Latest / CattleUSA Daily / 338: Last Week’s Selloff Has Us Asking: Is the Cattle Market Crashing? With Samantha Cozza-Wright

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338: Last Week’s Selloff Has Us Asking: Is the Cattle Market Crashing? With Samantha Cozza-Wright · CattleUSA Daily

• 0:00
  Today on the podcast, we are welcoming back Samantha Kozarite
• 0:02
  once again to answer the question that so many producers
• 0:05
  have on their mind right now. And is this the beginning of the
• 0:08
  end of the highs in the cattle market that we have been seeing
• 0:11
  over the past year? Over the past week, we saw a
• 0:14
  pretty volatile cattle market and some pretty significant
• 0:17
  declines. But Samantha is here to break
• 0:20
  all of that down for us. What we really have seen over
• 0:22
  the past week, what is really going to continue to impact the
• 0:26
  cattle market and if producers need to start buttoning up the
• 0:29
  hatches. Before we hop into today's
• 0:31
  podcast episode with Samantha, if you are watching on YouTube,
• 0:34
  make sure you take a second hit that subscribe button and like
• 0:36
  this episode. And if you are watching on any
• 0:38
  of our other podcast platforms, make sure you take a second to
• 0:41
  go right and review the show. Go follow the show and share it
• 0:44
  with a friend. If you enjoyed today's episode.
• 0:46
  Now without further ado, let's go ahead and hear from Samantha
• 0:49
  Kozar Wright. Welcome to the Cattle USA Daily
• 0:56
  podcast, your go to source for the latest livestock markets,
• 0:59
  industry insights and the updates shaping agriculture
• 1:02
  today. I'm your host, Lauren Moylan, a
• 1:05
  passionate advocate for agriculture, here to keep you
• 1:07
  informed and connected. Now let's dive into today's
• 1:11
  episode. Samantha, welcome back once
• 1:16
  again. How has harvest been?
• 1:19
  How's life in Northwest Kansas been?
• 1:21
  Hectic is harvest. Planting.
• 1:24
  Very hectic. I knew what you meant you're
• 1:26
  good. We have AI mean everyone in
• 1:28
  Kansas pretty much has a failed wheat crop.
• 1:30
  So we are somewhat harvesting, but we're going to swat that for
• 1:33
  hey. But no, it's it's good.
• 1:35
  Just chaotic hectic. Same old song and dance.
• 1:38
  Think a lot of people are kind of in the same boat.
• 1:39
  We've finally been getting some rain over the past few weeks.
• 1:43
  So it's kind of kept us out of the field.
• 1:46
  Par for the course. You don't want to wish away the
• 1:47
  rain, but trying to get corn in before June one too.
• 1:50
  So a little stressful, but pushing through.
• 1:52
  Absolutely. Definitely are, definitely are.
• 1:54
  Well, what have we been seeing on the markets over the past
• 1:57
  week, Samantha? It's interesting how every time
• 2:00
  we come on here and every week it's something different.
• 2:02
  I mean, we were coming off of a really, really volatile week
• 2:06
  last week. I think everyone's so careful of
• 2:09
  that, that big crash that everyone's been cautious of for
• 2:12
  years as we've been on this steady inclining and cattle
• 2:15
  prices for the last four or five years here.
• 2:17
  And so a lot of people were thinking that that that crash
• 2:20
  last week was kind of the beginning of the end.
• 2:22
  And you know, I really, now that we've had some time to sit on it
• 2:25
  and seeing how we've transitioned out of it as we're
• 2:27
  coming into Tuesday of this week, I really don't think
• 2:29
  that's the case. There was just so much headwind
• 2:32
  last week. First off, there was people
• 2:34
  speculating on a bearish Catalan feed report long before it was
• 2:37
  even published. So that kind of already set sail
• 2:40
  on a sinking ship. But the biggest factor in last
• 2:43
  week's sell off was the barrier at the entrance of the Cargill
• 2:46
  plant in Fort Morgan, Co. And I, I heightened barrier
• 2:50
  because it was not such a big deal until they actually they
• 2:54
  put up barricades at the entrance.
• 2:56
  I mean, a little context. The labor strike started that
• 2:58
  last full week in April. Cargill rejected wage
• 3:02
  negotiations. Union workers rejected the wage
• 3:04
  negotiations and then transitioned to a month later.
• 3:08
  They actually locked these workers out until they could
• 3:11
  come to some sort of agreement. So said something about working
• 3:14
  wasn't safe in those conditions until they could come to
• 3:17
  negotiations. Whatever.
