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Cattle: Weight It Out · 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 your fresh updates on what's happening week to week within the cattle market.
• 0:09
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_01: Today is November 19th.
• 0:18
  SPEAKER_01: I've got Jace back with us today.
• 0:19
  SPEAKER_01: How's it going, Jace?
• 0:20
  SPEAKER_01: Going pretty good.
• 0:21
  SPEAKER_01: Alright, let's talk about this cattle market.
• 0:23
  SPEAKER_01: She's been a doozy here lately.
• 0:25
  SPEAKER_01: Yet again, we're going to cover three main topics, kind of branch off from there.
• 0:29
  SPEAKER_01: We're going to talk about weights, cash with the kill a little bit here, how that's been going, and then we're going to wrap up maybe with some chart action and kind of what we look at going forward.
• 0:38
  SPEAKER_01: But let's talk about the recent weight action because honestly, at this point, that has been heavily talked about, hasn't it?
• 0:45
  SPEAKER_00: Yeah, so we hadn't had the weight data for a little bit here, but we got the last week's data, or I guess would be two weeks ago now, um, came in at 983 pound carcasses on the steer side.
• 0:57
  SPEAKER_00: So that's that's about 30 pounds 25 pounds heavier than we we got to last year.
• 1:04
  SPEAKER_00: So a big carcass.
• 1:05
  SPEAKER_01: That is not a live animal, for for just to rephrase that.
• 1:09
  SPEAKER_01: And that is that is a doozy, isn't it?
• 1:11
  SPEAKER_01: That's heavy.
• 1:12
  SPEAKER_01: Heaviest ever.
• 1:13
  SPEAKER_00: Like a 1,550 pound average steer in the U.S.
• 1:16
  SPEAKER_00: So that's that that would be mostly attributed to the north, which would be probably quite a bit bigger than that, even.
• 1:23
  SPEAKER_01: And that's attributed to holding cattle back for what reasons?
• 1:27
  SPEAKER_00: Just because the you can put weight on pretty cheap.
• 1:30
  SPEAKER_00: Gotcha.
• 1:30
  SPEAKER_01: Well, that has been uh impacting the market here a little bit on the bearish side.
• 1:35
  SPEAKER_01: Recently, uh the cash side took a little bit of a hit.
• 1:39
  SPEAKER_01: What we're opening up the week, probably about five bucks weaker with what has traded undressed, probably$345.
• 1:46
  SPEAKER_01: But what do you think this week's gonna look like here for cash going forward?
• 1:50
  SPEAKER_00: Yeah, I we opened about five dollars weaker, and there was even some weaker trade than that today, some$340 in the meat sort of stuff compared to last week at$350 to$360 area.
• 2:03
  SPEAKER_00: So, I mean that that starts to matter here.
• 2:06
  SPEAKER_00: They're still getting uh even to slightly positive basis on it, and I think the Packers really taking advantage of this situation.
• 2:15
  SPEAKER_00: You can see it in how many they're killing these past couple weeks.
• 2:18
  SPEAKER_00: So, like last week they killed 17,000 or so more than more than the previous week, and this week they're on track to do about the same thing, so just killing more because they can buy them a little cheaper in the cash market, and the cutouts still staying pretty strong.
• 2:37
  SPEAKER_01: So I'm gonna circle it back then to weights.
• 2:39
  SPEAKER_01: So when you circle it back to weights, how do those two talk to each other, I guess?
• 2:43
  SPEAKER_00: Yeah, I think we're getting a little bit we're getting a little bit more supply around us here that's available to be killed, and we're not we're not placing, we don't think we're placing quite as many as what we're as what we're killing.
• 2:56
  SPEAKER_00: So we're actually building inventory probably in the in the short term here.
• 3:02
  SPEAKER_01: Gotcha.
• 3:03
  SPEAKER_01: Alright, how about we get into some of this chart action?
• 3:06
  SPEAKER_01: Because honestly, the the volatility's been great uh here lately.
• 3:10
  SPEAKER_01: It was another red day.
• 3:11
  SPEAKER_01: We were down about three and a half bucks on live cattle.
• 3:14
  SPEAKER_01: Uh feeders were down about five dollars there, so live cattle down quite a bit relative to to feeders there from what we have been seeing.
• 3:22
  SPEAKER_01: What do you think about some of the support levels that could be potentially below us that we're trading at today, close to it, uh, or or are there any?
• 3:31
  SPEAKER_00: Yeah, so we're right on top of the 200-day moving average on the live cattle side.
• 3:36
  SPEAKER_00: Dece and Feb both traded below it most of the day today, ended up closing just slightly above it there, so still we're treating that as support.
• 3:47
  SPEAKER_00: But we've had a lot less news this week on the market, but we still seem to be trading a little bit softer here and testing out our support levels, especially that 200 day.
• 3:58
  SPEAKER_00: We've bounced off of it twice now, and I guess today would be the third time if we bounced and that we're gonna do that.
• 4:05
  SPEAKER_01: So, how do we handle this?
• 4:07
  SPEAKER_00: I don't know.
• 4:08
  SPEAKER_00: We're I think tomorrow will tell us a lot about how we're gonna trade the the charts, I guess.
• 4:14
  SPEAKER_01: The the other part of this is just outside market influence, it seems like lately.
• 4:18
  SPEAKER_01: That's played a huge role in this as well, whether it's cattle, hogs, grains.
