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Interest Rates and Cattle on Feed · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:24
  SPEAKER_03: Alright, today is September 23rd, and I have Nick Bork and Jordan Record joining me in the crowded podcast room today.
• 0:34
  SPEAKER_03: How are we doing over there, boys?
• 0:36
  SPEAKER_03: Oh, we're doing good, Lucas.
• 0:38
  SPEAKER_03: Yep, doing well, Lucas.
• 0:39
  SPEAKER_03: All right.
• 0:40
  SPEAKER_03: As they said, uh, this is Lucas Peters, your fill-in podcast host for the ProAg uh podcast here on this Friday.
• 0:46
  SPEAKER_03: Mike Minor enjoying a little uh time away from the office.
• 0:50
  SPEAKER_03: And uh uh he's away, but uh boy, the markets were a little crazy this week.
• 0:56
  SPEAKER_03: Uh hey, Jordan?
• 0:57
  SPEAKER_02: Yeah, we had uh quite a lower day today and uh kind of a little bit lower on the week.
• 1:03
  SPEAKER_02: So corn today uh down 11.5 cents at 676 and three quarters on the December corn, while soybeans were also lower down 31.25 at 14.25 and three quarters on those November beans.
• 1:16
  SPEAKER_02: The livestock today also traded quite a bit lower, down a buck fifty on the October hogs at 92.62 and a half, and December hogs were down two eighty-seven and a half at eighty-two eighty.
• 1:29
  SPEAKER_02: The live cattle today down sixty cents at one forty-four twenty-five on October, December down eighty cents at one forty-eight.
• 1:37
  SPEAKER_02: With a cattle on feed report for the week.
• 1:39
  SPEAKER_02: We seen corn unchanged, soybeans down twenty-five cents, cattle down almost three bucks, and lean hogs over five dollars.
• 1:48
  SPEAKER_02: So it was quite the red day.
• 1:50
  SPEAKER_02: Crude oil also kind of charging lower, down four thirty-eight currently at 79.11 on the November crude oil.
• 1:59
  SPEAKER_02: This week, you know, we uh had a uh Fed fund uh rate hike of uh another three quarter percent, which is uh you know helping push uh these commodities lower.
• 2:12
  SPEAKER_02: Um expected to see another two hikes for the rest of the year, maybe another one and a half percent is what uh they're expected to add onto that.
• 2:21
  SPEAKER_02: Um you know, uh going forward here, we got inflation kind of soaring, and uh currently we're over eight percent.
• 2:29
  SPEAKER_02: Uh you know, when you look at history there, uh to kind of squash this of inflation going forward.
• 2:35
  SPEAKER_02: History would tell you that you need to see interest rates up over the inflation number.
• 2:40
  SPEAKER_02: Currently we're only at three percent on the um Fed funds rate, so it uh it's gonna be a while here with these uh rising interest rates, I think.
• 2:50
  SPEAKER_03: What do you think that's gonna do to our uh producers out there that have to borrow some money for inputs or uh feed cost or yeah, it's it's gonna be tough, right?
• 2:58
  SPEAKER_02: Commodities lower, interest rates.
• 3:00
  SPEAKER_02: I mean, it it's it's probably gonna be a couple years.
• 3:03
  SPEAKER_02: I mean, there's a few talking three three years of this stuff is what uh what we could see.
• 3:08
  SPEAKER_02: But the dollar um today kind of showed what uh what it can do to commodities, right?
• 3:14
  SPEAKER_02: Dollar um up a buck eighty at one point I seen.
• 3:18
  SPEAKER_02: Trading almost 113, where last week we're at 110.
• 3:22
  SPEAKER_02: I mean, this is this is some big numbers we're talking about now that can really hurt exports, right?
• 3:26
  SPEAKER_03: Like a 20-year high or something crazy on uh on the dollar, like exactly.
• 3:31
  SPEAKER_02: I looked it up, it was uh March of uh 2002 today is the last time we've seen March of 2002.
• 3:38
  SPEAKER_03: You were still in grade school, weren't you?
• 3:40
  SPEAKER_03: No, it's been a while.
• 3:42
  SPEAKER_03: I know that.
• 3:42
  SPEAKER_03: Uh uh so you know, boy Jordan, you're full of a lot of good news there.
• 3:46
  SPEAKER_03: Uh uh is there any good news in the countryside now that the combines are rolling?