• 3:18
  Regardless, they're not processing.
• 3:20
  But again, I reiterate the same incentive that that, you know, I
• 3:24
  pounded home two months ago during that labor strike in
• 3:27
  Greeley and that is they're not slaughtering to capacity.
• 3:30
  They were averaging 4000 head a day at a plant that has a Max
• 3:34
  capacity of 4700 head per day. I mean, you don't have to dig
• 3:39
  very deep in this day and age. I mean, in this current cattle
• 3:42
  market, in this industry to recognize a lot of these plants
• 3:45
  are not running to capacity, especially your corporate
• 3:48
  Packers. And the difference in kill is
• 3:50
  being absorbed by other plants. This specific scenario, they've
• 3:53
  not been been processing cattle since April 23rd.
• 3:56
  That's almost exactly a month in between from the time they
• 3:58
  halted processing to when the actual official report came out
• 4:03
  that they were, you know, undergoing labor negotiations.
• 4:06
  It was no big deal until 9 News, you know, was all over the
• 4:10
  story. And then Cargill makes this huge
• 4:12
  grand gesture to barricade the entrance and then it blows up
• 4:15
  and, you know, same old song and dance.
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  And honestly, why an immigrant worker would, I mean, an
• 4:22
  immigrant union worker would strike over unfair wages at a
• 4:24
  time where slaughter is at all time lows.
• 4:27
  It's just so over my head. I mean, I'm not really definite
• 4:32
  of either side in the least. I think you're fighting fire
• 4:34
  with fire, fire. And Cargill knows that they have
• 4:38
  the upper hand in these negotiations.
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  They're going to use that as a tool.
• 4:41
  You know, we've kind of seen this this before.
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  And the thing about it is, is now becoming such an incentive
• 4:47
  among other union workers at other plants who have contracts
• 4:51
  coming up on expiration to strike as well.
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  So, you know, I really do think this could become a bigger deal
• 4:56
  in the cattle markets over time. If you see other plants start to
• 5:00
  follow lead and start striking or just flat out close.
• 5:03
  I mean, like I said, I can pun the, I can pound the
• 5:06
  fundamentals home all night long, but at the end of the day,
• 5:10
  regardless, it depresses the market.
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  And I think people are kind of concerned around the Fed cattle
• 5:15
  market too, because we're seeing formula trades be way light.
• 5:20
  You know, they're really down. I think that works in our favor
• 5:22
  of keeping cattle current. But the last few weeks, the
• 5:25
  Packers have really started to buy cattle for later delivery
• 5:29
  and try to get ahead on captive supplies.
• 5:31
  Not drastically, I mean, but depending how much or how little
• 5:35
  beef demand, you know, starts to move product and how fast in
• 5:39
  this prime grilling season period that we're getting into
• 5:42
  between Memorial Day and the 4th of July, I think that will be
• 5:45
  kind of the the biggest indicator, yeah.
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  It's one of those things that when we were talking about it
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  with the Greeley plant, the same thing applies.
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  We have the ability with every other plant in our regions to
• 5:58
  absorb what that plant was processing because our rail
• 6:02
  speeds are down. So many of these processing
• 6:04
  plants aren't running even full weeks anymore.
• 6:08
  I have some friends that work in Dodge City and National and
• 6:12
  Tyson aren't running on the weekends this summer.
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  They're they're just, they're closing down on Saturdays and
• 6:17
  Sundays because they don't need to work on the weekends.
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  They don't have the processing speed or the cattle to process
• 6:23
  to make it worthwhile opening on those days.
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  And so that I just say all of that to reiterate the fact that
• 6:29
  yes, this is a domino right now, but it isn't a big enough domino
• 6:34
  to worry about. Like you said, Samantha, it's
• 6:37
  not one of those things that we need to stress about or that is
• 6:39
  really going to long term effect to the cattle market.
• 6:42
  As long as all of these other plants, if they decide to strike
• 6:45
  or do things like that, they're not all doing it at once.
• 6:48
  As long as they're not all doing it at once, we're completely
• 6:50
  fine unfazed by it and it will will just be absorbed throughout
• 6:55
  the rest of the cattle market. So it'll continue to affect the
• 6:59
  cattle market as far as people trading headlines goes, but in
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  the long term it's not really going to make that big of a
• 7:05
  difference. Right, exactly.
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  And the keyword in that headlines, I mean, everything in
• 7:09
  a volatile market is such an over exaggeration.
