Practically Ranching
Join Matt Perrier as he visits weekly with interesting, thoughtful, entertaining individuals within the beef community. Conversations will inspire curiosity and creativity while maintaining the independent spirit and practical nature for which ranchers are known.
Practically Ranching
#79 - Don Close, Getting Past the Noise
Don Close is a senior animal protein analyst for Terrain Ag. He’s enjoying serving in leadership roles in the cattle industry and conducting research on a wide range of topics after overseeing the establishment of Terrain as the team’s first leader. Don’s prior experience includes his work as a senior animal protein analyst at Rabobank, and as a market director for the Texas Cattle Feeders Association, where he worked on all economic and market-sensitive policy issues for cattle feeders in Texas, Oklahoma and New Mexico.
In his three decades of professional experience, Don has been a licensed commodity broker, handled risk management and pricing for large cattle operations, managed a grain procurement program, and published market updates and outlooks for cattle and hogs. Don earned his BS in agricultural economics from West Texas A&M.
Terrain | The Sneaky Barrier to Herd Expansion: Big Cows
Thanks for joining us for episode 79 of Practically Ranching. I'm Matt Perrier and we are here. Thanks to Dalebanks Angus, your home for practical profitable genetics since 1904. Once again, I'm late with this episode. No excuses, no apologies. You know, I'm not sure you can call a side hustle, a side hustle when it's also a pro bono gig, but that's what this podcast is and the last month or so, I haven't been able or willing to prioritize it over the real hustle, the ranch, the family, and everything else going on in the last few weeks. But we are back with a really good discussion with Beef Economist Don Close with terrain. The past week's market correction following our president's comments about beef prices have spurred quite a few discussions, quite a few meetings and infinite social media posts. You know, I've read and listened to a few of these, uh, very few, and I've had mixed emotions after I get done with each one. You know, it brought to mind that we started this podcast three and a half years ago for this type of reason. Issues like these are usually more nuanced and more complicated than an Instagram reel or a truth Social post can cover. Honestly, this one's way more nuanced than an hour podcast can cover, but Don and I are gonna touch on a few of the high points as we see them. We talk a little bit about the last week and a half's events. We talk about beef prices and consumer demand. We talk about expansion signals and, and his article from last spring, the sneaky barrier to herd expansion, big cows. Most of all, we talk about perspective and confidence in the marketplace and how the last couple of weeks, as tough as they have seemed to be. They may, may very well lengthen this stage of the cattle cycle where cow calf producers have been in the driver's seat and may very well continue to be in that driver's seat due to supply fundamentals and the lack of herd expansion. You know, Don, Don and I, and I mentioned this, Don and I tried to record a podcast late last spring, and we had so many technical glitches that we finally gave up and decided it may not have been meant to be, this one went better, but I guess an episode with Don wouldn't be complete if I didn't have some kind of technical hiccup. So about two thirds of the way through this episode, my microphone quit working. I didn't know it. Uh, luckily the echo through Don's speaker quietly captured most of my portion and the good part, Don's, is fine, but I get pretty faint and pretty quiet in the last third of our conversation. To my friends listening, what can I say except,"you're welcome." As always, I appreciate you listening. I appreciate your continued support of this podcast and of our Dalebanks Angus program. Uh, if you would stick around at the end for a brief bit of info about our Bull and heifer sale coming up on Saturday, November 22nd. Most importantly, I appreciate your interest in the beef community. You know, US cattlemen are a passionate bunch, and we're really passionate about this business, and I'm glad that so many of you are willing to channel this passion toward progress; regardless of the noise that might be happening around us. So keep up the good work and enjoy this conversation with Mr. Don Close.
matt_2_10-27-2025_100619:Don, we had scheduled and tried, what, two or three times to do a podcast this summer? and
don_2_10-27-2025_100617:Yep.
matt_2_10-27-2025_100619:don't even remember what we were talking about. You'd written something and I thought it was brilliant and I thought, we've gotta get out, get. On here and talk about it. And it was a whole lot more positive than any of the discussions that anybody in this business has had over the last week. or two.
don_2_10-27-2025_100617:It's, uh, for the market information business, it's been a tough weekend.
matt_2_10-27-2025_100619:So how in times like this and we have to qualify this, we are recording at 10 0 7 Central time on Monday. The 27th of October, because I don't know for sure whether I'll get this out this week or next. And honestly, we'll probably talk for an hour and something could change significantly before we're done with this dang thing. How does a
don_2_10-27-2025_100617:it, and likely will. How does a
matt_2_10-27-2025_100619:in times like this, sort through the noise and what do you look at as you have customers and clients and producers turning to you for answers?
