Larry Hicks Cattle Hedging

(Larry) Hello, my name’s Larry Hicks. I have a company called Cattle What we do is we work with feedlots and ranchers and farmers on managing their risk. Our key, key motto is “managing your risk, is manager equity.” But we really try to work with producers is to understand that the key to making decisions flows to the balance sheet. And in the balance sheet we’re looking at the protecting equity and we’re looking at building equity through retained earnings. And we do this by focusing on assets. The assets are either the cattle out on grass or the cattle in the feed yard. On the liability side we’re looking at the cost of grass, the cost of corn, or the cost of the feeder cattle. And the point of managing your risk is protecting… watch the growth in potential of your asset. At the same time managing the liability side, netting a positive growth in equity to the balance sheet. The biggest mistake producers make is lack of discipline. By nature they’re speculators. And so they tend to be big speculators. One of the things I tend to talk about is who they are and what they are. Who they are is cattle producers. And they spend a lot of their time on the production side. But what they are are businessmen. We need to work with them on being better businessmen. Because they lack the disciplines of running a good business because they let the production side of who they are be a force that over rides, the what they are and that is a good businessman. It doesn’t matter if you are a cattle producer or a widget producer. You need to know where your costs are. You need to know where your margins are. And you need to protect your equity. At, one is we have the website called which has over 2,000 graphs that look at supply and demand and trends in the market place. We also have…we’ll have a learning center in 2015 to help educate people more. Then we have another product called Hedge Positions. What Hedge Positions does is it uploads your cattle from your feeding operation on a lot by lot basis and then it compares the futures market, adjusted by your local basis to see on a lot by lot basis whether you’re making or losing money. And then as you put your derivatives or your futures or your options on those are loaded up into your hedge positions account and as the market moves up and down then you get an idea of whether you’re making or losing money. If we were to focus on one key thing that the producer that we try work with on and that is discipline and accountability.

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