• 7:13
  And I hate to say it, but I really do think, you know, as we
• 7:16
  transition into the, the later part of 2026, that volatility is
• 7:20
  going to continue as long as we're at these price levels.
• 7:23
  And the reason I say that is 1. I mean, you look at the live,
• 7:27
  live cattle futures, your cattle feeders are loving these bases
• 7:31
  levels to hedge to. I mean, nobody likes to pay
• 7:34
  margin calls. And another reason being the
• 7:37
  nearest feeder cattle contract as of Thursday is now August.
• 7:41
  That leaves two months of speculation to fuel that
• 7:44
  disconnect between cash and the futures market.
• 7:47
  And another reason I say that is because, you know, the people
• 7:51
  trading the board, Lauren, like you said, headlines, they're so
• 7:54
  much more susceptible to fear mongering because everyone's so
• 7:58
  cautious of that crash. But at the end of the day, you
• 8:01
  know, as crazy as it is that a rumor can drain the optimism out
• 8:05
  of an industry overnight. No news following something like
• 8:08
  this can sometimes be as bad as the initial announcement because
• 8:11
  you've got everyone in Chicago speculating on what happens
• 8:15
  next. Where do we go from here?
• 8:16
  But I do think that it's a good sign we're stabilizing.
• 8:19
  We stabilize some on Tuesday. We'll kind of see how that
• 8:21
  transitions into the further part of this week, but kind of a
• 8:24
  good sign and we'll hope that continues on.
• 8:26
  Yeah, absolutely. It's one of those things that
• 8:29
  this is a wave that we just have to continue to ride out and see
• 8:32
  how it unfolds and see how it affects the market.
• 8:35
  Like you said, going into some prime grilling season and some
• 8:39
  just, it's been a volatile market over the past year.
• 8:42
  And I know a lot of producers are really just kind of waiting
• 8:46
  for that next ball to drop. And I know that that can also be
• 8:49
  a really stressful time. I know most producers aren't
• 8:52
  trading on the board in Chicago or things like that, but they
• 8:55
  are still kind of holding their own breaths waiting for that
• 8:58
  next ball to drop. So I know it can be a little
• 9:00
  stressful waiting for that. But at the same time, we've had
• 9:03
  a really volatile market, but we've also had a really
• 9:05
  resilient market over the past year.
• 9:07
  And I think that all of the highs and lows and waves that
• 9:10
  we've seen has continued to prove that for all of our
• 9:12
  producers. Yeah, I completely agree with
• 9:14
  that. But yeah, and then I mean, we
• 9:16
  kind of touched on that, that bearish catalog feed report to
• 9:19
  just for a little bit of reference, you know, I've voiced
• 9:22
  before that I'm not 100% confident in the accuracy behind
• 9:25
  these reports, specifically in the way they gather information.
• 9:28
  But I will say, you know, some of these numbers did align with
• 9:32
  what we're seeing. I think the biggest take away
• 9:34
  from Friday's Catalan feed report, I won't get into it
• 9:37
  fully and bore you guys with numbers, but moral of the story,
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  placements were higher, marketing's were lower, kind of
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  the marketing's that's pretty much what we expected.
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  Placements kind of took everybody for a gander.
• 9:47
  But in the same sense, we're seeing widespread drought, we're
• 9:51
  seeing widespread fires. So a lot, lot of people kind of
• 9:54
  expected that we were going to see some early sales in the
• 9:57
  summer because people don't have grass.
• 9:59
  And when we look at those numbers specifically on that
• 10:01
  Catalan feed USDA report and you get into the down and dirty of
• 10:05
  it, a lot of those numbers that we saw an increase in placement
• 10:08
  are a lot of those states that we saw an increase in placement.
• 10:10
  It was like I said, the dry states, the fire states,
• 10:13
  Colorado, Oklahoma, Nebraska, of course, I mean Nebraska, gosh,
• 10:18
  poor Nebraska. There are 9 the States and 90%
• 10:21
  drought. I mean some sort of drought in
• 10:23
  90% of the state. And then on top of that, you
• 10:27
  figure 1,000,000 acres of, of grass or property or whatever
• 10:31
  lost in fires. And that's a big deal,
• 10:33
  especially in the Sandhills. That's not just something you
• 10:36
  recover from in a year or two, but you know, in the same sense
• 10:40
  you've also got an incredible cash market.
• 10:43
  I mean, the timing of it, thank God, is great.
