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you know us as producers and the

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customer that I work with they end up

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wearing many many hats they're the CEO

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the COO the CFO uh HR department in some

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instances uh but they have to wear all

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of those hats um and then they also have

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to buy cattle as a banker what I really

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want to see is everybody keep their

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hedges in place especially in a market

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like this if we were at the bottom end

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of the market I probably wouldn't be as

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big an advocate for you probably should

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keep your hedges in place and that's

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always a borrower's decision it's really

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not the bank decision it's the borrower

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decision the key is you got to have a

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lot of communication whether you be the

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largest borrowers out there feeding Catt

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or the smallest and your your Banker

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really needs to understand what you're

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up against when you are in a market like

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this where prices have risen you know

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significantly everybody's in a little

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bit of a cash crunch it's not easy to

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get that money on a day's notice you

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need that money in your commodity

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account or you're going to blow people

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out of Hedges that's just the way it

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works but what's important from a

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producer standpoint is we we we all have

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to be having the right communication the

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right conversations so that that money

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is readily available welcome to we live

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it the live a podcast your source for

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livestock market insights management

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strategies and real conversations with

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those who don't just work in the cattle

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industry they live it here are your

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hosts tyd Cordova and Casey mayy

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[Music]

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ah welcome back they said to uh we live

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it podcast uh tidy Cordova Casey Mary uh

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hosting these things here bringing you

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trying to bring you educational value to

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the industry um case and I had this idea

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I don't know several years ago and just

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kind of now getting to where it can come

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to tuition um trying to have guests on

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here to join us that uh that can educ

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educate Us in different parts of the

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industry so we want to welcome y'all

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back we thank y'all for joining us uh we

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want to ask you on whatever platform

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you're watching it on if you'll hit the

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Subscribe button and the like button so

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Subs subscribe and like is that what she

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said Casey at this the thumbs up so but

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be sure to subscribe it for us so but

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without further Ado want to welcome John

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Sloan with a Texas out of Amarillo Texas

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uh we're going to kind of get in some

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insights on the uh Market volatility and

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then what that looks like and then we

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might go further on into some strategies

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some details uh want to analyze the

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market a little bit and what that looks

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like and then maybe move on into talking

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about okay how do we make those plans

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and what those plans look like going

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forward as you try to grow and you try

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to get bigger and that's the the name of

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the game is you know let's start out

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small and then let's gradually get

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bigger and what do we have to do to do

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that so Casey if you want to kind of

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lean in on that a little bit and then

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we'll get to John and we'll ask him a

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few questions and maybe roll on with

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some stuff yeah a lot of the ideas that

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you'll have from this show is things

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that we experience or we live through

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you know um so whether I know how about

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that that in so uh one of the things

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that we've run into here recently as

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we've seen the market escalate and as

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we've seen some different things occur

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uh is a lot of the things that my

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customers are talking to me about is the

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banking side of things and so uh I I

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know that's one of the deals and I've

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said that at length and whether it's

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been on here or uh talking directly to

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my customers or my clients um those are

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things that we don't necessarily think

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about every day is those banking

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relationships or they're not necessarily

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as fun to do as going out and buying a

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set of cattle or feeding cattle or doing

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whatever uh and and John I told you this

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before we came on here um you know us as

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producers and the customer that I work

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with they end up wearing many many hats

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they're the CEO the COO the CFO uh HR

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department in some instances uh but they

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have to wear all of those hats um and

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then they also have to buy cattle and

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they have to you know run their feed

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yards and they're doing everything from

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the windshield or through the windshield

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of their pick up um and so whenever we

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get to points like this it's like going

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to the doctor almost you got to get more

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consistent with uh that as you progress

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or as you age or you morph into things

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so I think it's important that we go

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through this I think it's going to be

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something that's super educational

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hopefully uh that we get to get

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experience with that so John if you want

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to kind of introduce yourself and tell

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us a little about bit about you where

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you come from where you started um where

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you where you where are you from I mean

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what do you where did you grow up yeah

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thank thank you very much guys for

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having me here today I really appreciate

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it I uh I do work for a Texas in

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Amarillo I've been with the Farm Credit

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system for almost 30 years now it's hard

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to believe but I did grow up uh uh on a

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small community called Truth to

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Consequences New Mexico which is just uh

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north of Los cruus New Mexico TR

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Consequences New Mexico yep

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that's America are you sure that's okay

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that's perfect for the cattle industry

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Truth where he got consequences got that

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right uh but yeah I did grow up in New

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Mexico and uh worked in as far as my

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banking career goes I've worked in New

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Mexico Arizona and Texas for about the

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last 14 years

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cool that's kind of awkward silence

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right there was it so well let's just

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kind of get right into it and deep get

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into the meat of it of of kind of what

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we wanted to start discussing and and

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the first thing we want to talk about is

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this Market volatility okay so what does

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that look like on your side when this

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thing starts doing what it's doing I

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mean we're getting these big highs and

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then you know you're you're these things

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are costing so so much more uh our

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finance levels are going up our interest

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rates are going up the margin calls are

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going up and then it's just such a risk

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now so kind of on your side of that deal

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kind of explain what that looks like on

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your side and and what you guys look for

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to to balance that out to to help sure

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sure well so the way I look at the

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market is if you think about the

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volatility and what's happened over the

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last say year or so the the cost of

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these animals has risen by how much

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probably 40 50% higher in some cases

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correct oh we've easily doubled what it

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cost to buy these cattle sure I mean

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beforehand a lot of the cost of

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production was you know financ maybe

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through feed yards or something like

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that because grain costs were higher uh

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but as the grain costs have come down

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and cattle prices have gone up the bulk

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of what we're having to do is spend it

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on cattle so we've easily doubled the

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price of cattle right so you know if you

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think of think of it in those terms if

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you had a ,000 animal say a year ago or

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18 months ago or whatever now those

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animals are 2,000 plus correct so you

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just have a significantly amount more

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money tied up and anytime you're in a

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banking relationship uh with any Bank

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you're going to have to put some of your

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own Equity into the deal you're not

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going to likely ever get 100% financing

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on a house uh livestock or anything so

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more and more of the producers money is

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tied up in their operating line now even

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though they're making very good money

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most likely all of their cash is now

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tied up because they're paying so much

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more for the animals the feed uh

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interest costs Etc and it's more and

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more important to have a great banking

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relationship and a banker that really

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understands how to get you through times

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like this because it's gotten to be much

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more complicated and quite honestly

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there are some banks out there that uh

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may not have the experience in terms of

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uh you know Market type cattle to really

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structure the loans correctly so that to

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me is the most important part is having

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the right relationship and having a a a

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banking institution A lender that really

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understands the industry and can help

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you through times like this where the

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Market's really high or let's say it

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happen to drop 50% in three months you'd

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have the flip side and you then you'd

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have you know the opposite problem where

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you may very well be losing money on

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every pen of cattle yeah so that's

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that's the way I look at it so so I was

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looking at this uh over the last couple

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of weeks and so if we look back at the

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market and I'm going to talk fed cattle

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uh fed cattle market 2021 Market was a$1

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35 if we look before that the market had

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really never I mean it had gone up into

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the 172 area back in 1516 obviously but

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then we had broke back in there and we

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spent five years consistently in a

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channel between a dollar and a140 so we

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had a do we had a $40 range in cattle um

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and then we we went on this ensuing

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rally uh over the last four years where

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the market went up into the 160s 170s

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180s and then I I have not run into uh

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and and John this is what I want to

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really kind of get into and dig deep

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into January 28th of this year

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2025 um I probably heard more people

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running into borrowing constraints more

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than I ever have um and and since I've

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been doing this or exposed to this um

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and I think a lot of those situations um

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I think there's like multiple different

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parts of it I'm going to tell you the

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industry is probably more hedged uh now

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and so they're having to make margin

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calls obviously um but then also they're

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having to like buy cattle there's also a

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instance where they're prepaying feed

