Each year cow-calf producers must decide what marketing route to use to sell their weaned calves. For producers that do not follow the cattle market all year long, evaluating marketing options can be challenging. The three primary channels beef producers have to market their calves are local sale barns, electronic auctions, and direct trades. The cattle market is dynamic, so it is important to reevaluate these options continuously. This article will discuss the advantages and disadvantages of each of these marketing options.

Local Sale Barns. Marketing calves through a local sale barn is often the most rapid and convenient method for selling cattle. The process of bidding creates price discovery in that market, however local market conditions typically prevail. The size of the local sale and number of buyers present are important considerations. Research conducted at livestock auctions in Arkansas showed that number of order buyers present can significantly influence the average selling price of cattle. In general, the more buyers that are present to bid on the cattle the lower the chance is of selling cattle for less than what they are worth in the broader market. This was especially true if the number of order buyers present was less than about 15 in the Arkansas study. If a producer usually sells cattle through an auction barn, prices from the local auction market should be compared to other auction locations. When comparing one market to another, the price differentials must offset the expected difference in transportation, shrinkage, and marketing cost.

Electronic Auctions. Electronic auctions include satellite video auctions and Internet auctions. Since the late 1980’s video cattle auctions have drastically increased in popularity. This marketing avenue requires the video taping of the cattle offered for sale and the preparation of a description of the cattle for the sales catalog. Internet auctions work in the same manner, but may not include a video or photos. One of the primary advantages of marketing cattle electronically is the total number of buyers viewing the cattle. Electronic auctions with more than 500 buyers are not uncommon. Electronic sales create price discovery across a broad market because the cattle are presented across many satellite downlink sites or over the Internet. Generally electronic sales are a cash forward contract since cattle are sold for future delivery, and cattle are sold F.O.B. the ranch or the scales designated by the seller. Compared to regional auctions, electronic auctions often reduce overall transportation costs because the cattle are shipped directly from the seller’s location to the buyer’s location.

Direct Trades. Direct trades, often referred to as “country trade,” can either be immediate cash sales or forward contracts for future delivery. One of the primary advantages of direct trades is the development of a personal relationship with a buyer that may allow for reputation sales for good cattle. At the same time, there is no true price discovery so the pricing is based on the buyer’s expectations alone. Therefore, the seller of the cattle is always at risk of selling below the market. If a producer typically sells cattle directly to a buyer, it is important to make sure the buyer is offering a competitive price by checking market information. To make a fair price comparison it is necessary to account for all marketing costs including transportation, shrinkage, and marketing fees.

Other Considerations. In order to make good marketing decisions, producers must have thorough knowledge of the calf market. Those cattle producers that understand seasonal cattle prices, the cattle cycle, and current market conditions are best equipped to make the right marketing decisions for their cattle. Uniformity of sex, weight, and hide color can improve the marketability of a group of cattle. Additionally, any information regarding the past performance and carcass characteristics of cattle from the same ranch or genetic pool should be presented to the buyers.