Latest / Professional Ag Marketing Podcast / Cattle Market Meltdown | Cattle Talk February 27th, 2026

Transcript

Cattle Market Meltdown | Cattle Talk February 27th, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_00: Welcome to the Cattle Talk Podcast.
• 0:05
  SPEAKER_00: Your weekly breakdown of cattle market fundamentals, key news, and the insights shaping the industry.
• 0:12
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:20
  SPEAKER_01: All right.
• 0:20
  SPEAKER_01: Today is February 27th.
• 0:22
  SPEAKER_01: I've got Jace with us here today on the Cattle Talk Podcast.
• 0:26
  SPEAKER_01: Let's talk about an interesting cattle market, Jace, because today we had a little bit of a meltdown, didn't we?
• 0:32
  SPEAKER_02: Yeah, we absolutely did.
• 0:34
  SPEAKER_02: We took the live cattle and the feeders both below the 50, 40, and 50 day moving averages.
• 0:40
  SPEAKER_02: And actually, we closed the April live cattle below the 100 day.
• 0:44
  SPEAKER_01: Right below the 100 day there.
• 0:45
  SPEAKER_01: Feeder cattle, if you're looking at that chart, it looks like we've got just a wee bit to go to that 100-day moving average, another probably five, six bucks through most of those contracts, kind of what I'm seeing, Jace.
• 0:57
  SPEAKER_01: So we do need another handful of dollars to really stress that one too much.
• 1:01
  SPEAKER_01: But at this point, we are definitely putting some strain on that chart action on the cattle market, aren't we?
• 1:07
  SPEAKER_01: Can we talk a little bit about why that may be happening?
• 1:10
  SPEAKER_01: One, end of the month.
• 1:12
  SPEAKER_01: Two, we've had a little bit of bearish action, whether it be at the Packard level.
• 1:16
  SPEAKER_01: Three, it's just ran out of some steam, right?
• 1:18
  SPEAKER_01: I mean, this thing's gone up a long time, hasn't it?
• 1:20
  SPEAKER_02: Yeah, it has.
• 1:20
  SPEAKER_02: It's gone up for a while, and we've seen cash prices, you know, for the past month and a half just keep grinding higher.
• 1:27
  SPEAKER_02: Not grinding higher, going way higher.
• 1:30
  SPEAKER_02: And um what we'd what we'd seen last year is a high in the cash market, like the first week of February.
• 1:38
  SPEAKER_02: And if we are putting on the weight, the average weight that we're putting on the steers is like 30 pounds more than last year.
• 1:46
  SPEAKER_02: Well, if you take that back to days on feed, it's probably about 25 days on feed for that last 50 pounds of live weight.
• 1:55
  SPEAKER_02: And so you get us right about here with the larger supply of the yearlings up north.
• 2:00
  SPEAKER_01: Gotcha.
• 2:00
  SPEAKER_01: So you think we're probably crawling our way out of a hole, might be finding some bigger sized cattle in a little bit greater capacity here over the next near term?
• 2:08
  SPEAKER_02: Yeah, we might be running into a little bit more inventory, and then on top of that, we've got this JBS potential strike at Greeley.
• 2:17
  SPEAKER_02: All the union members have registered for it.
• 2:20
  SPEAKER_02: It's I don't know how much of it's just a formality and leverage, but nonetheless, they're they're making their way towards a strike and nothing down.
• 2:31
  SPEAKER_01: The last few weeks it seemed like we had really seen a lot of cash cattle trade like late, late on Friday afternoons here.
• 2:37
  SPEAKER_01: I'm talking like three o'clock in the afternoon.
• 2:39
  SPEAKER_01: Yeah, this week here, what have we seen going up to?
• 2:42
  SPEAKER_01: I mean, it's Friday afternoon here, about two o'clock almost.
• 2:45
  SPEAKER_01: What have we what are we looking at going into the end of the week on this cash cattle deal?
• 2:49
  SPEAKER_02: Yeah, I think what we saw yesterday, we saw a bit of volume trade in the north.
• 2:54
  SPEAKER_02: A lot of that is your basis traders.
• 2:57
  SPEAKER_02: They're trying to eke out a positive basis or an even basis, and got a little concerned with that as the Packers started bidding lower yesterday.
• 3:06
  SPEAKER_02: But then into today, the market melted down a little bit, and we saw quite a bit more trade in the south and and as well as the north and basis traders as well as just maybe a little bit of panic selling.