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right there at going into the end of the

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year and I think a lot of guys the

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stoutest guys that I've dealt with from

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an equity standpoint running into

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crunches from a from a borrowing

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capacity standpoint um and so that's

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where I probably want to focus is go

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okay look how do we get ourselves into a

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position where we don't have to say I

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can't pay for that I can't do this

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particularly when somebody's got a

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tremendous amount of equity in their

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cattle 50% or so are you in the industry

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looking to stand out trust the experts

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00:09:32,600 --> 00:09:37,040
at IMI Global and where food comes from

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00:09:35,040 --> 00:09:39,600
the leaders in third party verifications

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with over 30 years of experience their

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team knows agriculture inside and out

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ensuring you get innovated and

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personalized service every step of the

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way they help ranchers all over the

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country add value with programs like age

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Source nhtc verified Natural Care

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are you ready to add value get started

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today with imig global and where food

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comes from visit imig global.com for

275
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more

276
00:10:12,880 --> 00:10:18,360
information yeah I I couldn't agree more

277
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um as a banker what I really want to see

278
00:10:18,360 --> 00:10:21,720
is everybody keep their hedges in place

279
00:10:20,160 --> 00:10:24,160
especially in a market like this if we

280
00:10:21,720 --> 00:10:26,240
were at the bottom end of the market I

281
00:10:24,160 --> 00:10:27,920
probably wouldn't be as big an advocate

282
00:10:26,240 --> 00:10:29,720
for you probably should keep your hedges

283
00:10:27,920 --> 00:10:31,079
in place and that's always a borrower

284
00:10:29,720 --> 00:10:32,920
decision it's really not the bank's

285
00:10:31,079 --> 00:10:35,320
decision it's the borrower's decision

286
00:10:32,920 --> 00:10:36,959
the key is you you got to have a lot of

287
00:10:35,320 --> 00:10:38,360
communication whether you be the largest

288
00:10:36,959 --> 00:10:41,040
borrowers out there feeding cattle or

289
00:10:38,360 --> 00:10:42,480
the smallest and your your Baker really

290
00:10:41,040 --> 00:10:44,160
needs to understand what you're up

291
00:10:42,480 --> 00:10:47,200
against when you are in a market like

292
00:10:44,160 --> 00:10:48,959
this where prices have risen you know

293
00:10:47,200 --> 00:10:51,720
significantly everybody's in a little

294
00:10:48,959 --> 00:10:54,240
bit of a cash crunch it's not easy to

295
00:10:51,720 --> 00:10:55,760
get that money on a day notice you need

296
00:10:54,240 --> 00:10:56,800
that money in your commodity account or

297
00:10:55,760 --> 00:10:59,040
you're going to blow people out of

298
00:10:56,800 --> 00:11:00,519
Hedges that's just the way it works but

299
00:10:59,040 --> 00:11:03,680
what important from a producer

300
00:11:00,519 --> 00:11:05,519
standpoint is we we we all have to be

301
00:11:03,680 --> 00:11:07,440
having the right communication the right

302
00:11:05,519 --> 00:11:12,399
conversations so that that money is

303
00:11:07,440 --> 00:11:14,360
readily available and uh where where

304
00:11:12,399 --> 00:11:16,959
this really becomes a problem is when

305
00:11:14,360 --> 00:11:19,480
there's no planning that's been done so

306
00:11:16,959 --> 00:11:22,320
as the market was running make sure

307
00:11:19,480 --> 00:11:23,839
you're talking to your Banker frequently

308
00:11:22,320 --> 00:11:25,360
and you're giving yourself enough time

309
00:11:23,839 --> 00:11:27,560
to make sure you've got the money set up

310
00:11:25,360 --> 00:11:29,040
to make those calls because those kind

311
00:11:27,560 --> 00:11:30,839
of things don't happen overnight I mean

312
00:11:29,040 --> 00:11:32,320
if you're borrowing you know half a

313
00:11:30,839 --> 00:11:34,480
million dollars or a million dollars or

314
00:11:32,320 --> 00:11:35,720
more it's not like you're going to

315
00:11:34,480 --> 00:11:38,440
probably be able to get that money in a

316
00:11:35,720 --> 00:11:39,959
one day turnaround uh have a lot of

317
00:11:38,440 --> 00:11:41,760
conversations with your Banker have a

318
00:11:39,959 --> 00:11:43,240
lot of conversations with your commodity

319
00:11:41,760 --> 00:11:45,800
broker probably those two people ought

320
00:11:43,240 --> 00:11:48,279
to be talking and make sure that you've

321
00:11:45,800 --> 00:11:50,079
got everything in place so that you do

322
00:11:48,279 --> 00:11:51,839
not miss out on a margin call and you

323
00:11:50,079 --> 00:11:53,480
can keep your strategies in place

324
00:11:51,839 --> 00:11:57,000
because it is the borrower strategies

325
00:11:53,480 --> 00:11:58,639
it's not the bank strategy and what I

326
00:11:57,000 --> 00:12:01,160
always want to make sure of is that

327
00:11:58,639 --> 00:12:03,000
whatever my customer wants to do that's

328
00:12:01,160 --> 00:12:05,440
what we're able to do and that only

329
00:12:03,000 --> 00:12:07,880
happens through great communication so I

330
00:12:05,440 --> 00:12:10,680
I've heard guys say my banker makes me

331
00:12:07,880 --> 00:12:13,240
hedge and I know that that's probably

332
00:12:10,680 --> 00:12:14,320
not true okay so there m there's a

333
00:12:13,240 --> 00:12:16,199
difference between makes and

334
00:12:14,320 --> 00:12:17,480
incentivizes so can you kind of go down

335
00:12:16,199 --> 00:12:19,760
that path a little bit and talk to us

336
00:12:17,480 --> 00:12:22,120
about you know maybe what you guys do

337
00:12:19,760 --> 00:12:25,680
what the incentive why would a banker

338
00:12:22,120 --> 00:12:29,320
encourage uh or um be behind someone

339
