The following article is from DTN:
Even though June marketings by big lots are expected to fall as much as 6{6b02cb02835b82b7f756ddf6717aaab7139b350de274ea97f5b53eb230607107} below 2011 (3 to 4 points of the shortage was tied to one less business day), out-movement remained large enough to overshadow early summer placement and pull the on-feed population seasonally lower (e.g., the July 1 bunk line stands to be nearly 700,000 shorter than the March 1 peak).
Interestingly, if last month’s placement comes in as expected, total placement for the first half of 2012 will prove only 1{6b02cb02835b82b7f756ddf6717aaab7139b350de274ea97f5b53eb230607107} smaller than the large, drought-driven in-movement of Jan-Jun 2011. Most would have assumed a much larger cut-back in placement when new year feeding activity began in January. Needless to say, 2012 has hosted quite a mean drought of its own.
Still, this year’s dry stretch started much later than the drought of 2011. A big factor inflating this year’s placement has been the sizable increase in the importation of Mexican feeder cattle.
Thanks to a savage drought in Mexico this year, feeders have been crossing the border in droves. Mexican feeder imports through the first five months of 2012 totaled right at 300,000 head, roughly 25{6b02cb02835b82b7f756ddf6717aaab7139b350de274ea97f5b53eb230607107} more than Jan-May.
If there’s a wildcard in the June placement deck it might involve deteriorating pasture conditions that trigger more cattle into lots than is commonly assumed.
Cattle Inventory Comments: Although the beef cow kill during the first half of the year slipped nearly 9{6b02cb02835b82b7f756ddf6717aaab7139b350de274ea97f5b53eb230607107} under Jan-Jun 2011, comparisons are being made against a large kill last year, and the culling rate from the smaller beginning inventory remains high. So despite more heifers entering the herd, the mid-year beef cow inventory is projected near 30.7 million head, about 700,000 head below last year, more than a million head smaller than two years ago, and more than 2.5 million below the 2006 peak.
In short, the death march of liquidation continues. Indeed, given how drought conditions and high corn prices have intensified over just the last 30 to 45 days, it seems a good bet that new inventory totals unveiled on Friday will already be behind the curve in terms of anticipation further herd liquidation.
Between the midyear herd inventory and the July 1 on feed report, we should get a good handle on the number of feeder cattle outside of feedlots as the market moves into the second half of 2012. If most of the above guesses are in the ballpark, the July 1 feeder pool should total close to 37.6 million, 2{6b02cb02835b82b7f756ddf6717aaab7139b350de274ea97f5b53eb230607107} to 3{6b02cb02835b82b7f756ddf6717aaab7139b350de274ea97f5b53eb230607107} below last year and the smallest replacement supply in recent history.
Source: DTN
Posted by Haylie Shipp
