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Weather & Cattle · 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 involve 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.
• 0:23
  SPEAKER_00: Today is June 2nd.
• 0:25
  SPEAKER_00: I've got Nick with us here today.
• 0:26
  SPEAKER_00: How's it going?
• 0:27
  SPEAKER_00: Good.
• 0:28
  SPEAKER_00: Awesome.
• 0:29
  SPEAKER_00: Well, we're going to talk a little bit about this weather market that we found ourselves in now on the grains, and then we're going to talk about the wild week that the cattle markets had.
• 0:38
  SPEAKER_00: How's that sound?
• 0:39
  SPEAKER_01: Sounds great, Mike.
• 0:41
  SPEAKER_00: Awesome.
• 0:41
  SPEAKER_00: Well, this week here, uh, you know, after putting in a low back on like 518, uh, December corn traded down to that 490 area, that low level, and we've rallied significantly.
• 0:53
  SPEAKER_00: Closed last week at 534, closed uh today at about 541, so a seven round seven cent week uh week over week rally here for the December corn futures.
• 1:05
  SPEAKER_00: A really strong close.
• 1:06
  SPEAKER_00: We had a lot of resistance around this 535, 536 area on December corn.
• 1:12
  SPEAKER_00: We hit it about three times, kind of failed to break through it, and now uh we finally busted through that, had a nice close about 541.
• 1:20
  SPEAKER_00: So I I think that was a key close and uh market.
• 1:24
  SPEAKER_00: We'll see if it has any further legs under it here.
• 1:27
  SPEAKER_00: Technically, we've had some buying going on, but with low water reserves going into the growing season, funds are becoming a little bit concerned, Nick, about holding uh a net marginable uh position here on these uh on these grain markets.
• 1:41
  SPEAKER_00: And you know, when that 1130 GFS monitor uh on the weather came out, uh that really kind of uh slingshotted this market higher today because the corn market was struggling early on.
• 1:52
  SPEAKER_00: We were trading a couple cents lower.
• 1:54
  SPEAKER_00: And then uh when that GFS model came out at 1130 there, it showed some dryness in that eastern corn belt.
• 2:01
  SPEAKER_00: And uh they showed that uh backing off on on some rain coverage in Iowa and northern Illinois and Indiana.
• 2:09
  SPEAKER_00: Uh, you know, they did put a little bit of rain in the southern part of Illinois, but uh overall they backed off on that eastern corn belt.
• 2:16
  SPEAKER_00: And uh that really that really supported markets pretty much after that point today uh had a really nice close.
• 2:23
  SPEAKER_00: And you know, in general, here the market's becoming a little bit concerned about the eastern corn belt.
• 2:27
  SPEAKER_00: And so fear is trickling into these uh grain markets.
• 2:31
  SPEAKER_00: We are uh trading uh what would seem like a classic uh weather market at this point here, kind of the start of one.
• 2:39
  SPEAKER_00: Uh so it's uh you know, we're looking at a time frame here where uh we usually like to add some sales and get some activity picked up.
• 2:48
  SPEAKER_00: So I think uh the American farmer here is gonna start uh getting pretty busy marketing here if we get another little bump back up above 550.
• 2:57
  SPEAKER_00: And I think that's a key point because that really gets you around some decent marginable levels that uh we haven't seen for some time.
• 3:05
  SPEAKER_00: This would be the highest close or even traded price on corn since April.
• 3:10
  SPEAKER_00: So we really haven't seen anything above this 540 area, so pretty key time frame here um to be looking at weather.
• 3:17
  SPEAKER_00: It's a little bit early, but uh they are growing somewhat concerned here about this uh corn crop at uh even this early in the game.
• 3:26
  SPEAKER_00: So tell me about the cattle market that you uh that you witnessed here this week, Nick, and uh let's start with uh just kind of the market activity and what you took away from it with that big day yesterday.
• 3:40
  SPEAKER_01: Yeah, so it really really is just a a truly uh or a true cash market led rally, you know, in the in the live cattle futures here.
• 3:51
  SPEAKER_01: Cash is cash is coming up uh probably nine to ten bucks here week over week.
• 3:58
  SPEAKER_01: Um the South participated probably the most.
• 4:01
  SPEAKER_01: Uh they're gonna see you know some cash levels down there close to a buck eighty, I think.
• 4:08
  SPEAKER_01: Uh they still are behind the north quite a bit.
• 4:10
  SPEAKER_01: But it's the you know the futures market has to respect that low, the the lowest of the cash bid, and and the south being at buck eighty now.
• 4:19
  SPEAKER_01: Um June futures had a lot of work to do.
• 4:21
  SPEAKER_01: And uh, and that's why we we saw what we did here yesterday and follow through again today.
• 4:27
  SPEAKER_01: Um if you look at the um the you know uh some charts though.
• 4:32
  SPEAKER_01: I mean that we are getting very, very overbought here, but yeah, being cash led, um uh this thing should continue to have some momentum, I think, with with June futures, you know, still trading uh a few bucks below the the southern cash bid.
• 4:51
  SPEAKER_00: Do you think uh so we go into delivery right?
• 4:54
  SPEAKER_00: First notice day on uh what is that Monday here on the June cattle?
• 4:57
  SPEAKER_00: Yep.
• 4:58
  SPEAKER_00: So uh we should be looking here uh a little bit more aggressively about uh what that August is doing.
