October 15, 2015
It has been said that a cattle feeder has two emotions—optimism and denial—while cow-calf producers fluctuate between blissful ignorance and pessimism. I attended a CattleFax presentation this week and saw a graph showing fed cattle profitability in recent times. It was described as a roller coaster ride; I’m sure a few cattle feeders would describe it more like a parachute drop. Maybe one where the parachute didn’t open.
Regardless, I couldn’t help but think while the ride in prices has been pretty dramatic, the swing in emotions has even been more severe. The last couple of months has nearly erased the euphoria of last fall. I wouldn’t describe cow-calf attitudes as desperation or despair, but more as widespread uncertainty and growing concern.
This business is not for the weak of heart or mind; it never has been and likely never will be. However, the recommendations on dealing with this environment are pretty consistent — be a low-cost producer, manage your risk aggressively, strive to improve your top line as well as your bottom line, collect and analyze information to make better management decisions, and be in the game when the good times occur.
The inherent problems of timing the market and outsmarting the market are monumental and those who try are usually punished severely by the market. My observation is that those who have been the most successful are those who determine where they want to take their business, and then develop a plan to implement it, not necessarily in response to market fluctuations but rather in spite of them. They tend to have the following mantra – “I may be wrong, but I’m never in doubt.”
Time will tell whether or not or to what extent the market will recover from its recent parachute drop. Now more than ever, it’s time to plan your work and work your plan.
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