Sort & Cull

We knew Monday was going to be rough. Another day of limit-lower closes in both the live and feeder cattle markets, and now we are left to simply sit back and hold our breath to see how long this spell of chaos will endure.

For those who haven't heard yet, news broke late Friday afternoon, Nov. 21, that Tyson Foods intends to close their Lexington, Nebraska, plant and reduce their plant in Amarillo, Texas, to a single shift per day. DTN's Senior Livestock Editor Jennifer Carrico highlighted the full details here: https://www.dtnpf.com/….

The gut-wrenching blows the market has endured lately have been anything but benign. And while I'd like to again shout from the rooftops that the industry still sits with a historic 72-year low in the cow-herd, the market is more worried about the headlines of today as opposed to the unwavering fundamentals.

So that leaves you and I with a couple of options. We can frantically react to this news; or we can harness our thoughts and begin to ask ourselves some of the necessary questions.

Number one, in the short-term (next six months), does this change anything for my operation? Number two, in the long-term (next three to five years), does this change anything for my operation? And number three, what effect is this decision by Tyson going to have on the greater marketplace that could potentially affect my operation?

I can't answer the first two questions for you, but I can add some thought to the third point. In terms of how this could potentially affect the greater marketplace, I personally believe the reduction of throughput will only push the herd build-back that much further out as yet another level of confidence has been eroded from the market. Friday's Cattle on Feed report highlighted that fact as the total number of heifers on feed for Oct. 1 totaled 4,355,000 head, which is still 38% of the total on-feed numbers. And whenever heifers are at or above 37% of the total number of cattle on feed, the industry knows heifers are being sold as feeders and aren't being retained as replacement females. And while it's still true that feeder cattle prices are still trading at record highs compared to recent years, the bullish sentiment which both the industry and market possessed three months ago isn't the same as it is today.

No one knows how long the market is going to remain on edge following this development. And if anything, we've learned as of late that more news can always be found. But for those of you who are heavily invested in the business and are planning to play the game long-term, control the things you can control, don't let emotion drive your choices and remember the world loves to spin fast -- but you don't have to.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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