Latest / CattleUSA Daily / 284: What the Strong Cattle Market Tells Us Right Now and Why the JBS Shutdown Matters

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284: What the Strong Cattle Market Tells Us Right Now and Why the JBS Shutdown Matters · CattleUSA Daily

0:00
In today's episode with John Campbell, we are breaking down
0:02
everything in the cattle market and what we have been seeing
0:05
over the past week in Lahana and then across all of the live
0:09
cattle market in general. John also answers a few
0:12
questions that he's been getting from some audience members, some
0:15
people in his life about the cattle market right now, what
0:18
we're seeing in the highs and lows and the volatility of that
0:20
cattle market. And then John and I are talking
0:23
about the hot topic of the week, and that is the JBS plant in
0:27
Greeley, Co closing down and locking the doors this past
0:32
week. And what that truly means for
0:34
the cattle market as a whole, what it's going to do to the
0:36
industry and what we believe we're going to see in a larger
0:39
scale effect of this packing plant closing down.
0:42
Before we hop into today's podcast with John, if you're
0:44
watching on YouTube, make sure you go hit that subscribe button
0:47
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0:49
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0:51
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0:53
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1:00
And without further ado, let's go ahead and hear from John
1:02
Campbell. Welcome to the Cattle USA Daily
1:08
Podcast, your go to source for the latest livestock markets,
1:12
industry insights and the updates shaping agriculture
1:15
today. I'm your host, Lauren Moylan, a
1:17
passionate advocate for agriculture here to keep you
1:20
informed and connected. Now let's dive into today's
1:23
episode. John, welcome back to the
1:30
podcast once again. How are you?
1:32
How's how's life been? Everything's terrific.
1:35
We had a great sale this week and everybody's still kind of
1:38
rolling off the high of that and that lasts a couple days and
1:42
then you got to get back and find something to do for next
1:46
week. But that's a, that's a great,
1:49
great thing about this business. You know, a new market, new sets
1:52
of cattle, new customers every week, and everything is
1:57
different and everything's the same.
1:58
Just the way we like it, just the way we like it.
2:01
Keeps life nice and interesting. Well, yeah, great.
2:04
I love it. Well, what have we been seeing
2:06
on the markets over this past week?
2:08
Here at at Winter Light stock bike, lower Commodity Futures on
2:13
Thursday, Friday, Monday, that's down $5 and oil over $118 a
2:20
barrel. Like hell.
2:21
I'd say we got along pretty good.
2:24
No really 86th anniversary sale here in La Jolla, Colorado.
2:29
And yes, I've been there for more than half of them, but 7000
2:35
and I I show it. I, I don't know how many people
2:37
come up to me and you know, I say you got to do something
2:39
about that Gray hair. And so anyway, but my wife likes
2:43
it so I'll find him. But 7266 cattle and you know,
2:49
the calves and and, and I mean, we had every reason to be lower
2:53
calves steady in spots, strong. There was nothing any cheaper
2:58
curse about 10 to 15 higher and I thought the feeders 3 to 8
3:03
bucks better here on Tuesday. Excellent, excellent quality,
3:07
tremendous condition. I mean there you just couldn't
3:10
go anywhere to find the selection that we had.
3:13
Here's some 415 LB black stairs at six O 55 weight steers 532.
3:20
There's nothing cheaper about that. 6 weight steers up to 485
3:25
and that's where that 15 higher comes in. 7 weight cattle for
3:29
grass at 7:13. Then you get into the feeder
3:32
weight cattle here in La Jolla. We still had eight weight stairs
3:35
up to 357 and 9 weight stairs to three and a quarter.
3:40
And most of those would have been we don't get, we get some
3:42
weak cattle here, but a lot of those would have been
3:44
backgrounded cattle on the heifer side of things.
3:48
Black heifers, weaned effers weigh in 335 at 6:40.
3:54
We had some four way defers. I'm near the 6 dollars 595 which
4:00
would be 20 higher 485 LB. These were some Wayne SIM Angus
4:05
Heffers would rock 495 right up against 5 bucks weighing close
4:11
to 5-6 weight efforts at 4:31. Again the replacement deal
4:15
strong 720 LB replacement efforts to 395.
