Harrington's Sort & Cull
John Harrington DTN Livestock Analyst

Monday 01/13/14

Seed Caps Fill Early Year Bleachers

2014 stands to be the year that farmer-feeders got back into the cattle game. And all it took was a $3 drop in the price of corn.

The USDA's National & Stocker Cattle Summary released on Friday cited auction after auction of explosive price action, new year spending sprees manned in large part by erstwhile cattle feeders rediscovering the art of "walking the crop to town."

To say these "born again" beef producers have embraced old habits with new enthusiasm may be damning with faint praise. Comparing last week's overall price surge with the last good test of 2013 (i.e., the week ending Dec. 20), the official market review indicated that "feeder cattle and calves sold fully $3-$10 higher with routine instances as much as $20 higher."

I thought the government's coverage of the sizzling 6-weight market was especially telling of farmer-feeder zeal. For example, the midweek auction at Bassett, Neb., hosted a bidding slugfest at record-setting expense. When the smoke cleared in the wake of 350 steers averaging 638 pounds leaving the ring, the barn office printed an invoice reading $211.34.

In case you're wondering, the lucky owner of these pricey jewels will be successful in marketing fed corn at $4.50 per bushel if he manages to sell their finished frames next August at $145 (assuming 612# of feedlot gain at 75 cents per).

The fact that such an ambitious "breakeven" currently soars nearly $17 above the August live contract would have struck me as insane just before Christmas. But now that the cash fed market has rocketed nearly $10 in just three weeks, I'd be forced to upgrade my assessment of potential success to "very unlikely."

It will be interesting to see if the somewhat friendlier supply and demand table for corn unveiled on Friday will be enough for some to reconsider their newfound love of the cattle business. Given recent signs of romance and passion, it will take more than a 25- to 50-cent rally in the cash corn trade for these new Lotharios to just leave the feed truck parked.

For more of John's comments, visit http://feelofthemarket.com/…


Posted at 3:07PM CST 01/13/14 by John Harrington
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