Irrational commodity markets sinking producers

Any reasonable reading of the fundamentals of supply and demand in the cattle business leads to the conclusion that prices should be at profitable levels, because there is a basic shortage of fed cattle coming out of the feedlot, and a shortage of yearling replacements to go back in the feedlot.

However, the plunge of the Stock Market has spilled over into commodities trading on the Chicago Mercantile Exchange and the Chicago Board of Trade, and futures prices have sunk like a rock. This has led the cash cattle market to be down $4-$10 on feeder cattle, and $3-$4 on fed cattle.

These are not unrealized, theoretical losses for cattle producers. They actually breed and own the cattle themselves, individually. They sell them once a year, in the fall, for their annual payday. The timing of this market crash is an unmitigated disaster for many farmers and ranchers.

Owners of retirement plans and 401Ks are urged to hang on, don't sell, and your retirement investment will come back when the market does. If you don't sell out, you've only suffered a theoretical, paper loss.

For ag producers, there is no hanging on. When the crop is ready to sell, be it grain or livestock, it has to go. Like the old saying of the grocery business goes "Sell it or smell it!"

Farmers and ranchers are taking their lumps as we speak, without any real alternative.