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CATTLE TODAY

HUNTIN' DAYLIGHT -- HARD TIMES ARE RELATIVE

by: Wes Ishmael

Depending on whether you count the grains of sand that have already reached the bottom of the hourglass or the ones still left on top, these financial times are getting awfully bleak.

In fact, some pundits are describing the current financial crisis gripping the globe as the worst since the Great Depression.

The U.S. government made the controversial decision to try to shore up bad private business decisions with a $700 billion banking bailout; the next day the Dow Jones market plunged, as did stock markets around the world.

Commodity markets—a safe haven not so long ago for investment dollars battered by financial insecurity and outright illiquidity—have plummeted. Pick one. In the middle of October, Darrell Peel, livestock marketing specialist at Oklahoma State University noted that since mid-August, corn futures were down 24 percent, wheat futures were down 28 percent, feeder and live cattle futures were both down 12 percent, the Dow Jones industrial average was down 25 percent, crude oil was down 21 percent percent, and Choice boxed beef prices were down 9 percent.

At the time, cash calves and stocker cattle were still looking for a bottom after losing a smooth $5 to $14/cwt. or so during the previous two weeks, depending on where those calves called home.

Though the aforementioned input commodities prices are falling to within at least a day's hard ride to reality, they're still plumb high by historical standards, especially when cattle net profit opportunity is losing ground faster.

Add to that increasing equity requirements for short-term credit, wonderments about the availability of long-term credit. Sprinkle on top the drought gripping wide swaths of country during the last several years. It's easy to see why few analysts expect the nation's cowherd to expand for at least the next two to three years.

Plenty of Hope, Too

When you do your counting from the top of the hourglass, the view is vastly different.

Not only are cow numbers short in this nation—key global beef producers are losing cows, too. Notwithstanding the current financial crunch, beef supply is stable at best, while global per capita income and beef demand increase.

When the incentive finally exists for expansion to begin again in this country and around the world, supplies will be even tighter.

Shorter term, though there is nothing easy about the current mess, producers have more technology—much of it underutilized—available to them than at any time in history to reduce costs, increase output or both. Whether that technology be reproductive, pharmaceutical, mechanical, electronic or something else there are lots of cats left to be skinned.

As an industry, agriculture overall is also well positioned to weather the current storm. Look at any figures you want, debt-to-asset, debt-to-equity, etc. and the industry is more solvent than it has been in decades.

Lessons of Our Kin

There's a picture—one of many preserved by my Mom and the generations before her that I get a bang out of pondering. It was taken about 1938, if my facts and memory are straight. In the dusty foreground is a string of Hereford mamas and their babies coming into a gathering pen. Behind them in the distance are three riders, one with his rope lifted high overhead, another with his hand held high, and the third with his rope held out at his side, all in various stages of encouragement, the way you do.

The picture was taken by my Grandma as the “boys” mothered up cows for the last counting at the Temple Ranch where my Mom was born.

The ranch was being sold to Davis-Noland-Merrill Grain Co. of Kansas City. Over the 28 years my Grandpa, Orville “T.O.” Alley managed the old Temple place would be known variously as the East Davis Ranch or just the Davis Ranch. To everyone locally, though, it was the Z Bar. That ranch and others added by the syndicate became known collectively as the storied Z Bar Ranch in Barber and Comanche Counties, Kansas. Ultimately, my Grandpa went on to own his own ranch in the Kansas Flint Hills.

But, on this day in 1938, it was Davis-Noland-Merrill buying and George Temple selling.

I look at that picture and I get to thinking about how the world might have seemed on that day.

It was only a couple of years after one High Plains Dust Bowl, and the severe drought that went with it as cause and effect; and about 15 years before another one. It was only about 10 years after some of these boys had either gone to fight the Great War or had been called up, and just a few years before the second Great War. It was just a few years after the Great Depression, which itself was the second great financial unraveling since the Teens. Never mind the animal health problems they worried with then, things we thankfully only learn about in history books now.

Here these folks are mothering up cows to count because someone is selling a ranch and someone is buying it. Accuracy matters to the people on either side of the transaction because they believe there's a future worth worrying about.

I look at the picture, and I see those arms raised, almost as if in greeting across the generations. They look like they're held up in victory, never despair—we made it! Sometimes, I look at it and imagine the arms are raised in challenge, their generation to ours, and I can hear them say, “You think you've got uncertainty, you think times are tough? Grab a shorter rein and tighter seat—bear down—We figured it out even when we weren't sure what we should figure. You can, too. You can.”

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