Mitigate your risk
This issue of the Western Livestock Journal contains the annual Commercial Cattle Issue (CCI).
Each summer, we publish this magazine just ahead of the fall bull and production sales and this year’s theme is centered on controlling risks associated with your operation— easier said than done, I know, but topics nonetheless that can be talked about as much as cattlemen talk about the weather.
Over the last few years, the beef industry has seen its share of reward, but that clearly didn’t come without the expense of a sharp crash in 2015. Cattle feeders and stockers take enormous risks each and every year, and as our markets spiraled skyward, those risks became financially overwhelming when cattle on inventory were left at $300-500 per head overpriced after the markets came back into check.
In last week’s edition of the WLJ, right on the front page was a cautionary piece about fed cattle supply fears heading in to the fall months of this year. Right now, people with cattle on inventory are facing an increasing risk each and every day. I’ve heard many conflicting reports about the current fed cattle inventory, but that being said, September and October are two months to definitely pay attention with receipts. A downward market through the fourth quarter will risk profit potential on a lot of cattle at the bunk right now.
This past year has been a positive market for most of the segments of the beef industry. Cow-calf producers have been able to stay profitable and stocker/feeders have been able to purchase cattle that penciled along with contracts that supported gains. Even on the board, as the market has swung both directions, the risks and rewards favored all involved. Overall, it’s been a good year.
With daily limits having the ability to swing cattle $20/cwt. in a given week, our market currently carriers a lot of risk each week. Our industry handling the “log jam” inventory they say is coming will be another example of how connected our contracts are to current supply levels.
I cannot help myself in this column, simply because if you personally know Pete Crow, you understand his comments a few weeks ago. When talking about risks, as a media outlet, a controversial opinion column carries the risk of offending advertisers and readers. But I do have respect for his comments because he writes what is on his mind. We know that to be true each and every time his column is published, regardless of the risk involved.
Throughout the CCI, risks will be talked about repeatedly. Each decision carries a risk and a reward. Reducing risk oftentimes reduces the reward payoff, but a reward is a reward. We all know those personalities who aren’t afraid of large risks. We have one of those in the oval office right now. When they receive that big payoff, the grass looks pretty green. But as for me, I’ll take a smaller payoff if I know I’ll leave some on the table for the next goround.
With bull and production sales coming up in a matter of days, lots of decisions impacting the future of cow herds will be made at each auction.
Selecting bulls to further a program is a quick and easy approach to reducing risk while adding marketability to a calf crop. Anymore, each bull sold carries so much data analyzed from actual performance, predicted performance, and DNA evaluations. An enormous amount of information can be digested in order to help further each program. For those of you needing assistance this fall, please contact any of the WLJ fieldmen to help you assemble the bull battery you need for your program.
Again, please take advantage of this year’s CCI.
It’s a great source of information. We thank all those who contributed to this edition, be it editorial or advertisements.
As I conclude this column, I want to reach out to a strong supporter and member of the WLJ community, the Ron and Jennifer Anderson family. They lost their daughter this past week unexpectedly and I felt it necessary to use this column to let them know we are all thinking of them during this time. God bless you. — LOGAN IPSEN