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Central Texas | John
Can't really blame the declines on any single factor but there were a few events that threw more fuel on the fire. In the early 70's there was a govt beef price freeze, russian grain buying spree followed by an embargo and some drought. In the 80's was dairy buyout that threw lots of cows on the market and some more drought along with usda PIK program. In 96 there was massive drought in east Texas and other areas. Then there was BSE in Canada and finally in USA. No way anyone can know what will happen for sure but historical cycles have proven as reliable as anything for giving us an idea where things may be headed. Goes back to "Those who fail to learn history are doomed to repeat it". Bottom line is there are millions of market negative possibilities and they are usually different scenario's in every price decline.
As far as how long for prices to recover, in the 70's think in about 4 years prices were back to pre crash levels and on up to then record levels in 79 or 80. Think it was in 1980, I sold some feeder cattle futures at $.89 and they never hit $.90 until maybe late 90's so that recovery took more than 1 cycle to get back to previous highs.
IMO-about all a person can do is make sure they have their financial house in order. Specifically should have a LOT of equity in there cattle while prices are high so can stay in business when there is a major price decline. If equity position is not terribly strong, could be a good move to sell some high priced animals and use that money to reduce debt and increase equity. That will also reduce pasture/feed needs that will allow better drought surviveability. Also if stay very conservatively stocked, can be in position from both feed and money standpoint to buy more animals when market does decline. | |
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