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Cattle Market Beatdown · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_00: Welcome to the Cattle Talk Podcast.
• 0:06
  SPEAKER_00: Your weekly breakdown of cattle market fundamentals, key news, and the insights shaping the industry.
• 0:13
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:23
  SPEAKER_02: It's November 6th.
• 0:25
  SPEAKER_02: I've got Jace back with us here today.
• 0:27
  SPEAKER_02: We are going to talk on a cattle market podcast.
• 0:29
  SPEAKER_02: Everything cattle futures.
• 0:30
  SPEAKER_02: How's it going today?
• 0:32
  SPEAKER_01: Not sure how to feel yet.
• 0:33
  SPEAKER_02: I know.
• 0:34
  SPEAKER_02: I I've been weary of asking that question most of the day, especially to cattle guys, because it's been a rough week, hasn't it, Jace?
• 0:42
  SPEAKER_02: Just give me a little bit of a rundown on what what we're looking at.
• 0:44
  SPEAKER_02: Like these fat cattle, no feeders, how much we've lost here recently since the high, even going back, how much we've lost like the last week in this future market.
• 1:04
  SPEAKER_01: So um taken that down to 214 from its highs of around 232, 233.
• 1:10
  SPEAKER_01: And like on the on the November feeders, we were above 350 on that same day on the 26th of October.
• 1:17
  SPEAKER_01: So we've taken we've taken$28 off there.
• 1:20
  SPEAKER_01: Um just really, really sour trade over the last couple weeks.
• 1:24
  SPEAKER_01: And it's it kind of it all started on the the last day, uh the last update we had was the day before the cattle on feed report that was bullish with placements.
• 1:35
  SPEAKER_01: So a little bit interesting.
• 1:36
  SPEAKER_01: You know, we people want to talk about the news in the market, but the last news we had, outside news, other than just fundamentals, was good news, and we were down off of it, and we've been down since.
• 1:49
  SPEAKER_02: Let's talk a little bit about this technical picture because it's I I don't want to down downplay or just skip past how hard of a sell-off this market's been.
• 1:58
  SPEAKER_02: If you pull up a December live cattle futures, let's start with that.
• 2:02
  SPEAKER_02: Um pretty strong break there.
• 2:05
  SPEAKER_02: We had 10 years to 11 straight sessions lower now.
• 2:10
  SPEAKER_02: And on those 10 sessions, we've averaged about$2.1 dollars a day on that sell-off in fat cattle.
• 2:18
  SPEAKER_02: That's incredibly impressive.
• 2:19
  SPEAKER_02: It's one thing to be like, oh, we had 10 straight down days, but it was like 10 or 20 cents a pop.
• 2:24
  SPEAKER_02: We've been averaging 210 lower a day out of this lower market that we've had.
• 2:30
  SPEAKER_02: And uh tell me a little bit about what you're seeing from both.
• 2:34
  SPEAKER_02: We had a double bottom back in August, and we we were able to rally that market incredibly well.
• 2:41
  SPEAKER_02: Now we're testing those support levels.
• 2:43
  SPEAKER_02: What did you see out of technicals today?
• 2:45
  SPEAKER_01: Yeah, I saw us getting down to that low.
• 2:48
  SPEAKER_01: We traded whatever that was 55 cents, 45 cents under the under the low from back in August there.
• 2:56
  SPEAKER_01: So kind of a a bottom right near those lows.
• 2:59
  SPEAKER_01: Um, that's pretty good support.
• 3:01
  SPEAKER_01: If you go through that, if you go through that, you're gonna have a little trouble because your next your next lows are quite a bit quite a bit lower going into last year in the 190s.
• 3:11
  SPEAKER_01: So I that's kind of your only your only two support points right now are just the lows from back in August and that we're technically a little bit oversold.
• 3:22
  SPEAKER_01: We were yesterday.
• 3:22
  SPEAKER_01: I don't we aren't even really oversold anymore.
• 3:25
  SPEAKER_01: So um I I don't know that there's you know that's some pretty good support, but beyond that, there's not a lot of support.
• 3:32
  SPEAKER_01: We went through all of the moving averages, the 20, 50, 100, 200 with no no problem at all.
• 3:39
  SPEAKER_01: No, no retracement off of any of those points.
• 3:42
  SPEAKER_01: So I do I do think we could yeah, we could struggle a little bit here, and fundamentals are ultimately gonna have to pick us up.
• 3:50
  SPEAKER_02: For sure.
• 3:50
  SPEAKER_02: Uh talk to me a little bit about the uh you know resistance here for the near term, probably on live cattle.
• 3:57
  SPEAKER_02: Uh 214.05 on the December fat cattle here.
• 4:01
  SPEAKER_02: You're probably looking at like resistance around.
• 4:03
  SPEAKER_02: I'm kind of picturing this 218-217 level.
• 4:07
  SPEAKER_02: Uh, I'd like to see uh us kind of get back to a level around there and see how we can go past that.
• 4:14
  SPEAKER_02: What do you see uh technically for a few of these indicators like RSI and putting us in the oversold category?
