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Commodity Investing: Maximizing Returns through Fundamental Analysis by SARAH MULHOLLAND, JESS GASPAR, JOHN ECKSTEIN, ADAM DUNSBY

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CHAPTER 12

Cattle

Perhaps the cow ought to be considered man's best friend. Cattle provide meat and dairy for food, leather for clothing, raw muscle power for transportation and farm work, and, in many poorer countries, serve as a store of wealth. And, unlike the dog, you can send cattle outside to feed themselves. This is because cattle are ruminants, a term that refers not to their capacity for deep thought but rather to their distinctive ability to digest plant fibers. Remarkably, the cow can convert the plant fibers cellulose, hemicellulose, and lignin into usable energy, a feat that modern ethanol producers are also working hard to achieve. (See Chapter 8, “Corn,” for further information on ethanol.) In the cow, this process is achieved by microorganisms that live in the rumen, the largest of the cow's four stomachs. When cows ruminate, they regurgitate and chew partially digested food so that the microbes in their rumen are better able to process it. Somewhat coarsely, cows could be described as small biofuel plants that produce beef rather than ethanol.

RAISING CATTLE

Raising cattle is a more complicated process than raising hogs. First, the time from gestation to slaughter in cattle runs 30 months, whereas the life cycle for slaughter hogs runs 10 months. Thus, cattle production requires more long-term planning and, consequently, one might expect longer cattle cycles and more financial hedging on the part of farmers. Second, the life cycle of fed cattle typically comprises ...

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