00:12:25,680 --> 00:12:31,480
that's managing risk so as far I I think

340
00:12:29,320 --> 00:12:34,079
the right word is encourage What A

341
00:12:31,480 --> 00:12:36,760
lender really wants to stay away from is

342
00:12:34,079 --> 00:12:38,560
lender liability and if I'm requiring a

343
00:12:36,760 --> 00:12:40,199
person to hedge cattle and then let's

344
00:12:38,560 --> 00:12:42,839
say they you know put a hedge on they

345
00:12:40,199 --> 00:12:45,600
sell their cattle at 200 and they run to

346
00:12:42,839 --> 00:12:48,760
230 well I the bar and come back and say

347
00:12:45,600 --> 00:12:50,600
well you just lost me 30 bucks and

348
00:12:48,760 --> 00:12:52,360
that's never a position A lender wants

349
00:12:50,600 --> 00:12:54,199
to be in now there may be lenders that

350
00:12:52,360 --> 00:12:56,600
put themselves in that position but

351
00:12:54,199 --> 00:12:59,199
really encourag is the right word what

352
00:12:56,600 --> 00:13:02,199
we like to do is we give incentives for

353
00:12:59,199 --> 00:13:04,839
being hedged so you will not have to put

354
00:13:02,199 --> 00:13:08,360
as much of your own Equity into a cattle

355
00:13:04,839 --> 00:13:11,040
feeding deal if you hedge your cattle

356
00:13:08,360 --> 00:13:14,560
what the reason why is it's taking the

357
00:13:11,040 --> 00:13:16,000
bank you're basically hedging the bank's

358
00:13:14,560 --> 00:13:17,839
portion of the money in the deal is

359
00:13:16,000 --> 00:13:19,480
really what you're doing because you're

360
00:13:17,839 --> 00:13:21,000
able to borrow a lot more money than

361
00:13:19,480 --> 00:13:23,880
you're probably putting it in your own

362
00:13:21,000 --> 00:13:25,680
Equity so as a banker we want to have

363
00:13:23,880 --> 00:13:27,839
those cattle heads so we know our

364
00:13:25,680 --> 00:13:29,920
position is safe I'm not looking for

365
00:13:27,839 --> 00:13:33,000
guys to hit home runs I want them to hit

366
00:13:29,920 --> 00:13:34,920
singles so I want them to hit a single

367
00:13:33,000 --> 00:13:37,160
every single day of the week I'm not

368
00:13:34,920 --> 00:13:39,480
looking to finance a person that hits a

369
00:13:37,160 --> 00:13:41,720
home run once a year I want a strategy

370
00:13:39,480 --> 00:13:44,440
that I know they will make money every

371
00:13:41,720 --> 00:13:47,839
day in every Market if you if you went

372
00:13:44,440 --> 00:13:49,440
across a whole year there are there

373
00:13:47,839 --> 00:13:52,440
people may lose money here and there

374
00:13:49,440 --> 00:13:54,839
week to week day to day but in general

375
00:13:52,440 --> 00:13:57,320
month to month in cattle feeding if they

376
00:13:54,839 --> 00:13:59,600
have a sound strategy from start to

377
00:13:57,320 --> 00:14:01,880
finish they are likely to make money

378
00:13:59,600 --> 00:14:03,560
every single year yeah and so I think

379
00:14:01,880 --> 00:14:06,040
part of that probably just understanding

380
00:14:03,560 --> 00:14:08,959
your borrowing base more so so let's

381
00:14:06,040 --> 00:14:10,680
let's say uh I'm a I'm a guy that I've

382
00:14:08,959 --> 00:14:12,800
you know been feeding cattle here for a

383
00:14:10,680 --> 00:14:15,320
couple of years and I've started out and

384
00:14:12,800 --> 00:14:16,839
you know I've got a um you know I

385
00:14:15,320 --> 00:14:18,360
haven't necessarily had to do a barring

386
00:14:16,839 --> 00:14:19,480
base I just said I've got these cattle

387
00:14:18,360 --> 00:14:21,440
and I went and borrowed some money to

388
00:14:19,480 --> 00:14:22,759
finish those cattle out let's say I've

389
00:14:21,440 --> 00:14:24,440
made pretty good money on this set of

390
00:14:22,759 --> 00:14:26,560
cattle and now I'm doubling up and I'm

391
00:14:24,440 --> 00:14:28,279
going to buy another set of cattle what

392
00:14:26,560 --> 00:14:29,920
is a barwing base like what can you

393
00:14:28,279 --> 00:14:31,480
explain what that is I know we have

394
00:14:29,920 --> 00:14:33,720
conversations I've got conversations

395
00:14:31,480 --> 00:14:36,240
with my guys explain what that is and

396
00:14:33,720 --> 00:14:38,360
like what the point of that is in in the

397
00:14:36,240 --> 00:14:40,199
very simplest term of borrowing base is

398
00:14:38,360 --> 00:14:43,440
a is a report you're going to furnish to

399
00:14:40,199 --> 00:14:46,880
your lender most likely monthly maybe

400
00:14:43,440 --> 00:14:48,600
quarterly and in its most simplest terms

401
00:14:46,880 --> 00:14:50,199
if let's say I'm just financing the

402
00:14:48,600 --> 00:14:52,079
cattle I'm not financing feed or

403
00:14:50,199 --> 00:14:55,360
anything else you're going to have the

404
00:14:52,079 --> 00:14:56,959
cost of the cattle on the borrowing base

405
00:14:55,360 --> 00:14:59,720
versus the loan on the cattle so it's

406
00:14:56,959 --> 00:15:01,600
going to show you your Equity position

407
00:14:59,720 --> 00:15:03,959
and there's different ways to Value the

408
00:15:01,600 --> 00:15:07,240
cattle there's different ways every Bank

409
00:15:03,959 --> 00:15:09,000
does this but in general at least the

410
00:15:07,240 --> 00:15:12,320
way we do it what we're trying to strive

411
00:15:09,000 --> 00:15:14,320
toward is to Value those cattle at

412
00:15:12,320 --> 00:15:16,000
Market every single month so we want to

413
00:15:14,320 --> 00:15:19,040
know what are those cattle worth every

414
00:15:16,000 --> 00:15:20,800
month when they finish I don't really

415
00:15:19,040 --> 00:15:23,199
care so much about what you paid for

416
00:15:20,800 --> 00:15:24,720
them what I really care about is what

417
00:15:23,199 --> 00:15:27,160
are they going to be worth the day you

418
00:15:24,720 --> 00:15:29,480
finish them and what's it cost to take

419
00:15:27,160 --> 00:15:32,680
those animals to finish

420
00:15:29,480 --> 00:15:35,040
does that make sense so that that way

421
00:15:32,680 --> 00:15:36,680
every single month I know exactly where

422
00:15:35,040 --> 00:15:38,000
you are and you know as a producer

423
00:15:36,680 --> 00:15:41,160
exactly where you are and what your

424
00:15:38,000 --> 00:15:43,319
Equity position is so it's a protection

425
00:15:41,160 --> 00:15:45,600
reporting mechanism for the bank but

426
00:15:43,319 --> 00:15:48,440
it's a great management tool for the

427
00:15:45,600 --> 00:15:49,880
producer because every single month or

428
00:15:48,440 --> 00:15:51,639
what I would say hopefully is every

429
00:15:49,880 --> 00:15:53,279
single day they know where they are on

430
00:15:51,639 --> 00:15:55,680
their Equity position and their animals

431
00:15:53,279 --> 00:15:58,000
and their feed so as it gets more

432
00:15:55,680 --> 00:16:00,440
complicated uh you have feed on there as

433
00:15:58,000 --> 00:16:01,839
well you have receivables if you do

434
00:16:00,440 --> 00:16:04,839
prepaid you have those on there so what

435
00:16:01,839 --> 00:16:06,720
we're trying to do is lend The Producers

436
00:16:04,839 --> 00:16:08,319
