Latest / CattleUSA Daily / 268: Cash Strength Returns, But Are Cows the Wild Card in This Cattle Market?

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268: Cash Strength Returns, But Are Cows the Wild Card in This Cattle Market? · CattleUSA Daily

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  In today's episode of the Cattle USA Daily podcast, Dan and
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  Samantha are coming on once again to give us the rundown on
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  the cattle market. Everything that we're seeing on
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  the board this past week and also the cash market, how those
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  things are intertwining together.
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  We're also going over the cow market right now, what we're
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  seeing in cow slaughter, coal cows, all of those things.
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  And we're touching on supply and demand, what we need to watch as
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  we go into the next few months of the year.
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  Before we hop into today's episode, if you're watching turn
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  on YouTube, make sure you take a second to hit that subscribe
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  button. And like this episode.
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  If you're watching on any of our other podcast platforms, y'all
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  know the drill at this point. Make sure you take a second to
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  make sure you're following the show and also go right and
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  review it as well. Without further ado, let's go
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  ahead and hear from Dan and Samantha.
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  Welcome to. The Cattle USA Daily Podcast.
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  Your go to source. For the latest livestock
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  markets, industry insights and the update shaping agriculture
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  today, I'm your host Lauren Moylan, a passionate advocate
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  for agriculture. Here to keep you informed.
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  And connected. Now let's dive into today's
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  episode. Dan, Samantha, welcome back once
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  again. How are we doing this week guys?
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  Great, doing great. How's everybody else doing?
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  Doing good. Love to hear it, Samantha.
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  You didn't blow away yesterday. That's encouraging to see.
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  Yeah, that was miserable. We had 70 plus mile per hour
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  winds, some wrecks on Interstate fires.
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  It was horrible. Yeah, we didn't have any fires,
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  but I heard some neighbors that did.
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  Southwest Kansas, really southwest Kansas in Oklahoma had
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  some really, really bad fires yesterday and last night.
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  I haven't seen an update on how they're going, but that wind was
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  miserable for a lot of people. Yeah, we just got half inch of
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  rain the past weekend, so I was pumped and then I mean, not very
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  much, but take what you can get. And then we had this and tried
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  it all out again. Jeez, got to love it.
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  Got to love it. Well, did you have any of that,
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  any of the wind? Nothing.
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  It was windy. I mean nothing.
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  There's no fires. It's, I don't know, 30 mile an
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  hour winds. That's a normal for.
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  Western Kansas, Yeah, Jeez Louise.
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  Got to love it. Well, what are we seeing in the
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  markets this week, guys? Give us the rundown and the
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  update. Big old pop yesterday off that
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  higher cash late Friday. So that's all encouraging gaps
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  on the charts, Island bottom, technical breakouts out of a
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  trend channel, open interest rallying, all, all great signs.
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  It's, yeah, an expectation that we've got the leverage here,
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  here and right now. And then we're going to keep
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  using it. And if that happens, yeah, it,
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  it looks strong. I shouldn't say open interest.
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  It was getting higher it it leveled off yesterday.
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  So overall, cattle still look strong and healthy, led by that
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  good old cash rally. Yeah, absolutely.
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  I think that that strength from cash finally gave that market
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  something to price off of. I mean, that's exactly what they
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  were looking for and they definitely got it late last
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  week. I think we only had about 600
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  head of fads traded on a negotiated basis through
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  Thursday, so it was looking pretty disappointing.
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  And then Friday hit and they busted out with another 45 to
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  46,000 head. So most of that was traded
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  anywhere from 2:40 to 2:46 in the north and 2:40 249 in the
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  South. So I think a lot of that 240
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  trade in the north came earlier in the week, but S's definitely
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  trading at a premium. There was also, I think playing
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  more sales that didn't even show up on the USDA report because
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  they were marked 249 + 1. So we had some 250 trade.
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  Of course, Packers, they ride it that way because they don't they
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  have to bite the bullet to get cattle bot to keep these plants
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  running efficiently and and that plus one kicks it from cash to
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  formula. So they don't want that that
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  higher price reported as cash and then and the weighted
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  average bumping up the base price on these formula trades.
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  So, you know, it's just, it's same old, same old with the
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  Packers. They always find a way to work
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  the system. And, and really, I just can't
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  believe the USDA doesn't crack down on that harder than they
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  do, especially being a government entity, I mean, as
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  regulated as they are. But regardless that that 250
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  trade was there and that was a huge mark for live cattle.
