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What Bull Buyers Seek

December 4, 2012

The Northeast Arkansas Angus Association (NEAAA) recently had its fall sale and there were 54 bulls listed in the catalog.  By combining the catalog data with selling price for the bulls that sold and a little statistical computing, discover what buyers were looking for in their bull purchase.

Today’s bull buyer has a lengthy list of valuable tools to aide with choosing a bull:

  • age
  • sire and dam
  • EPD’s for calving ease, docility, stay-ability, birth weight, weaning weight, yearling weight, and milk
  • EPD’s for carcass traits such as weight, marbling, ribeye area, and back fat thickness
  • index EPD’s such as value ($) based EPD’s
  • efficiency related EPD’s such as residual average daily gain or an energy maintenance type EPD

Sometimes, production information for the bull is available

  • weight gain, adjusted weaning and yearling weights
  • scrotal circumference
  • frame size
  • index of the bull’s performance relative to other bulls at a common testing facility
  • feed conversion

Without set goals for the type of offspring marketed (breeding or terminal), when offspring will be marketed (weaning, yearling, or carcass), and how offspring will be marketed (retained, commodity auction, or premium auction), these tools turn into information overload and the system, intended to make bull purchasing more informed, shuts down.

To gain some insight into what buyers were looking for among the bulls offered at the NEAAA sale, examine the simple correlations.  A correlation is a measure of how strongly two things are related.  They can be positive (meaning as one increases the other increases) or negative (as one increases, the other decreases).  No correlation would be 0, and perfect correlation would be either 1 or -1.  The primary interest is what was correlated with sale price (assuming buyers compete more and therefore pay more for bulls that exhibit characteristics with greater demand).  The correlation analysis with sale price included age, weight, and catalog EPD data for the bull being sold and the EPD’s of the bull’s sire.  In addition, each bull’s sire was categorized into 1 of 4 popularity ranks based on the amount of records that contributed to maternal and carcass EPD’s. A rank of 1 would be for a bull that was essentially sired by an ‘unproven’ bull.  A rank of 4 would be for a bull that had a large number of progeny records and high accuracy EPD’s.  A rank 4 would be considered ‘proven’ and ‘well-recognized’.

Sale price had no relationship with bull’s age at time of sale.  This was likely due to sale requirements for bull minimal age and most being less than 2 years of age.  Bull weight was positively correlated with sale price; therefore, buyers paid more for heavier bulls.  Buyers paid less for bulls with higher birth weight EPD.  Weaning weight EPD was not related to sale price, but yearling EPD was positively correlated with sale price.   This suggests that buyers were interested in a lot of post-weaning growth potential.  There were also $ index EPD’s available and similar to weaning and yearling EPD’s, the value index at weaning ($W) was not as important to buyers as the value of post-weaning performance ($F).

The EPD that appeared to be of greatest importance was MILK as it exhibited the strongest relationship with sale price.  This suggests buyers were looking for sires that could increase the weight of calves through the heifers they produced.  This concept makes sense given the low US cattle inventory and economic signals to expand the cow herd.  However, with high cost of production and a wealth of popular press articles focusing on ‘herd efficiency’, it was interesting to note that traits correlated with increased maintenance requirement (weight and milk production) were positively correlated with sale price.

As mentioned earlier, the EPD’s of the sire for each bull being offered for sale was included in the correlation evaluation.  Sire EPD’s were included to examine any carcass related traits with price as many bulls offered for sale did not have interim EPD’s for carcass traits.  One assumption here is that the bull’s carcass traits would be correlated with his sire’s carcass traits as they were with birth, weaning, yearling, and milk EPD’s (which had a correlation of 0.44, 0.68, 0.70, and 0.88, respectively).  The only significant carcass related trait between a bull’s selling price and his sire’s EPD was back fat.  Bulls from sires that had a greater back fat EPD had a reduced selling price compared to bulls from sires that had a lesser back fat EPD (aka, negative correlation).  Considering the relationship with yearling weight EPD and back fat EPD, it appears that buyers were spending more for post weaning growth but not necessarily emphasizing carcass quality grade characteristics but lean characteristics.

The final correlation examined was the popularity ranking for the sire of each bull offered for sale.  Among all correlations, this had the strongest relationship with price (0.55).  Buyers paid more for bulls that were ‘proven or well-recognized’.

While the correlation was great for examining simple relationships, it doesn’t quite reveal what information, to the buyer, appeared to be of greatest overall importance or the dollar value of that information.  To get this, more analysis was involved.  Since bull rank exhibited the strongest correlation, the first analysis examined the value of this relationship.  Bulls that were sired from ‘well-recognized’ sires (rank 4) were worth $842 more than ‘unproven’ sires (rank 1) and for every 100 pound increase in weight, the sale price increased by $133.

Sire rank was a grouping category that represented multiple characteristics.  Based on the correlation of sire rank with EPD’s, sires that were ranked numerically higher represented lesser birth weight, greater yearling weight, greater weaning weight for daughters offspring (milk EPD), greater ribeye area, less back fat,  and greater yield grade.  The well-recognized sires had similar EPD’s for marbling (quality grade) as lesser known sires.

The second analysis focused more on the value placed on EPD’s instead of sire rank, for every 1 pound increase in birth weight, bull price decreased $186, and for every 2 lb increase in milk EPD, sale price increased $98.  As mentioned earlier, the bulls that were ‘well-recognized’ were the same bulls that had lesser birth weights and greater milk.  Therefore, it is difficult to ascertain if buyers were paying more for traits or sire name recognition.

As an overall synopsis, bull buyers paid more for heavier bulls that would be expected to produce calves with greater growth potential either through milk production of daughters or post-weaning weight gain.  However, these characteristics only explained 46 to 52% of the difference in price.  The unexplainable (48 to 54%) portion lies within individual goals of the bull buyer, and at this point the discussion regarding the unexplainable difference in price is only an assumption.  Factors that might attribute to unexplainable differences in price include purpose of the buyer (seedstock clean-up bull or commercial herd bull), reputation of the seller, bull to buyer ratio, and buyer goals (calving ease, growth, maternal, or carcass traits).  A clearer understanding of the unexplainable would require understanding not only the different traits among bulls offered but also the different intentions of buyers, because what bull buyers seek is not all the same, is not restricted to traits, and influences price.

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