uh an adequate amount of money so that

437
00:16:06,720 --> 00:16:10,480
they can keep their strategy in place

438
00:16:08,319 --> 00:16:12,240
you know you would think today cattle

439
00:16:10,480 --> 00:16:14,120
prices have risen dramatically there's

440
00:16:12,240 --> 00:16:18,560
cattle coming out of the feed yards

441
00:16:14,120 --> 00:16:20,639
making1 to $300 per lot per head well

442
00:16:18,560 --> 00:16:22,199
nobody's got any cash because all the

443
00:16:20,639 --> 00:16:25,639
money's going back into the higher pric

444
00:16:22,199 --> 00:16:28,519
cattle right and so that's just where we

445
00:16:25,639 --> 00:16:31,040
are in the industry and that's why a

446
00:16:28,519 --> 00:16:33,240
borrow base set up and a revolving line

447
00:16:31,040 --> 00:16:34,519
of credit is important because a

448
00:16:33,240 --> 00:16:37,720
producer needs to know he's got the

449
00:16:34,519 --> 00:16:37,720
money to continue his

450
00:16:38,440 --> 00:16:41,720
strategy that you keep saying strategy

451
00:16:40,759 --> 00:16:44,040
and

452
00:16:41,720 --> 00:16:45,759
communication and I think communication

453
00:16:44,040 --> 00:16:47,759
is a key to a lot of things it keeps

454
00:16:45,759 --> 00:16:49,959
everybody if you can keep everybody on

455
00:16:47,759 --> 00:16:51,720
the same channel and the same wavelink

456
00:16:49,959 --> 00:16:54,399
it don't matter what you're doing that

457
00:16:51,720 --> 00:16:56,399
communication is is key and and a lot of

458
00:16:54,399 --> 00:16:58,560
people don't don't like to make those

459
00:16:56,399 --> 00:17:01,720
phone calls but they just they need to

460
00:16:58,560 --> 00:17:03,040
be I mean that's right and I I'll tell

461
00:17:01,720 --> 00:17:04,720
you that we were talking about this

462
00:17:03,040 --> 00:17:06,439
earlier and it's it's like we like being

463
00:17:04,720 --> 00:17:08,120
in the calmness of the water where you

464
00:17:06,439 --> 00:17:10,120
don't necessarily have a whole lot going

465
00:17:08,120 --> 00:17:11,799
on there um you know you like being in

466
00:17:10,120 --> 00:17:12,880
the Lazy River I guess if you will

467
00:17:11,799 --> 00:17:14,720
because you don't really have to do a

468
00:17:12,880 --> 00:17:17,160
whole lot there whenever starts getting

469
00:17:14,720 --> 00:17:19,280
real choppy and whether the Market's

470
00:17:17,160 --> 00:17:21,199
going up or down or whatever it's doing

471
00:17:19,280 --> 00:17:23,160
um people get it gets real turbulent and

472
00:17:21,199 --> 00:17:24,760
we don't know what to do and so I think

473
00:17:23,160 --> 00:17:27,360
the biggest thing is like stepping back

474
00:17:24,760 --> 00:17:28,720
from a weekly standpoint going through

475
00:17:27,360 --> 00:17:30,480
uh and trying to understand where you're

476
00:17:28,720 --> 00:17:31,960
at at where you're going what you think

477
00:17:30,480 --> 00:17:33,640
the Market's going to do and then

478
00:17:31,960 --> 00:17:35,080
putting that in kind of a financial plan

479
00:17:33,640 --> 00:17:38,039
but like I said when we first started

480
00:17:35,080 --> 00:17:40,520
this most guys don't have the ability to

481
00:17:38,039 --> 00:17:42,919
do that on a daily basis because they're

482
00:17:40,520 --> 00:17:44,320
so busy they're exhausted one because

483
00:17:42,919 --> 00:17:45,559
they've been feeding cattle all day long

484
00:17:44,320 --> 00:17:48,120
or they've been riding their horse or

485
00:17:45,559 --> 00:17:50,799
they've been doing whatever um but but

486
00:17:48,120 --> 00:17:53,240
as we've grown and this Market has been

487
00:17:50,799 --> 00:17:55,400
extremely fun extremely exciting and

488
00:17:53,240 --> 00:17:56,880
extremely rewarding and the craziest

489
00:17:55,400 --> 00:17:59,240
thing is when we got to the market highs

490
00:17:56,880 --> 00:18:01,400
that we just recently experienced

491
00:17:59,240 --> 00:18:02,840
um people were freaking out because

492
00:18:01,400 --> 00:18:04,640
mostly because of lending I mean it's

493
00:18:02,840 --> 00:18:07,840
like we're running into constraints you

494
00:18:04,640 --> 00:18:10,400
know from that standpoint so um I I

495
00:18:07,840 --> 00:18:12,520
think that uh to your point just having

496
00:18:10,400 --> 00:18:15,159
that barwing base that ability to go

497
00:18:12,520 --> 00:18:16,760
back and go okay where am I at today oh

498
00:18:15,159 --> 00:18:18,480
a hedge yeah that does lost me some

499
00:18:16,760 --> 00:18:20,600
money but I've got the rewarding side of

500
00:18:18,480 --> 00:18:24,640
it from a cattle Equity or cattle market

501
00:18:20,600 --> 00:18:26,799
appreciation standpoint right and and it

502
00:18:24,640 --> 00:18:28,799
there is a cost of hedging for sure and

503
00:18:26,799 --> 00:18:30,039
we get push back you know sometimes

504
00:18:28,799 --> 00:18:31,760
because of what I talked about earlier

505
00:18:30,039 --> 00:18:33,760
well why would I want to sell my cattle

506
00:18:31,760 --> 00:18:35,760
and put a hedge on them today when I

507
00:18:33,760 --> 00:18:40,520
think this Market may run up another 20

508
00:18:35,760 --> 00:18:43,039
30 bucks what the Hedge is really doing

509
00:18:40,520 --> 00:18:44,760
as you well know it's protecting the

510
00:18:43,039 --> 00:18:47,720
producers Equity position and the banks

511
00:18:44,760 --> 00:18:51,400
of course and what we don't want to have

512
00:18:47,720 --> 00:18:55,000
happen is we have a $3 $40 drop and now

513
00:18:51,400 --> 00:18:57,640
now all the equity's gone so the more

514
00:18:55,000 --> 00:19:00,159
money that you're borrowing because in

515
00:18:57,640 --> 00:19:03,080
general what whether you're borrowing

516
00:19:00,159 --> 00:19:06,080
$200,000 or whether you're borrowing $20

517
00:19:03,080 --> 00:19:07,440
million the equity is likely the same

518
00:19:06,080 --> 00:19:09,600
that you're going to have those cattle

519
00:19:07,440 --> 00:19:11,080
it doesn't necessarily change because

520
00:19:09,600 --> 00:19:13,120
you're borrowing less money or more

521
00:19:11,080 --> 00:19:14,520
money it's probably the same so think

522
00:19:13,120 --> 00:19:16,799
about how many more dollars are on the

523
00:19:14,520 --> 00:19:19,039
line as these operations grow or the

524
00:19:16,799 --> 00:19:21,559
cattle you know double in

525
00:19:19,039 --> 00:19:24,919
value there's just a lot more Equity

526
00:19:21,559 --> 00:19:26,960
riding and that's that's why we like to

527
00:19:24,919 --> 00:19:28,200
have hedges in place because we just

528
00:19:26,960 --> 00:19:30,640
don't want to see a producer get blown

529
00:19:28,200 --> 00:19:31,679
out there's not a lot of options if a

530
00:19:30,640 --> 00:19:35,440
especially like think if you're a

531
00:19:31,679 --> 00:19:39,360
younger guy uh growing your operation

532
00:19:35,440 --> 00:19:41,000
you're you've done well everything is is

533
00:19:39,360 --> 00:19:42,720
going good because cattle Market's been

534
00:19:41,000 --> 00:19:44,840
