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Contributor

Re: Re:You're assuming the pen gets filled......

Like most everyone, I have a hard time grasping how this will shake out, but I can share a couple observations, mainly borrowed from others.  The idea that 2.8 billion is a comfortable carryout is not true.  In 87, the carryout was nearly 4 billion (correct if wrong).  The next year it was GONE and total consumption not near today's.  End users take note and consider why there USED to be a price premium in spring before the new crop was established.  Traders too, take note.   Think 2012 (already forgotten!).  Then a question:  6 million PP acres seems to be bantered about and I don't know why.  A recent year, 2013 I think, produced 2-4 million PP without much effort and it was a pond that year compared to an oversized swamp this year (better bean prices then too).  Seems to me we could throw out 12 or 18 million without being outside the realm of possibility.  Because if you are well past your corn date, PP must look better than beans for most--that is if you can plant beans.  Any guesses on PP acres?  I'm not convinced 6 million to be wrong, but it's almost as if a good share of analysts can't grasp that the wettest spring on record could mean 6-8-12 billion less bushels.  I think the national yield in 93 was just north of 100!  Yes, we produce better yields now, but not in a swamp.  Most of the crop's nitrogen is growing algae  in the Mississippi backwaters right now.  So history probably  suggests this could change things.  My wild guess is national yield of 150 and lots of abandoned acres.  And 3-4 million extra corn acres out of Texas and other dryer areas minus 14 million PP elsewhere for a total 9 million loss.   Just a guess...

Honored Advisor

Re: Re:You're assuming the pen gets filled......

Feedlots would like to feed to the heaviest weights, it`s the packers that determine the highest prices.  Like watch the buyers turn up their nose at <1100lb fats, but go crazy for the 1350lb sweet spot cattle, then if it`s some 1600lbs .  The auctioneer asks "what`s wrong here?" and one of the buyers holds out his arms indicating "too big" as the carcass will be too heavy to process efficiently.  

 

Feedlots want to feed heavy, cause their fixed costs are the same whether the cattle are 1100 or 1500, that extra 400lbs is a 1/3 of an extra steer and they`re sold by the pound.   But if the packer docks, that plus the small loss in feed efficiency, they`ll do what the packer wants or go broke.  But this goofy idea that a feedlot will ship under finished cattle just because corn goes from $3 to $4.50 isn`t correct.  Try selling under finished cattle once and I guarantee you`ll never do that again and in the future you`ll err on the side of having them a little too finished....I do. 

And hogs 280lb is the sweetspot up to 300lbs, but when I was young 220lb was a finished hog, I don`t think a packer would even want a hog under 235lb.

 

I think you hear things like "cattle last week averaged 1357lb, last year they were 1340lb...so weights are up" . Well, water, overnight stand, cattle pooped before getting scaled, hotter or cooler weather, all kinds of shrink causes.  And these market advisors get carried away on "corn too high, so expect a wave of 1,000lb cattle coming and it`s Trump`s fault!!!"   is a bunch of fiction writing.  

 

But we get over 1 million head of feeder cattle a year from Mexico now.  And oh the feedlots sing the praises of the wonderful Mexican feeder cattle, so if Mexico has more they`ll send them and the US feedlots will buy them.

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