version of the Market Plus segment.

Joining me now is Walt Hackney and Elaine Kub.

Guys, welcome back.

Thank you, thank you, Mike.

Pearson: Now, Walt, our first question goes to you

and it is an issue that I'm sure you're very

familiar with.

This is from Lee Reichmuth in Nebraska from Twitter.

Lee wants to know, what does the cattle industry

need to do at this point because anyone unhedged

for the last two years is close to bankruptcy?

What can producers, what should producers be doing

from today going forward to stave off bankruptcy

for these independent producers?

Hackney: Many of them cannot and bankruptcy is

going to be a way of life as we approach the deep

fall of this year.

There's a syndrome out there right now among

cattle feeders that the feeder cattle, if you

will, are unhedgeable, there's nothing they can

do, they're paralyzed and they are a victim of the

marketing process that's going to take them into

bankruptcy.

And I know how that sounds but it is a basic fact

that there's too often these producers have an

opportunity to get away from that attitude but

they've got to go now finally to a professional

trader that can give them the proper techniques to

get their hedging program done.

I've got a customer in Saginaw, Texas and he's a

huge operator, he is so big that you would think

that he cannot, his exposure has got to be

phenomenal in regard to his cash flow needs and

his risk protection.

He called me last night and we had a long visit.

Every hoof of cattle he buys, which is annually

about 35,000, maybe 40,000 head of cattle a year,

every hoof of cattle he buys he hedges and is

easily done and he hooks a $60 a head tag to their

tail and quits.

He doesn't go for the big money, he's not going for

the gold ring off the carousel.

He's going for $60 a head and that's all he wants to

make on them.

He made it when the other cattle feeders were losing

$400.

He made it last year when they were losing $400 to

$500.

This year they're losing anywhere from not quite

break even to a couple hundred bucks a head.

He has made money all the way through this.

And there he is, hedgeability of these

feeder cattle if they'll take advantage of a

professional marketer in the commodity end of it.

Pearson: Elaine?

Kub: I'll weigh in on this because there may be some

scenarios where the size of the contract it might

be easier to do it if you're at a large scale,

in some cases, than it is at a small scale, but in

that case I would suggest that people go talk to

their crop insurance agent about the livestock risk,

the LRP, there's livestock crop insurance, it's not

really crop insurance but it is a risk protection.

It is effectively a put of any size.

And the details of it, you should speak to your

agent, but I just wanted to point that out that it

can be done at any size.

Pearson: It is out there at any size operation and

it's effectively a subsidized put.

That's what it is.

Hackney: Elaine, since this is part of your

business, do you understand, which I do

not, but do you understand what Pete Bond was telling

me in regard to his techniques of putting

these -- he's got a daughter your age and she

does 100% of that by herself in his business.

Kub: Sounds like you guys need to get a new analyst

on here, yeah.

Hackney: She has designed a hedge program that is

phenomenal and that's what they use and it's unlike,

he'll explain it to me every time I talk to him

and when we get done I couldn't repeat him.

Do you see the potential of a hedge in cattle

through the techniques you're aware of?

Kub: Sure.

You would lock in your selling price through a

put or a short futures that can be done.

And in the cattle industry, and I don't know

exactly what your friend is doing in Texas, but if

he's feeding in that instance he has also got

to lock in his input costs, which is primarily

feed, that's the easy part especially now when corn

is $3.

This is a no brainer.

Pearson: How far ahead are you locking in feed costs

here at $3 cash corn?

Kub: Twelve months or more.

You look to December 2017, those futures are $3.90 so

that is an opportunity for everybody to look at this

and say, if I'm going to be producing corn in 2017

at $3.90 that doesn't sound so bad and if I need

to be feeding cattle for the next year and I can

buy it now for $3, that sounds pretty darn good.

So there's opportunities here.

Pearson: I didn't mean to interrupt.

He's locking in inputs, locking in his selling

price, but there have been times over this past year

with the incredible volatility where there is

no place you can hedge and find a $60 profit, but

there are other options you could use.

Kub: Well, and what I'm suspecting he's doing or

his daughter is doing is that, you're right, not

every day you can go to the market and find your

$60 but the days that you can find it he's not

getting greedy and waiting for $75, he's locking it

in.

Hackney: He catalogues an inventory of cattle, as

you suggest, cannot be worked into that program

and as that market moves he takes portions or all

of those catalogue inventory and he puts them

into that $60 a head program.