good you've done a great job buying

535
00:19:42,720 --> 00:19:46,520
cattle great job selling the animals

536
00:19:44,840 --> 00:19:48,760
great job managing the

537
00:19:46,520 --> 00:19:52,520
animals you can't do anything about the

538
00:19:48,760 --> 00:19:55,039
market and if if you're getting a

539
00:19:52,520 --> 00:19:57,000
position where you don't have some

540
00:19:55,039 --> 00:19:58,880
protection you can very well lose all

541
00:19:57,000 --> 00:20:02,640
your equity in a very short period of

542
00:19:58,880 --> 00:20:06,039
time so that's that's the concern well

543
00:20:02,640 --> 00:20:07,200
so y'all explain this to me then yeah

544
00:20:06,039 --> 00:20:10,120
we're concerned about the equity

545
00:20:07,200 --> 00:20:12,720
position but also with this big runup

546
00:20:10,120 --> 00:20:15,559
there's the margin cost coming so what

547
00:20:12,720 --> 00:20:18,159
happens when that accounts drained and

548
00:20:15,559 --> 00:20:19,559
this thing keeps running up that's the

549
00:20:18,159 --> 00:20:21,360
communication you're talking about

550
00:20:19,559 --> 00:20:22,840
that's communication between your

551
00:20:21,360 --> 00:20:25,280
commodity broker and your Banker that

552
00:20:22,840 --> 00:20:26,440
need to be happen look if this thing

553
00:20:25,280 --> 00:20:28,200
keeps running up we're going to need

554
00:20:26,440 --> 00:20:31,280
this much more money you might want to

555
00:20:28,200 --> 00:20:33,080
go to figuring that out because

556
00:20:31,280 --> 00:20:34,760
shouldn't your Equity grow too so you

557
00:20:33,080 --> 00:20:36,880
could loan them more money on the margin

558
00:20:34,760 --> 00:20:38,720
account or am I looking at that wrong

559
00:20:36,880 --> 00:20:42,039
yeah Ty what I would say on that is it's

560
00:20:38,720 --> 00:20:44,640
it's really two separate issues so I I

561
00:20:42,039 --> 00:20:45,840
almost separate the margin part of this

562
00:20:44,640 --> 00:20:47,360
correct because that money's got to go

563
00:20:45,840 --> 00:20:51,080
out no matter what and it's probably got

564
00:20:47,360 --> 00:20:53,000
to go out in the market we're in 100%

565
00:20:51,080 --> 00:20:54,640
financing from the bank so I'm not you

566
00:20:53,000 --> 00:20:56,600
know if if you call me and say well I

567
00:20:54,640 --> 00:20:58,840
got to make a margin call well I'm not

568
00:20:56,600 --> 00:21:00,320
going to go out and try to find out well

569
00:20:58,840 --> 00:21:03,320
what cattle inventory do you have today

570
00:21:00,320 --> 00:21:05,280
we got to get that done and so that

571
00:21:03,320 --> 00:21:09,679
money is going to probably be supplied

572
00:21:05,280 --> 00:21:11,279
by the bank at 100% now on the the uh

573
00:21:09,679 --> 00:21:13,200
Equity side of this

574
00:21:11,279 --> 00:21:14,880
thing the

575
00:21:13,200 --> 00:21:17,120
whether

576
00:21:14,880 --> 00:21:18,640
typically now every bank is different

577
00:21:17,120 --> 00:21:21,760
okay so when I say typically what I what

578
00:21:18,640 --> 00:21:24,520
I mean is whether I'm lending a guy

579
00:21:21,760 --> 00:21:27,520
$100,000 or $20 million let's say I

580
00:21:24,520 --> 00:21:28,880
finance 200 producers pretty much their

581
00:21:27,520 --> 00:21:30,679
loan requirements are likely to be

582
00:21:28,880 --> 00:21:32,240
almost the same in terms of how much

583
00:21:30,679 --> 00:21:36,880
Equity they got to put in those animals

584
00:21:32,240 --> 00:21:38,279
MH and a a a severe Market drop it's

585
00:21:36,880 --> 00:21:41,720
going to it's going to harm that

586
00:21:38,279 --> 00:21:45,080
producer and uh it's going to do it in a

587
00:21:41,720 --> 00:21:46,400
in a in a hurry and so all I'm saying is

588
00:21:45,080 --> 00:21:49,320
yeah but it's going to harm him on this

589
00:21:46,400 --> 00:21:51,640
side on the equity side correct okay so

590
00:21:49,320 --> 00:21:54,600
so that say this cattle this C's this

591
00:21:51,640 --> 00:21:56,200
these cattle are hedged M it's gonna

592
00:21:54,600 --> 00:21:57,440
he's he's covered over here on this side

593
00:21:56,200 --> 00:21:59,200
in this account you got two different

594
00:21:57,440 --> 00:22:01,240
accounts you got your well I don't know

595
00:21:59,200 --> 00:22:03,720
if he's I don't know if he's explained

596
00:22:01,240 --> 00:22:04,799
that so we might have him explain what

597
00:22:03,720 --> 00:22:06,760
he means by that because I don't know if

598
00:22:04,799 --> 00:22:08,400
we really D because I think most guys I

599
00:22:06,760 --> 00:22:10,640
mean I'm going to tell you the vast

600
00:22:08,400 --> 00:22:12,840
majority people that I work with at Blue

601
00:22:10,640 --> 00:22:14,400
Reef that are hedging cattle and this

602
00:22:12,840 --> 00:22:16,799
what we're really trying to explore and

603
00:22:14,400 --> 00:22:18,760
I'm trying to learn more about honestly

604
00:22:16,799 --> 00:22:21,320
um again we don't try to learn about

605
00:22:18,760 --> 00:22:23,600
things until incentive drives outcome

606
00:22:21,320 --> 00:22:26,400
yeah like I need to go to the doctor

607
00:22:23,600 --> 00:22:30,200
said you're naked yeah that's right so

608
00:22:26,400 --> 00:22:32,559
um so what John had mentioned is having

609
00:22:30,200 --> 00:22:34,520
two separated accounts so you have an

610
00:22:32,559 --> 00:22:36,480
account where you have the amount of

611
00:22:34,520 --> 00:22:38,159
equity that you need that's required to

612
00:22:36,480 --> 00:22:41,039
buy the cattle and how much money you're

613
00:22:38,159 --> 00:22:43,640
putting up and then the you know the 80%

614
00:22:41,039 --> 00:22:46,679
that that the bank is going to loan you

615
00:22:43,640 --> 00:22:49,480
um John explain the strategy or the plan

616
00:22:46,679 --> 00:22:50,919
or however you go about what you use for

617
00:22:49,480 --> 00:22:52,919
producers on hedge accounts because like

618
00:22:50,919 --> 00:22:55,400
I said most of them are they're all

619
00:22:52,919 --> 00:22:58,159
trying to they're all dipping in one pot

620
00:22:55,400 --> 00:23:00,080
what well whether it be a separate loan

621
00:22:58,159 --> 00:23:02,919
on so like on bigger accounts when I say

622
00:23:00,080 --> 00:23:04,360
bigger I'm going to say loans in excess

623
00:23:02,919 --> 00:23:07,720
of let's just say $5

624
00:23:04,360 --> 00:23:10,039
million or greater a lot of those we

625
00:23:07,720 --> 00:23:11,919
will do a separate hedge account or at

626
00:23:10,039 --> 00:23:15,400
least a sub account where that money is

627
00:23:11,919 --> 00:23:17,799
only there for Hedges so so you know as

628
00:23:15,400 --> 00:23:20,919
a producer let's say I set a million

629
00:23:17,799 --> 00:23:23,880
dollars in there I think you ought to at

630
00:23:20,919 --> 00:23:26,919
least have 10% if you're bwing a million

631
00:23:23,880 --> 00:23:30,400
dollar I need to plan on at least

632
00:23:26,919 --> 00:23:31,960
$100,000 10% that loan set aside for

633
00:23:30,400 --> 00:23:34,200
