Video Sale and Market Breakdown with Troy Marshall

Whether you’re new to the business or have family ties going back generations, marketing insight and opportunities are vital to the continued success of any operation. But how can producers get good cattle in front of the right buyers? Video sales are one option that might be worth exploring. 

On this episode we invite you to take a seat and join the conversation as we chat with Troy Marshall, director of commercial industry relations at the American Angus Association, as he shares his perspective on two recent video sales, opportunities available via the AngusLink program and Genetic Merit Scorecard, where the national cowherd sits regarding expansion and much more.

We thank Westway Feed Products for their support of this episode!

Find more information to make Angus work for you in the Angus Beef Bulletin and ABB EXTRA. Make sure you're subscribed! Sign up here to the print Angus Beef Bulletin and the digital Angus Beef Bulletin EXTRA. Have questions or comments? We'd love to hear from you! Contact our team at abbeditorial@angus.org.

Transcript

Lynsey McAnally (00:02):
Angus at Work, a podcast for the profit-minded cattleman. Brought to you by the Angus Beef Bulletin, we have news and information on health, nutrition, marketing, genetics and management. So let's get to work, shall we? 

Hello and welcome back to Angus at Work. Whether you're new to the business or have family ties going back generations, marketing insight and opportunities are vital to the continued success of any operation. But how can producers get good cattle in front of the right buyers? Video sales are one option that might be worth exploring. I'm Lynsey McAnally and on today's episode we invite you to take a seat and join the conversation as we chat with Troy Marshall, director of commercial Industry relations at the American Angus Association, as he shares his perspective on two recent video sales opportunities available via the AngusLink program and Genetic Merit Scorecard, where the national cow herd sits regarding expansion and much more. So, let's dive in! 

Today's episode of Angus at Work is brought to you by Westway Feed Products. Westway Feed Products liquid supplements increase forge utilization when seasons cause forges to decline in value. Our products deliver effective and efficient nutrition to your herd. To learn more about the best way to raise beef, please call 800-800-7517 or visit westwayfeed.com. 

Welcome to Angus at Work, and today I'm here with Troy Marshall. Welcome, Troy!

Troy Marshall (01:59):
Thanks. Glad to be here.

Lynsey McAnally (02:01):
So I hear that you have been on an exciting adventure the last week or so and we are here today to hear a little bit more from you about some video sales and what you heard from producers out and about.

Troy Marshall (02:15):
Yeah, it's been an exciting two weeks. We had a western video sale in Reno and also the Superior sale in Snowbird, Utah. This last week between the two sales they sold over 450,000 head of feeder cattle. So one of the more active weeks we see. Those sales tend to be kind of the bellwether for the calf market going forward. A really stout week! All in all, the five-weight calves average about $3.30 on average. Their heifer mates were back about $2.95. So to put that in perspective, we're up anywhere 5 to 10% compared to a year ago. And at really historically high prices on all classes of cattle across the board. On some of those bigger yearling cattle, we saw the cost of those exceed $2,500 on some of those lots. So a lot of optimism in the market right now. Very strong prices overall.

Lynsey McAnally (03:16):
Awesome, that sounds amazing. That's quite a lot of cattle that were marketed last week, a very large number. So as far as expectations for what you saw and what that might mean for the market going forward, what's your perspective there?

Troy Marshall (03:35):
Yeah, we probably saw as much differentiation as we've seen despite the higher prices. The feeders or buyers are really looking for the right kind of cattle and I think the value of genetics is just going to continue to increase from that standpoint. One of the interesting things, too, was from a program standpoint. We kind of saw those prices maybe soften a little bit or didn't see as big a premiums as we've seen in the past on some of those programs, and I think that's just really kind of a supply and demand thing. But overall, as you'd expect, they still like the larger load lots. Angus cattle, black hide cattle, very much in demand. We probably saw as big a spread between black-hided calves and off-color that we've seen in a long time. And really, from a genetic standpoint, not surprising given the incentives of the marketplace. But the buyers are really looking for marbling and carcass weight. Those are the two biggest drivers in their equation.

Lynsey McAnally (04:38):
Awesome. That's a great perspective and I feel like it's always a good thing to know what those buyers are placing emphasis on regardless of whether you've been in the business for decades or you're the new kid on the block. So when we talk about AngusLink, speaking of new producers and those who might not be familiar with the program, can you tell us a little bit? If you had to give a 30-second elevator speech over what AngusLink is, what would you tell somebody?

