Life was good when our only worry was herd expansion

Life was good when our only worry was herd expansion

I listened to an economist this week talk about when the market highs would be reached, herd expansion would start, and the eventual downturn in prices would begin. Of course, the cattle cycle is something we all understand, and I feel like we have the metrics down well enough that we can actually manage around it. However, I couldn’t help but ask myself, if I were a betting man, which do I believe poses the biggest risk, and which do I believe is more likely to occur first – increased cattle numbers, a global recession, a U.S. debt failure, or a geopolitical crisis.

Let’s consider these one by one:

• Cattle numbers will increase, but the process is slow and it looks like cattlemen are looking at strong prices until close to the end of this decade.

U.S. debt is over $18 trillion and will likely reach $20 trillion by the end of President Obama’s second term in office. In fact, we’ve seen our national debt increase by 75% in eight years.

• Sad to say, but the cautionary economic examples of Greece, the old Soviet Union, etc., have nothing on the U.S. What’s more, no one believes the political needed to deal with this very real and increasing problem even exists in Washington, D.C. The current situation is clearly unsustainable, but because a U.S. economic collapse will take down the global economy, it will be propped up as long as possible. It’s coming, we just don’t know when.

• A geopolitical crisis also seems to have a very high probability. The Middle East is a tinderbox, Iran’s nuclear program is symbolic of the potential for major issues in that region. Then there’s the incursion of Russia into the Ukraine and perhaps further, and China’s increasing assertiveness in the Pacific. If I were forced to place a bet, I’d wager on an eruption in the Middle East, but only because I believe that China’s threat is more long term. But Russia can’t be ignored because the economy is in such disarray that Russia essentially might be forced to initiate some sort of global confrontation to deflect the impact of the economic problems at home.  

I’m hoping that the cattle cycle is still our biggest concern. Given all these other issues we face, I have to admit that I much preferred the days when all we had to worry about were cow numbers and beef demand.

The opinions of Troy Marshall are not necessarily those of beefmagazine.com and the Penton Agriculture Group.

 

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