margin and I need to be comfortable

634
00:23:31,960 --> 00:23:36,080
lending you that money as we start the

635
00:23:34,200 --> 00:23:38,960
season you know if we meet once a year

636
00:23:36,080 --> 00:23:40,640
we set up a plan then I think what a

637
00:23:38,960 --> 00:23:43,799
producer ought to be asking

638
00:23:40,640 --> 00:23:45,120
is do I have 10% set up and I think

639
00:23:43,799 --> 00:23:48,200
that's probably a minimum at least in

640
00:23:45,120 --> 00:23:51,240
this market the way it's run uh for

641
00:23:48,200 --> 00:23:52,840
margin calls and then as a producer you

642
00:23:51,240 --> 00:23:56,279
can monitor that whether it be in a

643
00:23:52,840 --> 00:23:58,919
separate account or it's all in one loan

644
00:23:56,279 --> 00:24:01,919
you should know well if I've put out you

645
00:23:58,919 --> 00:24:04,200
know to my commodity broker 80 880,000

646
00:24:01,919 --> 00:24:06,400
of the 100 I'm running now the Market's

647
00:24:04,200 --> 00:24:07,840
still running I'm short probably better

648
00:24:06,400 --> 00:24:09,240
have some conversations exactly we're

649
00:24:07,840 --> 00:24:10,640
going to need another 50 or 100 or

650
00:24:09,240 --> 00:24:12,360
whatever that's right well typically

651
00:24:10,640 --> 00:24:15,400
when the market has what they refer to

652
00:24:12,360 --> 00:24:17,279
as a blowoff top it's typically the the

653
00:24:15,400 --> 00:24:19,440
commercial the producer blowing out of

654
00:24:17,279 --> 00:24:20,880
Hedges you know you go from and I talk

655
00:24:19,440 --> 00:24:22,799
about this with my customers at length

656
00:24:20,880 --> 00:24:24,640
all the time where we talk about fear

657
00:24:22,799 --> 00:24:26,919
hope greed panic and all those different

658
00:24:24,640 --> 00:24:29,000
emotional cycles of things it's like

659
00:24:26,919 --> 00:24:31,440
right now where the market has had lots

660
00:24:29,000 --> 00:24:33,399
of chop in it you know it rallied up and

661
00:24:31,440 --> 00:24:35,480
we put in a high there at the end of

662
00:24:33,399 --> 00:24:36,880
January where we were kind of 207 fats

663
00:24:35,480 --> 00:24:39,039
and you know call it right a bump it up

664
00:24:36,880 --> 00:24:41,440
against 280 feeder cattle and then the

665
00:24:39,039 --> 00:24:43,320
market corrected and then rallied back

666
00:24:41,440 --> 00:24:44,760
and we're going to see these big ensuing

667
00:24:43,320 --> 00:24:46,799
and everybody acts like volatility is

668
00:24:44,760 --> 00:24:49,000
new volatility is not new they've been

669
00:24:46,799 --> 00:24:51,240
saying volatility is new I'm 44 I got in

670
00:24:49,000 --> 00:24:53,559
this industry at 24 it's been new for

671
00:24:51,240 --> 00:24:55,840
the last 20 years right so it's just

672
00:24:53,559 --> 00:24:57,640
part of doing business honestly right so

673
00:24:55,840 --> 00:25:01,200
what what gets people messed up in my

674
00:24:57,640 --> 00:25:03,320
mind is what I refer to in a market is

675
00:25:01,200 --> 00:25:05,880
the zone of ruination and that's when

676
00:25:03,320 --> 00:25:08,159
the Market's in a in a not in a trending

677
00:25:05,880 --> 00:25:10,279
aspect it's in a choppy aspect where a

678
00:25:08,159 --> 00:25:11,399
producer that never thought the market

679
00:25:10,279 --> 00:25:13,919
was going to go over

680
00:25:11,399 --> 00:25:18,360
$2 convinces himself that the Market's

681
00:25:13,919 --> 00:25:20,880
going to go to 215 or 220 or 230 because

682
00:25:18,360 --> 00:25:22,520
he's feeling the pressure from whether

683
00:25:20,880 --> 00:25:23,360
his wife saying why am I sending this

684
00:25:22,520 --> 00:25:25,880
money

685
00:25:23,360 --> 00:25:29,520
out uh he wakes up and he's got a margin

686
00:25:25,880 --> 00:25:32,000
call in his account his calls his banker

687
00:25:29,520 --> 00:25:34,960
and says man I can't make this and then

688
00:25:32,000 --> 00:25:36,520
he just says get me out um and a lot of

689
00:25:34,960 --> 00:25:40,240
times that's whenever you have the

690
00:25:36,520 --> 00:25:42,320
blowoff tops um and so I I have

691
00:25:40,240 --> 00:25:45,000
experienced people that have come to

692
00:25:42,320 --> 00:25:47,960
work with me that have blown out at the

693
00:25:45,000 --> 00:25:50,760
top and so my biggest fear honestly in

694
00:25:47,960 --> 00:25:53,760
this market as we go through this is

695
00:25:50,760 --> 00:25:55,720
having a producer that has let's say

696
00:25:53,760 --> 00:25:57,799
I've got a million dollar line of credit

697
00:25:55,720 --> 00:26:00,840
I've got $200,000 of my own money in

698
00:25:57,799 --> 00:26:03,679
there I've got $800,000 borrowed the

699
00:26:00,840 --> 00:26:06,399
market goes up and then all of a sudden

700
00:26:03,679 --> 00:26:08,000
we have this valuation there that's high

701
00:26:06,399 --> 00:26:10,360
and you're like man I've never been able

702
00:26:08,000 --> 00:26:12,679
to make this amount of money again and I

703
00:26:10,360 --> 00:26:15,799
sell the market futures market and then

704
00:26:12,679 --> 00:26:18,320
the market goes another 15% or 10%

705
00:26:15,799 --> 00:26:20,520
higher than that and you don't have the

706
00:26:18,320 --> 00:26:23,279
capital or the borrowing capacity or the

707
00:26:20,520 --> 00:26:24,720
relationship to manage that and then

708
00:26:23,279 --> 00:26:26,480
every day you go man I'm stupid for

709
00:26:24,720 --> 00:26:28,440
doing this why did I do this and then

710
00:26:26,480 --> 00:26:31,120
boom you get out and what you thought

711
00:26:28,440 --> 00:26:33,799
was locking in a $200 profit and then we

712
00:26:31,120 --> 00:26:35,840
see something happen a gray Swan a BL

713
00:26:33,799 --> 00:26:37,720
Black Swan something happened in the

714
00:26:35,840 --> 00:26:40,559
market and then all of a sudden you lose

715
00:26:37,720 --> 00:26:43,640
$300 ahead and then originally you had

716
00:26:40,559 --> 00:26:45,320
$200 put up now you can't be in business

717
00:26:43,640 --> 00:26:48,080
anymore and you still owe the bank a

718
00:26:45,320 --> 00:26:51,000
$100 that's right and that's exactly

719
00:26:48,080 --> 00:26:53,000
what we're trying to guard against

720
00:26:51,000 --> 00:26:55,720
because and I keep using the word

721
00:26:53,000 --> 00:26:58,720
strategy but what you just what you just

722
00:26:55,720 --> 00:27:00,480
described is why the producer should

723
00:26:58,720 --> 00:27:04,279
think through the strategy with the

724
00:27:00,480 --> 00:27:07,039
banker with the commodity broker so that

725
00:27:04,279 --> 00:27:09,520
he then he's disciplined about okay I

726
00:27:07,039 --> 00:27:13,039
know I've already I've already explained

727
00:27:09,520 --> 00:27:15,159
and I've thought through for my own self

728
00:27:13,039 --> 00:27:17,919
why I'm making these margin calls even

729
00:27:15,159 --> 00:27:19,799
though it's costing me money because the

730
00:27:17,919 --> 00:27:21,159
producer went into it with a strategy

731
00:27:19,799 --> 00:27:23,799
