The Market's Fine Print


By John Harrington
DTN Livestock Analyst

Last Friday rained livestock supply data like the soggiest days of Noah. The dark clouds of NASS opened up in early afternoon, dumping buckets of numbers linked to cattle on feed, family planning in the swine industry and stacked pallets of frozen cuts of meat in cold storage.

As if this statistical gully washer wasn't enough to flood the general marketing sewer, bureaucratic rainmakers had already soaked the playing field the day before with a slow-moving front of livestock slaughter totals.

By the time I locked the office that night, I felt drenched to the bone. My fingers were numb from updating countless spreadsheets and my new sense of understanding was disappointingly sad. In fact, the impact of any other such squall might have caused me to steer my listing craft to the nearest rum-serving port in the storm. But now I had a hot game of checkers with my grandson waiting at home, all the stimulation I desired or could handle.

Jack's mother had asked her parents if they would like a little houseguest for the weekend, and we jumped at the opportunity. He just turned 11 this spring, but sometimes speaks like a teenager studying for his college boards. I could be prejudiced.

Because he's a boy in a fairly large sea of granddaughters, we let Jack pretty much call the shots when he visits solo. As long as it doesn't bother child protective services or the local fire department, the kid carries a blank check around me.

That said, his behavior is delightfully predictable: He loves to play checkers and ask more questions than Charlie Rose. Regarding the latter, don't discuss anything in front of him and expect to waive cross-examination.

The board was already set up when I walked through the backdoor with Jack's first move long since made. "Your move, Grandpa," he beamed. "Watch out for the triple jump."

We quickly took up the traditional trash-talk sparked by competitive checkers, both promising to bury the other in such humiliation that name changes and new addresses would be required. Worthy of professional wrestlers, such demonstrations typically last through two or three moves, but then serious strategizing on Jack's part caused an extended period of relative silence.

I loved these "between-move" moments the best for the chance to talk about a wider range of topics, faking the ancient wisdom grandfathers are supposed to wield. This time I started out by telling him that since he had mastered checkers so easily, I needed to teach him how to play chess, a far more complicated game, one truly worthy of his brainpower.

I droned on and on, the birthright of the young elderly. But just when I was waxing about the complicated yet powerful maneuvering of the chess piece known as the knight, Jack suddenly snapped out of his checker trance and asked: "If the on-feed report and hog inventory were games, which would be like checkers and which would be like chess?"

"What in the world are you talking about, son?" I said shaking my head. "Are you trying to sneak back a move?"

"No, Grandpa," he insisted. "When you first came in you told Grandma you were sick of the USDA playing games with livestock numbers. I just want to know which games."

They say there are no dumb questions, but this one seemed to come dangerously close. Still, who was I to snuff out this budding curiosity? Maybe his oddly teaming imagination would someday discover a cure for cancer or cable television.

"Golly, Jack," I said, responsibly holding my head in deep thought. "I've never considered it quite that way. But it's a darn good puzzle. I guess cattle on feed reports are more like our favorite game of checkers. You know, all the pieces -- on feed, placement, marketing -- all pretty much move in the same way. Sure, they can move back and forth from month to month. But there's really no hidden potential, no surprising strategy that can suddenly hit you of the blue. Once and awhile, the government may issue some startling revision. Yet for the most part, what you see on the cattle feeding checkerboard is what you get."

"On the other hand," I continued, "the rules required to interpret quarterly hog reports clearly approach the complexity of chess. Yes, you do have some totals that all move in the same direction. But there are other implied realities such as gilt retention, litters per sow, and percent of sow herd farrowing that can transcend prescribed patterns of movement. Indeed, their rather random movements can cause other previously predictable pieces to go AWOL from the rulebook."

"But here's the thing, my dear inquisitive boy," I stressed with extra enthusiasm. "Neither of these old-fashioned board games, as fun and demanding as they may be, are complicated enough to do justice to the dynamic livestock markets of today. Remember that these reports Grandpa has been grumbling about concern only the supply side of the market equation. But what about a game that could simulate also the complexity of demand, macroeconomics, and global issues like Brexit. Maybe the game closest to the great market maze would be something like three-dimensional chess played blindfold."

"What do you think, Jack?" I said, turning back toward the checkerboard. "Jack? Where did he go?"

"When you started to talk about gilt retention," my wife informed, "he headed down to the basement to play Assassin's Creed on the Xbox."

John Harrington can be reached

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