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| The market has rallied $15 from the lows....& in the short run should now be in hedge zone. We picked up a lot of hedges last week.
For those of my age and recall as various industries consolidate.... eggs in the sixties.& broilers and turkeys....(Iowa was once the turkey capital......in the feed business I recall feeding a lot of midwest broilers...).....and also the regroup in cattle,,,the two boys who bought the original big feedlot in texas got it from Cont. Illinois Bank for zero down..(bank asked them to take it) .they made it work.......in eggs...some had to go to a percentage arrangement to survive....and now in hogs--IT WILL ALL WORK OUT....folks get pretty aggressive when there is cheap money ....always have to look back in time in agriculture...things get better in the long run..but expansion at the wrong time is always wrong.....the shoe I see...while we may soon see inflation input in livestock prices....there will also be an inflation effect in INPUTS....this is a long term cycle...have patience.....REMEMBER HISTORY....WE ARE IN THE MIDST OF ASSET INFLATION (TO IMPROVE BANK BALANCE SHEETS).....WHEN THE CYCLE CHANGES....and we return to assets valued based on free cash flow....then it will again be teeth gnashing time.....hogs in my mind are an investment opportunity as long as you are long, long in cash or equity......other assets are trickier...as when the dust settles again, WHICH IT WILL....whatever is on your equity statement will have to cash flow...those my age...know what I mean. | |
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Hogs & Pork