Troy Marshall (05:05):
Yeah, Really AngusLink was created by the board of American Angus Association with just two primary goals and those were to put more dollars in the pockets of commercial cattlemen and to reward them for the investment that they're making in superior genetics. And so with that, we really have two programs with AngusLink. One is Angus Verified, which allows producers to differentiate their cattle. To qualify for that, they have to be a 100% Angus. And then the second program is the Genetic Merit Scorecard which differentiates those cattle even further. We give three scores for beef, grid and feedyard and it's kind of interesting. It's a great benchmarking tools as well. The way we score those animals is 100 is industry average, so anything above a hundred is better than the industry average and vice versa, and the scores go from 0 to 200. At those video sales on the screens, you would've seen the scores for all three of those traits being displayed as the cattle sell and it's been really exciting that we've seen about $18 million last year in premiums being paid out. For us, AngusLink enrollments were up significantly from a year ago in terms of the number of cattle enrolled and being sold. That's going to increase the premiums, but right now, early here through the summer and the early video sales, we're seeing those premiums be higher than a year ago, which is really exciting. So, I expect to approach $30 million in premiums being paid out to AngusLink enrollees this summer.

Lynsey McAnally (06:47):
Those numbers are really impressive to hear and I had on my notes here to ask about the benefits of AngusLink. I think that the program really speaks for itself when you talk about all of the premiums and the number of cattle that have been enrolled.

Troy Marshall (07:01):
Yeah, it's been really exciting. Not only just the premiums and dollars in this business, but also as we mentioned, it's a great benchmarking tool. One thing that's exciting for me is just watching a lot of the producers that have enrolled now for two or three years. It's really kind of given them a target and we've seen those cattle improve and their scores improve year after year. Just seeing that acceptance there. We all love this business and we all do things right, it's really about documenting what you do for the cattle, how they're managed and what kind of genetics that are there to get rewarded for it.

Lynsey McAnally (07:44):
Sure. I feel like it comes down to - if you're trying to differentiate between being a good producer and being a great producer - that documentation really can make a difference

Troy Marshall (07:56):
Reality is, we had reputation cattle always. We still have reputation cattle in the marketplace and that's very important, but the trouble with reputation is that it usually doesn't extend very far. You have two or three buyers that maybe know what your cattle will do and how good they are. That's a great thing and really what the AngusLink program is designed to do is to help producers document that so we can take reputation cattle and make it kind of a nationwide concept.

Lynsey McAnally (08:28):
I was kind of curious if you had spoken to anyone or if you had anybody come up to you during that trip that may not currently be enrolled but was either thinking about being enrolled or are trying to get other people enrolled in the program?

Troy Marshall (08:45):
Yeah, Lynsey, that's a great question and probably the most exciting thing to me about the AngusLink program right now is the amount of new interest we're generating. Partly it's because of the premiums and partly it's because we're starting to grow the program enough that we're getting to a critical mass standpoint. We had 174 lots sell between those two video sales this year, a little over 400,000 head. So we're getting to that point where people are recognizing the program and starting to see how those cattle are selling and that's generating a lot of interest from other producers. Partly there's a lot of producers out there that historically have not been part of a program for one reason or another. Like the NHTC, all natural-type programs maybe didn't fit into their marketing scenario and the AngusLink program gives them an opportunity to compete and differentiate their cattle at a really cost effective way and fairly simple.

(09:46):
That's one of the neat things about the Angus Link program and our partnership with IMI. Really, it's only the cost of age and source verification. So it's a $3.00 to $3.50 charge to participate in the program and that's mostly the cost of the ID. You have the opportunity to participate in NHTC, All Natural, CARE program if you'd like, but there really is no additional cost for doing the Scorecard or Angus Verified and it's really a simple process. Those producers just have to provide us their current bull battery with the registration numbers and we take it from there. Very simple enrollment process. And so we are seeing a lot of growth in the program, a lot of interest and the exciting thing is that about 50% of the people in the AngusLink program are first time enrollees. We're seeing more and more people coming into the program every day.

Lynsey McAnally (10:46):
That's a great sign for sure. I'm sure that makes your day when you see those numbers coming in.

