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Monthly Archives: December 2012

Cycles

I do not pay very  much attention to cycles.  I will admit they do exist.  I see market cycles within the week, the month, a six month period, and even the year and beyond.  The thing is due to the way I market cattle the cycles do not matter at all to me.  Before I learned how to market cattle on a real time cash flow reckoning, I paid a lot of attention to this stuff.  I was listening to the wrong people.  Good thing I got that straightened out or else I’d probably be an unemployed production welder right now. (no offense to the welders out there.  I love welding myself.  It’s just that there have been a lot of layoffs in my area).  I have noticed another cycle.  The cycle of the cry baby

Right now we are somewhere near the top part of their cycle.  They tend to emerge when losses in the cattle biz go beyond $200/head, anything below that we do not hear from them very much.  So I conclude that any losses around $150ish and lower are acceptable losses.  (snorf)  There’s a sweet sexy term, acceptable loss.

I’ll give you a few examples.  In the middle of the last decade 04-05 the “experts” were predicting time periods when we would begin exporting to Japan again after BSE.  So the cattle feeders would load on a certain weight of cattle that would be market ready at that date.  Only the boarder did not open around that date.  These guys would bid a huge premium into feeders, thinking they would get it back when exports resumed.  They really believed they would get $10/ctw more for fats when exports resumed.  They did this several times for over a year.  Losing big money every time.  “It was all Japan’s fault.  They weren’t playing nicely and cooperating.  It was Canada’s fault, after all that is where the dirty cow originated form.  What am I to do?”  The peak cycle of the cry baby

I saw it again in 08-09 when the market fell out of bed.  In summer of 08 corn was high, fuel was high, feeders were high, fats were high.  Then bang!  This housing bubble thing popped.  “During the high run up in stocks the damn hedge fund managers put their money in commodities.  The CME has more corn contracts for bushels than we have bushels.  It’s just all funny money and bullshit contracts, that never should have been printed to begin with.  Then when stocks fell, they pulled out of commodities to buy cheap stocks, which is where they belong anyway, in stocks, and crashed our markets too.  Them assholes!”  Early 09 was peak cycle for the cry baby.

Here’s one that is more current.   Everybody is crying over the drought affecting their operation.  Costs are high (not as high as they were.  Feeders and corn were both higher than they are now).  But hey, it’s not my argument.  “Forage prices are too high.  I can’t afford them so I am forced to buy poorer quality forage.  We need rain.  The price of corn is too damn high.  We need to repeal the RFS.  What is the governments deal anyway?  Picking one corn user over the other.  It’s all ethanol’s fault.  We keep losing acres of forage production and pasture to the plow to raise corn for ethanol”.  Thing is folks I don’t know if this is even the peak yet.  “We need a Farm Bill!  We need to fix this fiscal cliff problem”.

Well I got some good news for you guys.  The 10 year cycle peaks on years that end in 3 (snorf)

Do you notice something here?  They always have something or someone to blame for their short comings.  Bud Williams told me once that in his lifetime of observing and working with ranchers that they are more than happy to lose money as long as they have someone to blame it on.

A few years back I got to go golfing with a few big shots.   During the day we were discussing the cattle biz, sipping whiskey, and smoking cigars.  They were all bragging, and yes it seemed like bragging, about how much money they were losing.  One asked me what my worst move was of the year so far, and I told him I made $17/head.  I got laughed at!  They said $17/head wasn’t worth scratching their nuts for.  I didn’t understand, still don’t.  It’s cool to lose money and not cool to make a small profit?  WTF!?

The cry babies are busy right now.  Last week was cattlemen’s convention in my state.  I didn’t go.  I was busy.  So this weekend I tried to get caught up on the news.  There they were on the TV and news articles bragging about how tough it is.  How resilient they are.  But oh man “If we don’t get some help, or relief soon it will be real bad and people will be out of business.”  That is another natural cycle folks.   Businesses fail all the time.  Bankruptcies happen all the time.  And have since the beginning of civilization.  And yet we have managed to make it to the point we are at now.  A time of such great abundance.  The cry babies didn’t make that happen!

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Posted by on December 11, 2012 in Uncategorized

 

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