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Cattle: Post Labor Day · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_01: Welcome to the Cattle Market Talk Podcast with Professional Ag Marketing.
• 0:04
  SPEAKER_01: Come here to get you fresh updates on what's happening week to week within the cattle market.
• 0:09
  SPEAKER_01: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_01: September 5th, I've got Jeff with us here today.
• 0:17
  SPEAKER_01: How's it going, Jeff?
• 0:18
  SPEAKER_01: It's going great, Mike.
• 0:20
  SPEAKER_01: Kinda like the cattle market.
• 0:21
  SPEAKER_01: We've got over$400 choice here.
• 0:25
  SPEAKER_01: Still, we've got the futures just a running still.
• 0:28
  SPEAKER_01: This week, maybe not so much, though.
• 0:30
  SPEAKER_01: Three straight days of pretty good setback to the 20-day moving average.
• 0:34
  SPEAKER_01: What's going on there?
• 0:35
  SPEAKER_00: Well, I think that's the key point in my mind is it it maybe is one of the most bearish um looks that this cattle market has had.
• 0:45
  SPEAKER_00: I mean, Mike, we've had like six trading days since we put it in a contract lifetime high.
• 0:51
  SPEAKER_00: Yeah.
• 0:51
  SPEAKER_00: So I mean, there's a change.
• 0:53
  SPEAKER_00: Um, but you know, tell that 20-day moving average, and and you know we're not, you know, the biggest traders from a technical standpoint, but that sucker has really held up this cattle market.
• 1:06
  SPEAKER_00: Mm-hmm.
• 1:06
  SPEAKER_01: It's been a beautiful uptrend that hasn't wavered much.
• 1:09
  SPEAKER_01: It's had a nice tight uptrend.
• 1:11
  SPEAKER_01: It's been a really easy one here, uh, really, to just keep an eye on.
• 1:17
  SPEAKER_00: And we're we're right there on today's lows.
• 1:20
  SPEAKER_00: So, you know, I'm not sure what to think about it if we if we start busting through that type of a trend.
• 1:27
  SPEAKER_00: I would guess we would pick up some sellers.
• 1:29
  SPEAKER_00: There's still some money that sits on the sideline here trying to capture the downtrend on this bugger if it were to ever happen, you know.
• 1:37
  SPEAKER_01: But like, so October.
• 1:39
  SPEAKER_01: Um, let's talk about October cattle here.
• 1:42
  SPEAKER_01: It we had a high, you want to call it somewhere around like 242, just over 240.
• 1:48
  SPEAKER_01: Yep.
• 1:48
  SPEAKER_01: Today we pulled back to 235.97.5.
• 1:52
  SPEAKER_01: That cash isn't gonna really drop at all, is it, this week?
• 1:55
  SPEAKER_01: I mean, it's pretty much steady, right?
• 1:57
  SPEAKER_00: This week's gonna be steady, yep.
• 1:59
  SPEAKER_00: And then a little higher down south, which arguably you would say that matters more to the marketplace than what we're seeing up here.
• 2:05
  SPEAKER_01: Yep.
• 2:05
  SPEAKER_01: So I I would argue that, you know, it a nice day because October's a lot of those cattle are coming up for sale.
• 2:11
  SPEAKER_01: Yep.
• 2:12
  SPEAKER_01: You're gonna be needing to lift those soon anyways.
• 2:14
  SPEAKER_01: So a little bit of a gift of a setback here, anyways, maybe if you needed to get something lifted, anyways, for sales coming up the next couple weeks.
• 2:21
  SPEAKER_00: Starting to stare at a six to seven dollar basis.
• 2:23
  SPEAKER_00: I know that's not at what it was a month ago, but it's all for good for September.
• 2:27
  SPEAKER_01: Yeah.
• 2:28
  SPEAKER_01: So I don't know.
• 2:28
  SPEAKER_01: That was something that caught my eye this week, just because I knew big break.
• 2:32
  SPEAKER_01: We're not really gonna go lower on cash, so I thought that was at least a little bit of an opportunity.
• 2:37
  SPEAKER_01: Um so that caught my eye.
• 2:39
  SPEAKER_01: The other thing, obviously, is just that supplies are tight.
• 2:42
  SPEAKER_01: We aren't importing Mexican feeder cattle still.
• 2:45
  SPEAKER_01: Um we are not importing really Brazil beef directly, I would call it.
• 2:50
  SPEAKER_01: Um, we are not really increasing supply, that's for sure, when it comes to actual supply in the United States for production.