4:20
Bulk of the feeders were kind of 330 to 3:50 and some big 8
4:26
weight efforts up to 338. You know, again, when you've got
4:31
the best quality and conditions and really the best clientele,
4:36
why you don't have to put a news flash out Monday morning that
4:40
the markets gone to shit. Anyway, they brought him and we
4:44
got it for him. So it it was, it was a great
4:47
day. So encouraging the the cash
4:50
market at the winter livestock sale, Burns did not follow the
4:54
absolute fall out of bed situation that we had with the
4:57
markets early in. The week.
4:59
And that people were still there.
5:01
Everything was in place for crash and and, you know,
5:04
everybody else was saying the world come to an end, world come
5:07
to an end. And, and I've been down that
5:09
road enough times to say, you know, just let's just kind of
5:13
hang on here a minute and, and we've got the merchandise and
5:17
you know, through Cattle USA and the house was full of buyers
5:21
everywhere from Nebraska, Iowa, South Dakota, They went
5:26
everywhere. And some of the highest cattle
5:28
we sold were at the end of the sale and we were done at little
5:33
after 5:00 on Tuesday evening. So hats off really to our true
5:39
they they did an excellent job. And then we were surrounded by
5:42
some of the best, but mainly tremendous producers that really
5:47
had some outstanding genetics and condition and just offered
5:51
cattle that our Mission Impossible to find other places.
5:56
And everybody really rode to the front and did a great job.
5:59
Wow. That's so great to hear, John.
6:02
What are we seeing around the region?
6:03
Was this kind of a trend that we saw across all of the region
6:06
over this past week or just the other livestock, winter
6:08
livestock? Family I don't have of course.
6:11
Pratt and Celina are today, Dodd City yesterday with 33183 cattle
6:17
and they would have, you know, we were lucky to mark it up a
6:21
couple 100 points on Tuesday but then they just train wrecked it
6:25
on yesterday, Wednesday, we're recording this on Thursday.
6:29
But I thought Dodge got along good, £130 stairs at 580.
6:35
They had some 428 weight cattle at 492.
6:39
Again, seeing big numbers of calves as you go E actually not
6:45
old crop wing wing Cavs still had some fixed weight cattle up
6:52
to 439. Again, we're talking about Dodge
6:54
City 7 weight cattle for grazing north of $4.00 as well.
6:59
Four O 3 and then you get into their feeders.
7:02
Why 8 weights at 3:51 and our best 9 weight cattle brought 3
7:07
1/4 and Dodge City for sure at the heart of them.
7:11
They're 9 weight cattle at 3:30 for side of things in Dodge
7:16
City, KS 433 LB effers at 480-4515.
7:22
At 4:46 they had 6 weight effers north of $4.00, four O 5, some 7
7:28
weight effers at 34575 and 8 weight cattle up to 327.
7:35
So again, an outstanding day for the condition of the outside
7:42
market. So at Pratt and I'd be talking
7:45
last week. We'll see how they get along
7:47
today. They've got a big week run
7:49
today, be mostly bigger cattle, but they sold some 530 LB stairs
7:54
a week ago AT5226 weight stairs. I'm probably headed to the Flint
8:00
Hills AT4657 weights at 4:10. 8/20 at 381.
8:06
Again, this was a a week ago and 9 weight stairs.
8:10
That's where you might see a little pressure.
8:12
They sold 9 weight gattle a week ago in Pratt for 360 effers. 540
8:17
at 468, six weight effers. A week ago 413 seven weights at
8:23
369 their best 8 weight effers would have bought the 3:35 and
8:29
some big 9 weight girls at 310. Lina Kansas 22167.
8:35
Again the wheat run is is on back east but 513 LB stairs at
8:40
5:35. We'll talk about these grass
8:43
cattle in a little more depth here in a minute, but 620 weight
8:47
stairs at 467 weights at 428 weight cattle.
8:53
Salina, KS A1 week ago, 73 and 9 weights to 337.
8:59
They still had four weight heifers up to five and a quarter
9:02
and five weights AT4876 weight heifers AT4O97 weight heifers at
9:08
358 weight at 28 and 9 weight heifer, which they resemble a
9:15
school bus when you put them on feed, they're a little tough.
9:18
319. So over the last seven days, I
9:23
would think we just got along and tremendously well.
9:25
Well, that is so great to hear. And again, going back to what
9:30
echoing what I just said, that, you know, commodities might take
9:34
a hit, the board might take a hit, but people are still
9:37
showing up day in and day out and there is still a demand for
9:41
these cattle that we're bringing to the sale barns.
9:42
And so it's really encouraging that the right people are
9:44
showing up at the right times and that these producers are
9:47
still getting some really good prices for what they're bringing
9:51
to the market. Absolutely.
9:54
Well, John, on another topic, markets JBS, what are your
9:59
thoughts? How, how is this whole thing in
10:02
Greeley? What we talked about this gosh,
10:04
like 3 weeks ago. And I think Samantha said it
10:07
perfectly. I don't know if you've listened
10:08
to Samantha's podcast recently, but she said it perfectly.
10:11
She was like, you know what, like either shit or get off the
10:15
pot. Like stop talking about it guys.
10:18
Either do it or don't do it. Let's let's move along with our
10:22
lives because we've been talking about it for a month now.
10:25
And now JBS has gone ahead and move forward with, with being
10:28
like, hey, we're going to do some renovations and we're going
10:30
to do some updates, some other things.
10:32
And they've said if you're going to strike, go ahead and strike.
10:35
So John, what are your thoughts on kind of just how this is
10:38
going to affect the market and what we're going to kind of be
10:41
looking at over the? Next few weeks, First off, I I
10:45
thought I'd cover cover some questions and, and I'll get to
10:48
the JBS deal. Perfect.
10:51
You know, I, I had several people ask me as far as the
10:55
market goes with, you know, this huge wave of bad news that we've
10:59
had from the futures taking a crap to the Iranian war to the
11:04
oil prices, fat cattle down 5 bucks.
11:07
And for the stock market, you know, all all over the map.
11:10
How come all of that bad news, as we just mentioned in the
11:14
market report hasn't affected the light cattle market like it
11:18
did last fall when, you know, we just had a hint that Trump might
11:24
lower beef prices. So I bring in Argentina in and
11:27
we we up at 40-50 bucks within a matter of hours and trying to
11:32
compare the two. And I thought that was an
11:35
excellent, excellent question. Why then, why not now?
11:39
And again, I'm classifying it more on on light cattle stalker
11:42
cattle in the fall. It's really especially at that
11:46
time of year, I believe it was October.
11:49
You know, we're kind of in a time of plenty.
11:52
And we talked about how man, oh man, couldn't have been a first
11:55
timing for an announcement in the fall of the year.
11:59
Believe me, you can call a wrong number and you'll get somebody
12:02
with a 5 hour bounce steer cap to sell.
12:04
They're everywhere and everybody's got them and
12:06
everybody's selling them. And and so, you know, it was
12:09
more about the timing. And you know, you have immediate
12:14
sellers in the fall of a perishable product and those are
12:18
highly susceptible to news like that.
12:21
And in the same camp, no sense of urgency in October on a
12:25
buyer's part. They know there's thousands more
12:28
of them to come. And so, you know, that kind of
12:31
translated in a big dip in the market while while now actually
12:37
worse news has developed, but supply versus demand is
12:41
completely switched. I mean, we're running out of
12:44
time currently to put these grazing cattle together and the
12:48
numbers of that class, contrary to the fall is disappearing
12:53
fast. So buyers don't have the health
12:55
problems and no extended weather risk with buying cattle now
13:00
versus buying cattle last fall. So fundamentals have just
13:03
switched from the fall to the spring.
13:07
And but the fundamentals ruled out over, you know, all, all the
13:11
bad news that that we've had thrown at it.
13:14
Like I said, fundamentals kind of win in that type of scenario
13:17
as far as the JDS plant and you know shutting down, how is that
13:24
going to affect the cattle market?
13:26
I just preface the the question a little bit with, you know, the
13:29
workers voted to strike last Friday and gave JBS their seven
13:35
day notice and yes, said, well, don't bother with the notice and
13:41
lock the doors 2 days later Monday morning.
13:44
And if there's anything I have a mat on more for than the big
13:48
four Packers, I would say it's labor unions.
13:51
And I've worked for a Packer and I've worked with a labor union
13:55
and my order of preference would be a number 1B whipped with a
13:59
long chain #2 would be a packing plant employee, number 3A shark
14:05
suit stunt double and a tie for four would be a labor union or
14:10
in charge of board of body maintenance.
14:12
So that's kind of my order of preference there.
14:15
But you know, my opinion is, you know, the markets have eight
14:19
months advance notice to react to to through the strike that's
14:23
going on. So as far as that effect on the
14:25
market for the industry really doesn't need the kill capacity
14:29
that JBS has to offer right now. And some people ask questions
14:34
about well, well, how are they going to handle the AMA cattle,
14:38
the contract cattle, the formula cattle, JBS will have to play
14:44
pay in most instances, they'll have to pay the additional
14:47
freight that that's not on the seller for the contract.
14:51
And the formula cattle, the producer will have to stand the
14:55
tissue shrink on the carcass and and kind of technical, but
14:59
that'll definitely affect the yield and in some instances even
15:02
affect the grade. But again, depending on how far
15:06
they have to ship them. If you're feeding cattle in
15:09
Greeley Co as Weld County, I don't know what ranks number two
15:13
or three as far as the most cattle on feed.
15:16
Those cattle will either have to go to Utah or they'll have to go
15:19
to Grand Island. And again, to repeat JBS life
15:23
stand afraid on those cattle hot as a producer, my people tell me
15:29
if they go to Grand Island from Greeley, they're looking at
15:33
about 4/10 of a percent on their dressing percentage.
15:37
So if you if you think the cattle were going to make 64%
15:41
while now they're going to make 63.6% could definitely affect
15:45
the grade. And, and if you're selling on a
15:47
formula, all those things are important.
15:49
Also, you have to remember, they're already shipping JBS
15:53
already shipping Iowa, Nebraska cattle to Texas anyways, as are
15:57
a number of other plants. So they're already doing it.
16:00
But so before I really start crying with sympathy about JBS,
16:06
keep in mind that they have 139 processing plants at 109,000
16:13
employees. They operate in seven countries,
16:16
and they're #2 also in pork processing and #2 in poultry
16:21
processing. Just to qualify JBS last year,
16:25
all they did was make $7.2 billion in revenue.
16:31
So everybody's hearts bleeding over them.
16:33
And honestly my opinion is they could give two shits about
16:37
Greeley Co when you look at their resume and no doubt it's
16:43
going to cost them something to to shut down and it is expensive
16:47
to gear back up. But if you think they're worried
16:50
about replacing 3800 employees, they're not.
16:54
You know those employees were making 23 to $25.00 an hour.
16:58
Most of them don't speak English.
17:00
It's reported in the Greeley plant.
17:02
There is 57 different languages spoken in that plant.
17:07
Probably not a big demand for telemarketing or convenience
17:11
store clerks in downtown Greeley.
17:14
So last time they strike, as I mentioned before, I was at the
17:18
interview desk and the line was 10 blocks long for work at half
17:25
the pay. So and really shame on them,
17:28
shame on JBS and shame on the US government for letting these
17:32
huge corporates just get out of hand.
17:35
I mean, it's devastating to those families, devastating to
17:38
the community and we all know what it does to the cattle
17:42
market and, and, and our industry.
17:44
I mean, it, it, it's, it's just tragic.
17:47
So supposedly there's a bill being introduced that has really
17:51
got some teeth in it by it, you know, like by the time it gets
17:56
watered down, it probably just like transparency in the fat
18:00
cattle market, you know, and then you get to Colorado and
18:03
Texas. Oh no, that's confidentiality
18:06
and we can't share that with you, you know it.
18:08
And so the there there's a pretty interesting bill that's
18:12
come out and and we'll kind of go over the insurance and outs
18:16
of that next week. Yeah, for sure.
