If you want to make money buying and selling cattle, you must learn how the market operates. The major determining forces of price in the cattle market are season and cattle classes. You must equip yourself with knowledge about the cattle classes to enable you to make smart purchasing and selling decisions. There is great potential of earning a desirable income buying and selling cattle, but you can only achieve this through informed decisions.
Learn cattle classes. Cattle prices are mainly determined by their classes and sex. In order to trade at the best prices, you must learn the differences. Traditionally a pregnant heifer sells at a higher price than a cow with a calf. During fall in the South, 500-pound calves are sold at the same amount as 400-pound calves per head; thus you can get 100 pounds of calf at no cost. In the North, you can sell heavy calves at a higher price per pound than lighter calves during fall. During the herd-building period of the cattle market, heavy heifers, lightweight heifers and bred heifers sell at the same price per pound, but feedlot cattle sell at a hundred dollars higher than cattle that graze on open land.
Trade on real market prices. If you want to make money in the cattle market, you must ignore estimates of future price direction. Transaction decisions based on presumptions about future prices are likely to go wrong. Note that what matters is the price at the particular time you are in the market.
Discipline yourself. Make it a standard rule to always sell cattle that are priced too high and buy those that are priced too low in the market. This way you can take advantage of the commonly mis-priced cattle in the market and get the best deals.
Establish your feedlot’s cost of production. Calculate the expenses you incur for the feedlot so that you can gauge the viability of the price and value of cattle in the market. If the market price exceeds the feedlot’s cost of production, you can make a significant amount of money.
Stay prepared. The market can be unpredictable, and it is important for you to anticipate market fluctuations. A management-intensive program that includes frequent sorting and weighing of cattle will enable you to benefit from market opportunities that arise. On the other hand, cash flow and a money reserve out of the cattle business will enable you to stay prepared for any hitch in the market.