So, four weeks ago I had a complete shoulder replacement. Surgery went well and I have not had a bit of trouble with my shoulder; however, I’ve had a tough couple of weeks with a variety of odd complications. The first one was on the fourth night after surgery I had some kind of a reaction to my pain medicine that kept me from catching my breath. Didn’t matter how deep I tried to breathe, it just wasn’t enough air to satisfy my panicking brain. Somewhere along in there a vision of a bluegill tossed out on the bank of a pond entered my mind…
Lucky for me, Kelly, also known as Nurse Ratchet, was there to tell me that it was just anxiety. Easy for her to say; she was breathing just fine. Fortunately, I think we have everything straightened out now and I finally feel like I am getting much better quickly.
Two months ago if anybody would’ve asked me if I could stay in the house for a month, I’d have said impossible. Amazingly, I have basically stayed in the house for a month with only a few excursions into town –– whenever I could find a driver. Kind of a sad day when the most exciting thing you do is get to ride to the post office to mail a check to Consolidated Electric.
Tomorrow being Friday, I have found a driver and I intend to head to the barn for the first time in four weeks. It’ll be nice to be amongst cattle and my people again. I’m not gonna lie, when I stay in the house all day by myself without seeing anybody until Kelly gets home from work it is sobering. One time Kelly got home from work and she said something to the effect that she couldn’t tell whose tail was wagging harder, the puppy’s or mine.
The cattle business is experiencing some good times right now. This week for the first time in a very long time in the five-state feeding area, the weighted average fed cattle price was $150.06. Unfortunately, these high fed cattle prices are a bit deceptive because cattle feeders are currently experiencing very high costs of gain also.
In response, nutritionists are cutting corners trying to cheapen rations at every opportunity substituting corn and even ingredients like fat with cheaper less effective products. The result is a cheaper ration, but interestingly average carcass weights are bigger every week with October 15 at a whopping 924 pounds, while the percentage of choice and prime cattle is dropping like a rock. This week the choice select spread is over $30 with choice beef at $2.52 and select beef at $2.22.
The trickle-down nature of the cattle business causes this handsome fed cattle price to be expressed at the livestock auctions selling feeder cattle at recent highs. Optimism among cattle feeders abounds and is justified by the sheer drop in supply of cattle caused by the last three years of severe culling across the nation, mostly due to drought in cow country.
Last week’s cattle on feed was very positive, simply by not being at all negative. Placements at 96% and marketings at 104%. Supply is definitely shrinking.
With the continuing big cow culling process as we touched on earlier is still alive right now. It is being reflected in lower pound cow prices due to the large number of cows coming to town because of an extraordinarily dry fall experienced over a very wide area in the Midwest. Cows are broadly worth $.50-$.70 and bulls $1.00 but I think these lower prices will be transitory (I wanted to use that word).
The cattle cycle is still working and basically we are headed higher due to basic supply and demand. The cattle business will stay good for many months and probably several years as long as the economy of this world and this country remain stable. One problem arising in this country that everyone reading this will be interest-ed in involves a shortage of diesel fuel. Since I have so much time, I’ve read extensively and researched government policies to explain why this is happening, but basically the bottom line is the United States only has 25 days of diesel fuel available. This shortage is acute in the New England states where heating oil is also widely used. Better stock up while you can.
To close this month, I’d like to touch on something that maybe as significant to the world economy as COVID turned into. This significant event happened last Friday at the close of the weekly news cycle, so it is very much under reported in the media. Something this big going on in China and the fact it’s not being covered in the news is absolutely astounding. For some unknown reason, the Biden administration has all of a sudden started to play hardball with China… It’s either hardball or Russian roulette.
Apparently, I owe China Joe Biden an apology because I have said before the $31 million he and Hunter Biden extracted from Chinese communist party officials was his purchase price. Apparently, Joe was not sold, but only rented out. Last Friday, the United States, along with our global allies, embargoed the export of middle and high-end computer chips to China. This embargo includes any machinery or software necessary for their production.
Not only did the United States embargo chips and equipment, any American citizens working for any Chinese high-tech companies were given an ultimatum. American citizens had one week to choose between quitting their jobs and leaving China OR they would forfeit their American citizenship. I did not even know that was possible for the United States government to make that demand. Americans have been leaving China in droves.
Let me explain. I did not know that basically there are three types of computer chips. Tier 3 are low end chips that go in calculators, watches etc. Tier 2 are mid range chips that are used in vehicles. Tier 1 are the high-end chips used in cell phones, bullet trains, aviation military applications etc. I incorrectly assumed China being a manufactured powerhouse that they have become in the last 20 years, would be able to fabricate computer chips. China consumes 70% of the world’s chips but only produces 15% of all low-end chips.
Actually, for Tier 1 and Tier 2 chips, because of their highly technical manufacturing processes, China has imported all of the middle and high end microchips for all these years and are only able to produce low end micro chips.
I’ve highlighted China’s problems before which include highly polluted water systems, government corruption, floods and drought that have strained their food production systems to the brink, and their demographics problem. Even if China was slowly on the way out, this embargo could push them back into the Stone Age.
So what will be the result of this embargo? Stocks are crashing proximately 46% for the year. Do you have 401(k) money I’d be reviewing what companies are in your basket. One example would be Tesla… No more cars to be built without microchips.
Another possibility may be found in our own history. A little-known fact is that up until 1940, 80% of Japan’s oil came from the United States, along with most of its imported scrap metal and their airplane fuel. In response to the invasion of China by the Japanese, the American president Franklin Delano Roosevelt embargoed these products in 1941. Backed into a corner, Japanese Navy set sail for the U.S. naval base at Pearl Harbor on November 26, 1941 resulting in “a day that will live in infamy” on December 7th. (Ironically the steel in the bombs and torpedoes and the fuel in the planes used to drop them was supplied by companies in the United States.)
Just a quick item for everyone to note. Our November fall cow sale will be a fantastic offering of females. Please mark your calendars between now and then find someplace else to put a cow because when the spring gets here there’s no telling what they will be worth.
That’s all for this month I will see you at the sale… in about a month.