• 3:50
  SPEAKER_03: What are you hearing out there for yields?
• 3:51
  SPEAKER_02: Yeah, so so far on yields, um getting a little bit back on the bean yields, we've we've had a few producers out there and um you know some different stuff coming from the countryside.
• 4:00
  SPEAKER_02: I'd say, you know, it's uh mid to low sixties is kind of been the number that I've heard a lot of.
• 4:07
  SPEAKER_02: Um heard some stuff out in South Dakota in the 40s, but as you kind of work here in Southwest Minnesota, um mid to upper fifties to low sixties kind of seems to be about the number I've I've heard of some 70s, so there is some surprising stuff out there.
• 4:23
  SPEAKER_02: It looks like some some decent bean yields so far.
• 4:26
  SPEAKER_02: On the corn side, you know, you got uh basis levels that are um still rather stout kind of coming into harvest.
• 4:34
  SPEAKER_02: So we have seen some wet corn coming out to try to fill those contracts.
• 4:37
  SPEAKER_02: Um and you know, it's been pretty decent too.
• 4:41
  SPEAKER_02: I think everyone's kind of pleasantly surprised, right?
• 4:43
  SPEAKER_02: The hilltops are definitely uh a little thin, right?
• 4:46
  SPEAKER_02: You know, a little bit lower moisture is definitely gonna kind of take care of them, but the valleys, you know, they got some some pretty good corn down there.
• 4:52
  SPEAKER_02: So I've heard, you know, 200, 220, a lot of stuff kind of coming in right around there is what it seems like on the corn side.
• 4:59
  SPEAKER_03: Yeah, I would have to agree with you.
• 5:00
  SPEAKER_03: Locally, the you know, some of the silage appraisals coming in from uh uh our customers we work with and the adjusters that we talk to um you know locally are 210, 230 are a pretty common number for uh getting a silage appraisal in.
• 5:14
  SPEAKER_03: And and some of those early corn uh, you know, getting combined is is right in that range as well.
• 5:20
  SPEAKER_03: Uh soybeans uh locally, like you said, I think that 60 to 65 is going to catch a lot of soybeans in Rock County and stretching a little further east.
• 5:30
  SPEAKER_03: Uh as we look west and talking to a few guys out there, a lot of 40 bushel beans uh out in South Dakota the way it looks, at least on these early harvest results.
• 5:40
  SPEAKER_03: Um you know, it's kind of uh not a funny story if you're uh if you're down in southern South Dakota, but talking to a farmer down there, he thinks his soybeans are going to yield the same as his corn, or maybe a little more.
• 5:51
  SPEAKER_03: That's uh never a good combination uh to have.
• 5:54
  SPEAKER_03: Um yeah, so there's some some tough spots out there, but uh early results locally look uh really positive and and prices are still high enough to make uh make a profit and and look forward to next year.
• 6:06
  SPEAKER_03: So uh thanks for the uh market update there, Jordan.
• 6:09
  SPEAKER_03: And uh now we're gonna switch gears to to my good friend Nick Bork.
• 6:14
  SPEAKER_03: Uh we had a catalon feed report uh this afternoon about two o'clock.
• 6:18
  SPEAKER_03: Nick, uh what what did that tell us?
• 6:22
  SPEAKER_01: Yeah, thanks, Lucas.
• 6:24
  SPEAKER_01: Um we certainly had a uh had a you know a cattle on feed report showing that the industry here is kind of turning on all cylinders yet today.
• 6:33
  SPEAKER_01: Certainly the uh the slaughter numbers are showing that we're still killing a a huge amount of cattle for this time of year.
• 6:40
  SPEAKER_01: Packers are aggressively buying cattle, and and there certainly is a lot of willing sellers out there yet too, with with what cost the gains have done over the last year and continue to do.
• 6:52
  SPEAKER_01: Um 101% uh for this for the for the uh September 1st on feed number.
• 7:00
  SPEAKER_01: Um that would be that that'd be the second highest uh uh number that we've seen for cattle and feed in the last 10 years, just second only to 2020.
• 7:10
  SPEAKER_01: Um so certainly got a lot of lot of numbers on feed yet, but uh we're really turning and burning cattle.
• 7:18
  SPEAKER_01: Um marketings are high, and therefore placements have been higher too.
• 7:22
  SPEAKER_01: But um the the placements for for August came in at 101 percent.
