Sort & Cull

Aggressive buyers at the National Stockyards in Oklahoma City on Monday morning were among the unofficial honorees to launch the cash cattle market of 2016. Judging by preliminary market reports, they performed the ceremony in bullish style.

On an estimated run of 8,500 head (up from initial receipts in 2014 of 5,503), the country's largest auction ring sold calves and yearling as much as $10-$20 higher than the pre-holiday test. Of course, the explosive price trend is a little misleading given all the excitement of the last two weeks. The sizzle of the price jump has much to do with "catch-up."

Actually, I was more interested to learn about the size of the new year's inaugural run. Why? Because one of the big questions to be posed in the first quarter of 2016 involves Jan-Mar placement potential, potential probably augmented to some extent by the surprising shortfall of feeder cattle placed in the last third of 2014.

For a variety of reasons, ranging from good, late-season pasture conditions to imploding feedlot margins to crashing feeder prices, placement activity from late summer through early winter dropped to the lowest level seen before the current data series began in 1996.

Between August and December (I'm projecting that last month's in-movement was at least 8% smaller than the previous year), big lots net placed 513,000 fewer than the same five months in 2014, 755,000 fewer than the three-year average.

Generally speaking, placement delayed and placement denied are two different realities. Eventually, feeding companies in 2016 should move to tap into what would appear to be a large backlog of replacements. To be sure, the waiting reserve may be smaller than a year-to-year comparison would imply thanks to the likelihood of aggressive heifer retention through 2015.

Nevertheless, I think monitors of feedlot placement will stay perched on the edge of chairs over the next several months, anxiously waiting for the other shoe, of some size, to drop.

(AG)

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