Sort & Cull

Late February through the end of March is typically a time of significant shifting within cattle country; from wheat pasture to feedlot, from corn stalks to calving ground, from springing cows to bawling newborns. Yet there are several reasons to think that this year's winter decampment stands to be especially thunderous and earth shaking.

First of all, the best available inventory numbers suggest the number of calves and yearlings outside of feedlots on January 1 represented the largest population documented since 2011 (i.e., 25.7 million head, 1.3 million more than the previous year). It's not difficult to appreciate such aggressive stockpiling.

Like the discouraged George Washington herding as many battle-weary troops as possible into Valley Forge to dream of a spring offensive, ranchers used every semi, goose-neck and broken-down cutting-horse they could find to retreat from the disastrous prices of 2015.

Whether winter pastures soon empty into feedlots or summer grazing plans, these deferreds steers and heifers will at least momentarily benefit from the potential of recovering beef demand and higher fed cattle sales.

Another new cattle reality set to gain notice on the Richter scale concerns ongoing herd expansion and the large number of baby calves set to drop over the next 30-45 days. Given a January 1 cow herd of 39.6 million head (i.e., 2.7% larger than the previous year and the biggest group of mamas seen in five years) and assuming a successful calving rate of 90%, I'm guess the 2016 calf crop (70% plus to be born this spring) will total as much as 35.5 million, 1.2 million more than in 2015.

To be sure, the nursery just opening will be both crowded and noisy.

Yet, the strangest factor shaping late-winter cattle movement may be the low price of wheat and that market's dismal prospects for the foreseeable future. For the second week in a row, Oklahoma City sold feeder cattle weighing less than 800 pounds (i.e., stocker types) at sharply higher prices. Guess what? The top cuts were cattle off wheat pasture being taken back to wheat pasture.

The price of wheat is currently so unattractive that many winter ranchers are deciding in favor of graze-out. If this trend continues, the feeder offering in May will be unusually large.

Market watchers interested in monitoring this strange late-winter decampment should keep a close eye on the August/October live cattle spread. Though the spread is currently flat, October may find it difficult to keep pace with August if the late spring placement proves to be historically large.

For more from John see www.feelofthemarket.com

(CZ)