That's what he does.

Kub: That would be a minimum size.

Hackney: Possibly, I'm sorry I brought that into

your program here, Mike.

Pearson: That's helpful news for a lot of us.

Hackney: I get an incessant parade of cattle

feeders calling me asking me how they can, if there

is a hedge potential.

I'm not smart enough in the marketing in regard to

commodity to be able to give them any advice.

Kub: Well and like you say, Mike, some days

there's not and you wouldn't make money.

Pearson: Well now, Elaine, next question to you and

this one you kind of talked about on the show.

This is from Ben on Twitter in Jesup, Iowa.

He wants to know, where do you see the low in these

markets?

Kub: Well, I'm on Twitter so I saw Ben's question in

advance and I knew I was kind of spoiling it in the

show.

And to be honest the numbers that are the dates

that I said in the show are just me looking at a

chart.

What he's referring to is earlier in the summer I

did this statistical analysis of what date of

the year would you be most likely to see a corn

market high and it was June 18th and that worked

out great this year which was fantastically lucky

and I feel fantastic.

And I haven't done the full statistics about what

date of the year would you be most likely to see a

low.

But in these normally abundant years it looks

like there have been some lows in very late August

and then the crop size gets trimmed and then that

was the low, which that may very well be what

happened this year.

And some years there's kind of a low in November

if perhaps the crop gets bigger and bigger through

harvest, which is not the case this year.

Pearson: Right, but we're seeing a divergence where

corn that August low, we hit that $3.18 or $3.17

and change and the crop gets smaller.

Beans, we did hit a low or kind of a low in August,

now the crop has grown so do you expect that

November low or are we going to grow this bean

crop all the way through January?

Kub: I think beans are going to continue to have

some good news with continued buying.

There's going to be commercial business

actually going in there and buying those beans on

the futures.

Anyway, so I'm not too worried about beans.

Pearson: Okay.

But you're not yet reowning?

Kub: Oh no, I'm not - Pearson: If I'm selling

cash off the combine I just let those sales go.

Kub: Yeah.

Well, I haven't followed my own advice in that

matter but I'm just saying I'm not real optimistic,

but I'm not real pessimistic.

I'm neutral.

$9.60 is I think maybe the best we can expect but I

haven't sold my beans.

Pearson: Alright.

Put our money where our mouth is.

Hackney: Mike, I can't help but sit here and

think if I'm a producer and one of the fans of

Iowa Public TV and Market to Market how valuable

this conversation is to me.

I'm learning more sitting here than I came to the

party with.

I am.

Kub: I think Walt is being sarcastic.

I just said, I don't know, sell your beans, maybe,

maybe not, I don't know.

Pearson: You haven't though.

Kub: I have not.

Pearson: So Elaine is holding her beans, that's

her market advice for everybody.

Kub: But I'm not holding them for very long.

I've paid 5 cents for this month of storage but I'm

not doing that for very long.

Pearson: So harvest is done in your part of the

world?

Kub: In my acres it is.

Hackney: On the beans.

Pearson: On the beans.

Corn in progress?

Kub: Corn, nationwide we are going to hit the

halfway mark right about now.

More or less we're at halfway.

Pearson: Okay, in corn harvest.

Final question, and this is a big one.

We're delving into all sorts of issues with this

question was emailed to us.

We invite you to email us questions too.

MarkettoMarket@iptv.org I think is our email.

This one is from Brian.

He wants to know, what do we have to do to make the

consumer, our legislative bodies and the feds

understand the dire circumstances our

independent beef producers are in?

What if anything do we have to do?

Do we need to make the consumer or the feds

understand the potential road to bankruptcy for a

lot of cattle feeders in particular?

Hackney: Very briefly in my case I don't think that

it's necessary to have a formal effort to educate

the consumer in regard to using the agricultural

products.

They've got to eat and they've got to be able to

pay the price.

If you're going to the dance you pay for the

fiddler.

And that is what they've got to do.

What I'm trying to say is, we have every kind of an

educational process in effect as we speak that

will cause your friend there on the email to do

what he's, he wants someone to spoon feed him.

That's not out there.

You've got to get busy with the evidence that is

available and take advantage of the programs

that are already out there.

Pearson: Utilize the Farm Bill, utilize the

livestock risk marketing program.

Kub: Which is still kind of a raw deal compared to