Splitting pairs and doubling down are both strategies in blackjack. If used correctly, they can increase your chances of winning.

When you’re dealt a pair of low-value cards (2s, 3s, 6s, 7s, 8s) — especially if the dealer’s up card is weak (2 through 6) — you should split them into two separate hands. You must place an additional bet equal to your original wager to split. Each of the split cards then becomes the first card of a new hand, and you play each hand independently.

Doubling down typically is used when you have a strong starting hand, such as a total of 9, 10 or 11, and the dealer’s up card is weak. Doubling down allows you to increase your bet and potentially win double the amount if you win the hand. It’s risky because if you get dealt a low card, you can’t hit again and could risk losing twice as many chips.

Many novice blackjack players like to play it safe by keeping bets low. But sometimes, playing it safe can convert a favorable hand into a wasted opportunity.

Marketing corn, marketing cattle and marketing corn through cattle share some of these same attributes. It’s about getting the balance right between playing it safe and taking a risk by identifying where the advantages exist.

No clear choice exists this year

The USDA currently projects the 2024-25 season-average corn price at $4.40 per bushel. Futures prices, adjusted for a historical Iowa basis, project a more pessimistic $4.10 per bushel. Both are below estimated corn production costs.

Iowa State University's finishing yearling steer costs and returns data indicates cattle-feeding margins have been volatile so far this year. In 2024’s first four months, cattle-feeding margins ran from a loss of $307 per head in January to a profit of $362 per head in June. Summer margins should be positive. But future markets suggest losses returning this fall. Overall, 2024 margins may average near breakeven. Next year’s margins look worse, but rarely can producers lock in a profit at or before placement.

Historically, farmer-feeders have used cattle as an alternative way to market corn and diversify their operations. When corn prices were high, farmers sold corn for cash. When corn prices were low, they fed cattle if they could find reasonably priced feeder cattle.

To effectively feed cattle, corn farmers need the labor, facilities, knowledge and relationships to do so. An alternative is custom feeding. An Iowa Beef Center Feedlot Operator Survey shows that 24% of cattle that are custom fed typically are owned by crop operations, not feeding cattle.

Cattle feeding carries risk

Factors that impact cattle-feeding profitability include:

In a survey, Iowa feedlot operators listed ability to grow their own corn as the most important factor for improving the cost of production.

Corn farmers marketing corn through cattle potentially delay income and may require additional financing. The effects of higher interest rates on operating costs are significant in the current environment.

In June 2021, the interest cost for an 800-pound feeder steer ran about $28 per head. By this June, the interest expense had ballooned to about $95 per head if working solely from borrowed capital.

The interest expense more than tripled because interest rates nearly doubled and cattle prices climbed about 80%. This increase narrows margins quickly and raises risk because of a higher investment cost. The total interest expense attributed to a feeder animal includes capital to buy the animal and money for inputs to finish it.

If you are not borrowing money and using equity, your interest cost is opportunity cost. That's the return you could earn investing your equity somewhere else.

Suppose your alternative is marketing corn. Is the return you could get selling corn for cash more or less than corn could earn fed through cattle?

Two hands may be better than one

Just as splitting pairs in blackjack can open new avenues for success, so too can marketing corn through cattle.

Splitting pairs can help in two types of situations. The defensive play is breaking up a pair with a bad total value (a pair of 8s, for example) into two cards with better scoring potential. The attacking play is splitting a pair in order to get more money on the table against a weak dealer hand (a pair of 4s versus a dealer’s 6).

Currently, both the corn and cattle-feeding markets may be more on the defensive side. However, a producer needs to be in the game to be able to go on offense. After splitting cards, a blackjack player also may have the option to double down on one or both of the split hands. So, too, may the corn farmer and cattle feeder.