• 4:22
  SPEAKER_01: I mean, uh basically we had a flip-flop today for the grains, hogs, and equities.
• 4:27
  SPEAKER_01: Basically, all of them just traded the opposite of what they did yesterday.
• 4:30
  SPEAKER_01: Um that'll probably continue tomorrow.
• 4:33
  SPEAKER_01: We're gonna get a dump of economic data on us yet again.
• 4:36
  SPEAKER_01: We're gonna get some minutes from the Fed um from their last meeting, just a few things.
• 4:41
  SPEAKER_01: I think that the volatility is gonna seem to be staying through the end of this week.
• 4:45
  SPEAKER_01: And uh yeah, some direction here will be nice because we've been in a pretty solid downtrend.
• 4:51
  SPEAKER_01: We're uh it'd be really nice to try to take out some some highs from yesterday, for example, Jace.
• 4:57
  SPEAKER_00: Yeah, that's that's accurate.
• 4:59
  SPEAKER_00: And I I think another point that's worth making is the Omaha Stakes CEO was on Fox this weekend and talked about the possibility he he thinks it's a high probability that we have ten dollar hamburger by Q3 of 2026.
• 5:16
  SPEAKER_00: And so then then they went back to Bessent a couple days later with that same that same question there, and they did he did acknowledge that beef is a different market that's more of a long cyclical pattern versus other things that they can just bring prices down on.
• 5:36
  SPEAKER_00: So I don't know if it's so much in the crosshairs of of getting cost down as they're acknowledging that that that might be one that's that you have to let the market play out.
• 5:46
  SPEAKER_01: It'll be interesting on that front because one, that's been a huge drive from the administration to try to fix that here.
• 5:54
  SPEAKER_01: Um, but consumer sentiment's been low, people feel poor, uh, they're they're gonna start holding some of their money back.
• 6:01
  SPEAKER_01: Food away from home seems like uh spending uh has gone down quite a bit on that on the restaurant side, for example.
• 6:08
  SPEAKER_01: So that's something that we're probably gonna talk about a lot going forward too, Jace.
• 6:13
  SPEAKER_00: That's true.
• 6:13
  SPEAKER_00: And just I guess this is a little bit of a side note, but the we've been putting a lot of prime steaks or prime beef on the market here with these bigger weights.
• 6:23
  SPEAKER_00: And what I keep thinking back to, Mike, is if you have a prime steak, are you gonna not eat a prime steak again?
• 6:30
  SPEAKER_01: I know that how do you go back to eating crappy food after you've got good?
• 6:34
  SPEAKER_01: And we didn't realize that after COVID, too.
• 6:36
  SPEAKER_01: And honestly, the cutout, uh you can comment on that too, but it seems like we found very, very nice support for the cutout here lately, haven't we?
• 6:44
  SPEAKER_00: It seems to be trading just seasonally.
• 6:47
  SPEAKER_01: Yep.
• 6:47
  SPEAKER_01: From a really, really high level.
• 6:49
  SPEAKER_01: From a really, really high level, so it seems to be holding.
• 6:53
  SPEAKER_01: Uh anything on replacement markets or diving into any recommendations here?
• 6:58
  SPEAKER_00: Yeah, I guess I think just on the on the fat cattle side, this volatility has been able to um we've been able to move some of our positions into more options-based positions and insurance products.
• 7:13
  SPEAKER_00: So I guess that's been our focus on the on that side, and yeah, just making sure that we know what we've got covered and staying covered in this volatility is very, very important.
• 7:25
  SPEAKER_01: The replacement market, just to finish up here, looking at that, you know, the drought monitor, that's continuing to show favor for the herd expansion.
• 7:34
  SPEAKER_01: Um, chances are that the slow rebuilding of the nation's cattle herd is probably gonna try to morph into a little bit more faster uh rebuild here soon.
• 7:45
  SPEAKER_01: Uh things are kind of lining up for that.
• 7:47
  SPEAKER_01: I would argue here.
• 7:49
  SPEAKER_01: Data to support that, not a ton at the moment that we're seeing it occur.
• 7:53
  SPEAKER_01: Just all the all the chips are kind of lining up here for it.
• 7:57
  SPEAKER_01: So it'll be hard to imagine it doesn't happen.
• 7:59
  SPEAKER_00: Yeah, I think I think that's accurate.
• 8:01
  SPEAKER_00: One caution to that that I have is with all the rhetoric around the beef being too high and outside markets pushing it down, hit it sh it has put a little more concern on the on the banks and guys, ranchers that are investing in this this long-term play of a heifer.
• 8:23
  SPEAKER_00: It there definitely are more concerns, and they're a little more hesitant just from that side.
• 8:28
  SPEAKER_00: From a from a drought side, and that all of those, I mean cheap feed, it makes sense.
• 8:35
  SPEAKER_00: But and cheaper money getting cheaper is gonna help that too.
• 8:38
  SPEAKER_00: Yeah, but there is still concern on the actual rhetoric and beef price talk side.
• 8:44
  SPEAKER_01: D's nine ten, I think, is the FOMC meeting coming up, something like that.
• 8:48
  SPEAKER_01: So should be getting our next look there.
• 8:51
  SPEAKER_01: Uh, but the minutes are coming out tomorrow.
• 8:53
  SPEAKER_01: So thank you for your time today, Jace.
• 8:56
  SPEAKER_01: I appreciate it.