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Cattle: Oh SNAP · 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 7th.
• 0:17
  SPEAKER_01: I've got Jace with us here today.
• 0:18
  SPEAKER_01: We're going to talk about the cattle market.
• 0:20
  SPEAKER_01: How's it going?
• 0:21
  SPEAKER_01: It's going pretty good.
• 0:23
  SPEAKER_01: Perfect.
• 0:23
  SPEAKER_01: Well, let's start with a little bit of outside activity regarding this cattle market.
• 0:28
  SPEAKER_01: It's been pushed around a lot lately by some outside market influences.
• 0:32
  SPEAKER_01: Talk to me about the correlation between what's going on with the equity markets, for example, and the cattle.
• 0:39
  SPEAKER_00: Well, I guess we've just seen broader markets having a little bit of trouble this week.
• 0:44
  SPEAKER_00: The shutdown running into, I guess, the longest shutdown we've we've had ever.
• 0:50
  SPEAKER_00: And that the markets don't like that we're we're starting to see more effects from that.
• 0:55
  SPEAKER_00: You're seeing it on the equity side, and it's starting to flood over into the livestock markets.
• 1:01
  SPEAKER_01: For certain, you've seen uh a combination of concerns over whether it be stretched valuations of any AI-related tech stock right now.
• 1:10
  SPEAKER_01: You've got a slowing U.S.
• 1:12
  SPEAKER_01: economy, it would look like from the parameters that we can actually still follow because we don't have government data because of the shutdown.
• 1:18
  SPEAKER_01: So we're following what we can from who we can when it regards to uh this the U.S.
• 1:24
  SPEAKER_01: economy and some of the parameters that we have to watch.
• 1:26
  SPEAKER_01: And then just any policy uncertainty regarding this U.S.
• 1:29
  SPEAKER_01: government shutdown and obviously trade tariffs and some of the late news we've had there.
• 1:35
  SPEAKER_01: Honestly, this week it was probably a little bit quieter from a lot of those concerns and Trump influencing our markets, I would argue.
• 1:43
  SPEAKER_00: Yep.
• 1:43
  SPEAKER_00: Yep, I would I would agree.
• 1:45
  SPEAKER_01: It was a risk-off week across many of these commodities, equities, uh, no matter what you really looked at.
• 1:51
  SPEAKER_01: Uh this week, I would argue you've seen a pretty good increase in the US dollar, and alongside of that, you've seen the stock market pull back, you've seen gold pull back, and a lot of these factors come from the fact that we have some uncertainty regarding any cuts going forward into the December time frame, just lack of economic data could hold that back a little bit.
• 2:13
  SPEAKER_01: So a lot of risk off this week across many different commodities and equities.
• 2:18
  SPEAKER_00: And we've seen consumer sentiment hit the lowest level here in 10 years now, today.
• 2:24
  SPEAKER_00: So that that's that's starting to weigh on things.
• 2:26
  SPEAKER_01: And that's basically a feeling, right?
• 2:29
  SPEAKER_01: Consumer sentiment would just be, do I feel rich today or not?
• 2:32
  SPEAKER_01: And today they would say, I am worried, I am concerned, that I'm not gonna have enough money, basically.
• 2:37
  SPEAKER_01: So uh from that standpoint, people tend to spend less money when they feel like that.
• 2:42
  SPEAKER_01: So uh when it comes to yeah, outside stuff, obviously there's a lot of s a lot of talk about Snap earlier on in the week as well.
• 2:50
  SPEAKER_01: What can you tell me about the impact that had on the meat market?
• 2:53
  SPEAKER_00: Yeah, so the SNAP benefits, the the food stamps there, they they I think play a bigger part than we were figuring in this market.
• 3:02
  SPEAKER_00: You know, we had them, we had they got paid out in October, so they get paid out the first of the month.
• 3:08
  SPEAKER_00: And they were supposed to get paid out the beginning of the month in November here.
• 3:12
  SPEAKER_00: They have a contingency fund that they can pay out of for a month or so during the events of a government shutdown or something similar.
• 3:20
  SPEAKER_00: And they they they there's been a fight between the Trump administration and federal judges on if that's gonna get paid out or not.
• 3:29
  SPEAKER_00: So currently we have we've seen some of the money go out as of last night, but not not sure exactly how much of it has gone out.
• 3:38
  SPEAKER_00: But that has been that has been holding these protein markets down a little bit, just with uncertainty and thinking that it maybe weighs a little more on the on the price of our retail products than we would we would think, with with the snap benefits being about 10% of grocery store revenue and the meat trade, I guess about 20% of that being used at the meat counter.
• 4:03
  SPEAKER_00: It starts to it starts to become a number that matters.
