- DTN Headline News
Todd's Take
Monday, December 17, 2018 2:41PM CST
By Todd Hultman
DTN Lead Analyst

After many years spent working in and teaching about commodity markets, I don't ever recall equating my job to the way a country minister might talk to his congregation. Not until recently, that is, after an interesting experience at this year's DTN Ag Summit.

The first time I ever read a commodity-related article that sounded like it could have come from a man of the cloth was a few years ago. In October 2014, at the height of the bull market in cattle, DTN Livestock Analyst John Harrington penned the article, "Cattle Party Rocks On, But With Fewer Lampshades."

(https://www.dtnpf.com/…)

Harrington described how record cattle prices and profits in the first three quarters of 2014 made for a helluva party, but also pointed out that fed cattle breakeven prices recently fell below breakeven levels. Harrington's parting line to the fictional barkeep was classic: "Just make sure they know, until further notice, no one else is buying their drinks."

The article was on point, as spot cattle peaked near $172 per cwt that month and sank below $100 two years later. Beyond the economic tip, Harrington's sober perspective captured the essence of where bull markets go wrong: We get drunk on the feeling of good times and often aren't prepared for what follows. It was a lesson on temperance as much as it was economics.

Why was I thinking about that this time of year? Was there something I needed to confess before Christmas?

No, it wasn't festering internal guilt, but my Tuesday morning breakfast with a small group of impressive guys that happened to come to DTN's Ag Summit meeting in Chicago.

As official host of our table, I was supposed to have a conversation starter, so I came up with this: As you know, with grain prices in the dumps again this year, there are a lot of farmers that won't be taking their families on Christmas vacations to Chicago. I know you won't brag, but if you could pick out one thing, what have you done differently that has helped you survive all these years?

The first gentleman paused and said (to the best of my flawed recollection), "You know, we have always been afraid of taking on too much debt." I assumed when he said "we" he was referring to a family operation. "There have been years we probably could have expanded more than we have, but we stayed conservative."

I asked, what kept him from overspending when corn prices were high, like in 2008? He said, "We sold some corn near the high, but we also sold a lot of corn at $4.00 that year." As he spoke, there was no hint of regret, and he added, "$4.00 at that time was a good price."

As I was thinking about his comments, the second fellow jumped in, "I am a fourth-generation farmer in our family, and I always heard from an early age that the third generation loses the farm -- I was determined not to be that guy." He also mentioned an article he read many years ago, which he kept and still reads, offering down-to-earth advice about farming for the long haul.

The third fellow at the table said he has a background in finance and accounting and has always kept close tabs on the numbers. He says it bothers him when he talks to farmers that don't know their numbers, and it makes him shudder when he hears about big loans that have little chance of working out.

At this point, I'm pretty sure my mouth was hanging open as I realized that all three men from different parts of the country just answered a spontaneous question with the same Midwestern message of temperance and frugality that many of us learned growing up, either from an Aesop fable or sitting on a wooden pew Sunday morning.

Don't get me wrong, I am not casting stones at anyone struggling in these tough times, and sure, there are many factors that go into whether a particular farm makes it or not. Even so, I was fascinated that these three survivors all displayed what I would call a healthy respect -- maybe even a tinge of vigilant fear -- for the ups and downs of life and consciously chose to stay on the cautious side.

For the record, the fourth and final grower at our table was one of those indomitable spirits that comes along once in a blue moon. He was born with so much energy and vinegar that you could parachute him into the Amazon rainforest and he'd find a way to come out on top. That's a quality that can't be taught, and it made for some fun stories.

Here in the fourth consecutive year of low corn prices and anticipating possibly a billion bushels of U.S. ending soybean stocks, it is easier to see the value of not getting swept up in the euphoria of good times. The challenge is to remember these lessons when the party seems so alluring. For me, Harrington's timeless wisdom and the sage advice from a Tuesday morning breakfast are the kinds of things we all need to keep tucked in our caps.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman

(BE/AG)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, December 17, 2018 11:28AM CST
Friday, December 14, 2018 1:00PM CST
Monday, December 10, 2018 9:15AM CST
Technically Speaking
Editorial Staff
Monday, December 17, 2018 8:15AM CST
Monday, December 10, 2018 9:17AM CST
Monday, November 26, 2018 10:39AM CST
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Monday, December 17, 2018 12:54PM CST
Thursday, December 13, 2018 10:33AM CST
Friday, December 7, 2018 7:08AM CST
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Monday, December 17, 2018 6:09AM CST
Thursday, December 13, 2018 3:25PM CST
Tuesday, December 11, 2018 2:20PM CST
Minding Ag's Business
Katie Behlinger
Farm Business Editor
Monday, December 10, 2018 2:16PM CST
Thursday, October 18, 2018 3:08PM CST
Thursday, October 11, 2018 10:05AM CST
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Friday, December 14, 2018 2:15PM CST
Thursday, December 13, 2018 3:07PM CST
Tuesday, December 11, 2018 3:23PM CST
DTN Ethanol Blog
Editorial Staff
Friday, December 14, 2018 12:25PM CST
Thursday, December 6, 2018 12:55PM CST
Monday, December 3, 2018 11:31AM CST
DTN Production Blog
Pam Smith
Crops Technology Editor
Friday, November 16, 2018 4:00PM CST
Thursday, November 1, 2018 6:46PM CST
Monday, October 8, 2018 7:04PM CST
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Friday, December 7, 2018 4:51PM CST
Thursday, November 29, 2018 5:04PM CST
Monday, November 26, 2018 9:38AM CST
South America Calling
Editorial Staff
Friday, December 14, 2018 1:50PM CST
Tuesday, November 27, 2018 2:39PM CST
Tuesday, November 20, 2018 7:12AM CST
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Thursday, December 13, 2018 1:57PM CST
Monday, December 3, 2018 11:32AM CST
Monday, November 19, 2018 5:21PM CST
Machinery Chatter
Dan Miller
Progressive Farmer Senior Editor
Tuesday, November 20, 2018 11:58AM CST
Thursday, October 18, 2018 10:53AM CST
Friday, October 5, 2018 10:16AM CST
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Monday, December 17, 2018 3:44PM CST
Friday, December 14, 2018 3:43PM CST
Thursday, December 13, 2018 3:15PM CST
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Monday, November 26, 2018 9:13PM CST
Friday, November 2, 2018 5:31PM CST
Friday, August 24, 2018 5:53PM CST
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN