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2023 Recap · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_02: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_02: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_02: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_02: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_02: This is your host, Mike Minor.
• 0:22
  SPEAKER_02: Let's get started.
• 0:23
  SPEAKER_02: Today is December 29th, and we're gonna have a little recap of 2023 today.
• 0:29
  SPEAKER_02: We're gonna talk about grains, cattle, and hogs on a recap of the year and kind of some things that happened here.
• 0:36
  SPEAKER_02: So I got Pat with us and I got Jeff.
• 0:38
  SPEAKER_02: So how's it going today, guys?
• 0:40
  SPEAKER_01: It's going good, Mike.
• 0:41
  SPEAKER_01: How are you?
• 0:41
  SPEAKER_02: Very good.
• 0:42
  SPEAKER_02: Very good.
• 0:43
  SPEAKER_02: Well, let's start off first in the grain market here, Pat.
• 0:46
  SPEAKER_02: So the way I'm gonna structure this uh first part, anyways, is just a little reflection on where we started this marketing year at, which on the corn market, and you'll see a little bit of a trend here, started off a lot differently than where we're currently sitting at uh in these futures prices.
• 1:02
  SPEAKER_02: So if you go back to the the first trading day of 2023, March 24 Corn Futures, our current front month right now, uh closed that day at about 618 the end of the year, and then about 614 the first trading day of the year.
• 1:18
  SPEAKER_02: So at 471 March futures today, uh we've really experienced quite a setback basically since the beginning of the year.
• 1:26
  SPEAKER_02: Uh very similar to a year like 2013 where we came off some higher priced$6,$7 corn, and we've just trended lower pretty much through the extent of uh 2023.
• 1:40
  SPEAKER_02: The main focus point, I think, on the grains this year, guys, was that we did have some hope that sparked some buying in this grain market kind of around that beginning of June time frame, end of May.
• 1:53
  SPEAKER_02: We had some dryness uh occur throughout the the Midwestern Corn Belt that had sparked some very large concerns about supply.
• 2:03
  SPEAKER_02: And we were able to trade that up back to a level around that 630 level, you know.
• 2:08
  SPEAKER_02: So um a lot of focus was about we traded around that six dollar average through the spring crop insurance time frame and feb.
• 2:18
  SPEAKER_02: And we actually did for about three days, we kind of traded back up to that level again this year during that June time frame.
• 2:26
  SPEAKER_02: So we did get a chance kind of to sell that Feb uh price yet again, just for a couple days.
• 2:31
  SPEAKER_02: It was very hard to take advantage of because it was so quick.
• 2:34
  SPEAKER_02: And then it it gyrated back and forth.
• 2:36
  SPEAKER_02: We wiped out all the gains by the beginning of July and had one more head fake kind of through the end of July before uh we really put this market to bed uh into the four dollar range, uh low or higher four dollar range here, real recently out of this corn market.
• 2:52
  SPEAKER_02: And I was reading some recaps from other people, and I uh I noticed the that Elaine Cub had one in the Cubs Den, and hers was focused on Todd Holtman every morning before the bell, he writes uh a thousand words on what's gonna happen or what's going on in corn, wheat, and soybeans.
• 3:10
  SPEAKER_02: And I noticed that she had focused on in those thousand words, she typed in what words were the most typed out of all the whole year.
• 3:20
  SPEAKER_02: And she noticed that the words like China not mentioned a whole lot this year.
• 3:25
  SPEAKER_02: It was basically all to do with either long, that was mentioned a heck of a lot of times, like 775 times in the before the bill comments this year.
• 3:36
  SPEAKER_02: Um talking about long or or short, which short was only mentioned like 620 times.
• 3:42
  SPEAKER_02: So a lot of talk about the long managed money futures contracts, or uh they talked about rain, that was mentioned over a thousand times, um, yeah, which wouldn't be uncommon, but they also talked about exports, that was over a thousand times.
• 3:55
  SPEAKER_02: So there's a lot of focus on, you know, exports and rain this year, but not a heck of a lot to do with China, Pat and Jeff, which I thought was interesting uh looking back at their recaps.
• 4:07
  SPEAKER_02: And I think that is an accurate representation.