don_2_10-27-2025_100617:I'm gonna give two answers. The first and probably the most professional answer is you've just got to do everything possible to close out all of the noise and what were the fundamentals that we were working with a week ago, and look at it from that perspective. The second answer again, is not nearly as professional, but I tell clients. There are just times that the best thing you can do is shut that screen off and go do something else. You just got to step away long enough for hopefully the smoke will clear, but just to get a clear head that you just don't get so caught up in all the noise.
matt_2_10-27-2025_100619:I was fortunate last week as the president made his comments and as everything leading up to that and following it occurred, we were ultrasounding bulls and collecting yearling data and getting a catalog off to press, and getting ready to clip bulls this week, which we're doing and videoing and everything else. I've got a bull sale to get ready for, and I think that was maybe God's way of saying,"you need to keep your nose to the grindstone because otherwise you'll go down these rabbit holes. And really get worked up." So I guess either fortunately or unfortunately. I didn't get to probably stay as close to the goings on and the markets and everything else, and, and the things that were driving the markets. Anybody with a heartbeat probably knows. But let's from your standpoint, let's recap some of the things that have led up to what we've seen in the last, okay. This is Monday, the last seven to 10 days of this market.
don_2_10-27-2025_100617:Okay. So we started off with I believe it was a week ago Sunday night that on Air Force one, trump made a comment to reporters that beef was too high and that he, they were gonna fix that, and that the answer to that problem was to bring in more Argentine product. And then they came with the, the 13 page three to five point plan from Secretary Rollins of steps USDA was going to take to rebuild cattle, US cattle population. there, there were positive things in there. Are there, is there anything in there that is a real game changer? No. And then there was a text or a tweet or whatever, that a, he was going to increase the the tariff rate quota on Argentina. And with that, perceptions were that, we were going to probably see a 50% increase or, even double it. And for 24 and year to date Argentine product was about 2% of our total imports. It was a no no, star. We didn't expect that TRQ to go from uh, 20,000 metric tons to 80,000 metric tons, which was a bit of a shock to the market. So then there was some pushback on that. And then that's when Trump came with the tweet that producers should be thankful for him. That industry has been doing nothing for the last. 10 to 20 years and that it was his tariff implementation that enabled them to enjoy the prices they've seen for the year. And that's when the train went off the rails and social media exploded with the reactions from producers and, uh. from that time, things we got through the end of last week. The market was down hard last limit last Friday, and everything's okay, let's just, let's take the weekend and take a breather. And then we got uh, yesterday morning with all of the uh, Sunday morning talking heads and uh, secretary Bessent's talking that all the trade agreements with taiwan, Vietnam all of that. And that essentially an agreement was in place with China and that Trump and Xi would be meeting this Thursday to make finalizations. And then there's, there's there's talk in the market that president Lula from Brazil is requesting a meeting uh, with Trump. This week and that that could lead to a reduction in the 50% tariff rate with Brazil. And then the final thing uh, that immediately comes to mind is that the me, Mexico I believe Secretary of Agriculture or equivalent is coming to Washington this week to make a request to open the border to Mexican feeder cattle. So the. The massive uncertainty in the market, whether we, you know we closed last week thinking we did not have anything going with China. Now we're led to think we do, but the two real the straws that broke the camel's back as far as the futures market goes, is the potential to see the 50% tariff on Brazilian product be reduced to a more functionable level. And then the real one is what happens once that uh, border's open to Mexican feeder cattle.
matt_2_10-27-2025_100619:So there's a lot there. I wanna
don_2_10-27-2025_100617:Yes.
matt_2_10-27-2025_100619:the first one and I guess I'm gonna, i'm gonna show my true colors and my opinion, and I made a post for those who follow me or. Our Dale Bank's, Facebook, Instagram accounts. I made a post about this Friday. The thing that is most frustrating to me about this whole thing, president Trump's comments, the ensuing debates and, mudslinging on social media and meetings and everything else across the nation. The thing that I think gets lost is the quality portion of the beef price today. and that to me is really unfortunate because as we go to comparing what beef is priced today, especially compared to 20 and 30 years ago, like the president has claimed If I had the opportunity to sit down with President Trump, which I won't, but the first thing I would say is, Mr. every business dealing, every personal dealing, every dealing that I've seen you do over the last decades Has had one thing in common, and that is you like quality. Golf courses, real estate hotels, nobody. And certainly you wouldn't expect to go in and renovate a hotel, reopen it, which he's done. And turn it into the highest quality experience that anybody could take part in, and then charge the same room rate that it was when it was the Commodore Hotel in 1970, whatever, when he bought that before he turned it into the Grand Hyatt in New York City. We have done that with beef. If you look at what we were selling in 19 96, 30 years ago. You can't even compare it to what we're selling today. And so guess what? That price should be higher and consumers have rewarded us for doing that. You talked, you and I talked about this the last time we visited a couple years ago, that consumers like quality. And they are willing to pay for it. Why in the world would anybody that has had the success marketing quality that Donald Trump has, try to compare that, make that comparison. And so that's the thing that I would like us to be talking about as an industry. Not, these posts that say well, our costs are higher, so we should get paid more. Well, That's not how the market works. The market tells us what we're gonna get based off of what the consumer is willing to pay. And my question to you as an economist, when you look at the data, is beef too high?
don_2_10-27-2025_100617:I do not believe beef is too high. Hard Stop. And why I say that, there's been a flurry of charts throughout the marketplace over the last handful of weeks, but. We've all been talking about the number of minutes
matt_2_10-27-2025_100619:Yeah.
don_2_10-27-2025_100617:work to, to afford a pound of beef and those, depending on whether we're talking ground beef prices or if we're talking all fresh beef price, choice beef, there, there's small differences in details, but the bottom line is for this 30 year period that you're talking about. As wages and affordability has increased, beef prices have essentially gone up at exactly the same rate as that average hourly wage. So the minutes required to work hasn't varied. Four minutes in the last four four minutes to and varying between 11 and 15 depending on what data series we're looking at. But we're talking the average hourly wage is working 11 to 14 minutes to buy a pound of beef, and that has been true throughout this 30 year window that you're talking about. So if, if I'm thinking the average guy's gonna work 14 minutes to afford a pound of beef, is that going to be a deal breaker on whether he buys or doesn't buy? No.
matt_2_10-27-2025_100619:So is there something else, in your opinion, and now we're probably getting a little more on the pol political side of things and not the economic side, but is there something else at play here that we're missing? We're, know, seeing the ability or President Trump seeing the ability For beef to be a huge negotiation I hate to use the word pond, but uh, something that he can use in his favor to get something else clear outside of the beef industry from Argentina, Brazil, wherever the case may be.
don_2_10-27-2025_100617:I think there are a couple of things and one of those two was answered over the weekend. I think when he makes the comment that he likes melee and he would, he wanted to see him reelected to have. One spot of democracy in central and South America. I believe that's a true statement. I also think if you look at the deals that he's making in regards to the trade agreement with Australia, a part of the trade agreements in Southeast Asia, I think a real key driver in this whole, the backstory in this whole thing. Has been, he's scrambling to get access to those rare earth elements that have try to that's the ingredient that makes this whole artificial intelligence thing run. And I think that he's looking forward to come up with enough alternative supply that when China says, we're no longer going to offer those rare earth elements. To other countries. He has a solution and a pushback to China. I think that's a huge driver in this whole story.
matt_2_10-27-2025_100619:Have we as a as a, beef industry, in your time as an economist, have we ever been used as that ace in the hole by a president that can get something else because, or thanks to the product that we're producing?
don_2_10-27-2025_100617:Oh, we could probably do twist on that and have we been used to that in that manner? It certainly doesn't come to mind but I think back to my limited memory of the Nixon's price freeze and how much we as industry thought that cattle and beef prices would soar once that price freeze was lifted and found just the opposite. The other example that I would give specifically to the beef side that we were used as a pawn is the whole herd, dairy buyout and the quantity of beef that dumped on the market. The beef cattle sector was clearly used as a pawn and dumped on in that occurrence,
matt_2_10-27-2025_100619:supply side moves. And that's the thing that. On one hand, I guess I puff my chest out and go, wow, look what we did. We are now something to be so proud of that we can get something else from our trading partners. I don't like it, but I've never seen in my life, I've never seen beef in such demand that we get to quote unquote, be used to get something else that society needs in the United States of America. And so I guess kudos to us. Great work, although it really sucks in the short term. And that's something that I think that um, we are so ingrained as ranchers, as feed yards, as everybody in this industry at looking things from a supply side. Why is beef high? Oh it's because we don't have many cows. Oh wait, we're producing just as many pounds as we have. We haven't hit the tight supplies by keeping a bunch of heifers yet. And so all of this being driven by demand it's really interesting to me because yeah, those are the two things that I go to as well. The dairy buyout, the price freeze in the seventies and eighties that led to some major turmoil in the beef industry. But those were supply side initiatives. This one's demand, this is'cause people want our product and want access to our market. It's a different animal.
don_2_10-27-2025_100617:Earlier on we were talking about, okay what has been the chain of events over the last week? And I think, if you look at the, at the cattle community as a whole agriculture really but specifically the cattle industry have been as big a Trump supporters as have as has been out there, no doubt. And. The whole mantra from when he first went down the escalator was to make America great again, but to then turn around and to his loyalist supporters and say, we're gonna make America great again. in everything except beef, we can bring in Argentine beef. I think that's where the real sense of betrayal came from in this, this last week activities.
matt_2_10-27-2025_100619:no doubt. And I think that's the one thing. I mean, He has united all segments, all producer groups, almost all, because they, everybody feels the same way. I mean, It was a slap in the face. And I think the principle of it is the most frustrating. Again, I look at it from a supply and demand, especially demand reward for quality, all these different things. None of it makes sense. from what we have heard from the president. And that's why I say that. And I've seen the post some people saying that, president Trump, like his character or not, he always has a strategic plan in order and there's a whole lot of noise that surrounds that. Sometimes I think that takes people's eyes off the ball. So that he can get done what he wants to get done but there is something at work here that he has a plan, hopefully. For the better of all of us. But yeah, it is doggone difficult to reason the comments, the moves obviously the fallout on the futures board and things like that as we go. So whether we're talking about Argentine beef, when we throw the Brazilian piece in there, that changes it significantly, I would say, in terms of volume, because again, Everybody's already probably seen just how little volume Argentina could probably send us if they continue to consume at the rate that Argent have always consumed meat and beef. F let's just go with what we know. Or if it's just Argentine beef, does that really affect the market? From a supply of beef at all?
don_2_10-27-2025_100617:No. When I went through and I looked at at the various tariff rates and the escalation, if you add in there, the fact that whether they're enforcing it or not is unknown, but Argentina has a 6.75% export tax on product. If you add our. T escalated tariff rates plus the 6.75% export tax from Argentina. I can actually make a mark an argument that product delivered to the east coast it, most of that product goes into Philadelphia, but for east coast delivery, it would actually be higher than where our domestic nineties are trading today. N no, it's a, it's, it is a wash at best. I'm not really sure exactly the math that was used, I've seen one breakdown that, that shows maximum it could increase ground beef prices by 6 cents. I, I, I'm not even there. I say it significant. No, it's, it is not a, that's not a game changer.
matt_2_10-27-2025_100619:Let's throw Brazil out there and if that is part of the deal and they get reduced tariffs and it is able to come this way, then what, what is your calculus on that?
don_2_10-27-2025_100617:The most honest answer I can give Matt is, I don't know, is it big enough to be a game changer? Undoubtedly, yes. But to take that that tariff rate from. Like 74%, 74.6% down to an unknown level, we don't know. So we're at this juncture, we simply don't have the information available to even make an estimate on what that amounts to on just available quantity, could we be talking. 10,$20 maybe.
matt_2_10-27-2025_100619:And the beef that would come from Argentina and brazil, correct me if I'm wrong, would be almost solely 90% lean trim correct? For grinding beef. May I ask you a philosophical question going forth, should choice beef choice. High choice in prime, I would say. Should that be separated from a retail, from a consumer, I should say standpoint from grind from hamburger? Are those two different products? In other words, people will trade down from hamburger to chicken breast, but they may not trade down from a strip steak to chicken breast, and if so, how does that change how beef market prices live? Cattle fed cattle. Feeders et cetera, et cetera. How does that change with these imports and thoughts about that? Because they're probably not gonna be competing with that part. of it.
don_2_10-27-2025_100617:Youve just asked an incredibly difficult question to answer. My, my answer to you is and essentially, correct me if I'm wrong, but what I think you just described was mCOOL.. Huh. And do I think that product should be segregated? No, I don't and I give that answer because of, we saw from when Cool was implemented that consumers may say they want that differentiation or label. But at the end of the day, price is what drives that purchase, and they said they didn't care. The other side of that is the complexity of that whole ground beef complex and the quantity of that product that is actual grind and trimmings from the fed beef sector. The just roundhouse term of 55% of that product that comes from our domestic non-ED slaughter, and then the balance of that product that comes from imports and exports, or I'm sorry, from imports to be able to really distinguish those products and the added cost that's required to have those products labeled. I, I just I don't think the juice is worth the squeeze.
matt_2_10-27-2025_100619:Your your, white paper that first introduced me to you, however many decades back Ground Beef Nation might deserve dusting off and a reread. If I thought that was where you were going after I had asked my question. cause I wasn't trying to lead into an MCO l discussion, but,
don_2_10-27-2025_100617:lead into no but you trust me. You are not the only one that has has reached out or made comments that there was more going on there than what we thought. Hopefully.
matt_2_10-27-2025_100619:it's to me, as we talk to folks about. Quote unquote, beef beef consumption,we have to recognize that while we are all very proud of the huge gains that we've made in the quality and the consistency of whole muscle cuts, and the demand that we've built because of it and the profitability that it is introduced into the beef chain because of it. Are we still at 60% beef consumption is grind, is hamburgers?
don_2_10-27-2025_100617:I, in my opinion, yes, we are, and I actually had that conversation with a retailer over the weekend and was trying to get an answer out of them of what percentage of their sales were ground product. Industry-wide, we talk, I think every, the most common response to that question is 50, 55%. If we really take a breakdown of, of how that product's used and the peg board add the peg board items in there. In my personal view, it's closer to 60, but that's, we're talking 5% difference here.
matt_2_10-27-2025_100619:or
don_2_10-27-2025_100617:And That's volume? Now. One thing too that we need to incorporate into this part of the conversation is a huge driver in what has enabled fed cattle prices to get to the level we've seen this year is because of this shortage of grinding material that we're talking about industry has had to grind an escalated volume of chucks and rounds that have pulled those muscle cuts off the, off of the market limiting that supply. So the contribution made from Chuck and round items to overall cutout, that's been a, a huge driver in this whole equation.
matt_2_10-27-2025_100619:Well, It has, it has made for some interesting demand and supply discussions. And I think anytime we have something like this that causes us to ask those questions and to argue and debate, whether it be online or face-to-face or phone conversations or whatever, I think it's good. I don't like the catalyst and the way we got here, but I think, it's it's been fascinating to me just how many ag economists and beef supply experts have come outta the woodwork in the last 10 days. I, I mean, Some posts from
don_2_10-27-2025_100617:I mean most from
matt_2_10-27-2025_100619:even in the cattle business that have all the answers. And I'm like.
don_2_10-27-2025_100617:And I'm like,
matt_2_10-27-2025_100619:if it wasn't
don_2_10-27-2025_100617:this is wasn't
matt_2_10-27-2025_100619:to some people's bottom line that are trading on these future boards this week, or selling calves even. This is. Great entertainment. It's very comical to watch all these experts come outta the woodwork.
don_2_10-27-2025_100617:Tell you what when some of these uh, huge developments occur in this rapid of succession I'm about ready for, have some of those experts come out, they can have it. I, this let me off.
matt_2_10-27-2025_100619:Yeah, as a, as an Ag
don_2_10-27-2025_100617:Yeah.
matt_2_10-27-2025_100619:person told me last week when I texted a question to them, they just said. Can I get off this ride? It's it's maybe gotten to spinning a little too fast. So when I called you last spring, and I had to dig this email back up. This was in April that I had read a, an article that you had published in CB's newsletter that was titled The Sneaky Barrier to Herd Expansion. And that's what I wanted to talk about then.
don_2_10-27-2025_100617:then. Yep.
matt_2_10-27-2025_100619:Has your, first of all, let's talk about what that sneaky barrier is and was, or the barriers. And then I guess with the week two weeks events and turns, do you still see that? And where do you see expansion going from here? Given all of the things that we know on October the 27th at 10:37 AM.
don_2_10-27-2025_100617:There, there's several questions folded up into that from when I published that article last spring, early summer. My, my view on that topic has only solidified, I think that the abil, the number of head that we can graze per unit has been, cut back and limited just because of the added consumption of the additional, let's just say, two to 300 pounds on the average cow.
matt_2_10-27-2025_100619:Yeah, just make, sure in case people didn't read that sneaky barrier is that it takes more land to run a cow today, and that's why we haven't expanded more
don_2_10-27-2025_100617:It, it, we can say it takes more land or. And as I think about it, because most producers have a fixed number of accessible acres, I look at the reverse of the equation and we just can't run as many cows on the fixed unit as what we did
matt_2_10-27-2025_100619:Okay.
don_2_10-27-2025_100617:1975.
matt_2_10-27-2025_100619:And so, as you have solidified that opinion where do we go? From here. Do we see a change, major change in management and delivering the nutrients to those cows? Do we see a change in size and metabolic needs of those cows? Where's the economist's seat? Say we're going from here.
don_2_10-27-2025_100617:I don't know that, that we've been on So running so hard on that, on that trend that, that, I don't know. It, It is like all these other things that this isn't a quick fix. Now we don't have, we haven't had any data now going on, you know, because of the government shutdown. But we've made the comment throughout this conversation that beef production is essentially unchanged with the reduced number of cattle because of increased carcass weights. We're down a couple of percent it we could be down as by years end, we could be down as much as 4% on beef production for the year. So it, we've done an amazing job of keeping production steady but the weight of that, of continuing making cattle bigger and having a quicker rollover it's starting to weigh on us, we're struggling harder to keep that beef production level un changed so that, that's, that needs to be brought out. As we go, you know, and I, I think about it and I'm going down an area that you are, you are way, way more professional in than I am. But for so many years when a guy has gone and looked through his calf crop to select those heifers, he's going to retain. He picks the biggest, fastest growing heifers in the pen. And so we've just, we forced this increase in, in cow weight by genetic selection. I think that's been a driver. The other challenge I see with that is if we were to go, if, if we were to go back and talk. To try to sell a customer a pen of bred heifers, and we're trying to sell him something that's going to have a mature body weight, cow weight of, let's just say 10 50 to 1150. They couldn't drive off the place fast enough.
matt_2_10-27-2025_100619:Yep. Been there.
don_2_10-27-2025_100617:There we've created a lot of challenges in this whole thing. I, you know, I, I read articles and I talk about, and the articles talk about. The number of cows that can be carried on a unit and the number of saleable pounds of product from a set of moderate weight cows to the number of pounds of saleable product from a large set of cows. And there's actually more, more saleable pounds from the herd of smaller cows with more numbers than there is the bigger cows. I believe that's true. I really believe that's true.
matt_2_10-27-2025_100619:how much, we go back to last week's announcement by the Department of Ag and trying to open up some western lands, public lands, some CRP. How much does that help? and that's a very regional, and again, I told somebody the other day that called, was all up in arms about this, and I said, you know, it's been a long time since we've had a east versus west battle in cattle associations and policy discussions. But this may cause that because this is gonna pick some winners and losers in the ability to expand if you have access to those acres as compared to somebody in my area where we don't have either CRP or public grazing lands, that our guys will go, eh, I don't get the opportunity to take on more just right here next to. Me.
don_2_10-27-2025_100617:You are way more optimistic from the impact of that announcement than I am to, can we open up some acres? Can we make life better more functionable for that Western producer with the policies that were in that 13 page document? Yeah, I believe so. Is there gonna be enough ground open up to radically change cow numbers? I'm just not there. Okay. Yeah, and you may be right. I just, that's one of those that from the outside looks like it could be, but maybe it may not be. I, and I'm talking above my knowledge level here, but I just. While there clearly are examples, that increased grazing could be helpful. But I just think if you take fence quality, if you take just how fractured a lot of that ground is the functionality or usability of a lot of that public lands, I still think is going to be a challenge. Yeah. So let's change gears for just a minute. We're gonna go back a little bit as we talk about importing, lean, trim, and grind. Do we today, and I really do not know the answer to this. Do we have an excess of beef tallow as we increase these carcass weights and have all this additional fat on these heavier carcasses? Are we using all that in grind or for something else that we're refining? And if not, does that increase the value of beef Tallow enough that we make a little more off the carcass because outta a demand for the white fat. I first to answer the question, we have a massive excess of fat. Okay. I figured we did ma massive. I have heard, I've heard the comment has been made to me by some incredibly credible industry leading meat science folks that when we take a 1600 to 1700 pound steer, one third of his live weight is fat. That's including internal? Yes. Yeah, so that's a per that's total pounds of fat against his live body. Weight is fat. So we got plenty to go around. Yes, just. Whether it's that much more valuable as grinding fat to go in with those nineties to make a so 80 20, 70 30, whatever the case may be. We're, we were getting to the point of minutiae, but back when we were having that whole ground beef conversation and blending rates, one thing that we did not say in that is if we do. See increased product from Argentina, whatever that quantity's gonna be. If we do see a more livable tariff rate from Brazil and that product starts coming back in, so we get that supply of nineties, it's going to be price supportive to 50% lean. Now, is that a sva? Is that gonna save the farm? No. But to keep, when you lower the price of nineties, you're going to increase the price of fifties. Fifties, okay. One, one other thing that I do, I really think there is merit to, I think, the whole regenerative renewable diesel thing. I just I don't get it. But I do think the re the public debate on food safety with seed oils and the number of people and restaurants starting to go back and use beef tallow as a frying oil, I think we could see see measurable improvement. And it's not gonna be a game changer, but I think we could see measurable improvement to cut out. By during, by bringing those drop credits up. When Secretary Kennedy, it was before he was Secretary Kennedy, I think it was on the campaign, started talking about that and Steak and Shake or whichever Yep. Smaller burger chain announced that they were gonna switch to beef towel for their, for the fryers. Friars. I had a fellow cattleman say. This could be absolutely huge for cattlemen, and I haven't heard anybody since then publicly say that, Hey, we could see a major profit driver be on the fat, the 50 even the straight fat. Yep. Yeah, I, I haven't heard anybody else talk about that, but I'm glad that you brought it up and I don't know to say that it's gonna be a, a game change. It's not gonna be. A mega price impact, but it will it be an escalating contributor? I do believe that's correct. Every little bit helps, especially when we get to talking about drop credits and things like that because that goes a long ways to even just paying for the processing Yes. Of these things. That brings up another question and you may or may not track this, I know AX does, and several do. Do you on a monthly basis or annual basis track where we see estimated profitabilities at all the different segments in the beef chain from retail type processor feed yard on down. I'm absolutely interested every year to see the cattle facts result. I don't run that calculation personally. Okay. But I do. But I do value them doing it. It's been comical to me the last week of seeing some of these posts as some of our cow calf producers that will cast blame. And we're not the ones that should be losing all this profitability when the packer is making what they're making right now. And I just stand there. Slack job going, I wouldn't want to know. What packing processing segments are losing today given the high price of fed cattle and everything else. And so I didn't know if you had access to that, but I would say it's negative. It's just a question of how negative it is right now. Correct. Let's just call it 200 to$250 today. And it, and earlier in the summer it was on top of 300. Yeah. Yep. That's and they made a lot of I'm not making excuses. Because they made a lot of money four years ago. Yes. And I get that. Hopefully they've still been able to use some of those coffers to get through the lien times. But yeah, this would be a time that I would not want to own a large, any size of packing processing plant. I have you have an idea, but you know, the, the overwhelming majority of my customer contact is with individual producers and primarily cattle feeders. But over the last year, I have had more interaction with beef packers. That are looking for a perspective of market contraction, where we're at with expansion and just as they're trying to work on this whole margin thing they, the, it is a huge hurdle. And you said it, what we, what we're seeing, they all made tremendous amounts of money through COVID and Okay, fine. But what we've seen, they, they've all spent some money on CapEx, but they've divided themselves into those that set on the money waiting for this day to happen. And those plants that have spent larger quantities on capital expenditures and trying to increase efficiency to get their self through this tight supply. So essentially we've got two battles going on today. We've got those that between setting on the money and capital expenditures, and then we have the battle of the old existing plants that's setting on tremendous cash resources against the new startup plants. So there's a couple of different battles going on there, and quite often in that segment, those folks are constantly looking long term. Yep. They're looking. Five years, 10 years down the road and saying, where are we gonna be? Yes. And I, and quite often my neighbors are looking five years behind and comparing to where we were and what we were doing and it's frustrating to me that we have that habit. It. As running cows, but I think it's probably because we've used Mother Nature and we've used trends and things like that to teach us, and quite often that makes it harder to look long term. This discussion we're looking at, as I speak on the futures board,$2 and 27 cents live cattle and$3 and 46 cents feeder cattle. And considering that a train wreck. Yep. Sure. When we, if we just looked back six months or a year. Yep. When we thought times were, I mean I remember the conversations a year ago, can this stay this good, this long? Yes. I said, I think it's gonna get better. Alright. And yet here we are giving up what we just made in the last 30 or 60 days and we think we sh shouldn't even be in this business. How do we function or how do we factor out that noise and look long term? And if so, what would you tell us to do in terms of expanding the cow herd and investing in genetics and things that we were planning on doing until the last week and a half maybe? I would, I will would absolutely continue to encourage the industry to expand. And I, if you look at over the last 18 months, we've talked about drought, we've talked about the high first cost of replacement, females. We've talked about the impact of higher interest rates on that higher price, female. We've talked about the age, demographics of producers, and we've talked about the challenges with sourcing labor. All of those factors are legit. But if you take the activities of the last 10 days in the marketplace and you destroy the confidence of that producer, potential producer to expand, if he loses his confidence in the outlook of the market, there's no fix for that. All those other issues. We may not like'em but there are alternative work, there are workarounds, a lack of confidence in the market. There is no workaround. So for that reason, I think the activities this past week are only going to delay and defer that expansion that is so desperately needed. That's the irony of President Trump's comment. If that's exactly what he was saying that we needed to do, was that you've got consumer demand through the roof. Prices are high, you need to get us more beef. Yes. He just doesn't understand the nature of the beast and that it takes three years about from a decision made now takes five years if we're talking about replacement females, for us to finally get beef to the marketplace. If the last real hard data we have on retail prices and production totals it clearly beef is still gaining market share on the other proteins. When we talk, you know, the time spent talking that price disparity and what are consumers behavior, are they trading to. We can see some indications, they could be trading down that beef value proposition to continue to buy beef, but we have not, with the last hard data we are not seeing them switch to the other proteins. We're just not seeing it. That goes back to compliment the part of this conversation that you were making early, early on of just how much that quality of that product has improved and how it's resonating with consumers, and I don't think that's gonna go away. Now, if you go through the center aisles of a store today and the number of package goods that have added protein or a good source of protein, the protein craze that we're seeing today. It, I think it's probably a, it, there will be a time that tide crest and but to say that we're going to lose consumer demand for red meats collectively, or beef specifically? I'm not seeing it. Yeah, I'm not either. And I would even push back a little on the protein trend, and maybe I'm being overly optimistic, but what we see today as this quote unquote return to protein is... it still hasn't gotten us back to where we were 30 or 40 years ago as a nation when we were in pretty good shape. Yep. In terms of our physical, weights and health, everything else I wonder if we're finally getting back to where we had been when we were a pretty healthy nation and that it actually stays and then to go further as a, hopefully silver lining of this whole imported ground beef thing. Maybe that does us a favor as an industry and keeps people buying at least ground beef instead of trading down away from the beef complex. And when the dust settles, we look up and go, you know what? We moved more of our beef tallow through more of our fifties through these lean nineties of imported beef. We didn't lose anybody. And oh, by the way, we're still selling just as much whole muscle product and creating even more demand, and we're ready to roll when we finally do get some expansion in cows but still, I, I think that as we look at this from truly a dollars and cents and demand standpoint, I don't know that it has to be this crash because I think that we still have a huge amount of customers who want to buy beef at these quote unquote high prices that everybody's talking about. We economists would discuss their willingness to pay. We have not yet seen any dent in their willingness to pay. I think that says it all. I wish that we could have gotten that message to President Trump before some of these messages or if he says that, I wish that we as, as ranchers would understand that, hey, it hasn't affected that consumer's willingness to pay. Let's not, as of counterpart of mine used to say, let's not break ourselves into jail and tell them that it's too expensive. Let's stay the course. Yeah. Let's do exactly what we were planning on doing in terms of rebuilding our herd and taking opportunities to grow or whatever the case may be, investing in things that are gonna make us more money down the road, and let's stay focused on that and factor out the noise. I, I still think we would be totally in agreement. I think the outlook for the industry is incredibly bright. I think there's opportunities to grow. I think that, uh. You're, you're dead on track that the focus of producers to today with so much noise is just set it aside and, and looked down the road.'cause it still looks very even with ebbs and flows and market prices, it still looks incredibly good. Yeah I've never seen it. I've never seen us have the opportunities from a consumer demand standpoint in my life. And I think it comes down to one thing, and that is they finally, for the first time since I was a kid or before, they want a product. Yeah. And, uh, quality pays and we need to keep focusing on what brought us here and continue to make incremental improvements in our efficiency and everything else. But let's not give that away. Yes. Don, I appreciate it a bunch. I know it's a action packed morning and probably will be for the next few days, but uh, appreciate your perspective and your work that you do there at Terrain. And uh, we'll keep in touch. Always enjoy our conversations. Matt. Thank you. You bet. Thank you, Don.
Thanks for tuning in to Practically Ranching, brought to you by Dalebanks Angus. We are looking forward to our annual sale on Saturday, November 22nd. We'll sell 153 yearling and coming 2-year-old bulls plus six elite fall yearling heifers from the top end of our registered replacements. The catalog is online and printed copies are in the mail now, so let us know if you'd like one coming to your mailbox. We'd love to have you at the sale, but if you can't make it, we'll be online at CCI live. May God bless you and we'll talk again soon. I.