Troy Marshall (10:50):
Very much. Yeah.

Lynsey McAnally (10:51):
Awesome. Well we had an exciting announcement here in the last week or so about $Maternal and I wanted to visit with you a little bit to see if you might mind explaining a little bit about what that data point is and about cattle that will be offered soon?

Troy Marshall (11:11):
As you know, I mentioned feedlot, grid and beef and they're very closely correlated to $B, $F and $G in terms of your herd bulls that you're using are the EPDs from the American Angus Association. With the new maternal score that we've added to the Scorecard, it is only for those cattle that are Angus Verified. We just don't have the cross breed adjustments in some of that for the maternal traits like we do for the terminal traits. But it's a neat program. We've had a lot of people that wanted to market their replacement females as either bred heifers or just replacement heifers and they just didn't have a way of really the maternal side of the equation. And so that's what $Maternal is. It's based off of $M or a maternal weaned calf value and additionally it gives the producers an idea of where the cattle rank from a mature size standpoint, from a milk production standpoint, which those are kind of interesting traits when we look at maternal because there is no right or wrong answer depending on your environment and what you're looking for. There are the other traits that go into that as well, like heifer pregnancy, docility, foot score and those kinds of things.

There's a lot of those and those are fun, too, because really the more fertile the better. There's not either, but it's I think going to give those producers a real opportunity marketing those replacement females a chance to differentiate their cattle and describe them for a broader market. And along with that, I think the timing is really good. Moisture conditions have improved around the country for the most part and with current prices we really haven't seen expansion kick off yet, but we're getting to that point where it's going to happen. So I think we'll see a lot more of these lead to Angus genetics being marketed as replacement females and the maternal score will help do that.

Lynsey McAnally (13:14):
Awesome. While you were on your trip, did you hear much from anyone as far as retention goes at this point or are people planning on retaining those females going into the fall?

Troy Marshall (13:26):
We're getting close. I think we're close to the tipping point, but when you look at heifers as a percent of replacements going into the feedyards, that's not really changed. Still kind of indicating we're in a liquidation phase. We have seen cull cows start to decline a little bit, but it's a slow time of the year and it's also pretty good moisture conditions around the country. We've seen that start to change in the last two to three weeks in some of the long-term forecasts. I definitely think we're close to expansion, but when you look at the numbers, we really haven't seen it yet. And I think when you look at the average age of the producer, interest rates, the value of these heifers right now? When you're looking at keeping a six weight heifer and it's going to cost you $1,800, you're pretty inclined to go ahead and let someone else own it. And so I think we will see expansion start, but at this point in time it really hasn't.

Lynsey McAnally (14:22):
I thought it was really interesting. I was talking to Will a couple weeks back, I guess it was the beginning of June and he mentioned that you haven't really seen a ton of expansion necessarily in Nebraska, but what he said he's seeing is kind of people culling that top and their older cows, and then retaining those females. So it's not necessarily expansion so much as it is capitalizing on those younger and newer genetics and hopefully stronger genetics. So I thought that was an interesting point from his perspective. We are seeing, I guess some herd retention from that standpoint, but not necessarily expansion of the herd.

Troy Marshall (15:01):
That's actually a really good point, Lynsey, you look back at the last liquidation phase and we had the drought in 2012 and then we started expanding about 2015 and you look at the percent CAB acceptance rate and those type of things. We saw a significant change in the industry as it got much better as we went into the next expansion phase. And I think we'll see the same thing this year. We have culled off our bottom-end cows as you mentioned. We're replacing them with better. We've seen the same thing with cull beef prices and that sort of thing too. Producers have looked at their bottom 20% and they've removed those and they're replacing them with top 20% cattle probably more so than any cattle cycle in the past. People realize that they want to breed back with quality in the value of quality. And so I really think one of the big signs is the next expansion or one of the trends that'll merge out of that is that we will see a real big jump in the overall quality of genetics in our industry. And couple that, too, with what's been happening on the beef-on-dairy side of things and we're in a very competitive environment, it's very exciting. But to remain competitive going forward, genetics are going to play a bigger, bigger role.

Lynsey McAnally (16:22):
And there are so many options out there. So having a way to distill down that data to something that's easily digested while you're sitting there looking at cattle, I think it just goes back to the importance of the Genetic Merit Scorecard and the AngusLink program overall.