• 3:20
  SPEAKER_01: So maybe three, four bucks lower a little bit uh week over week.
• 3:22
  SPEAKER_02: Yeah.
• 3:23
  SPEAKER_02: Four dollars.
• 3:24
  SPEAKER_01: Yeah, very nice.
• 3:25
  SPEAKER_01: Uh so keep an eye on some of that cash trade.
• 3:28
  SPEAKER_01: Well, what can you tell us about the packing situation then?
• 3:31
  SPEAKER_01: We're we're maybe finding a few more numbers.
• 3:34
  SPEAKER_01: Uh, we're talking about some either remodeling projects going on up at Aberdeen, or we're looking at uh, you know, JBS and the Greeley situation.
• 3:42
  SPEAKER_01: So we're backing off on uh on hooks a little bit here.
• 3:45
  SPEAKER_01: Uh what do you think their one, what do you think their margin looks like with the current cutout environment that we've got along with those numbers?
• 3:52
  SPEAKER_02: Yeah, so cutout has run up quite a bit over the past week.
• 3:55
  SPEAKER_02: Um, we're back up towards close to 380 level there on the choice.
• 4:00
  SPEAKER_02: And what we're what we're seeing there is Packer margins significantly improving with the lower cash that they're paying this week and the higher cutout.
• 4:09
  SPEAKER_02: So I think that's that's gonna be good for them, but I think they're definitely trying to play the leverage card here with these strategic remodel or little projects that they're they're cutting hours on some plants.
• 4:21
  SPEAKER_01: They're basically buying the picket signs for their employees at this point, aren't they?
• 4:26
  SPEAKER_01: To be like, oh yeah, go, we don't need to kill as many cattle this week, right?
• 4:29
  SPEAKER_01: It wouldn't it wouldn't seem like a foolish idea to shut down a plant for a little bit.
• 4:33
  SPEAKER_01: As long as that worker keeps coming back, which if they can make some money on the union out of the union, anyways, if they are on strike, then they're not setting that bad to where they have to go find another job potentially, anyways.
• 4:43
  SPEAKER_01: So that I think could be a concern, right?
• 4:46
  SPEAKER_01: Is if uh the risk of losing some some labor out of this situation would be a reason why they don't want to stay closed too long, right?
• 4:54
  SPEAKER_02: That's accurate.
• 4:55
  SPEAKER_01: And uh margin-wise, so that's been improving a little bit here.
• 4:59
  SPEAKER_01: Maybe we'll see what the Packers tend to do over the next couple weeks given that situation, but it's still pretty deep in the red, right?
• 5:05
  SPEAKER_01: Yeah, yeah, they are.
• 5:07
  SPEAKER_01: How about uh how about on breakevens then?
• 5:09
  SPEAKER_01: If if we're talking about a little bit of a meltdown here, we've sold off pretty significantly over the last couple days.
• 5:14
  SPEAKER_01: Like uh, how are guys sitting with that you think open cattle out there?
• 5:18
  SPEAKER_02: A lot of guys over the past, well, since basically the first of the year have bought a lot of these cattle with 240 break-evens out into October and December.
• 5:28
  SPEAKER_02: That's obviously not looking as hot today.
• 5:31
  SPEAKER_02: So I guess what we've what we've been trying to do is get get guys to get coverage on when it when it was up there or near there with with Windows or something similar, some option strategy.
• 5:43
  SPEAKER_02: But what we're what we're seeing now is a lot of those going into the red.
• 5:47
  SPEAKER_02: So gonna have to make a lot of decisions there.
• 5:50
  SPEAKER_02: And I would I would suspect the the buying of these feeder cattle.
• 5:54
  SPEAKER_02: I mean, it's been a tough decision for a while now, but it's it's getting tougher as these, you know, you if you bought cattle yesterday, they lose, they might lose ten dollars when you bought them and they lose another three or four today.
• 6:06
  SPEAKER_02: I mean, it just becomes a tougher decision.
• 6:09
  SPEAKER_01: You know, last time around, when we really broke hard this last fall, Jace, it seemed like those front months were pretty tied close to the cash.
• 6:17
  SPEAKER_01: Meanwhile, the major selling was occurring in those back buns.
• 6:20
  SPEAKER_01: This time, it's pretty even all the way across the board.
• 6:23
  SPEAKER_01: Uh, what are some of the differences that you kind of see in this futures market that may say this is a little bit different of a setback at the start than maybe what we saw last fall?