• 4:09
  SPEAKER_02: I mean, most of the the market moving events in the grain market this year had to do more with is it raining in the Western Midwestern Corn Belt, supply and demand options like exports.
• 4:21
  SPEAKER_02: It it wasn't a whole lot to do with China, and they talked a little bit about Russia and Ukraine as well, but that was definitely last year's story, anyways, is that did not get mentioned quite as much and definitely didn't seem to impact the market as much.
• 4:35
  SPEAKER_02: So I I don't know where you want to build off of that, Pat, I guess, but that was kind of what I had on the recap for for the grain markets here.
• 4:42
  SPEAKER_01: So corn's a buck and a half off of its highs, more or less, and uh more a buck and a half off of of summer highs, which are equivalent to where we started the year out.
• 4:52
  SPEAKER_01: So I I appreciate I appreciate that recap.
• 4:55
  SPEAKER_01: And and I also appreciate the observation as it relates to a buck and a half lower market, more or less, from where we're at at its summer peak, and we still harvested a crop that was below trend, right?
• 5:12
  SPEAKER_01: So the way that you describe that I find quite interesting.
• 5:16
  SPEAKER_01: We probably are um normally I suspect that if you have a buck fifty break from summer weather risk high to harvest lows, I'll bet you most every other year we harvest an above trend line crop, right?
• 5:32
  SPEAKER_01: And so I find that fascinating that we we did our a pretty traditional stereotypical, this is what you learn in markets 101.
• 5:41
  SPEAKER_01: The market sets a sets a high in the summer and it and it goes down into fall, right?
• 5:45
  SPEAKER_01: The market actually behaved in a way that you would expect it to from a seasonal perspective, but most of the time the reason why you have that expectation is because you uh you have normal weather in the last half of the growing season and it and it produces a trend line or a better sort of a crop.
• 6:03
  SPEAKER_01: And so the market behaved the way it traditionally does, and but we didn't necessarily have normal weather, to your point.
• 6:10
  SPEAKER_01: And so probably the best explanation as to why is because there wasn't a whole lot of talk about China and exports and some of those other key words that you that you were describing there as it relates to to morning uh uh talking points.
• 6:24
  SPEAKER_01: And so um I guess that's my observation, Mike, is is that uh um from a from a corn balance sheet perspective, um it's I suppose as we wrap up 2023 here and look into 2024, a little concerning, frankly, as it relates to a building-ending stock situation year over year in spite of below trend line yield events.
• 6:51
  SPEAKER_00: If you think about China, Pat, you know, uh Mike brought that up, and that's been true in the grain markets, but it's also been very true in the protein markets as well.
• 7:01
  SPEAKER_00: You know, they've really taken a back seat once in a while on the hug slides, right?
• 7:06
  SPEAKER_00: We like to put some Chinese stuff in there, but it's really just to say that, hey, they're they're gonna take some of the variety meats or a lot of the variety meats and things like that on the hugs, but they're not gonna take any more.
• 7:21
  SPEAKER_00: And then I think about the beef sector, and you know, last year into the first part of this year, they were continually importing more and more beef, and now that's kind of flatlined.
• 7:32
  SPEAKER_00: Um and that there's a supply issue going there from uh our standpoint too, but really makes you question, you know, going to the next 12 months, are we gonna hear a lot about China or are they kind of getting pushed into the background a little bit?
• 7:46
  SPEAKER_01: Yeah, and I I think um, well, first of all, I it's it's worth noting that um we've been we've been talking about um in in in the world of agriculture, we've been talking about China and prospects since the mid-90s, right?
• 8:02
  SPEAKER_01: So so and and and and so the the uh a disappointing outcome is it should be expected, frankly.
• 8:09
  SPEAKER_01: Not uh because uh it's it certainly hasn't been uh it's been the the rule uh as as we'll go back over a long period of time.
• 8:17
  SPEAKER_01: And so anyway, I would just say that as we think about what's happening in China today and look into 2024, I would just say that um you know they have their own set of challenges as it relates to the production side of the equation, especially on on the on the pork side of things, but they also have their set of challenges as it relates to what's going on um um in regards to economic activity.
• 8:43
  SPEAKER_01: And so their demand for commodities um I suspect has has peaked at somewhat recently, last three or four years, and it's gonna be hard for them to continue to sustain the type of growth in terms of consumption that we had uh uh come to maybe expect if nothing else over the years.