Troy Marshall (16:40):
No, and you hit on a couple key points there. It really had to be something that would work at the speed of commerce the way we sell cattle. It had to be simple enough and yet it had to be accurate enough in terms of describing the cattle that it was meaningful. And that's what's really excited me is we've gone forward and that National Beef announcement this summer where they added the Genetic Merit Scorecard to their grid as well for the first time ever. And what we're seeing is those feeders is that they are really seeing the value of the scorecard. They knew the value of genetics, but this just gave them an objective, reliable way of describing the genetic merit for a pen a feeder cattle in a cost effective way. And so I'm really excited about the future of the AngusLink program and what it means for producers with superior genetics. I've always been a critic, I guess you'd say, of the commodity system and that the poor cattle tended to be subsidized by the better cattle, the better producers. And the AngusLink program is designed to hopefully change that a little bit.

Lynsey McAnally (17:45):
And it seems like with the numbers that are coming in and what we're seeing as far as the success of producers utilizing that program, it's well on its way. So as far as comments that you might've heard from either order buyers or feedyards regarding the Genetic Merit Scorecard, do you have any comments from that side of things?

Troy Marshall (18:04):
Well, I mentioned that briefly, too, about the beef-on-dairy side and interesting I think the beef-on-dairy revolution more than anything showed the value of genetics to the commercial cattle feeding industry. They were seeing cattle that they thought were very similar with closeouts as much as $600 difference. And those differences were based on the genetics of the cattle. And when you look at our inputs right now, whether it be feed, interest rates, all those things, and also the premiums for prime CAB and just quality grade in general and just the price we're receiving for pounds, the value of genetics has never been higher. And so feeders are getting really excited about this tool. And I kind of liken it to EPDs when you're buying a bull. When EPDs first came out, people questioned whether they worked, but today they wouldn't dream of purchasing a bull without EPDs. And I think within five to 10 years the vast majority of all cattle that are marketed will be sold with a Genetic Merit Scorecard or something similar.

Lynsey McAnally (19:16):
Okay, so we're kind leading into the end of our discussion, but as far as what your thoughts on advice for commercial cattlemen going into the fall, whether it's on their cow herd, marketing calves, thoughts on purchasing bulls as we head into the fall sales season, what would your advice be to that subset of producers?

Troy Marshall (19:38):
I think continue to do what you're doing and just work on documenting that so that the marketplace is aware of it and differentiating yourself in the marketplace is really becoming more and more important. I encourage everybody to take a really active role in marketing their calves. I think there's a lot of opportunity there. As we mentioned, genetics are increasing in importance. They've never been more valuable. They really are driving margins right now in our industry. And so I think as we look at going into this next cattle cycle, the quality of our bull battery and the bulls we're purchasing are going to be more important than ever. Now when you talk about overall demand for Angus cattle, obviously on the terminal traits, Angus is recognized as a leader from a marbling standpoint. And what we've seen with Certified Angus Beef and prime premiums the last 18 to 24 months, it's really been outstanding.

(20:38):
And so we're producing the right kind of cattle and not only is it from a quality standpoint, but also the efficiency of production. And when you look at growth from comparing either carcass weight or post weaning gain, Angus is the recognized leader in our industry now for those traits as well. And then when you look at the expansion side of things and where Angus has always been kind of the mother cow of the industry, our advantages in calving and just mothering ability, all those little things, teat, utter quality, all those things there too. I think the diversity of our breed and one of our greatest strengths is that we really have the opportunity, whether you're looking at maternal or terminal lines or balanced trait approach standpoint, to put those genetics together in a package that not only produces the product super efficiently but produces the right kind of product that's compositionally right. And the exciting thing for me is I look at the next cattle cycle on where we're going. Angus, of course, is a recognized leader with great market share, but I expect that market share to increase through this next cattle cycle and the next expansion phase just because the market signals that are being sent and the advantages that Angus has.

Lynsey McAnally (21:59):
I mean, I'll be honest with you, just hearing the sheer number of cattle that were marketed in those video sales, that is just astounding to me.

Troy Marshall (22:10):
It is amazing that just those three sales somewhere close to a million head.