• 4:22
  SPEAKER_02: Uh do you think this is enough yet?
• 4:24
  SPEAKER_01: I I I don't really think so yet.
• 4:26
  SPEAKER_01: I know I know you can look at that market and say that a lot of it was traded on technicals, but I would I would argue that the uptrend that we saw leading up to this sell-off was more technical than this one is.
• 4:38
  SPEAKER_01: This one's more to match the fundamental picture of the bigger cattle in the north, sort of a deal.
• 4:43
  SPEAKER_01: But we we went up and filled that gap at the top in the low 230s on like December, and then straight down from the picture perfect, honestly.
• 4:53
  SPEAKER_02: And same on the way down here, if we work our way over to the feeder cattle chart cade.
• 4:58
  SPEAKER_02: One of the things I want to talk about there, similar chart action, um, not quite as uh extreme here, but we did fill a couple gaps today, or at least one gap in this feeder cattle market, didn't we?
• 5:10
  SPEAKER_01: Yeah, we did.
• 5:11
  SPEAKER_01: We did.
• 5:11
  SPEAKER_01: We filled all but the January one.
• 5:14
  SPEAKER_01: We missed that one by like five cents is all.
• 5:16
  SPEAKER_01: So I don't I don't know some people would consider that filled, but we pretty well filled that.
• 5:22
  SPEAKER_01: We aren't near the lows on feeders yet.
• 5:24
  SPEAKER_01: So that that could there's more room there, isn't there?
• 5:27
  SPEAKER_02: There's more room.
• 5:29
  SPEAKER_01: One point to make on this is when when we made our lows back in August, we had 550 corn.
• 5:35
  SPEAKER_01: So yeah, that it is a little different picture from that point, but it could still provide support if we go through the bottom on the live cattle side.
• 5:43
  SPEAKER_02: When I look at the technical picture, like MACD crossover, kind of crossed over right after we put the top in here recently.
• 5:49
  SPEAKER_02: We're a long ways away from that crossing back over again.
• 5:52
  SPEAKER_02: So maybe we'll need to put a plateau in this market or have a little recovery just to get those two lines to come together to hopefully give us a better little uh uptrend here technically.
• 6:02
  SPEAKER_02: What else can you tell me now as we move on more into a fundamental internal picture for this cattle market?
• 6:10
  SPEAKER_01: Yeah, the the fundamentals have been pretty bearish.
• 6:13
  SPEAKER_01: We've had bigger weights, a lot bigger weights, nearing a thousand pound carcasses on the steers.
• 6:18
  SPEAKER_01: Um, we've had lower cash.
• 6:20
  SPEAKER_02: So I could have averaged loads getting up to and over two thousand pounds in Northwest Iowa.
• 6:26
  SPEAKER_02: We're hearing some crazy stuff.
• 6:27
  SPEAKER_01: Yeah, and it's an interesting like it's an interesting fall from we we've hit we've been really wet like for probably five weeks of time where these cattle yards haven't had any time to recover.
• 6:39
  SPEAKER_01: So you've got dirt yards in northwest Iowa, eastern Nebraska, Central, where wherever there's dirt yards in the north here, we've been struggling to keep those pens together.
• 6:48
  SPEAKER_01: So you have big cattle in a yard where they can't get around very good, they're not gaining much weight.
• 6:54
  SPEAKER_01: Um, it's just a good, it's it's a good time to get rid of cattle, except for the fact that the Packers don't really want them right now.
• 7:01
  SPEAKER_01: So they've they've taken it.
• 7:03
  SPEAKER_01: I mean, we were we were at 230 in the in the north just two weeks ago.
• 7:08
  SPEAKER_01: And since since then, you know, they're we're down into the I mean there were some in the north here for 210.
• 7:14
  SPEAKER_02: So it seems like this time around, the Packers have had a much easier time when margin starts to escape them.
• 7:21
  SPEAKER_02: They're able to pull that back in right away, aren't they?
• 7:24
  SPEAKER_02: When they start to lose money, they just drop cash down to a level that makes sense for them.
• 7:28
  SPEAKER_02: And it seems like they're able to get that done, don't they?
• 7:31
  SPEAKER_01: It's I think it's simply a formula of them shutting Lexington down, the Illinois plant down.
• 7:37
  SPEAKER_01: I I just think those those small cuts matter at a time like this when we're needing to get these cattle gone.
• 7:44
  SPEAKER_01: And they've they've definitely got the leverage now, and they've had they've had positive margins for a while.
• 7:50
  SPEAKER_01: It's dipped into the negatives a couple times, but just by a few dollars ahead.
• 7:54
  SPEAKER_01: And they've largely been making money since July.
• 7:57
  SPEAKER_01: And that's that's maybe a a bullish point on the cattle market, is that they are they aren't losing a a ton of money right now, so they are they're able to kind of keep these chain speeds going.
• 8:10
  SPEAKER_02: What else do you want to talk about on the cattle market before we talk about some of the in outside influence this week?
• 8:15
  SPEAKER_01: Yeah, I think the the cutout starting to fall a little bit.
• 8:18
  SPEAKER_01: We've seen we've seen the pork market kind of taking it in the shorts here with um with the cutout heading lower.
• 8:26
  SPEAKER_01: We're seeing a little bit of the same on the cattle side or on the beef side, but ribs are still really strong.
• 8:32
  SPEAKER_01: Those middle cuts are really strong.
• 8:34
  SPEAKER_01: Um, I do think that could be a warning sign in the next in the next few weeks if we're not able to hang on to that market.
• 8:41
  SPEAKER_02: All right, let's talk about the outside markets because this cattle market did get a little bit of outside influence yesterday, along with everything.
• 8:48
  SPEAKER_02: Seemed like yesterday was just a sell day.
• 8:50
  SPEAKER_02: Recently, here yesterday, whether it was the grain markets, whether it was hogs, cattle, crude oil, live cattle, everything seemed to be getting sold off pretty hard here post-election, specifically yesterday.
• 9:05
  SPEAKER_02: Now, one of the things that I noticed out of this market was that you've been talking about uh a stock market that's been heavily driven by tech, and uh that that has rallied immensely.
• 9:17
  SPEAKER_02: And one of the things we saw through the election was that 40 out of the 41 local ballots uh for uh went against AI uh data centers.
• 9:28
  SPEAKER_02: Now, that was overwhelmingly against data centers, and that worries uh these investors right now, specifically in the NASDAQ, because it's so heavily weighted on the AI and AI data centers that that market got destroyed yesterday.
• 9:43
  SPEAKER_02: In fact, if you look at yesterday's sell-off in the NASDAQ market in one day, that was the largest point change ever in the Nasdaq market.
• 9:53
  SPEAKER_02: That was the hardest sell-off we've ever had.
• 9:55
  SPEAKER_02: Uh the Nasdaq closed off 1,421 points yesterday.
• 10:00
  SPEAKER_02: It was about 5.5%, Jace.
• 10:02
  SPEAKER_02: So that would be uh 10 of the worst percentage days, which is more relevant.
• 10:07
  SPEAKER_02: That would have been around 8.5%, would have been like the 10th worst one we've ever had.
• 10:11
  SPEAKER_02: So not quite in the top 10, ever percent sell-off wise, but it was definitely up there.
• 10:17
  SPEAKER_02: So most of it post-election market volatility, uncertainty is always a big question mark after uh elections.
• 10:24
  SPEAKER_02: Um uh mainly what we had seen here in this sell-off was just concern around this is gonna delay, permitting's gonna be really hard for data centers now, things like that.
• 10:36
  SPEAKER_02: So that's what the concerns were, and it trickled over into the cattle market pretty aggressively.
• 10:40
  SPEAKER_02: These consumers are tight already, and uh, you start to talk about something like that.
• 10:46
  SPEAKER_02: It it concerns many of these markets, specifically cattle as well.
• 10:50
  SPEAKER_02: So um the blue wave has brought a little bit of a red wave here, it looks like, over the end of the week.
• 10:56
  SPEAKER_02: Well said.
• 10:57
  SPEAKER_02: All right.
• 10:57
  SPEAKER_02: Anything else we want to talk about today on this cattle market podcast?
• 11:01
  SPEAKER_01: I think one thing to look for is just the the basis change over the next few weeks.
• 11:06
  SPEAKER_01: We went from a positive basis um outlook to to negative here for the the for the short term.
• 11:13
  SPEAKER_01: Um that does typically head closer to towards zero heading into the next few weeks.
• 11:19
  SPEAKER_01: So could be a little weaker on the board.
• 11:21
  SPEAKER_01: That could be a reason we're weaker on the board, could also be a reason why cash comes up a little bit.
• 11:26
  SPEAKER_01: We might we might get our leverage back just a smidge over the next few weeks, can take until the end of end of November.
• 11:33
  SPEAKER_01: But just another point, too, is our low was put in last year around Thanksgiving.
• 11:38
  SPEAKER_01: So, you know, it could it could be a couple more weeks of down here before you get before you get a whole lot of relief, or it could be it could be a while, but it does kind of feel like this time of the year is when we're running into our big cattle.
• 11:50
  SPEAKER_01: We'll get I think we'll get through it.
• 11:51
  SPEAKER_01: The Packers making money.
• 11:52
  SPEAKER_01: I think we'll run into some better markets in the future, but it might take a while.
• 11:56
  SPEAKER_02: Looks like in the north to close out the week.
• 11:59
  SPEAKER_02: 210 in the north is about all we could muster up for cash trade here for the time being.
• 12:04
  SPEAKER_02: Uh well off from last week's levels again.
• 12:07
  SPEAKER_02: All right.
• 12:08
  SPEAKER_02: Thank you for your time, Jace.
• 12:09
  SPEAKER_02: Everyone else, thank you for checking in today.
• 12:11
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• 12:14
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• 12:20
  SPEAKER_02: So thank you, Jace, for your time.
• 12:21
  SPEAKER_02: Thanks, Mike.