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  I, I think a lot of people didn't think we were going to
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  see that for a while, if at all. Kind of moving on to feeders
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  here. A lot of the sale barns last
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  week and early this week reported pretty choppy trade.
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  I think there was some unevenly steady reported and then there
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  was 5 to $20 higher depending on what area you were in, even a 20
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  mile difference, they were reporting different prices.
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  So I think these heavier weights are definitely in higher demand
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  as we keep pushing these, these bigger carcasses.
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  I think really demands going to be put to the test over the next
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  month as we not only get into tighter supplies, but a lot of
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  these break break evens on fats is such a moving and and almost
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  unattainable target for these feed yards.
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  So we'll see how much them and the Packers are are willing to
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  pay to keep inventory filled. These feed yards are also
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  getting a lot of added competition from our fronts up
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  north in Canada. Canada's hit kind of the same
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  boat that we're in. They hit their lowest supply
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  cattle and they don't have the volume to fill their feed yards
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  with domestic inventory. So they're coming down here.
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  I mean, I was reading the other day that record US cattle
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  numbers crossed into Canada and 25 and that that tariff free
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  cross-border trade definitely continued even into the first
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  part of this year. A lot of those cattle are
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  getting fed in Canada and sent back to the US for processing.
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  So it's just interesting to see that shift where it used to be
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  the other way around. We used to import a lot of live
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  cattle from Canada, so it's kind of flipped over the last decade.
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  But yeah, I think really just looking into the the next part
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  of the year, 2 big things to just keep an eye on the cash
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  market and really how much are feeders and Packers willing to
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  pay as supplies gets tight and even tighter come the next few
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  months? So and 2nd demand.
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  What does beef demand look like going forward?
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  We've kind of touched on this before just hitting into some of
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  these seasonal lows and me, I mean, yeah, beef demand looks
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  pretty optimistic going forward. Last month, the USDA had
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  actually projected that beef demand slips in 26, but February
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  they revised that and raised the per capita beef consumption to
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  59.5 lbs in 2026, and that's hitting record high.
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  So yeah, bottom line, I mean, beef's definitely still the lead
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  protein in terms of consumer demand and convenience is
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  definitely still in the forefront.
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  So we see that post winter demand shift to keep the to get
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  that push in the cut out and hopefully keep these kill plants
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  operating at a sustainable rate to keep this thing going.
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  Dan, what are your thoughts on supplies?
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  I think February was a big hole as far as fat cattle.
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  A little bit concerned here about March and April.
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  Lower slaughter rates backed us up.
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  Not not a big way, anything to be overly concerned about
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  causing a $2.00 cash market. But there's going to be a few
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  more numbers available here in March and April.
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  A lot of people feed cattle big for April.
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  You know, it's, it's one of the more popular months on the
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  board. So a lot of people feed for that
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  good positive basis in that time frame.
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  With that in mind, you also get the demand that comes with it.
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  So if the consumer does step up, you know, with these cheaper
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  prices at retail, we're finally seeing, you know, I think the
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  Packers forced to slaughter more and we can work through that,
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  that increase in available supply.
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  It's just a matter of of what the consumer decides.
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  You know, to be completely honest, boxes have struggled
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  every time we're up here, you know, 37375, they've struggled
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  and they've struggled with a lower slaughter rate.
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  So that's a little bit concerning to me as far as the
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  consumer goes. But you're also doing that in
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  the months of January and February, you know, two of our
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  worst months for beef demand. So you got to almost, I wouldn't
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  say take it with a grain of salt, but keep that in the back
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  of your mind as we come into grilling season.
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  If it's a normal grilling season with with nice weather and and
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  the consumer still wants beef, you know, it wouldn't surprise
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  me if we push boxes back to closer to 400 and and all the
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  sudden you're your Packers are forced to slaughter more.
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  So then we get we get worked through that supply.
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  I'm a little bit nervous about, but overall it's just a whole
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  home for the February. Just got to get past it.
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  Yeah, definitely feeling that winter slump.
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  I think in a lot of different areas across different markets,
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  different regions, all of the above.
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  As we push through the kind of dog days of winter, I guess you
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  could call February and hopefully March doesn't come
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  roaring like a lion and humble us all a little bit because I
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  think we'd be getting a little spoiled, especially with weather
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  and some other things that definitely do inevitably affect
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  our markets. So hopefully we can have some
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  calm as we go into spring. What are your thoughts just on
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  the cow market and cow supplies, cow slaughter, all of those
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  things, especially as we go into spring?
