Latest / CattleUSA Daily / 143: Cattle Prices Hit Record Highs but How Long Will It Last with Dan Gerhold

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143: Cattle Prices Hit Record Highs but How Long Will It Last with Dan Gerhold · CattleUSA Daily

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  Welcome to another episode of the Cattle USA Daily podcast.
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  Today we are welcoming back Dan Gearholt with the Cattle USA
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  insurance team. And today we are talking the
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  commodities markets. What is going on in the world of
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  commodities and just in the cattle market in general right
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  now. Dan breaks down the things that
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  have happened over the past week and then we touch on the next
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  couple months. What can we kind of expect out
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  of the cattle market over the next few months and what are
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  Dan's thoughts and opinions on that?
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  So that further ado, let's go ahead and jump into this podcast
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  episode with Dan. But before we do it, if you guys
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  could take half a second to go like subscribe, rate and review
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  this podcast. We really appreciate it here at
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  the team. It helps us continue to grow,
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  reach more producers and make a wider impact on this amazing
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  industry that is the cattle industry.
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  So let's go ahead and hop into this episode with Dan.
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  Welcome to the Cattle USA Daily podcast, your go to source for
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  the latest livestock markets, industry insights and the
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  updates shaping agriculture today.
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  I'm your host, Lauren Moylan, a passionate advocate for
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  agriculture here to keep you informed and connected.
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  Now let's dive into today's episode.
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  Dan, welcome back to the podcast.
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  How is life in Iowa? Great.
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  Can't beat this weather. I mean it's it's a cool 70° dry
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  silage season is beginning. Life is great.
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  Now I'm going to need to take a second here for all of our audio
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  listeners. Dan has showed up today with a
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  new facial cut, no new shirt today, no new cash cow, anything
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  but new facial hair. And Dan, I hear something about
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  your kids outweighed your wife on this decision and that is why
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  we now have. Some pretty to a boat, put it to
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  a boat. She got outnumbered.
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  You know, I just got to thinking to go along with that, Lauren,
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  you look at our cattle market, our environment, everything goes
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  back to the 70s. I mean mustaches are back.
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  The gals are all wearing baggy bell bottom type pants.
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  Cattle market, high inflation, the 70s were rocking very
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  similar. I think we've just gone back in
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  time. So it fits right in.
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  You're just. Bringing it back, you're just,
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  you're bringing it back and going along with everything
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  else. You're like, hey, I'm just
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  matching the cattle market here, so it's perfect.
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  Absolutely, 100%, yeah. That's beautiful.
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  Give the people what they want. Absolutely.
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  I love it. Well, Speaking of the cattle
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  market, what is going on in the world of commodities right now?
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  Up, up and away. The general consensus once again
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  has not changed. It's pretty remarkable.
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  And we had a screwworm scare Sunday when the news came out
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  that we have a had a confirmed case of screwworm in a human
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  over in I believe it was Maryland.
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  So that that gave the market a tiny little shock first thing
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  Monday morning, but turned right around and went back higher.
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  New highs here yesterday, both fears and fast all time record
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  highs charts are strong. Open interest is up.
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  Kill numbers are a lot stronger than what they were last week,
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  the week before the month prior. So got boxes rocking obviously
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  Labor Day this weekend. So probably a little bit of last
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  minute buys and spot market there.
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  So that's all encouraging, but you know it's I haven't seen a
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  reason to fight the trend yet. We've got deferred money up
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  above 240. So looking out that far on the
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  fat cattle and starting to hedge.
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  Also looking at the deferreds on Peter cattle for or you know,
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  particularly Cal calf producers stepping out to next year,
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  starting to to layer in that protection get, you know, 2530%
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  of the calves covered. You know, it's just no telling
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  anybody's guess when this thing ends.
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  Right now we're rocking in the 70s and let her let her RIP.
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  Yes, we absolutely are. Let her go, let her run.
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  And you know what? If it's going to be the 70s, you
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  might as well take it full blown like Dan did and bring it all
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  back and absolutely ride the wave all we can.
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  Every, every bit of it. We could get the vehicles to go
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  back to those days too. That'd be great.
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  No, I really like my backup camera, not going to lie.
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  You can put that on a an old Dodge Charger or yeah you can.
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  You could add it on. I could.
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  You bet. No, it's everything points
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  higher. I mean even the Hogs are are
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  getting a bounce here. It was good to see those bounce
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  yesterday. That gives me a little bit of
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  faith that you know, we can make a counter seasonal move into the
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  fall and winter time. Numbers are short.
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  They cut the kills on the Hogs too.
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  Once again, are they cut and kills because the hogs aren't
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  there or they cut and kill to maintain margins?
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  Could be a little bit of both or obviously some disease pressure
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  in that market. So overall, rising tide lifts
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  all boats. Now if it's going to be above
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  400 and we should see the the pork cut out, stay above, you
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  know, 100 pretty easily. Same with chicken.
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  Chicken's not cheap either right now, but inevitably beef is
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  still the highest, highest price protein available to the
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  consumer. But so far the consumer
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  shrugging it off got to celebrate that every time I, I
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  can be concerned and, and get in a bad mood.