18:18
And I mean, when you look at the Greeley plant, it's one of those
18:20
situations that they're killing about 30,000 head a week
18:23
approximately. And that is one of those
18:26
situations where you look at the entire cattle industry as a
18:29
whole. Right now, all of our rail
18:30
speeds at all of our processing plants are slowed down.
18:33
They're not. There's some processing plants
18:35
that aren't even running 3 shifts right now.
18:37
They're running shorter shifts. We have the ability right now
18:42
when you look at our entire processing plants and everywhere
18:46
in the area that this can be moved to, to pick it back up at
18:51
other plants. Like I genuinely, I told
18:54
Samantha this on the podcast yesterday and I'll say it again.
18:58
I genuinely think that this is going to be one of those
19:00
situations that, again, we're going to be reacting more based
19:04
off of the idea of it rather than the actual execution of it.
19:08
We're going to see the effect on the board potentially.
19:10
We're going to see the effect on the commodities, things like
19:13
that, because there are people reacting on those numbers that
19:16
are not in the cattle industry. And so we're going to see that
19:19
reaction from them. But I don't think that we're
19:21
going to see a long term reaction and true effect on the
19:24
cattle market because of the demand that we have for what we
19:28
have for supply right now. Going back to basic economics,
19:31
one O 1, our supply is short and our demand is high.
19:34
And so we still have a product that's going to need to be
19:37
processed and there's going to be some hoops that have to get
19:40
jumped through. And the long run, I think that
19:42
these employees at the JBS plant in Greeley are really just like
19:46
kicking themselves in the ass on this because it's not one of
19:49
those situations that I think that in the long run, this is
19:52
really going to work out for them.
19:54
Because you made just so many great points there, John, about
19:56
the last time that this happened.
19:58
Well. And it you know, like I said,
20:00
you look at JBS and and I you can if anything, I've proven I I
20:04
have no love lost there, but it but it actually, you know, puts
20:08
the ball more in into their court.
20:11
They can use that as leverage. Do well we have to all these
20:14
cattle somewhere else that's less kill capacity.
20:16
They can put pressure on the market that way.
20:19
And you know, Colorado has I think one of the highest minimum
20:23
wages of anywhere. And like I said, you your versus
20:27
a say a Texas, I'm not sure about Nebraska, but you know,
20:32
minimum wage there's $7.00 and something an hour.
20:35
So you're working off of that basis versus Colorado.
20:38
It's 15 something. But these people were making 20
20:40
some dollars an hour and, and I feel for them as well.
20:43
You know, I mean that's there's a lot of displaced families and
20:46
and bad deal. And, and, but in anyway, it's I
20:51
think JBS know, knows what they're doing and and they've
20:53
got they've got a plan and they've got a strategy.
20:56
It's about like thinking the Chinese are going to run out of
20:59
oil. Don't, don't worry about it.
21:00
They'll be fine. They they will be fine.
21:03
It is not one of those situations that they saw this
21:07
coming. They've known it was coming for
21:08
a really long time. I guarantee you every single
21:11
strategist on that JBS team is fully prepared for what they're
21:15
going to do with those cattle and how they're still going to
21:17
be able to control the market. Because if you think that
21:20
there's any love loss on the JBS side about this plant closure,
21:24
for now, there's not. There really isn't there.
21:28
I guarantee you they're not stressing, especially
21:30
considering that the labor union put in their notice and they
21:33
just said, well, sayonara, we're going to do some maintenance.
21:36
We're going to do some other things.
21:38
Like if they were stressed about it, they would have used those
21:40
seven days to try and cram in as much as possible in those seven
21:43
days. But they didn't.
21:44
They closed those doors and they said see around guys, we'll talk
21:48
in a few. Weeks and and again, shame on
21:51
the government for letting them get so big.
21:54
I mean, that's a drop in the bucket to what those people are
21:58
doing. You have and I feel for the
22:01
workers as well too. You have no leverage against
22:04
something like that. Yeah, but but don't think that
22:07
there's have have got to do anything.
22:11
You know, I mean, look at the plants that have shut down all
22:15
across the country. They put a chain link fence
22:17
around them in the guard guy in a guard house.