• 5:04
  SPEAKER_00: I know there's only about a four dollar difference there, so not really uh not really too worried.
• 5:10
  SPEAKER_00: That's a long ways out, but that's gonna become the front month pretty soon here.
• 5:14
  SPEAKER_00: And um that market on the June that's converged pretty closely with where that cash market was, anyways.
• 5:20
  SPEAKER_00: There's a pretty good separation there.
• 5:22
  SPEAKER_00: So I know a lot of people were watching that and worried uh, you know, about carrying some long positions into delivery.
• 5:28
  SPEAKER_00: So it'll be interesting uh to see how June acts here uh in the near term.
• 5:33
  SPEAKER_00: But a lot of market movement there this last week.
• 5:36
  SPEAKER_00: What do you think about uh about this market and seeing this recovery uh from the supply side?
• 5:44
  SPEAKER_00: So other than just uh going in and saying it was a huge week on cash, why do you think that occurred?
• 5:52
  SPEAKER_01: Well, you know, we we've certainly seen it in the in the cattle and feed report for a number of months now, you know, when you dissect that report and look at the placements, um, the next four months we we have a lower, significantly lower supply of of fed cattle than we than we did a year ago.
• 6:12
  SPEAKER_01: You also have um a cow harvest that is dropping relatively quickly.
• 6:17
  SPEAKER_01: I mean, simply there just in simply is not in not nearly as many cows going on feed today or cows being harvested.
• 6:25
  SPEAKER_01: So the so the beef the packing industry is aggressively looking trying to procure inventory.
• 6:31
  SPEAKER_01: And and uh so far, I mean, they're they're moving the meat yet.
• 6:34
  SPEAKER_01: They continue to move the meat, you know, choice beef here again at 308 today, and uh, you know, we should be at peak peak demand for beef right now.
• 6:44
  SPEAKER_01: And um, but with these these lower supplies coming at us and very current, you know, we're we we we simply don't have any carryover cattle really month to month, it doesn't feel like um, and uh and so that they're gonna aggressively bid for cattle.
• 7:01
  SPEAKER_01: And also I think a part of it too is um, you know, it's it's it's tough to to to to look at, I guess, um, you know, uh quantitatively, but I think we anecdotally we know that there is you know there was relatively poor performance this winter, and so a lot of the calves that got put on feed this fall just are are lagging behind a little bit.
• 7:28
  SPEAKER_01: Um and so that ready supply of of the calf feds uh probably is getting to gonna be delayed even into July.
• 7:36
  SPEAKER_01: And uh and and so the the market wants to pull some cattle forward.
• 7:40
  SPEAKER_01: I think there are some cattle being pulled forward, but but the supply situation right now is is not near, not like we experienced last year in the calf feds, and then and and plus uh and plus just lower numbers of placements um over the last six months.
• 7:58
  SPEAKER_00: How does it look from a breedstock perspective?
• 8:02
  SPEAKER_00: I mean, we really haven't started retaining any heifers at this point, have we?
• 8:06
  SPEAKER_01: It doesn't really it doesn't really feel like it know.
• 8:09
  SPEAKER_01: Um, you know, I I some of these d drought areas have improved um uh significantly, but uh you know, from what we're hearing there has not been a a great deal of heifer retention yet.
• 8:23
  SPEAKER_01: Um does that concern you?
• 8:25
  SPEAKER_00: Because I mean usually that's when you really start to get bullish, isn't it?
• 8:29
  SPEAKER_01: Yeah, right, right.
• 8:31
  SPEAKER_01: Um it does.
• 8:32
  SPEAKER_01: I mean it you know, our our the there are the a couple factors I think that we got going forward here.
• 8:38
  SPEAKER_01: If if we can sustain this bullish market, all things indicate we can today.
• 8:43
  SPEAKER_01: Um but I think uh, you know, like we we've all been talking about, you know, in in 14 and 15 we started importing quite a bit more beef.
• 8:52
  SPEAKER_01: Um we we start importing probably uh you know a a very sizable percentage of our of our production, you know, four to six percent of our production we actually imported in those years.
• 9:04
  SPEAKER_01: And that could be coming too.
• 9:05
  SPEAKER_01: I mean, we could we could change the supply situation quite a bit just by importing more beef.
• 9:10
  SPEAKER_01: Um we'll have to see how that unfolds here over the next over the next couple months.
• 9:15
  SPEAKER_01: But just demand in general, I mean if it you know it it's it's a little hard to believe that you know um you know I think the urban urban America is is starting to feel the pinch a little bit with or has for some time now with inflation and and uh and higher costs.
• 9:33
  SPEAKER_01: And if it's just a little hard to believe we can sub sustain this$300 choice beef so far we have, but I think uh the demand side is the biggest question mark going forward.
• 9:44
  SPEAKER_01: Um we know the supply is tight, we know the supply is gonna get tighter, but um demand, demand will will tell the story here over the next few months.
• 9:53
  SPEAKER_00: Two worthy fundamentals to be looking at here going forward demand and imports, I would agree, Nick, besides the obvious supply situation that we've got going on currently in the cattle market.
• 10:05
  SPEAKER_00: Thank you for your time today, and uh we can't wait for you next time.
• 10:09
  SPEAKER_00: Thank you, Mike.
• 10:10
  SPEAKER_00: And thank you to all our listeners.
• 10:12
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 10:15
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:20
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 10:26
  SPEAKER_00: See you next time.