From Our Side of the Fence

EMCC Owner/Partner

Sometimes things just don’t make sense. Take for example Friday’s cattle market. Fat cattle at our auction and all across the west traded at $103, while at the same time the salvage value of good slaughter bulls in Bowling Green was $103 to $108. Culling old breeding bulls by the pound sell higher than fat cattle? It’s not because bulls are too high.

Also Friday in western Kansas; 63 steers averaging 1376 lb were “stolen” at $101. These steers with a cost of gain of only $.76 nets $920.14 per head after the feed bill is taken out. At the same time at the auction in Bowling Green, most packages of mid 6 weight steers netted over $920 and a full load of back grounded heifers 674 at $1.49 gross at $1004. 6 weight feeder cattle higher than 1376 lb fats ? There’s a head scratcher.

I’m going to admit I don’t know what the hell is really going on – I don’t think anyone really does. But I think it is important that we at some point need to stop, take a breath look around and think. Having done some thinking; I’m going to call Bull-[baloney] on the last 6 months. Amazingly after having done so I’m becoming cautiously optimistic.

Fake meat, green new deal cow haters, packer’s blatant price gouging and predatory purchasing (aka stealing), negative interest rates in Europe, global warming, and now presidential impeachment due to Trump derangement syndrome (it’s real).

It’s easy to get lost and discouraged with the information and disinformation (aka Bull-[baloney]) swirling around us like a hurricane. I read somewhere “information swarms us, comforts us, and unsettles us”... and I would add; confuses us.

I’m beginning to think that the powers that be like it that way; wanting us confused and divided... especially divided. Divided we are weak, together we are strong. The silver lining to the Tyson plant fire is finally when faced with extinction, all segments of the cattle business have seemingly finally come together. Even some of the defenders of the packing industry have realized this time the packer greed is different.

So in this time of confusion and disheartening economic times for agriculture what can we hold on to as the truth? These are some of the reasons why I’m becoming cautiously optimistic.

• Historically there has never been a better time and never a better place to live than now in this great nation.
• Although it may be difficult to believe, the tide of overwhelming political corruption is turning and the white hats are winning. The Washington, DC politicians making the most noise causing the most trouble have the most to hide and therefore the most to lose. They are desperate, but they cannot stop what is coming.
• Beef is the preferred and coveted protein for many societies and America’s corn fed beef is recognized as the world’s best.
• McDonald’s is on the fake meat wagon now. Can you believe these big companies and the media have actually convinced a bunch of people to believe they want to eat fake meat?... now that’s Bull-[baloney].
• African Swine Fever is a true global pandemic and is in the process of killing at least 70% of the world’s hogs. Removing this cheap, plentiful protein source will in the long run open the door to many new markets for American beef. Although the media seems to be ignoring the most important food story of this century, global protein supply shortages and prices will become an issue in 2020.
• As reported here months ago, alternative plant based proteins (aka fake meat) and in a statement, Impossible Burger Inc. revealed their real market emphasis will be China. Still a future problem here.
• Cargill is advertising for truckers willing to drive a new route to California. I heard this myself on a radio advertisement. Why? I believe Cargill is gearing up to export meat to Asia via our California ports.
• We only have one problem to solve. The only obstacle to prosperity for beef producers is the unbridled greed of the packing industry. We solve this, our lives get better.
• When governments print money to pay bills it works for a while, but it never ends well.
• Abundant pastures and feed allow our cattle to grow with minimal expense.
• Finally, last week’s USDA cattle on feed report for the first time since December of 2016 signaled a slight down tick in the total number of cattle on feed. It also showed an 8% increase in 2019 heifer slaughter over the previous year. Cow kill 11% over year ago levels, which was another 11% over the 2017 mark. In short, the cattle cycle has/is turning and the cow herd is contracting.

Last month I made a list of options we have with option #9 being “Quit”. For now let’s replace option #9 with this final thought.

So yes, apparently optimism is eternal for cattleman. Sooo, let’s take this opportunity to keep thinking and for a minute let’s all think about this... the light cattle that are sold now will be harvested in a year. As I write this segment, October 2020 fed cattle contract is trading at a mere $108. I’m wondering why I should even buy any cattle because for the cattle to make any money, fed cattle will need to be a lot higher or calves will need to be bought a lot cheaper or both.

With a few good things starting to happen and a very positive megatrend theoretically by end of next year, that October contract could be $15 cwt to $30 cwt higher. Now my editor would never let me make a recommendation as risky as the CME, but on the other hand if you happen to have a little extra money I would rather “invest” in 2020 October live cattle than the Dow Jones Industrials. In my mind, my little October contract is my way of calling Bull-[Baloney] and pushing back by actually doing something ... even if it turns out to be wrong, I can feel like I’m doing something rather than only being done to.

Let me wrap things up with a few thoughts as examples of evidence that things are setting up for a positive turn. A recent article I’ve read described how all the donkeys in Pakistan are being slaughtered. This donkey meat was exported to China. I’m not sure how many donkeys are or were in Pakistan, but as the Chinese reach further into the world protein, their prowling will become undeniable and then public.

Have you ever seen pictures of store shelves on the coast right after the government announces the expected course of an incoming hurricane? Secondly, there is now backchannel confirmation that American beef (much of it from the Dairy side) is now ramping up, beginning a potentially massive exportation to China.

Just for perspective and a little context, let’s think about these numbers. For the week of 9-21-19, the USDA said that the beef slaughter was 658,000 head with average live weight at 1346 and dressed weight at 817 pounds, making for 536 million pounds of beef production. As of 2017 there are 1,409,517,397 Chinese. Hypothetically, if they all eat only 1 quarter pounder will be 352,379,345 lbs. of beef, or stated another way, it would take nearly two thirds of our total national beef production to feed the population one small quarter pound patty… and if they all wanted a second quarter pound patty for the week we couldn’t fulfill the order.

The Chinese can eat more than we produce... easily. Obviously, they will source proteins from all over the globe. But with their own protein production compromised by disease, proteins worldwide are seeing increased demand.
Where are the journalists and the news stories? The bottom line is we are being lied to because a lie of omission is still a lie. The biggest food story of our lifetime and no one knows....

Except readers of The Cattleman’s Advocate!

Finally a peek at next month’s article; I’m beginning to believe that our industry’s salvation could be found inside the radical environmental movement.

That’s all for this month. I’ll see you at the auction.