• 2:57
  SPEAKER_01: So it's still tight.
• 2:58
  SPEAKER_01: Our situation's not changing at all, I'd argue, from that perspective.
• 3:02
  SPEAKER_01: What do you see on actual production for both numbers right now and with weights?
• 3:07
  SPEAKER_00: Yep, so we are starting to see weights go up.
• 3:09
  SPEAKER_00: That's very seasonal.
• 3:10
  SPEAKER_00: Yep.
• 3:11
  SPEAKER_00: And we've all noticed, you know, we we're entering to I would just love this time of year when these cattle are up and running for a while, and you get into these September days, and they just they just eat eat the the whole thing, they eat it all and they're growing it all, you know.
• 3:26
  SPEAKER_00: And so that that will continue to happen, but you are starting to increase increase your pounds out the door from that standpoint.
• 3:33
  SPEAKER_00: We have seen kills come up just a little bit here.
• 3:37
  SPEAKER_00: It gets a little bit muddy as we try to go through Labor Day, but we did bump the kills a bit there last week from the week prior.
• 3:45
  SPEAKER_00: So uh I think we're gonna we're gonna see a little bit of an increase in kill as these margins continue to you know seem fairly favorable, at least compared to where they were in the months past, I guess is the best way to describe that.
• 3:58
  SPEAKER_00: Um, but I don't think they're gonna get carried away.
• 4:00
  SPEAKER_00: Um so yeah, we're gonna start putting some more meat on the marketplace.
• 4:04
  SPEAKER_00: We have started to put a little bit more meat on the marketplace if you exclude you know the scheduled downtime through Labor Day there.
• 4:10
  SPEAKER_00: Then that's what gets impressive about the continued 410 choice box beef.
• 4:16
  SPEAKER_00: Now, I definitely don't want to be quoted as saying it's gonna stay there.
• 4:20
  SPEAKER_00: Um, I think you gotta come under some pressure here.
• 4:23
  SPEAKER_00: Um but it's continued to be impressive compared to you know our expectations.
• 4:30
  SPEAKER_00: But you just can't ignore the seasonal on that.
• 4:32
  SPEAKER_00: You get past Labor Day, you get into some more weight and get into some more numbers, you're probably gonna have some lower prices.
• 4:38
  SPEAKER_00: And you know, so I'm sure that's part of what the the futures market is looking at.
• 4:43
  SPEAKER_00: You know, it's it's got a pretty significant drop priced in to the October board, like you were pointing out earlier, Mike.
• 4:50
  SPEAKER_00: Uh, I'm sure that's part of the reason.
• 4:53
  SPEAKER_00: Then you flip over and look at the cash market, and it's like, wow, there really is not too many holes to be poking into this market.
• 5:01
  SPEAKER_00: I really think we it would do us well to focus on that southern bid here in the coming weeks, maybe the coming months, Mike, uh, compared to what we're doing up here.
• 5:12
  SPEAKER_00: We're we're we talked about this before, but I was quick hit on it again.
• 5:16
  SPEAKER_00: We're we're switching places with those guys.
• 5:18
  SPEAKER_00: We are going to get into the heavier cattle, we are gonna get into some more numbers up here, and they're gonna be getting into some that aren't quite as uh ready, and probably a few less numbers.
• 5:30
  SPEAKER_00: Um that one is debatable.
• 5:32
  SPEAKER_00: Uh, but you know, with the Mexican feeder cattle being down, we that should be impacting some of those southern yards, although we are getting some reports that maybe that isn't as true as what we thought, which you know kind of blends back into the conversation we've had in prior weeks of are we backing up a few numbers or not.
• 5:50
  SPEAKER_00: And I I think uh we don't have a ton of signals to suggest that, except for just the sheer low kill volumes that we're experiencing, right?
• 6:00
  SPEAKER_00: So yeah, I look at the Southern Cash.
• 6:03
  SPEAKER_00: I I think that will tell us the story that's gonna be up a couple bucks week over week and really not showing uh any signals of of a weaker market today yet.
• 6:13
  SPEAKER_01: Did you have any key takeaways as we went through Labor Day with any observations for both demand and supplies here, how packers have reacted or retail prices?
• 6:22
  SPEAKER_01: What do you think from that?
• 6:23
  SPEAKER_00: Well, I I really like to look at demand through the holidays.
• 6:26
  SPEAKER_00: Um we've talked about that before, but that's why I'm I'm watching that beef market really closely.