• 6:33
  SPEAKER_02: Yeah, I think we're seeing a lot of the spreads normalize.
• 6:36
  SPEAKER_02: Like the April life cattle contract is the one down the furthest, down the most today.
• 6:42
  SPEAKER_02: Um, you go back into Ach and Dease and they're down 375 and 347, respectively.
• 6:48
  SPEAKER_02: So I think you're seeing it more normalize and maybe maybe less of a crash and more of just a correction here or uh or a reorganizing of those spreads.
• 6:59
  SPEAKER_01: And that would be more normal.
• 7:01
  SPEAKER_01: If you're gonna have a sell-off, usually those front months take it a little bit harder than the back months last time around.
• 7:06
  SPEAKER_01: It had a lot to do with the border closure and some of those logistical issues, right?
• 7:11
  SPEAKER_01: That that's why we were selling off those back months so aggressively.
• 7:14
  SPEAKER_01: It seemed like that was the case.
• 7:16
  SPEAKER_01: This time, not so much, just more of a correction type attitude, leverage maybe, over exhaustion.
• 7:23
  SPEAKER_01: So we'll see what that ends up being like.
• 7:25
  SPEAKER_01: But the the other hot topic I think we're talking about, especially as we look into next fall, is talk to me about the cow calf guy, how they're sitting, and some of the things we're working on today with those guys.
• 7:36
  SPEAKER_02: Yeah, so the cow calf guy has had a phenomenal past two, three years, but especially this past year has been incredible.
• 7:43
  SPEAKER_02: You know, guys making sixteen hundred dollars a cow on on calves that they're selling.
• 7:48
  SPEAKER_02: And I guess what we're what we're observing there is there's about eleven hundred dollars to be made from the time the calf's born until it goes out.
• 7:57
  SPEAKER_02: I mean, we've talked about that number before, but the packer, the packers have been losing 300 of that for some time here.
• 8:05
  SPEAKER_02: If you talk to a southern yard that has been a strategic crusher since the since the beginning of those yards, um, they've been they've been looking at$200,$300 losses on those cattle as well.
• 8:19
  SPEAKER_02: So the the cow calf guys making sixteen hundred dollars of eleven hundred dollars to be made.
• 8:26
  SPEAKER_02: So they're they're making a margin that's being subsidized by the other sectors of the industry, whether it's packing or the feedlot.
• 8:34
  SPEAKER_02: And I think I think what we're starting to see now, we saw Lubbock feeders this past week decided to close down.
• 8:41
  SPEAKER_02: That's a 50,000 head yard.
• 8:43
  SPEAKER_02: What we're seeing is a right sizing of infrastructure beyond the cow calf guy that is is going through a painful resizing.
• 8:52
  SPEAKER_02: We saw Lexington as well having to close down and just that that's gonna have to.
• 8:57
  SPEAKER_02: I mean, the packer and the feeder is not going to run on zero dollar or negative margins forever.
• 9:03
  SPEAKER_02: I mean, that just that's a bad business plan.
• 9:05
  SPEAKER_01: These are becoming very clear signs in this industry, and I think it's a trend that you need to watch out for, especially as we move forward, looking at things like retaining heifers, for example.
• 9:16
  SPEAKER_01: That's what really helped tip the market over last time around.
• 9:19
  SPEAKER_01: Right now, there are a few factors looking at some of these heifer prices as well.
• 9:23
  SPEAKER_01: I I would assume most of those are being bought to retain at this point at those price levels.
• 9:29
  SPEAKER_01: So some very interesting things developing in this cattle market, I think, worth talking about and mentioning.
• 9:35
  SPEAKER_01: Jace, you're our main cattle guy here now.
• 9:37
  SPEAKER_01: Uh, please, if anyone out there has any questions about coverage levels or what they should be doing, anywhere from a small cow calf guy to even the some of the most simple feedlot operations out there, uh, this is your man right here to talk to.
• 9:51
  SPEAKER_01: And if you need anything else, please reach out to us at Professional Like Marketing.
• 9:55
  SPEAKER_01: Try to get some other uh whether it be our daily market commentary, get signed up on account docs and manage some risk here today with us.
• 10:02
  SPEAKER_01: I appreciate your time, Jace.
• 10:04
  SPEAKER_01: We'll see you next time.
• 10:05
  SPEAKER_02: Thanks, Mike.