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  Cow slaughter is ticking up. I mean we kind of talked about
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  it and I believe this winter that we expected dairy cow
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  slaughter to tick higher and and it's doing it.
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  Dairies are calving these cows getting that that day old Black
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  Eyed calf that's worth anywhere from 12 to 16 and 1800 bucks.
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  And and then they're pounding the cow if she's, you know, not
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  not worth milking. So with the cow slaughter
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  ramping up, that does cause a shift in Packer aggressiveness
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  as far as fat cattle cause some of these hybrid plants will kill
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  both cows and fats. And if they didn't have the cows
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  the last two years, they were killing fats.
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  So that's going to cause a shift.
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  It's not a huge 1 yet. What I'm even more concerned
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  about is the spring as we come into even higher cow slaughter.
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  Pretty common, you know, not a not a ton of issues by any
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  means, but if we have any kind of issues, cow slaughter ramps
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  up from that. You also have the cow feeders
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  that buy a cow, you know, Thanksgiving, Christmas at
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  Prague, check and they feed them all the way to closer to Easter.
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  You get those fat cows coming to the market at the in that spring
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  time frame. That's another, another reason
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  we need to pay attention to that cow market.
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  Overall, I wouldn't be surprised if cow slaughter ramps up 10%
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  over last year. So it's, it's got me a little
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  bit on edge because the cows can kill a good rally.
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  But as long as that demand is there the way we need it.
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  And, and so far, if if consumers aren't eating the steaks, maybe
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  they'll back up and really plow through the burger.
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  Maybe we'll be OK and work through it and then be fine.
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  But overall, definitely some, some concerns there.
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  Yeah, absolutely. Cow slaughters definitely ramped
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  up. Dan mentioned dairy that's been
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  huge lately and they had that huge rebuild in their herd over
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  the last year or so. And now they're starting to
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  liquidate some of that and look for alternative markets because
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  a dairy prices have had a lot of downward pressure lately and
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  hopefully going to get that boost from the pyramid flip,
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  incentivizing healthy saturated fats and all those things.
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  But yeah, I think it's definitely going to be a little
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  problematic, especially as ground beef has been in such
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  high demand. They're kind of pushing out
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  those facts cattle and looking more towards those those cool
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  cattle. And so, yeah, I think that's
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  kind of what we're going to see there.
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  Yeah, definitely. Dan, what are we seeing in the
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  grain markets? Whole lot of nothing still
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  sideways action. You know, they they got hammered
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  yesterday and they're trying to put some of it back on today.
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  Inevitably, you know, you got to look at at the next step down
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  the chain, right Soybean male is struggling.
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  It can't seem to bust that three and 1/4.
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  You've got soybean oil, you've got all energies.
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  You know, crude oil is still in the low 60s, diesel, you know,
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  low twos. It's hard for me to get wildly
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  bullish, whether you're talking ethanol demand, whether you're
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  talking, you know, soy products, if we can't get the the next
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  product down the chain to really get going.
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  So I hope the farmers are using these rallies here this winter
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  and and coming into spring, get some puts in place, you know,
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  hope like hell you don't need them.
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  Because the balance sheet the USDA gave us is not, is not
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  bullish for $5 and $12.00 beans. And we don't, we all know how,
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  how the talk gets talked between Trump and China and doesn't
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  always turn into a walk. So I don't know if that's the
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  correct way to put it. But be very careful with those
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  rumors about China buying all the beans we have and buying us
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  out because South America, we got a crop very, very close to
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  hitting the market. And it doesn't sound like
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  there's a lot of issues down there.
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  I think we need to use these these opportunities in these
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  rallies to get some some protection in place.
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  Yeah, for sure. Samantha.
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  Dan, do we have any other thoughts on the cattle market,
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  anything else that we haven't already touched on or talked
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  about today that we need to cover?
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  Awesome, straight into the point.
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  I love it. Well, as always, thank you both
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  for your time. To all of our listeners out
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  there, if you need any coverage, want to talk about what works
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  for you and your operation, make sure that you check out those
• 13:28
  show notes down below and you can get a hold of Dan and
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  Samantha or another member on our team to discuss what would
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  work best for you as you continue to move forward into
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  the rest of winter and into spring as well.
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  Dan, Samantha, thank you for your time.
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  And to all of you listeners, we will see you all next time on
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  another episode of the Cattle USA Daily Podcast.
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  Have a good one y'all.