• 6:32
  SPEAKER_00: Um, you know, we're we've been getting beat up just a little bit on the the past couple days here, but um, you know, being three and a half bucks lower here going home tonight.
• 6:44
  SPEAKER_00: Um so maybe we'll yeah, I wouldn't be surprised at all if we start seeing some of that, but I'm I'm still gonna make the argument that it did everything it needed to do.
• 6:52
  SPEAKER_00: You know, you can argue, okay, was it just simply because we're so so small on the supply side of the situation, or was there some demand in there?
• 7:01
  SPEAKER_00: And I think I think if you're gonna say, well, we're posting uh basically new highs on the box beef since COVID, you've got to say there's not much wrong with the consumer side of this equation, right?
• 7:14
  SPEAKER_00: They're still buying it.
• 7:16
  SPEAKER_00: Um so the longer that we stay high kind of past labor day, it really has my attention.
• 7:22
  SPEAKER_00: We're seeing that a bit on the pork side, or that uh we just refuse to drop those product values like we normally would.
• 7:31
  SPEAKER_00: If we start, we see that a little bit on the beef side here.
• 7:34
  SPEAKER_00: Uh you could probably argue that this week we'll already we already are.
• 7:38
  SPEAKER_00: That gets me really interested.
• 7:40
  SPEAKER_00: That just all is sends very solid signals from a demand standpoint and shows us the consumer willing to pay some pretty good prices and get rid of some volume at least very late in the season.
• 7:56
  SPEAKER_01: Gotcha.
• 7:57
  SPEAKER_01: I know looking at some other the outside markets, um you know, we saw some spike in gas prices at least.
• 8:04
  SPEAKER_01: However, um, you know, it's the lowest price of gas that we've seen since 2020.
• 8:09
  SPEAKER_01: So actually it looked like uh gas was moderately high on Labor Day for demand, and I think that's just a good a good way to tell too how people are feeling.
• 8:19
  SPEAKER_01: They're gonna travel, grill, things like that if if they're feeling wealthy, at least if they're not, you know, can't afford a beef, can't afford to go to the lake or something over vacation.
• 8:30
  SPEAKER_01: That's one of my economic ways of kind of just viewing how the holiday patterns are going, I guess, is tracking some of that.
• 8:36
  SPEAKER_01: So yeah, lowest gas prices since 2020.
• 8:38
  SPEAKER_01: I that surprised me a little bit.
• 8:41
  SPEAKER_00: That it that is interesting.
• 8:42
  SPEAKER_00: Definitely some weakness showing up on that portion of the marketplace, isn't there?
• 8:47
  SPEAKER_01: Yes.
• 8:48
  SPEAKER_01: Any other final thoughts for the uh cattle guys out there today?
• 8:52
  SPEAKER_00: I would the only thing I would leave you with, and this maybe gets a little bit micro.
• 8:56
  SPEAKER_00: I I don't like to focus a lot on the feeder cattle market, but we definitely have some people that are in that uh marketplace.
• 9:02
  SPEAKER_00: That that index seems to be holding in there incredibly strong here this week.
• 9:07
  SPEAKER_00: Um we're looking that that should continue to stay in the 360s where the futures have sold off a bit here.
• 9:14
  SPEAKER_00: So there might be some opportunity.
• 9:16
  SPEAKER_00: The futures seem to be a little pessimistic, I guess, over on that front of things.
• 9:21
  SPEAKER_00: Maybe not completely unattached from the live cattle market and what we've been talking about over there, but probably just another item to put on the on your radar screen here if you're in that marketplace.
• 9:34
  SPEAKER_01: 361 on the index today should be going towards a high 360s, if not 3670 soon.
• 9:39
  SPEAKER_01: If this trend does continue there for uh September really being at 359, we're uh pretty undervalued, but it did come back really strong today at at one point there.
• 9:49
  SPEAKER_01: Closed closed pretty decent compared to probably what it could have been.
• 9:53
  SPEAKER_00: Continue to see some really strong values coming out of the cash market there.
• 9:57
  SPEAKER_00: And um, you know, it's it's hard to argue with the folks who would say feeders are the leaders, and what they're indicating there is, you know, if you don't have the feeder cattle supply, you're probably not gonna have the live cattle supply.
• 10:09
  SPEAKER_00: And it's it's interesting for sure.
• 10:11
  SPEAKER_00: Got our attention a bit.
• 10:12
  SPEAKER_01: All right.
• 10:12
  SPEAKER_01: Well, thank you for your time today.