Lynsey McAnally (22:15):
We talk about the role that technology has in marketing and the ability to get cattle out in front of people and just having the opportunity for these producers to market their cattle in that sort of system. To me, and granted I'm fairly new to this side of things, but that seems like it just gives a world of opportunities to people who may not have ever had the chance to get their cattle in front of the right people.

Troy Marshall (22:41):
Your point I think is a great one is getting the right cattle in front of the right people. I really truly believe that the two things we're missing maybe as much as anything in the marketing is genetics as a risk management tool and managing your risk. And that's what those video sales do as well. And then the second part of that is the value of uniformity and consistency. And I think producers, too, have a real opportunity to increase their market value and just acceptance by those segments down the line by having a breeding program with specific objectives and doing everything they can to reduce the amount of variability in those calves and in that calf crowd.

Lynsey McAnally (23:30):
One of the things that I find so impressive about Angus producers in particular is their ability to find a way to market their cattle to the best of their ability regardless of how that takes place. So whether that is marketing cattle at a local feeder calf sale and getting the word out to people in that pool of buyers that they're going to have those calves there. Or I always go back to the Saluda County folks and how amazing it is that they are partnering smaller producers together to create those lot loads. I think there's so many things that are happening within the industry, just innovative producers finding ways to market those calves and I feel like this is yet another way to do that.

Troy Marshall (24:18):
Well, and I like your point there too. If you have 500 head of calves, you've got every branded program in the nation knocking down your door and you can actually sell pretty average calves and sell them pretty high. The ones who really are benefiting are the size, the smaller producers that have good cattle but maybe haven't been able to market them effectively. And that's what the Board sees and all these things that we're seeing develop is. Yes, the guys that have 500 head and they're signing up love to have them and they're doing well, but they were going to do pretty well anyway. We're only offering $3.00 to $4.00. It's the guy that had a hundred head that maybe would've sold them at $3.10 but instead sold them at $3.35. They're the ones we really helped.

Lynsey McAnally (25:12):
Creating those opportunities for producers feels like its one of the great things that the Association has had a hand in is putting those opportunities out there so that we can hopefully provide producers with even more opportunities to market those lot loads.

Troy Marshall (25:29):
Well, when you see those young people and you've maybe given them an opportunity to expand or stay on the ground and do that, and then also the older gentleman that's spent a lifetime and you kind of help him get rewarded a little bit for that, it's a pretty cool feeling, and this is lot my elevator speech stuff when you get to it, but when you look at the other segments of the industry, the packing industry sells the product on a differentiated value added basis every day with quality grade and all the branded programs that are out there that have created that the feeder not only gets to capture the value of feed efficiency and post weaning gain, but he sells 60 to 80% of them on a grid. So he's rewarded for value. The seed stock guys, we differentiate our product and we sell 'em from $4,000 to a $100,000 on a given bull sale.

(26:28):
And yet the cow-calf guy who runs the factory, that's the heart and soul of our business. They were the one that was left out of the value-based marketing revolution. And I really truly believe that what we're trying to do is transform the way feeder cattle are sold and put genetic merit into the pricing equation of feeder cattle. And I think if we do that, we go a long ways to improve an overall beef demand and profitability of those producers and keeping them on the land. And that's a cool thing. It's exciting to go to work every day and you feel like you're doing a good job.

Lynsey McAnally (27:01):
Alright, awesome. Troy, I have thoroughly enjoyed chatting with you, but one of the things we try to do at the end of Angus at Work is ask something good that's going on in your life. There's enough bad stuff out there, right? So I'm going to give you the opportunity to share one good thing that you see going on in the world.

Troy Marshall (27:20):
Oh, that's a good question, Lynsey. I guess the biggest thing for me is just that it really is, I think an exciting time in the cattle business with tremendous opportunities. And we have historically tight supplies with historically strong demand, and I think the next three to four years are going to be some of the most profitable that we've seen maybe in the last 20 or 30 years in the cattle industry.

Lynsey McAnally (27:43):
Awesome. Thank you so much for joining us today. Thank you. Appreciate it. Listeners, for more information on making Angus work for you, check out the Angus Beef Bulletin and the Angus Beef Bulletin EXTRA. You can subscribe to both publications in the show notes. If you have questions or comments, let us know at ABBeditorial@angus.org and we would appreciate it if you would leave us a review on Apple Podcast and share this episode with any other profit-minded cattleman. Thanks for listening. This has been Angus at Work!