• 10:45
  And incentivizing early sales and pulling these calves to the
• 10:48
  sale barn anywhere from 100 and 2000 and 50 days early.
• 10:52
  You know, at the end of the day, you know, if you start penciling
• 10:55
  the numbers, if you're just going to feed that pair out
• 10:57
  through the summer, sell in the fall, you know, you figure why
• 11:00
  tough out a dry summer if you can't or you don't have to and
• 11:04
  then spend another hundred $135 per pair in feed costs just for
• 11:09
  that calf itself when you can sell it right off the cow for
• 11:12
  about at the same price. I mean, like I said, after
• 11:15
  penciling out feed costs versus what you're giving up in pounds,
• 11:18
  it's essentially a wash. You watch the sale barns and
• 11:21
  people are sending 100 LB calves to town and getting 1850 ahead.
• 11:25
  I mean, it's insane. But, you know, another report
• 11:29
  that we had come out on Thursday before that Friday release that
• 11:32
  kind of got overshadowed and typically does, but was that
• 11:36
  livestock slaughter report. They said the average dress
• 11:40
  weight of a steer was 983 lbs through April.
• 11:45
  That's 34 lbs heavier year over year.
• 11:48
  And slaughter was back 9% through April.
• 11:51
  But beef production was only back 6 1/2%.
• 11:54
  And that's because of better performing cattle, you know, in
• 11:56
  terms of grading and efficiency. So I thought that was pretty
• 11:58
  impressive. And and I think people kind of
• 12:01
  forget sometimes how much the US cattle industry has evolved over
• 12:05
  the years. We went from producing £9
• 12:07
  billion of beef in the 50s to £26 billion of beef by the late
• 12:12
  70s and managed to hold that production level for decades,
• 12:16
  while herd sizes shrank 40% over the course of 50 years.
• 12:20
  So I mean, this industry is just one to nine at adapting and
• 12:24
  adjusting. And, you know, I think a good
• 12:26
  portion of that decrease too had to do with the bred heifer
• 12:30
  market. I mean, that pulled a lot of
• 12:32
  heifers out of the feed yard for the last few years even.
• 12:35
  I mean, I, I think it's probably a stretch given all the
• 12:38
  circumstances we're seeing that long term expansion maybe is in
• 12:41
  the near future. But you know, as far as the
• 12:45
  availability for land and, and first steps and everything else,
• 12:48
  it makes it a huge pressure point.
• 12:49
  But first step, send these Cavs to town early, generate some
• 12:52
  cash flow, keep the banker happy, at least get through
• 12:55
  summer, You know, and if we start to see cow calling and
• 12:57
  liquidation, I do believe we'll see the magnitude of that in the
• 13:00
  fall. So like I said, we'll kind of
• 13:02
  see how that transitions, but the cattle market is very
• 13:05
  resilient and cattle producers themselves are extremely
• 13:08
  resilient as well. Yeah.
• 13:10
  So you've touched on it quite a bit already, Samantha.
• 13:13
  But when you opened up the podcast, you're like, people
• 13:15
  really thought last week that this was this was the start of
• 13:19
  the end, that this was the first domino to fall, that the cattle
• 13:22
  market was crashing, that we were going to start going down
• 13:25
  from here. And I think a lot of producers
• 13:26
  maybe still have that question on their minds.
• 13:30
  So what are your just like candid thoughts about that?
• 13:33
  I know you've kind of different topics that are playing into
• 13:35
  that, but is this the beginning of the end or are we going to
• 13:38
  see some leveling out? What are what are kind of your
• 13:40
  thoughts just on where the cattle market is right now and
• 13:44
  where it's going to continue to go over the next?
• 13:45
  Month, you know, I don't I really don't think this is the
• 13:48
  beginning of the end like I said, I don't think we weed out
• 13:51
  the volatility for some time. But at the end of the day, the
• 13:54
  fundamentals are still very much in our favor.
• 13:56
  We've got extremely strong beef demand right now that's going to
• 13:59
  keep cattle, you know, pretty current for the most part.
• 14:02
  You're not going to get thousands and thousands of head
• 14:04
  backed up like we saw last fall or anything like that.
• 14:07
  So I don't think this is the beginning of the end.
• 14:09
  I think that there is some clear blue skies coming in the future.
• 14:12
  But like I said, you have to be very aware of that volatility.
• 14:15
  I mean, we lost $30 in feeder cattle in just three days from
• 14:19
  from a rumor and a barricade at the at a packing plant.
• 14:23
  You know, I mean, that's not something to shrug off $30 a
• 14:26
  hundred weight. That's quite a bit.
