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Transcript

Thanksgiving Feast · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_02: Today is November 26th, the day before Thanksgiving, and I got Jace Crocked with me.
• 0:27
  SPEAKER_02: How are you doing, Jace?
• 0:29
  SPEAKER_02: Pretty good, Jaden.
• 0:30
  SPEAKER_02: So to recap today's trade to start here, um we had a green green day throughout all commodities of today.
• 0:38
  SPEAKER_02: December live cattle ended the day up four bucks at 211.
• 0:42
  SPEAKER_02: Jan feeders ended the day up eight bucks at 315.
• 0:46
  SPEAKER_02: And December hogs ended the day above$80, up$2 on the day.
• 0:51
  SPEAKER_02: And the green complex here, corn led the way there, up eight cents in December.
• 0:56
  SPEAKER_02: And Jan Beans ended the day up seven at eleven thirty-two.
• 1:00
  SPEAKER_02: So Jay to start on the hog complex here, what did you see in there this week?
• 1:06
  SPEAKER_00: Yeah, so we had one of our first green weeks in a while here on the hog complex.
• 1:13
  SPEAKER_00: Um the first three months towards the beginning of the week or middle of the week here, we're trading below the index.
• 1:20
  SPEAKER_00: So wonder if it was a bit of a buy signal for the funds.
• 1:24
  SPEAKER_00: We haven't seen the up-to-date CFTC report yet, but wouldn't surprise me if that was a bit of fun buying in Feb and April, especially pushing that those contracts up about 240 today.
• 1:35
  SPEAKER_00: But we've seen this thing have quite a bit of softness since we struggled in the cutout in October time frame there, and just went through every moving average, tried to push back up through them in the in mid-November here, and couldn't quite do it, traded back to new lows, and then today we finally had our first close above the 20-day moving average in a while.
• 1:58
  SPEAKER_00: So finding maybe a little bit of technical support there and maybe a little bit of reason to keep it going for a little ways here.
• 2:06
  SPEAKER_02: So, Jace, would you say this week maybe uh the down day on Monday on cattle is maybe holding hogs back just a tad?
• 2:13
  SPEAKER_00: Yeah, I wonder if that just kind of spooked the marketplace on the proteins a little bit.
• 2:19
  SPEAKER_02: Okay, well, uh to jump into the cattle market now.
• 2:22
  SPEAKER_02: Um, yeah, like I said today, ended up eight bucks on the feeders and the fats we ended up five.
• 2:28
  SPEAKER_02: So can you take me through earlier in this week what what news were retrading there to have a limit down day on Monday?
• 2:34
  SPEAKER_00: Yeah, so to start the week, I guess it was Friday after the close.
• 2:38
  SPEAKER_00: We got the news from Tyson that Lexington, their Lexington plant would be closing down on January 20th, and their Amarillo plant would be cutting about half their employees and going to a one-shift plant there.
• 2:53
  SPEAKER_00: It it seemed they aren't they referenced the beef coming in from Brazil and the the the spread between the cutout, choice cutout and cash has been quite narrow and too narrow for them to keep operating.
• 3:08
  SPEAKER_00: They're operating in the red.
• 3:10
  SPEAKER_00: There was reports of them losing about 720 million in the past couple years in their beef industry, and the projection for 20 calendar 2026 was that they'd lose another 600 million.
• 3:26
  SPEAKER_00: So just big losses there, and you know, they made that decision to try and change the dynamics here.
• 3:36
  SPEAKER_00: I guess basically what has to happen is the spread between cash and cutout has to widen for that to change that we don't see another one go down.
• 3:45
  SPEAKER_02: So, Jace, um the reason for this plant shutdown is it is it the Packer trying to gain some leverage on maybe the cattle producer?
• 3:53
  SPEAKER_00: Yeah, it's a Packer that's been losing quite a bit of money, frankly, for the past couple years here, and they have to try and do something to get back in the black, and I think this is they kind of have to fall on the knife to do it, have to close one of their plants down, and it was it wasn't a question of if, it was more a question of when and who, but we we saw that here.
• 4:17
  SPEAKER_00: And the the market is very resilient this week.
• 4:21
  SPEAKER_00: I mean, we're higher now today at the close on the feeders than we were before the before the news on Friday there.
• 4:28
  SPEAKER_00: So quite a bit of strength, and I'm I'm pretty impressed by it.
• 4:32
  SPEAKER_02: Yeah, Jay, so uh there was some rumors, you know, um some news out there that Brooke Rollins was on a podcast this week with some um cattle guys and talking about the Mexican uh border opening.
• 4:44
  SPEAKER_02: Um what did you see there this week regarding the that news?
• 4:48
  SPEAKER_00: Yeah, that podcast she went on with a couple producers there and just talked, was trying to project herself as the feedlots friend or the cow calf guy's friend, and just talked through the border closure and the impacts that's having in Texas with the TCFA, Texas cattle feeders, wanting that open so that they can feed more cattle domestically here that originate out of Mexico, and then the cow calf guys wanting it kept closed, and I I think she kind of appeased both sides when she when she said that we were going it's not if but when we're gonna open that border up, but yet the time is not now.
• 5:31
  SPEAKER_00: So I I think that kind of got both sides a little calm down here, and I think that is a little bit why we traded so strong on the feeders today up eight and a half bucks, just the confidence that that thing's not gonna open right away here.
• 5:47
  SPEAKER_02: So yeah, Jace, a lot of guys like to look at you know 2014 to compare this, you know, where we were at in the cattle cycle, kind of the same, you know, price action we had back in 2014.
• 5:58
  SPEAKER_02: What have you seen there?
• 5:59
  SPEAKER_02: Are are we seeing kind of the similar similar pullback percent pullback we've seen back then?
• 6:04
  SPEAKER_00: Yeah, for that initial drop in 2014 of about 14-15 percent, we're very similar there right now.
• 6:13
  SPEAKER_00: Obviously, there's there's a lot of differences in that this one's primarily driven by the news and followed up by a little carcass weight stuff and some cash, some softer cash, but very different, very different fundamentals, I would say, but yet very similar on the chart action and yeah, history repeats itself, I guess you could say.
• 6:36
  SPEAKER_02: Okay, so to jump back in the grain market here to to end this podcast.
• 6:40
  SPEAKER_02: So to close the day here, we ended uh March corn here at 445.
• 6:45
  SPEAKER_02: Uh now we'll start looking to March corn for the front month there.
• 6:49
  SPEAKER_02: Um we we held some major support levels there this week.
• 6:53
  SPEAKER_02: Um, corn's been kind of playing follow the leader the past month or so, just kind of trading China headlines.
• 7:00
  SPEAKER_02: You know, if soybeans are higher, corn's higher and just kind of follows along.
• 7:03
  SPEAKER_02: But today it seemed like corn kind of led the rally higher today, and we we have been seeing some really good exports out of the corn market and shipping a lot of corn to Mexico.
• 7:13
  SPEAKER_02: But China, um the headlines regarding that price movement.
• 7:18
  SPEAKER_02: There is there was some overnight news that China did buy 10 to 12 cargoes from the U.S., but really no confirmation from the USDA there.
• 7:28
  SPEAKER_02: But if if that comes to comes to true here, they'll there'll be about 22% of their end of the year pledge that they that they said they would buy from us, the 12 million metric tons.
• 7:40
  SPEAKER_02: Um, so it's still, you know, with about four weeks left in the 2025 here, they still have a lot of work to do to be able to get to that 12 million metric ton level.
• 7:50
  SPEAKER_02: But it seems like there is some confusion when that 12 million metric ton um is supposed to be met by, you know, Trump did come out last week and said he had a call with President G, a really good call saying that soybean should be bought by spring.
• 8:04
  SPEAKER_02: So maybe we should be looking for this 12 million metric tons by spring.
• 8:09
  SPEAKER_02: Who knows?
• 8:09
  SPEAKER_02: Um Besson also did go on the news this week and said that China pledged to buy you know 87 million metric tons over the next three and a half years, so that equates to about 12 million metric tons per year.
• 8:22
  SPEAKER_02: But nonetheless, um the market it seems like it's not impressed with a few ships here or there.
• 8:28
  SPEAKER_02: They want to see a big purchase amount for this soybean market to be able to push 12 bucks.
• 8:33
  SPEAKER_02: Um, but the corn market and soybean market just seems like they're trading China headlines lately, and that's what we're gonna do until maybe until we get a January or December Wazley report.
• 8:46
  SPEAKER_02: Um, Jace, uh, to end here, do you have any final thoughts on any of the markets?
• 8:51
  SPEAKER_00: Yeah, there's been a lot of volatility.
• 8:53
  SPEAKER_00: It's a good time to look over positions that you have.
• 8:57
  SPEAKER_00: This volatility can be helpful if you're if you're in tune with your position and maybe switching to more options in these markets that have come off their highs quite a bit, like the cattle side and and the hogs and maybe on the grains, same same sort of deal.
• 9:14
  SPEAKER_00: I mean, that would be more your more your take, Jaden.
• 9:17
  SPEAKER_02: Yeah, Jace, do you want to do you want to tell me about what's going on with Pro Ag next week?
• 9:22
  SPEAKER_02: Uh talk about our guest speaker a little bit.
• 9:25
  SPEAKER_00: Yeah, so we've got on December 3rd, we've got Brett Stewart coming in and from Global Agri Trends talking about the global protein outlook, and he's just gonna go through that.
• 9:37
  SPEAKER_00: I guess he's he's very he's a very smart guy, very in tune with those markets and very knowledgeable.
• 9:43
  SPEAKER_02: Yeah, so if if anyone would like to come, uh uh take 16 December 3rd, about four o'clock, we'll have a happy hour, some appetiz appetizers, and we'll be able to listen to him speak and hear his knowledge with his experience with global trade.
• 9:58
  SPEAKER_02: Thanks for having thanks for joining the podcast today, Jace, and everyone have a great Thanksgiving.
• 10:03
  SPEAKER_01: Thanks, Jaden.
• 10:04
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 10:08
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:13
  SPEAKER_01: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 10:19
  SPEAKER_01: See you next time.