For most of us, 2014 is still a memory that we had hoped to relive. So many times saying “We’ll never see these prices again”and yet, here we are again saying “We’ll never see these prices again.” I’llremind you to never say never. Video sales are on my mind right now and over the next eight weeks we will see new records. This market is running right now.
Market volatility is a huge factor, more so now than ever. We need to ready ourselves for huge upswings and, unfortunately, huge downswings. The memory of 2015 is still vivid as well. We see these swings in the stock market every single day. Try owning some Tesla stock and then watch Elon Musk’s twitter feed next to his stock price. I tell you this from experience. Buy their stock and then go buy some Pepto Bismolbecause you’re going to need it!
I wholeheartedly feel that we will continue to see huge swings in the marketplace. Computers are programmed to chase good news and dump at the first bad signal. It comes down to algorithms. The problemwith this, or advantage in their case, is that computers don’t have emotion. As cattlemen, we manage on a lot ofemotion, sometimes even when the answer is obvious.
It’sbaseball season and our fieldman Jared Patterson is always preaching base hits. Base hits score runs too. We don’t always have to hit a home run.Keep control of all the inputs you can and help yourself with each base hit. Algorithms support more home runs and strikeouts than they do base hits.
Every ag newsfeed, including ours, is filled with market snapshots. It’s clearly a trajectory that favors the cow-calf and feeding sectors,but itcouldn’t have come soon enough. Let’s be honest with ourselves, the last few years haven’t been easy for those of us not in the packing sector. The national culling numbers are averaging around 13.5%. Culling has continued in 2023. We are already past the national cowherd numbers represented in 2014 and have been for almost a year. Couple that with the tough spring that much of the West faced, where I consistentlyhad cattlemen telling me they experienced death loss of 15-40% and the numbers justwon’t be there to support restocking with that many fewer calves to market.
I fully believe this market run will be more withstanding. Retention and rebuilding of the nation’s cowherd isn’t there to support a stop in this market, and I think interest rates and feed costs are mostly to blame.Nearly every single input is higher than it was in 2014. Couple this with a prime interest rate that is 5% higher today than in 2014, and debt loads are simply higher. I feel cattlemen will continue to sell heifer calves this summer and fall to offset a smaller calf crop and higher input costs. For example, since 2014, Americans have added over $100 billion just in credit card debt alone. Most credit linesare now over 9% and interest is a major component in management decisions. It’s not been a favorable economic landscape, and we’ll see how the next 17 months shape up as America gets ready for the next election. I think it’s going to be hard to see the difference between D.C. and Hollywood. How that affects us in ag is yet to be seen.
There are a lot of things we can be negative about, but I encourage you to do all you can to set yourself up for the next year. Be diligent with your dollars and focus on the base hits that you can get. The western U.S. is awfully green right now and watching cows and calves on the gain is a beautiful thing. Push the needle forward and set yourself up for the future. We’ve got a couple good years ahead.Comparing 2014 to 2023, the similarity is a small cowherd and high prices. Everything else is vastly different, including our attitudes. There are simply too many differences, but what we can do is use the history to make decisions for the future. Please be safe over the holiday week as we celebrate the birthday of this great country! — LOGAN IPSEN