that that's what he was going to do

732
00:27:21,159 --> 00:27:26,679
whether the market was over two or under

733
00:27:23,799 --> 00:27:29,720
two he went into it that year full well

734
00:27:26,679 --> 00:27:31,600
saying to himself not to the bank I I

735
00:27:29,720 --> 00:27:33,799
want to hit singles I'm not trying to

736
00:27:31,600 --> 00:27:35,840
hit a home run because I want to keep

737
00:27:33,799 --> 00:27:37,840
playing baseball I want to keep cattle

738
00:27:35,840 --> 00:27:40,679
feeding I want to do it for the next 20

739
00:27:37,840 --> 00:27:43,679
years and it nobody has unlimited

740
00:27:40,679 --> 00:27:45,760
amounts of equity so and we don't know

741
00:27:43,679 --> 00:27:48,039
when the the gray Swan or the Black Swan

742
00:27:45,760 --> 00:27:50,039
or the purple Swan or whatever color the

743
00:27:48,039 --> 00:27:55,000
swan is we don't know when it's going to

744
00:27:50,039 --> 00:27:57,080
come next right and so that's why this

745
00:27:55,000 --> 00:27:59,279
defi what this defined strategy is so

746
00:27:57,080 --> 00:28:02,480
important to to talk about and think

747
00:27:59,279 --> 00:28:06,480
through with you with your Banker with

748
00:28:02,480 --> 00:28:07,760
your family because really it's it's you

749
00:28:06,480 --> 00:28:10,159
as a producer and your family that are

750
00:28:07,760 --> 00:28:12,120
making this decision you're you're

751
00:28:10,159 --> 00:28:14,720
coming to the bank to get some

752
00:28:12,120 --> 00:28:16,600
money as a as a producer you've got to

753
00:28:14,720 --> 00:28:20,159
do whatever is right for you and your

754
00:28:16,600 --> 00:28:20,159
family yeah and that's

755
00:28:20,360 --> 00:28:27,159
a one one strategies not fit all right

756
00:28:25,000 --> 00:28:29,039
so you like you said it best right there

757
00:28:27,159 --> 00:28:30,519
you got to do what works for you what's

758
00:28:29,039 --> 00:28:32,000
best for you and your family and what

759
00:28:30,519 --> 00:28:33,720
you're doing I mean whether you're

760
00:28:32,000 --> 00:28:34,799
running light cattle whether you're

761
00:28:33,720 --> 00:28:36,360
going to run you're going to

762
00:28:34,799 --> 00:28:38,559
precondition them have a backgrounding

763
00:28:36,360 --> 00:28:40,360
yard whether you're going to feed cattle

764
00:28:38,559 --> 00:28:42,279
all the way through there's strategies

765
00:28:40,360 --> 00:28:44,559
for every one of those you just got to

766
00:28:42,279 --> 00:28:47,240
get to that strategy exactly and you got

767
00:28:44,559 --> 00:28:49,320
to get the right people we've we've

768
00:28:47,240 --> 00:28:50,880
harped on this a long time a lot of time

769
00:28:49,320 --> 00:28:54,120
since we started this deal this is a

770
00:28:50,880 --> 00:28:56,320
people business this is a a relationship

771
00:28:54,120 --> 00:28:58,240
business so you got to find those

772
00:28:56,320 --> 00:29:00,960
relationships with the right people that

773
00:28:58,240 --> 00:29:03,120
you trust and that you can move forward

774
00:29:00,960 --> 00:29:04,799
and trust them to strategize for you

775
00:29:03,120 --> 00:29:07,159
because you can't do it all he just I

776
00:29:04,799 --> 00:29:09,919
mean just like Casey was saying earlier

777
00:29:07,159 --> 00:29:12,760
we we got these people trying to be the

778
00:29:09,919 --> 00:29:16,440
the CEO the the vice president the

779
00:29:12,760 --> 00:29:17,960
janitor the feedbunk guy the doctor the

780
00:29:16,440 --> 00:29:21,640
you can't be good at none of them if

781
00:29:17,960 --> 00:29:23,159
you're trying to do them all and so we

782
00:29:21,640 --> 00:29:25,320
got to come up with the right strategy

783
00:29:23,159 --> 00:29:28,240
you got to get the right people in place

784
00:29:25,320 --> 00:29:30,760
and then you got to have your plan

785
00:29:28,240 --> 00:29:33,120
so do we want to dive more into this

786
00:29:30,760 --> 00:29:35,279
Market or do we want to kind

787
00:29:33,120 --> 00:29:36,559
of the volatility of the market have

788
00:29:35,279 --> 00:29:38,799
y'all covered everything you want to

789
00:29:36,559 --> 00:29:41,200
talk about there guys and is there any

790
00:29:38,799 --> 00:29:44,240
more questions you have Casey about the

791
00:29:41,200 --> 00:29:46,799
different accounts about you know that

792
00:29:44,240 --> 00:29:48,240
that that helped me a lot was the okay I

793
00:29:46,799 --> 00:29:50,880
have a a revolving line of credit over

794
00:29:48,240 --> 00:29:53,000
here to buy cattle with okay and I want

795
00:29:50,880 --> 00:29:57,159
to scale up my I want to scale up my

796
00:29:53,000 --> 00:29:58,799
operation but man I'm got nervous my dad

797
00:29:57,159 --> 00:30:00,799
never did it my grand Granddad never did

798
00:29:58,799 --> 00:30:02,519
it my great Granddad never did it they

799
00:30:00,799 --> 00:30:04,000
they thought hedging in the my great

800
00:30:02,519 --> 00:30:05,360
Granddad every time he looked at that

801
00:30:04,000 --> 00:30:08,679
board he'd say somebody needs to go

802
00:30:05,360 --> 00:30:10,320
shoot them and so they never went naked

803
00:30:08,679 --> 00:30:11,960
all their life and it worked for my dad

804
00:30:10,320 --> 00:30:14,880
and it worked for my granddad I mean it

805
00:30:11,960 --> 00:30:17,320
worked for them but at these levels I

806
00:30:14,880 --> 00:30:20,279
mean yeah has always cost a lot of money

807
00:30:17,320 --> 00:30:21,799
and and but you could lose the ranch you

808
00:30:20,279 --> 00:30:23,360
could use your things you've been

809
00:30:21,799 --> 00:30:25,360
working for all your life at these

810
00:30:23,360 --> 00:30:27,760
levels right with one little stump of

811
00:30:25,360 --> 00:30:29,440
the toe so now people are thinking you

812
00:30:27,760 --> 00:30:31,159
know we might ought to get serious about

813
00:30:29,440 --> 00:30:33,440
doing some hedging and stuff I've never

814
00:30:31,159 --> 00:30:35,640
even thought about it never even done it

815
00:30:33,440 --> 00:30:37,480
but at these levels and and and trying

816
00:30:35,640 --> 00:30:39,880
to grow my the weak cattle deal that

817
00:30:37,480 --> 00:30:42,159
we're trying to do and and then trying

818
00:30:39,880 --> 00:30:44,240
to buy some cattle early on to kind of

819
00:30:42,159 --> 00:30:45,679
risk I mean to to keep that cost down

820
00:30:44,240 --> 00:30:48,200
buy them lighter and keep them longer

821
00:30:45,679 --> 00:30:50,880
you know to keep that dollars per head

822
00:30:48,200 --> 00:30:53,399
down that makes a lot of sense having a

823
00:30:50,880 --> 00:30:55,480
having a heding account to just a one

824
00:30:53,399 --> 00:30:58,360
account you have 10% sitting over here

825
00:30:55,480 --> 00:31:00,159
to hedge with a lot of people don't know

826
00:30:58,360 --> 00:31:01,799
that that's an option A lot of people

827
00:31:00,159 --> 00:31:03,840
didn't know that was I didn't I me and

828
00:31:01,799 --> 00:31:05,240
I've been doing this I mean he said'