• 14:28
  But you know, regardless, we're seeing the fundamentals continue
• 14:31
  to be in our favor. And like I said, given in the
• 14:33
  current circumstances, long term expansion isn't necessarily in
• 14:37
  our favor. So I don't know that we
• 14:39
  necessarily have that weighing on the weighing on the market in
• 14:41
  the future. But I think everyone's very
• 14:43
  cautious of that next plateau. You know, when we see downtrends
• 14:47
  in the market, we start to wait for that, that new plateau just
• 14:50
  like we when we see a rally, where does it peak out?
• 14:53
  So I think we do have to be very cautious.
• 14:55
  The market goes up and down, we all know it.
• 14:58
  So just protecting of that as you look into the future towards
• 15:01
  those you know towards fall towards, you know, whenever your
• 15:05
  marketing date is. So that's something that we have
• 15:07
  to kind of continue to be aware. Of yeah, absolutely something to
• 15:11
  continue to keep our eyes on. It's not a factor that we need
• 15:14
  to overly stress about right now, but it is a factor that you
• 15:18
  need to continue to keep your eyes on and see what continues
• 15:21
  to happen. And hopefully there aren't any
• 15:24
  major headlines decide to absolutely wreck the cattle
• 15:28
  market. Hopefully people can keep their
• 15:29
  mouths shut about screw worm for a few weeks.
• 15:31
  I don't. I wonder what our running record
• 15:33
  is on not having a major news headline about New World Screw
• 15:37
  Worm. I wonder if we're getting close,
• 15:39
  like maybe next week when we get on the podcast, we're going to
• 15:41
  be like, well, our timer was up. They had to they had to talk
• 15:44
  about it. So we had another news, but
• 15:47
  hopefully they can keep their mouths shut about that for a
• 15:49
  little while. And we're able to let this
• 15:51
  cattle market kind of just do what this cattle markets going
• 15:54
  to do and let the fundamentals really be at play here and
• 15:59
  continue to drive what what we're doing right now.
• 16:02
  So any other things that we didn't hit on today, Samantha,
• 16:05
  that we need to cover? No, I don't think so.
• 16:06
  Like you said, Lauren, I mean, whenever the cattle markets in
• 16:09
  limbo, it seems like we start to trudge up some of these things
• 16:12
  that we've already traded for years or months.
• 16:14
  So yeah, let's hope we don't see anything like that.
• 16:16
  I do do know just on that topic, I don't really like to fuel
• 16:20
  speculation any, but I've talked to a lot of producers that are
• 16:23
  pretty cautious of the South border opening up to live cattle
• 16:26
  imports soon. And like I said, I don't think
• 16:28
  it's any been anything that we need to stress over.
• 16:31
  I don't think it's going to be anything drastic.
• 16:33
  You know, they don't have a lot of cattle waiting to come over.
• 16:36
  They've expanded their processing facilities, their
• 16:38
  feeding facilities, things like that to accommodate.
• 16:41
  They're making money off of beef down in Mexico.
• 16:43
  So I do think the efforts are going to be to a Max to keep
• 16:47
  that thing closed from Mexico and specific.
• 16:49
  But also if we do see it open, I don't think it's going to be
• 16:52
  detrimental. But in the same sense, you know,
• 16:54
  everyone's entitled to their opinion and there's people that
• 16:56
  think, you know, once they open that border and they will, they
• 16:59
  think they will, you know, sometime this year that it could
• 17:02
  be, it could be tough. So, you know, we'll see.
• 17:04
  But let's hope that we don't see anything like that for a while.
• 17:07
  Yeah, for sure. Definitely something we'll
• 17:09
  continue to keep our eye on. But I agree with you in that
• 17:12
  sentiment to Samantha that even if it does, I don't think it's
• 17:15
  going to have the effect or the hit on the market like a lot of
• 17:18
  people are kind of waiting on because of how long it has been
• 17:21
  closed and because of the way that Mexico has truly adjusted
• 17:25
  to their border being closed. So definitely something to
• 17:28
  continue to keep our eyes on as the market continues to evolve
• 17:31
  and ebb and flow and reride these waves out.
• 17:34
  But as always, Samantha, I appreciate your time and
• 17:37
  knowledge coming on today and sharing all of the things to all
• 17:40
  of you producers out there and all of our audience members.
• 17:43
  Thank you for listening to another episode of The Cattle
• 17:45
  USA Daily Podcast. We will see you all next time.