Incremental Always Works

This is a real tough time to be farming and raising livestock. We are in a time of severe turmoil and volatility in regards to pricing or inputs and production. You need to be an expert in so many things that it is truly difficult to know what is over exuberance and what is based on fundamentals. For example, As a cattle feeder is barley priced based on fundamentals at $180? Is that a good price? For cattle feeders it is based on the $250 that we saw in July but not in comparison to $120 that we had two years ago. Of course your feeling are totally reversed if you are a grain farmer. Currently with the extreme volatility sellers tend to get attached to former prices which puts supply in very tight hands. This is exactly where we are today. Buyers of barley are smelling blood and sellers are saying, “not at this price, it can sit in my bin awhile longer.”

The one thing that is for sure is that this volatility should be proving that incremental buying selling is the best strategy because it allows for spreading out the risk of your decisions. Feedlots that purchased alot of their supply at $245 and sellers that didn’t take advantage of the higher prices because they thought that barley was going to be $300 are all mad at themselves.

Going all in is a poker term that we sometimes use in business speak and it really should be left in the poker room not the office.

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One Response to “Incremental Always Works”

  1. Dan Says:

    Love the blog Shaun. Some very good insights.

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