829
00:31:03,840 --> 00:31:07,120
been doing it since we was in our 20s I

830
00:31:05,240 --> 00:31:08,799
mean been buying cattle since I was 15

831
00:31:07,120 --> 00:31:10,080
and I didn't know you could you could

832
00:31:08,799 --> 00:31:12,120
set those two different maybe it's

833
00:31:10,080 --> 00:31:14,600
because I didn't want to know but then

834
00:31:12,120 --> 00:31:16,200
never know that um yeah and I think I

835
00:31:14,600 --> 00:31:18,159
think the most important thing or one of

836
00:31:16,200 --> 00:31:20,240
the more important things is like just

837
00:31:18,159 --> 00:31:22,440
that exposure part of it and then the

838
00:31:20,240 --> 00:31:25,080
biggest thing is and I always go back to

839
00:31:22,440 --> 00:31:26,840
this behavioral psychology and like

840
00:31:25,080 --> 00:31:29,279
what's in your mind when things are

841
00:31:26,840 --> 00:31:31,919
going on so so like let's say it's this

842
00:31:29,279 --> 00:31:34,200
let's say you're 50% hedged the market

843
00:31:31,919 --> 00:31:37,320
goes up

844
00:31:34,200 --> 00:31:39,440
$201 you just picked up 10 bucks a 100

845
00:31:37,320 --> 00:31:41,440
okay but what most people are going to

846
00:31:39,440 --> 00:31:43,600
do is they're going to go I gave up 10

847
00:31:41,440 --> 00:31:46,600
bucks a 100 right and then what you

848
00:31:43,600 --> 00:31:49,440
should be doing is selling the next 5%

849
00:31:46,600 --> 00:31:51,760
or 10% legging into the next part of

850
00:31:49,440 --> 00:31:53,559
sales because we know it's easy to step

851
00:31:51,760 --> 00:31:56,399
back and look at markets and hindsight

852
00:31:53,559 --> 00:31:58,000
and go man I should have done that but

853
00:31:56,399 --> 00:32:00,960
when you're at and you got the back of

854
00:31:58,000 --> 00:32:02,440
your back against the wall and you got

855
00:32:00,960 --> 00:32:04,799
your broker calling you and saying I

856
00:32:02,440 --> 00:32:06,760
need a margin this thing or and then the

857
00:32:04,799 --> 00:32:08,639
other part of this thing that happens is

858
00:32:06,760 --> 00:32:10,519
is not only that but you miss

859
00:32:08,639 --> 00:32:13,159
opportunities so the market goes up you

860
00:32:10,519 --> 00:32:15,519
miss an opportunity to sell

861
00:32:13,159 --> 00:32:16,919
more Tai you call somebody and offer

862
00:32:15,519 --> 00:32:18,720
them a set of cattle and they tell you

863
00:32:16,919 --> 00:32:20,519
no because they don't have the money to

864
00:32:18,720 --> 00:32:21,880
do it they've been doing that a lot the

865
00:32:20,519 --> 00:32:23,639
last couple days I don't know if you

866
00:32:21,880 --> 00:32:25,519
know they're not but we've been we've

867
00:32:23,639 --> 00:32:26,960
been hearing no a lot here lately you

868
00:32:25,519 --> 00:32:28,799
figure on this High markets it'd be easy

869
00:32:26,960 --> 00:32:31,080
to sell one looks like there's a lot of

870
00:32:28,799 --> 00:32:33,159
people buying them though it's crazy but

871
00:32:31,080 --> 00:32:35,799
but again I think like I said prices

872
00:32:33,159 --> 00:32:37,799
that we thought would be not

873
00:32:35,799 --> 00:32:42,279
attainable and we thought would be

874
00:32:37,799 --> 00:32:44,000
awesome to get to we we somehow convince

875
00:32:42,279 --> 00:32:46,760
ourselves

876
00:32:44,000 --> 00:32:49,120
mentally that those prices are cheap now

877
00:32:46,760 --> 00:32:51,600
and and so that's where I really try to

878
00:32:49,120 --> 00:32:53,440
drive home and my customers are probably

879
00:32:51,600 --> 00:32:55,480
going to listen to this and know what

880
00:32:53,440 --> 00:32:57,480
I'm saying it's but it's it's something

881
00:32:55,480 --> 00:33:00,799
where what I try to drive home is this

882
00:32:57,480 --> 00:33:04,240
this is this is mental Warfare this is a

883
00:33:00,799 --> 00:33:06,440
thing of making sure that you don't you

884
00:33:04,240 --> 00:33:08,760
know you sell cattle and the market goes

885
00:33:06,440 --> 00:33:10,039
up and you don't you know bang your head

886
00:33:08,760 --> 00:33:11,360
against the wall and say I'm an idiot

887
00:33:10,039 --> 00:33:13,440
for doing that you should go man there's

888
00:33:11,360 --> 00:33:15,200
another opportunity here to sell more

889
00:33:13,440 --> 00:33:17,440
and making sure that you know what your

890
00:33:15,200 --> 00:33:18,880
inventory is you know what the value of

891
00:33:17,440 --> 00:33:20,840
that inventory is you know what the

892
00:33:18,880 --> 00:33:22,120
current market price is and then that

893
00:33:20,840 --> 00:33:24,760
gives you the next step and that's the

894
00:33:22,120 --> 00:33:25,919
opportunity and again like John I think

895
00:33:24,760 --> 00:33:28,360
it's awesome that you got on here and

896
00:33:25,919 --> 00:33:31,120
you were able to talk about these things

897
00:33:28,360 --> 00:33:33,440
um so that we could go through and

898
00:33:31,120 --> 00:33:35,559
really learn and I know we really harped

899
00:33:33,440 --> 00:33:37,360
on this part of the banking side of it

900
00:33:35,559 --> 00:33:39,279
but I think this part of the banking

901
00:33:37,360 --> 00:33:41,279
side of it really folds into a lot of

902
00:33:39,279 --> 00:33:43,559
other things when it comes to that so

903
00:33:41,279 --> 00:33:46,440
but it's really kind of setting a plan

904
00:33:43,559 --> 00:33:48,279
and and managing through that plan and

905
00:33:46,440 --> 00:33:51,840
and and trying to understand it and I

906
00:33:48,279 --> 00:33:54,200
think we'll get into that that plan

907
00:33:51,840 --> 00:33:57,559
so-called that we talked about strategy

908
00:33:54,200 --> 00:33:58,919
now we need to talk about plan but I

909
00:33:57,559 --> 00:34:01,279
think we probably need to do that on the

910
00:33:58,919 --> 00:34:02,480
next one um so you guys are going to

911
00:34:01,279 --> 00:34:04,679
invite me back we're going to have a

912
00:34:02,480 --> 00:34:06,399
part two yeah so whether you like it or

913
00:34:04,679 --> 00:34:09,480
not you're going to be on part two and

914
00:34:06,399 --> 00:34:11,159
we'll we'll continue this education on

915
00:34:09,480 --> 00:34:12,560
okay now we've talked about the

916
00:34:11,159 --> 00:34:14,280
different stuff through the hedging and

917
00:34:12,560 --> 00:34:16,399
all that stuff and and and how the

918
00:34:14,280 --> 00:34:19,679
financing part works now let's just

919
00:34:16,399 --> 00:34:21,359
dissect the plan on okay what how do we

920
00:34:19,679 --> 00:34:24,240
set these strategies up who do we get

921
00:34:21,359 --> 00:34:25,879
involved and and who do we go to but

922
00:34:24,240 --> 00:34:28,520
first we're going to have to do that

923
00:34:25,879 --> 00:34:30,560
later so we need a uh take a little

924
00:34:28,520 --> 00:34:34,000
break here we uh appreciate everybody

925
00:34:30,560 --> 00:34:36,079
for uh watching and tuning in uh thank

926
00:34:34,000 --> 00:34:40,079
John for coming on and and trusting us

927
00:34:36,079 --> 00:34:41,359
to to share all this with us um remember

928
00:34:40,079 --> 00:34:43,679
uh if you're watching on whatever

929
00:34:41,359 --> 00:34:47,320
Platinum Platinum platform you're

930
00:34:43,679 --> 00:34:49,119
watching on hit subscribe as Katie says

931
00:34:47,320 --> 00:34:50,800
she saids be sure to tell them to hit

932
00:34:49,119 --> 00:34:54,000
subscribe so we're going to hit

933
00:34:50,800 --> 00:34:56,399
subscribe and hit like and uh join us uh

934
00:34:54,000 --> 00:34:58,119
next week for the followup with John and

935
00:34:56,399 --> 00:35:00,200
and we will get into that strategy and

936
00:34:58,119 --> 00:35:01,800
that plan on on what that looks like on

937
00:35:00,200 --> 00:35:04,240
the ranch or on the form or on the grow

938
00:35:01,800 --> 00:35:08,040
yard or where whatever your whatever

939
00:35:04,240 --> 00:35:09,359
your uh program is whatever your uh

940
00:35:08,040 --> 00:35:10,960
program for what you hire you want to

941
00:35:09,359 --> 00:35:13,240
run your cattle so thank you for

942
00:35:10,960 --> 00:35:15,119
watching remember we live it thank you

943
00:35:13,240 --> 00:35:17,310
Casey for being on and we'll see you

944
00:35:15,119 --> 00:35:18,470
next time

945
00:35:17,310 --> 00:35:22,670
[Applause]

946
00:35:18,470 --> 00:35:22,790
[Music]

947
00:35:22,670 --> 00:35:25,949
[Applause]

948
00:35:22,790 --> 00:35:25,949
[Music]

949
00:35:34,200 --> 00:35:37,560
he hey