the market, commercial producers themselves are still the ones who drive anticipation and reaction to the ebb and flow. Subconsciously or not, they have an uncanny ability to see a new window just as it is ready to open.
Ironically, as the industry creeps into the electronic age, the above reality should add even more value to the face-to-face interchange of information at places like Denver. Make no mistake, the seedstock producers who make the annual trek to the Denver yards go for the education as much as anything.
"When you go to Denver, you'd better have an open mind because if you walk away without learning something, you haven't done your job," says David Geffert of Geffert Herefords at Reedsburg, WI. He and his family have used the yard show as their annual production sale since 1983.
"When I leave here I know what the Red Angus, Angus and Hereford breeds (which Geffert raises) are doing. I can come here and have my finger on the pulse of the whole industry," says Geffert.
Likewise, Dean Churchill of Rocking Arrow Charolais at Valentine, NE, explains, "You have an opportunity to evaluate bloodlines and different breeders' cattle in somewhat of a volume situation." Plus, he says, you find perspectives that geography wouldn't allow otherwise. "We see people that come out of Washington, Idaho and Canada that we'll never see anywhere else we go."
Arguably, commercially-rooted venues like the Denver yards have lost some of their commercial appeal over the years. This is due to declining producer numbers and the fact that fierce competition means some of the bulls are priced as breeder bulls rather than range rovers.
"In the early years, I think we had more commercially-oriented people come through. Now, I think we see more breeder-oriented people looking for their next herd sire," says Rod Peterson of Pukwana, SD. His family's L7 Bar Limousin ranch has brought bulls to the Denver yards for 25 years.
Rather than shop for individual bulls per se, Peterson says commercial producers are more likely to use the show as a place to compare breeds and breeding programs. After all, the demographic melting pot an exhibition like Denver represents is really a micro-reflection of the industry transition itself.
"It used to be you'd talk to a lot of guys who had 100 or 200 cows at home. Now, it's more like 500 or 1,000 or more," he explains. With that in mind, producers coming through these days spend as much time talking about performance as they do studying skeletal structure and muscle.
"Sales in the yards are a year-to-year deal. The market is good now, and a lot of people are looking to buy bulls. Other years they don't," says Peterson. Just like the subsequent calf market the bull sale here seems to gauge.