Question-and-Answer Session
Operator
(Operator instructions) We’ll take our first question from Lisa Gill with JP Morgan.
Lisa Gill – J.P. Morgan
Hi. Thanks very much and good morning. Jim, can you just give us an idea of the timing aspect of when you think things potentially could return to normal? I mean, if we’re certain to see commodity prices come down as you’re having discussions with the farmers. I mean, are they giving you some timeline? And then, secondly, are you running into any credit – I think you’ve talked about credit procedures within your press release. I mean, are you running into any bad debt issues as you’re going through this period? And then just lastly, I think one of the bright spots in the quarter will just be that gross margin was better than what we are looking for. Can you maybe just talk a little bit through what you saw there and what your expectations are in the market inside and going forward? Thanks.
Jim Robison
Lisa, let me ask Bill to comment first on our experiences around our receivables.
Bill Lacey
Lisa, our day sales outstanding are right at 40 days. A year ago September, they were at 40.1. Our aging have not deteriorated and we don’t see – we haven’t seen any individual customers that give us any heartburn that we have had in the past. Of course, the agri [ph] business is made up of very conscientious people that are proud to pay their bills and they do so very regularly, so we’ve seen no deterioration on the receivable side.
Lisa regarding our – well, we think the market will turn around. We were very surprised to see the results of the last several months that we’ve seen. We usually see a building of activity that starts sometime as often as early August, and then builds through October, peeking at the end of October. This is called the fall-run in our vernacular, industry vernacular. We simply did not see that run this year. The causes are the rapid fluctuation in commodity prices that have caused real risks in buying in animals combined with the fact that most recently in the last 30 days we’ve seen feeder cattle fall off substantially. So people are holding back and allowing their animals to feed on grass or weed.
We have seen commodity prices come down across the board. The problem with this is that protein prices have come down as well. You still can’t invest in cattle right now and hedging economy, the profitability, and the transaction. Because of that, people are still holding back and waiting. I think the unprecedented volatility and the fact that historically we’ve seen corn as high as $5 a bushel in the last several months. We saw it approached $8 dollars in today’s trading. I think that concern and uncertainty about where grains will settle out is causing people to hold back. Having said that, the beef cattle are born and raised to be slaughtered in a 24-month period on average or so, and they’re going to come through at some point in time. It’s just a matter of when.
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