Sort & Cull

Near the final scene of "Lonesome Dove" when Gus lies dying because he won't have his pig-kicking leg amputated in order to save his life, he looks up at Captain Call and summarizes their amazing run of cattle, pokes, and wide open danger:

"My God, Woodrow. It's been a helluva party, ain't it?"

How many in the beef industry will long remember 2014 in a similar fashion? From the calving barn to the feedlot bunk to the meat counter at Wal-Mart, record prices and profits through the first third quarters of the year have made the market celebration worthy of the Roman Emperor Caligula (a party-animal if there ever was one).

I think the truly incredible thing about this bullish rave was the way it provided universal fun. For nine solid months there was not a single wallflower left out of the profit conga line. Happy ranchers, stockers, feedlot managers, packers, and retailers, virtually everyone clapped along "like a room without a roof."

If this is your first cattle party, my accolades may seem a bit strange. After all, aren't "party" and "fun" essentially synonymous terms? But those of you with drawers full of tear-stained dance cards and albums full of prom pictures with your Mom know exactly how painfully selective beef bashes can be.

This industry has a long history of "picking each other's pockets." All too often feedlots have celebrated at the expense of ranchers, or packers have reveled thanks to the red ink of feedlots. In this biz, to have all players simultaneously swinging on the same profit page is as rare as tight security at the White House.

Unfortunately, this extraordinary party appears to be winding down as we move into the fourth quarter.

According to the DTN cattle feeding model, last week marked the first time this year that fed prices fell below breakevens. Furthermore, our projections now suggest that feedlot breakevens are set to explode by nearly $20 per cwt by the end of the year.

Increasingly frustrated by the inability to sell boxes significantly higher in order to cover the stubborn cost of live cattle, beef processors are also looking for their coats and designated drivers. The sudden flatness of product demand and the seasonal odds of building supplies of competitive meat seem to read as ominously as flickering lights and turned over chairs.

As the crowd thins, the only carousers still sporting lampshades belong to the ranch fraternity. Good luck, barkeep, sending these guys home.

Just make sure they know, until further notice, no one else is buying their drinks.

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(AG)

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