I had a visit with a client in Nebraska today about the UBER-CRITICAL concept of "inversion".  He had a set of 8-weight heifers that he sold, and was fretting about replacing profitably.  He was right to worry.  The 8-weight heifers netted right at $91.00 per hundred.  Here's the problem:  his close-out cost of gain on those heifers was right at $0.96 per pound.

Warning!  Danger!  Red Alert!  All hands to Battlestations!

Why do I say that?  The sell price per hundred of the heifers is LESS than their cost of gain.  91 versus 96.  See that?   This is a DEAD giveaway that my client held those heifers too long.  When your cost of gain is higher than your sell price, it INVERTS the market underneath you as you are trying to buy back replacements.  Here's what I mean:

If I sell 825# heifers at $91.00 and my cost of gain on those heifers was $0.96, then I can pay a MAXIMUM of:

$90.00 for a seven-weight
$89.00 for a six-weight
$87.75 for a five-weight
$85.50 for a four-weight
$82.25 for a three-weight

See how the maximum prices DECREASE as the weight goes DOWN?  That's upsidedown, isn't it?  You betcha.  Silver-tongued blowhards (like myself) use the word "Inverted".  Inversion sucks.  Don't get inverted.  You need to be constantly addressing what you have in inventory AND constantly tracking running gain costs.  If you have a set of critters for which the gain cost and market price are converging - DUDE, GET RID OF THE CATTLE. 

Remember my mantra:

You don't make money in the cattle business by putting weight on cattle.  No, sir.  You make money in the cattle business by knowing when NOT to put weight on cattle.  Amen and alleluia.

Forecasters are killing the North American Cattle Industry.
"Global warming" is a complete fraud designed to advance the cause of socialism and enslave humanity.
Abortion is the murder of an innocent human being and is never justified under any circumstance whatsoever.
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