• 7:29
  SPEAKER_01: It is kind of interesting that um Iowa actually showed about 116 percent increase in placements over uh over a year ago.
• 7:40
  SPEAKER_01: And I think that's that's part of uh you know the industry is kind of shifting again a little bit to the northern plains, you know, this cost to gain certainly as feed costs have gotten high.
• 7:51
  SPEAKER_01: That's that's more uh pronounced in the south, you know, the the Hereford, Texas area, the the the the the heavy feedlot areas where they really got to ship a lot of byproduct products and corn in um is is certainly feeling it in this market.
• 8:09
  SPEAKER_01: But um, so we are seeing some some big placements in the farmer feeder sector.
• 8:15
  SPEAKER_01: Um marketings were also we're at 108 percent of a year ago.
• 8:21
  SPEAKER_01: That uh also would be the the the biggest uh marketing August that we have seen in the last 10 years.
• 8:29
  SPEAKER_01: So just a true testament that a lot of cattle on feed, but the thing is really cycling.
• 8:35
  SPEAKER_01: Uh we're we're really moving through a lot of cattle these days.
• 8:38
  SPEAKER_01: So um we'll have to see how this how this plays out going into September and October here.
• 8:45
  SPEAKER_01: The the numbers do kind of die down um from a year ago for the for the cattle that are available now for October and November.
• 8:54
  SPEAKER_01: Um so uh you know without having a lot of carryover from from these from the last couple months and then the the supply actually declining for October, November.
• 9:06
  SPEAKER_01: Hopefully we do continue to see this cash market move higher.
• 9:10
  SPEAKER_01: We have we did see about a three dollar increase in uh in the cash market here again this week, and it looks like that uh should should continue as uh as we continue to pull cattle forward and and and ship cattle in this environment.
• 9:26
  SPEAKER_03: Yeah, so uh thanks for uh the update uh there, Nick.
• 9:30
  SPEAKER_03: Uh uh I think yesterday we had a cold storage report uh come out uh as well.
• 9:35
  SPEAKER_03: Anything uh real surprising in that uh that report, uh Jordan?
• 9:40
  SPEAKER_02: Yeah, you know, we did have a cold storage report come out.
• 9:43
  SPEAKER_02: It was a little bit bearish there too.
• 9:45
  SPEAKER_02: Um you know, it showed uh a record uh amount of frozen uh beef um in the freezer.
• 9:52
  SPEAKER_02: So I think one percent higher than last year.
• 9:55
  SPEAKER_02: Um one percent higher than the than the previous month and twenty percent higher than last year is where it kind of came in at.
• 10:01
  SPEAKER_02: So um kind of piling a couple of bearish reports on top of each other here.
• 10:06
  SPEAKER_03: Yep, kind of some bearish reports, uh some bearish news, and we kind of had a bearish way to end the week, right?
• 10:11
  SPEAKER_03: Uh fellas.
• 10:12
  SPEAKER_01: So Yeah, and all that considered, you know, with the with the big kills and then and then kind of a lot of beef in storage, we have finally seen after a very flat choice in select beef cutout all year long, that certainly has been trending lower going into the fall season here, too.
• 10:27
  SPEAKER_03: So very good.
• 10:29
  SPEAKER_03: Uh well, geez, we kind of ended on a sour note here, uh guys.
• 10:32
  SPEAKER_03: What are you something you're looking forward to this weekend or next week?
• 10:36
  SPEAKER_03: Uh market-wise or anything?
• 10:38
  SPEAKER_02: Uh full week of bean harvest coming up next week, right?
• 10:41
  SPEAKER_02: 75 degree temps should should get the combines rolling.
• 10:45
  SPEAKER_01: Good, Nick.
• 10:46
  SPEAKER_01: Yeah, I would just say that uh that this next week's forecast is certainly gonna be uh gonna promote some uh beef growth out there.
• 10:54
  SPEAKER_01: We just got some cooler temps finally coming and and uh and you know cattle are gonna really grow well here here again soon after we've been hot for a really long time.
• 11:05
  SPEAKER_01: So Sounds good.
• 11:06
  SPEAKER_03: Well, hopefully uh everybody out there has a uh a good weekend and uh safe start to the harvest.
• 11:12
  SPEAKER_00: And thank you to all our listeners.
• 11:14
  SPEAKER_00: Please reach out to us from our website at professionalagmarketing.com or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 11:25
  SPEAKER_00: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.