Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Friday 06/29/12

Nervous Arithmetic

The hot, dry summer of 2012 is forcing cattle market watchers to reluctantly engage in nervous arithmetic. While the number gathering and analysis does not exactly require proficiency in trigonometry or calculus, the off-grass math can nonetheless leave you with a splitting headache.

I'm talking about the necessary ciphering to identify premature stocker movement into feedlots and possibly the resumption of forced cow liquidation.

While the late-June math in this regard is far less frightening than the devastating calculation seen throughout the Southern Plains last year, one can easily point to certain sale barn receipts that are adding up way too fast for this time of year.

Here's a small sampling of Nebraska and Wyoming feeder runs reported this week, compared with 2011 volume: Bassett, 4,090 head versus 2,110; Kearney, 3,075 head versus 0; Ericson, 1,500 head versus 0; Torrington, 2,250 head versus 0.

Of course, there's always a danger of generalizing from too few particulars. Yet the significant deterioration of pasture and range conditions since the first of May is well documented. In just eight weeks, the official rating of Nebraska grass has fallen from 93% fair or better to 57%. At the same time, Wyoming pasture has dropped from 86% fair or better to only 34%.

But if there seems to be strong evidence of forced feeder cattle movement on parts of the country, the most recent cow slaughter data has not been very suggestive of summer feed problems.

While the dairy cow kill has been 10%-15% larger over the four weeks of actual slaughter data (possibly tied in part to extreme dry conditions in California), the beef kill has remained roughly 10% below 2011.

Yet forced stocker movement is almost always exhausted before ranchers consider the ugly option of dismantling the cow factory. The huge wave of cow liquidation in Texas and Oklahoma last year did not crest until we were well into the third quarter.

Summer rainfall in cow country is always iffy business. But let's hope a few wet fronts can strategically stall-out here and there, at least enough to calm the nerve of herd enumerators sick of subtraction.

For more Harrington comments check out www.feelofthemarket.com

John Harrington can be reached at john.harrington@televentdtn.com


Posted at 3:11PM CDT 06/29/12 by John Harrington
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