22:20
And you know, like we we talked one time.
22:22
Well, why don't we go in and why didn't somebody go in and buy
22:24
Lexington? It's not for sale.
22:26
They're not going to sell. They're not going to create
22:28
their own competition. And if it comes to that point in
22:31
Greeley too why so be it. I mean, they are so massive.
22:36
We just shift our emphasis somewhere else.
22:39
You know, we, we got pork, we got poultry.
22:42
You know, the wheel hasn't fell off the machine.
22:45
Obviously, like 2 billion worth of profit in one year.
22:49
That can kind of let them coast maybe for a minute.
22:53
And that's, that's a tragedy of, of, of, of letting these things
22:59
get so big and so out of hand. They're just a monster and you
23:03
can't, you can't control them, nor do they have much of an
23:07
impact because they have impact on society, on impact on cost.
23:12
But as far as internal, they're not.
23:15
They're not worried about it. It's a bump in the road.
23:17
Yeah, absolutely. I couldn't agree more.
23:19
And it's one of those things that, like you said, John, will
23:22
kind of break down some bills that are potentially being
23:24
introduced right now on just the national side of things on
23:29
Capitol Hill of what this could potentially look like in the
23:31
coming weeks. Once you and I are able to
23:34
research it a little bit more and have a little bit more to
23:36
talk about on it. Because right now it's just some
23:38
rumblings and some potential things happening.
23:41
But we'll, we'll see how this continues to develop.
23:43
But I agree with you, do shame on the government for letting
23:46
JBS get this big and have that much control because it sucks
23:49
for the workers and that they don't have the ability to truly
23:53
strike in the way that we were supposed to be able to do here
23:57
in the United States as free citizens and as a free society.
24:01
And some other things like that, that just kind of go against
24:03
what our founding fathers really had in mind and in store when
24:06
they created this amazing nation that we all live in.
24:09
So really curious to see how that continues to develop.
24:11
And we'll, we'll break it down more next week, but any other
24:14
thoughts before we wrap it up today, John?
24:16
Well, I just beautiful, beautiful weather.
24:19
No, I mean it man, oh man. I think it was 80° here in
24:24
Lahata Monday and Tuesday both great day for a sale.
24:29
We're getting some rain I think in eastern Kansas and across the
24:33
Flint Hills. It's about time for those guys
24:36
to burn and get get things turned out.
24:39
But we're typical one. I was still waiting on the rain
24:44
and, and you know, all of all of Colorado really, I mean, there's
24:47
there's a, there's a big, there's a big dry area.
24:50
So we'll we'll pray for a little moisture.
24:53
Absolutely, definitely you're going to be doing that.
24:55
And people have already started burning here in the Flint Hills.
24:58
We're we're burning early this year.
25:01
Not everyone, it's not full-fledged burning season yet,
25:03
but some people have just said, hey, we're going to kick the
25:06
bucket down the road a little bit and we're going to, we're
25:08
just going to do this right now and get it over with since we've
25:10
had such great weather up here and had some been blessed with a
25:13
little bit of moisture here in the Flint Hills as well over the
25:15
past few weeks. But I tell you what, John, I
25:17
walked outside yesterday, though, and it was like a
25:19
whopping 17° after being 80° the day before.
25:24
And I was like, I was not ready for this.
25:27
I tell you what, I had to put my heavy coat back off.
25:31
I'd break your mittens out, huh? Yup, didn't have to break him
25:34
out this morning. Was able to walk to the office
25:36
in just my just my blazer in my jeans.
25:38
But oh boy, yesterday morning with that, with that cool, no
25:41
more than wind. I was like, oh, JK, summer's not
25:43
here yet quite yet, guys. We still have a few more months
25:46
of Kansas deciding to be bipolar a little bit, but it's
25:50
definitely around the corner. So prayers for all of you out
25:52
there that are definitely needing some of that rain as we
25:54
go into these spring months. And we will see you all next
25:58
time on another episode of the Cattle USA Daily Podcast.
26:01
John, as always, thank you for your time and all of our
26:03
listeners. We'll see you all next time.
26:05
Have a good one y'all.