Call the Market

Shipping Season Should Serve as Time for Cattlemen to Reflect on Business

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
: Use this time to strategize and build your operations stronger so that you can experience growth and prosperity in the years ahead. (DTN photo by Joel Reichenberger)

As we slowly work our way through October, cattlemen are running left and right, some weaning calves, some preg checking cows, while others are still trying to line up more feed before winter settles in. While we may still be months ahead of the calendar's year-end -- this point in time somewhat feels like a year-end mark for cattlemen as most have sold their spring-born calves or know what they're going to do with them as they begin to prepare for the next year's run.

If we're not careful we can go from preconditioning calves, to weaning calves and preg checking cows, to then shipping those calves and prepping the barn for winter without reflecting upon the past year and making note of the changes that need to be implemented in the year ahead or the opportunities that cannot afford to be overlooked again.

What lies ahead for you and your operation in 2023? How are you going to do things differently? What changes do you need to implement to be more profitable?

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I wish I had a crystal ball that would highlight how exactly the market will pan out in 2023 and could provide a fool-proof plan on how to be profitable in today's cattle business. However, just as we'll never know exactly how the market is going to shake out each and every year, each individual operation's "fool-proof" plan is going to look a little different from the next. Regardless of the size of the spread you run on or the number of cows you own, I want to share a couple of thoughts with you that I think are worthy of conversation.

First, I encourage you to read the book, "The Meat Racket," by Christopher Leonard. The book dives into the complicated nature of the meat processing industry and spends a considerable amount of time talking about Tyson Foods and how the Tyson family grew to what they are now. I have recently started rereading the book (it's that good) and felt that the lessons being taught in chapter six especially spoke to cattlemen in today's market environment. In chapter six, Leonard speaks about the "Tyson way" which was/is the principle of not getting fat during the upswing and projecting the tough times to last longer than assumed. We know that the cattle cycle runs in a cyclical 10-year cycle, but I fear that cattlemen are so eager and ready for a stronger market that they're going to overlook the fact that this high (whatever it may be in 2023-24) will at some point transition into a weaker market once again. The point being, start planning now for the market's next down spell.

Second, know your breakevens on everything. Spend the time figuring out what it costs you to run a cow, to run a bull, and the difference between buying bred females versus raising your own. I know that configuring breakevens can be difficult at first, but the peace that it brings you is powerful. It takes 90% of the emotional ruckus out of marketing calves, and it allows you to consider alternative marketing options that you may have not looked at before.

Third, what can you learn from the nation's recent drought to better prepare yourself for the next drought? I know that this may seem a little like putting the cart before the horse, as we're not even out of this drought yet, but that's the whole point, right? To better withstand the market's pressures, whether they be drought, weaker prices or higher internet, part of sustaining the test of time is preparing for the next unknown.

In conclusion, I hope that you use this time to strategize and build your operations stronger so that you can experience growth and prosperity in the years ahead. For some, that may mean finding a better banker. For others, that may mean looking at a risk protection plan for their calves. For others, that could potentially mean marketing their cull cows differently. Whatever the case may be, I encourage you all to set aside some time in the near future to reflect back on the past year, look to the year ahead, and strategize to eliminate as many unneeded stumblings as possible.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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ShayLe Stewart

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