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  But right now we're moving the product and life is great.
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  So as long as the consumer keeps going to the grocery store and
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  buying those steaks and roasts and I think we're, we're going
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  to be OK. So it's very, very common to see
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  that dip once you get past Labor Day.
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  So don't be. But inevitably, you know, two
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  months from now, we're going to find out what the holiday demand
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  looks like. So we get out to there.
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  I think we'll have have a sign of whether or not beef is too
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  high or not right now. Yeah, full steam ahead.
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  Yeah, A. 100% What are your thoughts going into the next few
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  months? You know, I the same thing, you
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  know, if if you see a box of slip, it wouldn't surprise me if
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  they slip back to that 38385 and the choice just a normal
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  seasonal slow down. As people get back to school and
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  they switch to casserole mode, roast mode.
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  You know, you're not going to see really, really super strong
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  drilling demand. You know, SO385390 hold that
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  level. Still optimistic as we come back
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  into holiday season, we can push back above $400.00 boxes again.
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  As I mentioned, if if it slips more than that, I think then we
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  truly know we cut into the consumer too hard.
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  So then then we should see the volume slow down once again.
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  The Packers will probably cut the kill as far as numbers.
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  There's no wall of cattle that I'm looking at in the near
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  future. I mean, cattle on feed.
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  Last Friday once again proved it, that we're killing more.
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  We're slaughtering more cattle than what we're placing.
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  Mexico still shut down. You know it.
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  The Cavs just aren't there. So a lot of the other thing I'm
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  saying, sail barns are all telling me the same thing.
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  We're moving these cattle early. We're moving on light.
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  I don't want to miss the market. It could be a tighter fall when
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  it comes to supplies of feeders available to get placed.
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  So overall, watching the index just RIP into the end of August,
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  usually this thing is starting to roll over because you're
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  seeing plenty of guys pull your wings off grass and and
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  available numbers go up, but not seeing it just keeps going
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  higher and higher Buddies. Yes, I mean, I think I sent a
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  message to to one of the winter guys that, you know, I, I think
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  I'm going to sit on my hands here instead of buying yearlings
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  that, you know, eight way to 380.
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  I might just pause and see how this all shakes out.
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  And they're like, don't sit too long.
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  You'll be buying nine way to 4 bucks.
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  I mean, it's it's anybody's guess.
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  I think he was joking, but it's certainly possible it could get
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  that high. It's just truly a supply and
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  demand market right now with cheap feeds and the
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  profitability in in the feed lot.
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  You know, it's full steam ahead for those guys.
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  Let's get filled right back up, even though prices are setting
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  new records every week. So you know, it's a great day to
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  be a cow calf man. It's a great day to be a
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  backgrounder. You know, even guys selling, you
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  know, market ready fast right now they're just making a
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  killing. That's going to change.
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  You know, obviously someday a little bit concerned that the
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  yearlings we are buying right now come with 240 break evens
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  for fed and and beyond. You know, that's we're going to,
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  we're going to need some strong beef demand domestically to
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  justify and see a return on those cattle.
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  So that's a little bit concerning.
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  But overall, and like I said, there's no wall of cattle coming
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  at us to be overly concerned about.
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  Yeah. What else do we need to head on
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  today? Is there anything else going on
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  in the market that we should be touching on today?
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  You know, Powell came out and said he's open to lower an
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  interest rate. I'm going to guess that he's
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  probably going to knock him down, you know, 1/4 of a
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  percent. It's high time in my opinion.
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  We're seeing everything kind of slow down as far as housing
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  construction, you know what not it'd be a good thing.
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  What that does cattle is, is a good question.
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  I'm surprised cattle have held in with this this high
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  inflation, but yet high interest rates this long.
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  So I wouldn't be surprised if managed money does a little bit
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  of pivoting based on that, but we're not going to find that out
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  for another month. So other than that, yeah, keep
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  an eye on on stocks, Cadillac to move with stocks.
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  And historically speaking, September, October is not a
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  friendly month for equities. So once again, back to school,
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  just pull on just normal swamp of September.
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  So not a big deal. Well, if that's everything that
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  we had on today, Dan, I appreciate it.
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  Appreciate your time. And as always, to all of our
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  listeners out there, if you would love today's podcast, make
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  sure that you are liking subscribing, writing review, and
• 9:56
  we appreciate all of those things.
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  And if you are interested in learning more about LRP rates,
• 10:01
  insurance, getting yourself covered, make sure you check out
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  the show notes down below where we have that Cattle USA
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  insurance link where we partner with Dan and his team to provide
• 10:10
  provide those LRPS for you guys. So make sure you head down
• 10:13
  there, you can get a hold of the team and they're there to answer
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  any questions you might have on what that looks like right now.
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  Because it can be a little confusing if you just go look up
• 10:21
  LRP rates right now and don't have the full story have it all
• 10:25
  explained to you. So make sure you go check out
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  that link down below and we will see you all tomorrow on another
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  episode. Have a good one y'all.