J.T. Korkow: My Crystal Ball
December 23, 2015
As I write this just prior to Christmas in search for appropriate subject matter, I can't help but reflect back over this past year's cattle market and consider the season at hand. In ranch country, we are closing out another business year. Hopefully, having paid our expenses and scheduled payments from sales of our annual production, we begin to look at planning for next year. Many of you held your heifer calves again, and will be making plans to either market them or breed them this year. As volatile as the market has been of late, you will have to be extremely cognizant of all the factors influencing the industry if you are to have any reasonable success in marketing. The beef complex has many factors to consider, and our recent downturn was claimed to be attributed with an oversupply of meat in the cooler…caused by heavier carcasses butchered…due to feeders late marketing of fats… due to a drop in the market…from lack of demand… due to less exports… due to the value of the US Dollar. As you see, it becomes all interconnected with now what is considered a "global market." Therefore, because export trade is necessary for a strong beef market, our trade agreements with other countries appear to overshadow anything going on here at home.
Last weekend, I was invited to a Christmas party at one of my Canadian friend's home in a rural area near the Rockies, southwest of Calgary. I had the opportunity to discuss a little of the cattle market with some of the local ranchers. It came no surprise to learn the trade agreement with the United States is of significant importance to our northern neighbors. As of last Monday, the Canadian dollar dropped below 40% of the US dollar, when they said only a little over a year ago they were at par! Obviously, that provides a great incentive for Canadian cattle to be marketed in greater capacity in the United States. Furthermore, it is a great incentive for us to send our cattle north to be fed! And with cheaper diesel fuel, it becomes even more attractive. I include this information in this to demonstrate, again, the importance of our trade agreements.
We enjoyed higher beef prices in 2014, for apparent reasons. We had a long term drought in the south and western sections of the United States holding back an increase of our herds and our dollar was not valued as high, thereby stimulating more than 30% of our beef being exported. But in looking forward to 2016, my crystal ball says we need to pay attention to the politics if we want to predict where the market will go. Because it is an election year, the countries we trade with are especially watching closely to who our next leader will be and what our trade policies will be, as well as the value of our currency. As we found with COOL, our trade policies must be considered with the global market in mind. If export trade is necessary for a strong beef market, then we need to position ourselves accordingly. The way we as individuals can do that, is: 1)Be active in our stockgrowers associations who have a voice with Congress and; 2)cast your vote for a new leader who understands foreign policy and doesn't sell out the American food producer. As far as the value of our currency, well, that is another subject to be discussed later…and may be more complicated for any of us to understand given this nation's debt.
May you all have had a Merry Christmas and look forward to a prosperous New Year!
Therefore, when Jesus came into the world, He said: "Sacrifice and offering You did not desire, but a body You have prepared for Me. In burnt offerings and sacrifices for sin You had no pleasure. Then I said, Behold, I have come-In the volume of the book it is written of Me- To do Your will, O God." He takes away the first that He may establish the second. By that will we have been sanctified through the offering of the body of Jesus Christ once for all. Hebrews 5:6-7,9
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