Gotta do what ya gotta do 😅

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In this session, you'll learn:

✔ Where crop insurance is headed

✔ Why more producers are stacking coverage

✔ How MPCI, ECO and SCO work together in real scenarios

✔ What policy options can strengthen your protection

✔ Planning considerations and reminders to keep top of mind

I used to like shopping, but only if I was shopping for dogs, trucks, or feeder cattle. Now I want to say that I hate shopping for all 3. Some of these dog breeders are morons. No Karen, I don't want to get on a waiting list for your 2027 pups, I want the one you advertised with a photo on your website, that you're now saying is unavailable. And it used to be fun haggling with car salesmen, just trying to get them down further and further. Now a days, you have to sit there an extra half a day to sign paperwork after you agreed on price, while they try selling you underbody coating and an overpriced detailing package.

I probably shouldn't have said I hate feeder cattle shopping right now, because it's still fun going to the barns. What is becoming more of a struggle is buying quality without much of a hope of a decent roi on that investment. Buying bred heifers and bulls right now is also nerve racking to those ranchers needing replacements. But you know who's looking at the worst ROI right now? The packers. Since cash cattle trade was disappointing this week, let's do some Friday afternoon cocktail napkin math.

• Mr Packer is buying a carcass today for $3.78

• Mr Packer is selling boxed beef for an estimated $3.70

• Since they're only getting a ~60% meat yield off that carcass, they need to average $6.30/lb off meat just to break even on their purchase price.

• Yes they sell hides, ofal, and so many different byproducts, but they still have costs and risks. If I were to use industry estimates printed recently, for them to print a breakeven, cash fat cattle purchases need to average $228 Live FOB.

• No, I'm not saying we should all take less money because we feel bad for them. It's a big market that belongs where its at because of things that happened in the past. Back then it was a market that traded those levels for reasons that existed then. The market, as it always has, is doing its job to make the supply meet the demand. I'm just stating that right now is not a great time to be at this level of the industry.

Is the next step down in the chain much better?

• Buy a 850# steer at yesterday's 374 index settlement and I'm $3,179 deep before freight and processing

• I'm still set on using $1 cost of gain given I'm using the bank's money to play at this high stakes poker table. If I plan to take that steer to 1600# pay weight, I'll have another $750/hd into him. Simple math says I'm looking to break even on this bet at $245 cash at the end of August.

• To get a measily 5% ROI, I'm looking to make $196/hd and need to trade these boys at $2.57 cash later this summer. We better hope demand is strong and there's truly no cattle left to get that to happen.

Grass cattle and grow yards are in the same situation.

• A 625# steer at $425 gets you started with a $2,656 investment.

• If your cost of gain is $1.10, it takes an additional $357/hd to get him to 850#

• With that 850# steer breaking even at $355, you need to see his cash sale hit $372 to pick up that 5% ROI.

• If you're this person, you better hope I get the $2.57 cash fats in August or my banker might not let me pay $372 for your yearling.

And is it much different for the neighbor up here who paid $5,200 for some bred heifers and already slipped one calf? Not in the least bit.

• If I use $1300 on average to wean a 500# calf these days, and put that heifer on a 5 year note, my payment each year would be $740. This means I need to sell my 500# calf for at least $2,040 every year for the next 5 years.

• Given I only get to sell 1 calf each year, I'd prefer to see a 10% ROI on my $2040 annual investment, making my breakeven on that weaned 500# calf $4.50, and that's a steer and heifer average.

The cow calf sector might look like the safest play on paper right now, but I'm not sure I'd bet on calf prices staying this high for 5 years straight. To be honest, I think feeding hogs looks like a safest bet for the moment. Or maybe slinging meat at the local Fareway is the best place to be right now. I will say, the retailer usually loses a little in the 2nd quarter selling beef, but I'm willing to bet their margins on hamburger buns and Busch Latte's make up for that loss. The moral of the story is we all have tough periods, but eventually get our day in the sun. I'm glad the rancher is getting their day, it's been long overdue.

Who knows what next week or next year will bring. Maybe those examples above will show great closeouts and ROI. I think we should all do our part to make that happen by eating 3 steaks and a pound of bacon this weekend. Ok ok, you don't have to twist my arm, I'll do it. Have a good weekend.

-Fat cattle kill at 86,000 vs 85,000 a week ago and 101,000 a year ago

-Choice boxes down .37 to $364.47 and select up .39 to $363.42 for a spread of 1.05 on 60 loads

-CME feeder index(Feeder LRP Settlement) for 2/12 came in at $373.91

-Fed Cattle LRP’s ending last week settled at $240.97

-Hog kill at 446,000 vs 490,000 a week ago and 477,000 a year ago.

-Afternoon Pork reported down .49 at $95.16 on 253 loads

-CME lean hog index on 2/11 reported at 86.89

-CME pork cutout index on 2/12 reported at 94.99

-LRP’s ending 2/13 settled at approximately $86.93

Most grain areas may see 0.25”-1” liquid. 2”-4” is possible across the southern ECB, TN valley to southeast USA. This will help some drought areas. Dakotas to west TX will see 0.10”-0.50” with a chance to see 0.25”-1” in some locations.

Happy President’s Day!