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Call the Market
ShayLe Stewart 7/29 9:41 AM

What a week it's been! On Monday, we saw the market crash lower in the first opportunity traders had to react to the data and announcements shared last Friday. (See "USDA Cattle on Feed, Inventory Reports," https://www.dtnpf.com/… and "USDA Eyes Mexico Cattle Port Reopening," https://www.dtnpf.com/…)

But, on Tuesday, the market turned on a dime and seemed to forget all the fear and panic that occurred just the day before. Which logically leaves people wondering: What the heck is going on? And what's next?

While I wish I could tell you every jolt and turn the market is going to make, so you can always stand confidently in your position, I don't possess that crystal ball. But what is becoming more apparent is we must be diligent market participants who are fixated on securing a profit and cannot be rattled and upended by every head fake the market makes. Which sounds like a noble plan, but can be difficult to follow and live by when your time, income and equity are all at stake.

But with that thought in mind -- being diligent market participants who are fixated on profitability, but not shaken by every bobble in the market -- consider these thoughts:

1) In high school, I was blessed with an ag teacher who was a kind man. He sought excellence and wanted his students to succeed to the best of their abilities. Of the many lessons he taught us, one saying will forever stick with me as it applies to everything we do. He spoke of the 7Ps of life: proper prior planning prevents piss poor performance. I apologize about the language. But doesn't that ring true for everything we do? If you want to succeed at something, it's going to take some planning and initiative.

If we want to improve the bottom line of our business, we've got to be fixated on improving our margins -- find ways to increase revenue and look at the things that cost us money but maybe shouldn't. We cannot simply sit around and hope the market remains strong and pull our calves off the cows and send them to town on a random day. Truth be told, in years like this that may be OK and you'll still likely see one of the highest prices you've gotten for your calves. But old habits die hard and this year is truly an exception as many would agree the market is nearing its peak for this cycle. In years to come, that type of marketing strategy could cost you gravely.

2) It's easier to absorb the shock of the market's daily whims when you're playing a calculated, long-term game. When you have in hand a marketing strategy or business plan, it's much easier to look at the turns of the market and ask yourself: Does this affect my long-term plan? And more often than not, the answer won't come in a day's time, but as the market slowly unveils the direction it's headed during the course of multiple days.

In conclusion, I share these thoughts with you in the hope you take it upon yourself to put effort into your marketing strategy for the year, so you secure as much profit as possible but also have some peace in the process. You and I both know one of the biggest downsides of the cattle business is the sheer amount of stress endured. So, if we can make our lives a little easier by having a long-term plan, it would be advantageous to do so.

With how fast the world operates, it's unlikely the stress, chaos and extra noise in which we battle daily is going to lessen on its own accord. Which makes it all the more important for us to have some refuge in our own tactics so that our businesses stand a chance to succeed.

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

 
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