From Our Side of the Fence

EMCC Owner/Partner

Good News
So far my 2020 has been filled with good news and what a difference a new year can make. A friend told me that a year ago this week we were blasted by a winter storm. That first night it was -24° and Schyler and I left the house at 2 a.m. to make sure all the cattle had found their way to shelter in the windbreaks and woods. Without a doubt, last winter was for a lot of reasons the worst winter in the cattle business I’ve ever had. Kinda makes this little dab of mud we’re dealing with now look like spring vacation on the beach. I know we’ve got a way to go, but irregardless of what the rodent’s shadow says I’m going to officially call for an early spring. When you read this we will be less than 60 days to spring grass.

More good news. In a CNBC story Wednesday, January 22, Burger King reports slower sales of fake meat. In particular, one 1,000-store franchise group is discounting Beyond Meat whopper prices in an effort to increase sales. As much money as Beyond Meat spends, I thought they would be selling millions of those veggie pucks. They report sales declining from 32 to 28 per store. Even with now 2 for $6 vs $5.59 suggested retail price, a second Little Rock franchisee concurs with their sales dropping from a peak of 30 per day to only 20.

Wait... more good news. We recently had an open position in Boonville that we were probably not going to fill, but two weeks ago we got an unexpected phone call. Many of you cattlemen will know Prairie Home native Blake Rhode either from “Flying R” hauling cattle, his dad Morris or brother Ryan. Blake is a new husband and a newer father.
Many of us remember the early young kid family days both how much work and and how much fun newbies are. Driving a truck for a living isn’t a new father friendly occupation, so Blake contacted us with the idea of a mutually beneficial arrangement which we readily agreed.

I’ve known the Rhodes for over 25 years from the hog buying days in the early 1990s. Our families have been doing business and being friends ever since. This is good news for us and good news for the Boonville community. We’re all going to benefit from the knowledge and especially the integrity Blake brings to the team.

I remember once attending a college lecture by a successful Springfield businessman. One thing he said that has stuck with me was him saying, “if the right person comes along even if you’re not hiring ... you hire them. “
Blake is the right person.

Not Good News
Of course there is more not so good news affecting our cattle business. After a slow start, the news out of China is painting a bleak picture for the Coronavirus affected areas. One thing the last 30 years should have taught us is that the Chinese are never going to tell us the truth. Wuhan China is the epicenter where the outbreak of Coronavirus occurred. Officially this virus jumped from bats to humans in a market selling exotic animals (nice way of saying bats, rats n snakes) for human consumption. The unofficial speculative theory is that the Wuhan Coronavirus is a weaponized version that was accidentally released from the Chinese military’s bioweapon research facility in Wuhan. This facility specializes in viral bioweapons. This conspiracy theory becomes more believable since 8 months ago in Canada two Chinese nationals working as scientists (nice way of saying “spies”) were arrested trying to leave Canada with samples of Coronavirus they had stolen from the laboratory where they worked.

The Chinese in their own special way are dealing with this. First their response was too slow because they never want to publicize anything that may embarrass the authorities. Now the entire country is mobilized to fight this like a war. Wuhan, a city the size of New York, has been completely quarantined as have nearby cities of 30 million other people. No transportation in or out. The problem with this is there are not adequate medical supplies, food or fuel going into the city. Would it be fathomable to believe that the Chinese government will let 17 million people either die without medical treatment or starve in an effort to stem the flow of infection to the rest of the country?

Truth is they might.

More inconvenient truth is the fact that although not yet widespread the virus has been slowly moving globally.
I could give you more about symptoms, incubation period, mortality rates etc. but the local news does that well. What I want to discuss is the effect on our cattle business. Apparently people that travel on business with expense accounts eat a lot of steak. Reduced travel and slowing economies reduces beef consumption, which reduces fed cattle prices. Since this started, even with huge beef exports we’ve lost $2-$3 off our live market and $7+ off the April fed cattle board now hovering at $120. So we just can’t catch a break but even with that $7 break fed cattle are still making a little money, mostly because they were bought after a hard break in the feeder market caused by the “Holcomb fire”.

I haven’t seen recent figures, but in a commentary last year Bill Bullard said that the live cattle producers’ share of the retail beef dollar was 52.2 percent back in 2012. In 2018, with record exports and increased beef demand, the producers’ share shrank to less than 44 percent. I’m curious what the percent of retail dollar made it back to producers in 2019. Even with strong beef demand and 2019 beef slaughter up 1.2%, I think it will be an all-time low.

When will cattle get better? I’ve told many people for months that if it isn’t good in April it will never be good. Although April beef sales and prices will be very important, the latest feedlot inventories show an extremely front loaded inventory, the bulk of which have been targeted to hit the March/April market. What I’m trying to say is I wasn’t the only one in the industry targeting April, so now the sheer surge in supply will pressure markets lower. Therefore I’m going to agree with the number crunchers that are predicting May/June fed markets to be as high or higher than April. This again will be most beneficial for the supply of fall calves/short yearlings selling in June and July. Time will tell.

Future News
On a very different note... Something we’ve all heard about that is coming down the road that will drastically affect our lives is the “5G network”. This network will make freeways full of self driving cars possible. Less advertised is the revolution in the field of quantum computing. Breakthroughs in this field of computing recently allowed a quantum computer to solve a math problem in minutes that would have taken the largest mainframe computer today 10,000 years. This type of breakthrough will make non-polluting non-radioactive fussion reactors possible. I don’t understand how these things work, but I can see that our lives merely 10 years from now will be very different. Science in all areas are on the brink of discoveries that will change human history and revolutionize human existence. What if we could cure all cancer? A group of scientists in England claim to have serendipitously discovered a way to kill all cancer cells. Human trials will start in November.

Finally let’s talk impeachment. I do not care how much anyone hates Donald Trump. This process pushed on this nation and this president by the Democrat leadership in the House of Representatives is reprehensible and the lack of due process is un-American. If this government is able and allowed to do this to him, the president of the United States just imagine what a rogue government could do to us. Criminals, Democrats or Republican just the same, should suffer consequences illegal activity and general wrong doing, but the longer they drag this out, the less confident I am that our legal system will prevail. Corruption in our government is so deep and broad the only institution left with integrity and credibility is the military. Is anyone familiar with Marshall Law and military tribunals?

I have a few more things to discuss but I will save them for next time. I will see you at the auction!