At the Oklahoma Cattlemen’s Foundation Spring Seminar, a panel of remarkable speakers came out and had the chance to educate guests on many topics relevant to today’s cattle industry, from operational diversification to protecting your profits.
Associate Farm Editor Reagan Calk had the chance to catch up with Brady Sidwell with Sidwell Strategies, after his presentation, where he talked about the importance of risk management.
With factors such as weather extremes and grain price movements impacting the markets, Sidwell said he does not see any relief for that volatility in those markets happening any time soon.
“Macro forces have been a big factor in commodity markets and cattle markets as of late with everything going on in the banking sector and around the world and geopolitics,” Sidwell said. “For quite some time, we are going to see all these factors continue to influence, and weather extremes continue to influence the cattle market volatility.”
As China has emerged as one of the largest beef importers from the U.S. market, Sidwell said things are becoming more challenging.
“President Xi just came off the national congress and was appointed into an unprecedented third term as president of the country as consolidated power, and then, of course, just getting back from Russia here a week ago,” Sidwell said. “It is clear between partnerships there and potential for some kind of Taiwan aggression, that the border and the emergence of China and kind of the counter to western allies are getting trickier.”
During these unpredictable times, Sidwell was able to give some insight into why insurance is important and how cattle producers can protect their profit. Just like people have insurance on their cars and homes, Sidwell said protection is also needed in the ag industry for when the unexpected occurs.
“A lot of these outside forces have nothing to do with how good we are at raising cattle or how good our overall system is,” Sidwell said. “It is unfortunately influenced by things outside of our control.”
If you have a profit that can be locked in and protected above break evens, Sidwell said now is the time to do so.
“Hitting home runs in the market is always difficult,” Sidwell said. “You are holding out for something bigger, and it is just important to be able to protect your downside, and there are tools out there for producers to protect their downside with, but yet keep the upside open if the market does continue higher as we think it will- in a choppy fashion- but we think it will trend higher.”
Using tools such as Livestock Risk Protection, Sidwell said, are great products to navigate these volatile markets.
Because producers cannot control the markets, Sidwell also talked about a few factors that good marketers should always consider.
“A successful marketer, I think, is somebody who is aware of their breakeven,” Sidwell said. “They know what they need to be profitable, and I guess, don’t get greedy. That is easy to say, but sometimes hard to do in these markets that are moving higher like we have seen recently.”
Committing to putting risk management in place is critical, Sidwell said, and just because there are big moves in the market to the upside does not mean they will stay that way.
“We all hate spending money on insurance, but you do it for the unexpected,” Sidwell said. “You don’t know when you are going to need it, but you need to price it into your cost of production and cost of doing business.”
For more information on risk management and more, contact 580-232-2272. To check out tools and information provided online by Sidwell Strategies, click here. Sidwell Strategies can also be found on Facebook at https://www.facebook.com/sidwellstrategies/ .
