Market Closeout
How tools for commercial producers can help capture more value.
March 5, 2025
Record prices and historically high profit projections for cow-calf producers are things we should all celebrate! This is even more exciting news when we consider this market has been more demand-driven than supply-driven at this point. During the CattleFax Outlook Seminar, convened as part of CattleCon 2025 in San Antonio, Texas, producers were told the improvement in demand has added $800 to the average price of a fed animal.
As cattlemen who produce and utilize Angus genetics, you can take a lot of pride in the fact beef demand has rebounded so strongly. We have greatly reduced the number of unsatisfactory eating experiences. The improvement in beef demand tracks right along with the improvement we have seen in quality grade, and consumers have voted decisively with their dollars.
If Select and low-Choice were stocks, you would be advising your investment advisor to dump them because the market growth is in Certified Angus Beef® (CAB®) and Prime product. These are growth stocks that are enjoying solid margins and growing market share. As Angus-influence supporters, we know Angus and quality are synonymous with each other.
Yet, with all of this good news, we would be remiss if we didn’t mention some major problems in our industry and the opportunities we have to address them. Commodity pricing does not work in a quality-driven or differentiated marketplace. Nevertheless, that was how our marketing system evolved.
Genetics have never been worth as much as they are today. We recognize genetics have become the single greatest driver of profitability. — Troy Marshall
Every segment of our business realizes a commodity system forces the good cattle to subsidize the poorer cattle. A commodity marketplace impedes information and feedback, and it fails to send appropriate market signals to incentivize producers. I could wax eloquently for this entire article about the failures and frustrations caused by a commodity-based pricing system, but it is universally understood and accepted that we can do better.
The power of genetics
With that said, there are a lot of aspects of our marketing system that do a tremendous job. Our system does a great job of allocating supply and is relatively efficient in aggregating groups of cattle and reducing some of the variation that we see. Competitive bidding and the professional marketing entities in our system are great forms of price discovery.
Genetics have never been worth as much as they are today. We recognize genetics have become the single greatest driver of profitability. Yet, we largely still sell calves on a commodity basis. It isn’t because buyers don’t realize there is a difference; it is simply they had no reliable, objective and verifiable way to describe those differences.
The Genetic Merit Scorecard (GMS®) is the missing link, and it’s the piece of the puzzle that needed to be filled in. The GMS gives buyers the ability to buy with confidence — similar to what expected progeny differences (EPDs) did for buying bulls, grids did for selling cattle, and branded beef did for consumers.
It provides buyers with the information they need, and it supplies a means for value to be created and information exchanged. Ironically, we have cattle feeders looking for the GMS, we have packers adding it to grids, and we are seeing historically high premiums for cattle enrolled in the AngusLinkSM program. Even with that continued growth, we are seeing more demand than supply.
Perhaps, the most unique aspect of the GMS is that, unlike other marketing programs, it is not based on scarcity. The more cattle that are enrolled, the higher the premiums trend as more buyers are able to access and view the results.
Perhaps, the most unique aspect of the GMS is that, unlike other marketing programs, it is not based on scarcity. — Troy Marshall
Historic growth in enrollment the last two years still leaves the program far short of reaching widespread industry acceptance. The question remains: Why are there not 15 million cattle enrolled in the program? It is a low-risk, low-cost solution that doesn’t require a lot of effort on the part of producers. Anyone who knows what bulls they have turned out, and the length of their calving season, has all the information needed to enroll.
The biggest impediment is simply a lack of urgency, as well as tradition. Prices are good, so we don’t feel a burning need to change.
We are talking about transforming, if not revolutionizing, the way feeder cattle are marketed! As a result, there has been some hesitancy. It almost sounds too good to be true. The bottom line is that the return on investment with the program is exceptional, and it helps producers in benchmarking their operation with the industry as a whole.
It is an exciting time for AngusLink! We are no longer just a good idea. We are having an influence on the industry. Despite high prices and tight numbers, we are expecting enrollments to continue to grow. Producers several years ago were taking a wait-and-see attitude to see if AngusLink was going to succeed, but today the conversation revolves around how they can get started to avoid being left behind. For all those reasons and more, it is an exciting time for AngusLink.
Angus Beef Bulletin EXTRA, Vol. 17, No. 3-A
Topics: EPDs , Genetics , Marketing , Selection
Publication: Angus Beef Bulletin
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