• 4:06
  SPEAKER_01: And it I don't think it'll be defunded or partially funded, you know, for long, probably, in my opinion.
• 4:12
  SPEAKER_01: I think it's gonna cause way too much of an uproar.
• 4:14
  SPEAKER_01: So I I think both sides probably want to put this at bay pretty soon.
• 4:18
  SPEAKER_01: I do think it would have a negative effect probably on beef demand, though.
• 4:23
  SPEAKER_01: Uh how much it's gonna be difficult to say.
• 4:25
  SPEAKER_01: But um, at this point, I don't think they're probably gonna let it carry on too long if it is only partially or defunded at least, in my opinion.
• 4:33
  SPEAKER_01: We'll see though.
• 4:34
  SPEAKER_01: What else do you gotta tell us about uh more specifically the the cattle market as of late from a technical picture?
• 4:41
  SPEAKER_01: What's been going on with these futures markets?
• 4:44
  SPEAKER_00: Well, I guess it's looked pretty technically weak.
• 4:47
  SPEAKER_00: You know, we broke through the 50-day moving average, which we hadn't broke through since about June, and then on the way down there broke through the hundred-day as well, have stayed pretty well below that now.
• 4:59
  SPEAKER_00: Um, and we did we did test the 200-day moving average yesterday and today, and we've s held that so far.
• 5:08
  SPEAKER_00: So I guess maybe a little bit of optimism or strength there, but it is an overall pretty weak technical picture on both the fats and feeders.
• 5:17
  SPEAKER_01: Worth mentioning in an environment where it seems like the easiest way is out on these managed money funds.
• 5:23
  SPEAKER_01: The uncertainty that we've got going on today with the massive amount of money and how long they've had them in the protein markets, it seems relevant, at least from a technical picture, to watch this market struggle here a little bit lately.
• 5:35
  SPEAKER_01: So something to keep an eye on.
• 5:37
  SPEAKER_01: It uh it sure seems like the easiest way is out for these funds.
• 5:40
  SPEAKER_01: But uh, more specifically to cattle, let's look at the uh fundamental picture.
• 5:44
  SPEAKER_01: What can you tell me about all the craziness that's happened on the cash side this week?
• 5:48
  SPEAKER_00: Yeah, so we've seen cash trade at the beginning of the week, it traded about steady with last week in the north.
• 5:56
  SPEAKER_00: There was practically no cash trade in the south last week, so we don't have much to gauge off of there.
• 6:02
  SPEAKER_00: They've got a pretty a pretty good leverage position in the south there.
• 6:08
  SPEAKER_00: Um so we saw cash trade in the north even with last week, just a basis play is what it looks like.
• 6:15
  SPEAKER_00: We were down on the board.
• 6:16
  SPEAKER_00: They were you were getting producers that were selling at a ten dollar positive basis that were worried about losing one or two last week.
• 6:23
  SPEAKER_00: And so you you got a little bit of relief there for the producer, and and now even later in the week here, we've seen the futures come back a little bit, but cash has actually softened again a little bit more.
• 6:37
  SPEAKER_00: So like two 225 was some of the cash paid today, 355 in the meat, and we're actually hearing that some of that's maybe going a little further south.
• 6:47
  SPEAKER_00: So maybe filling up the the packing plants down there with a little more northern beef to ease their supply tightness.
• 6:56
  SPEAKER_01: That makes sense.
• 6:57
  SPEAKER_01: That makes sense.
• 6:58
  SPEAKER_01: It a lot of activity this week, it looks like from the cash side.
• 7:01
  SPEAKER_01: Normally it's a pretty steady picture, a lot gets done at the end of the week and it's at a steady volume, right?
• 7:06
  SPEAKER_01: Like most activity gets done at one price or pretty dang close to it.
• 7:09
  SPEAKER_01: This week it seemed like it was kind of all over the board and in a lot of different destinations than normal two.
• 7:14
  SPEAKER_00: Yeah, that's that's very accurate.
• 7:16
  SPEAKER_00: Any final thoughts on the cattle market before we go?
• 7:19
  SPEAKER_00: Look at look at what you've got for coverage now.
• 7:22
  SPEAKER_00: Things have changed quite a bit.
• 7:23
  SPEAKER_00: You know, options that we thought were never gonna be out of the money are now out of the money or close, and we're just we're just making sure to go through, comb through everything and make sure we're we're cleaning everything up that needs to be and readjusting as we see fit.
• 7:38
  SPEAKER_00: Certainly a lot of uh massive changes in this market lately.
• 7:41
  SPEAKER_01: Thank you for your time today, Jace.
• 7:43
  SPEAKER_01: I appreciate it.
• 7:44
  SPEAKER_01: Thanks, Mike.