• 9:02
  SPEAKER_01: And so, you know, as we again look out into into 2024, I I think that's going to be uh probably another year of disappointment, frankly, as it relates to the amount of um of commodities, both grains and proteins that that China um would be importing.
• 9:20
  SPEAKER_01: And mostly that's an observation on on uh on an economy over there that just is having a whole lot of trouble uh uh stimulating or getting off the ground, if you will.
• 9:29
  SPEAKER_01: Um specifically, though, to to China is just um you know the adoption of of uh of biotechnology and their desire to utilize uh um uh current practices, you know, as it relates to GMOs and whatnot and in corn production in particular.
• 9:47
  SPEAKER_01: And so as we look into 2024, that's certainly something we're we're gonna want to keep an eye on.
• 9:52
  SPEAKER_02: It was really interesting too.
• 9:54
  SPEAKER_02: I found on Bloomberg when I was looking at more of the equity side and more outside markets, uh one of the things that the stock market got wrong.
• 10:02
  SPEAKER_02: So the whole article was just about all the things that the stock market had wrong going into this year.
• 10:07
  SPEAKER_02: And the the one that really caught my eye that was a little bit different that I forgot about was China reopening.
• 10:13
  SPEAKER_02: Everyone was uh envisioning what had happened with America when we opened up and we had massive inflation, and China was expecting that this year, and they didn't get it.
• 10:23
  SPEAKER_02: They had a much different reopening experience than what we had in the United States, and that lack of their demand after their reopening and how it didn't go as well.
• 10:32
  SPEAKER_02: Um, that was kind of a shock to all markets, I think, too.
• 10:36
  SPEAKER_02: But then just China in general, I mean, uh they're more active when we have lower prices too, just for what it's worth mentioning.
• 10:43
  SPEAKER_01: Indeed.
• 10:44
  SPEAKER_01: Let's jump around the planet a little bit.
• 10:46
  SPEAKER_01: Let's talk about South America for a second.
• 10:48
  SPEAKER_01: Can you give us a a little bit of a of a recap or run, Mike, on on what's going on down there these days?
• 10:54
  SPEAKER_01: If nothing else, focus on weather a bit.
• 10:57
  SPEAKER_02: Yeah, so I mean, if you go back way far, right?
• 10:59
  SPEAKER_02: Argentina was the big problem maker this last year.
• 11:03
  SPEAKER_02: Their crop size got cut in under half.
• 11:05
  SPEAKER_02: Uh so it was a huge supply problem out of Argentina, and Brazil had a really good crop last year.
• 11:12
  SPEAKER_02: Um, right now it's kind of flipped around a little bit.
• 11:14
  SPEAKER_02: So Brazil is experiencing some troubles in central and northern Brazil with dryness issues.
• 11:20
  SPEAKER_02: Uh they wrapped up planning not too long ago, and their very early harvest just started.
• 11:26
  SPEAKER_02: So they're like 1% complete at Mario Grasso for harvest on soybeans, which is the earliest ever that they've started harvesting.
• 11:34
  SPEAKER_02: It's a very small portion, very small sample size.
• 11:37
  SPEAKER_02: Uh yields are coming in poor, which is expected because of the dryness problems and why they're harvesting early.
• 11:44
  SPEAKER_02: But when we look at the overall production between the two of them, even if you pull Brazil our Brazil production down another 11 million metric tons from where the USDA is already sitting at, they're still at record levels between them and Argentina for production.
• 12:00
  SPEAKER_02: So it as long as Argentina holds at where they're produ supposed to produce, uh it should still be a rather abundant crop in those two areas.
• 12:10
  SPEAKER_02: And weather-wise, currently, we're going into a big weekend here.
• 12:13
  SPEAKER_02: They're experiencing rain from about Saturday until the full end of the full first week of January.
• 12:19
  SPEAKER_02: So that's supposed to be one of the first big rain events they've had that'll cover the central and northern regions that are needing it the most, Pat.
• 12:27
  SPEAKER_02: So it's gonna be a big weekend.
• 12:29
  SPEAKER_01: So so that's that's an important point as we uh as we record this podcast on Friday, the the midday, Friday, the the the 29th, is is the next three or four days, uh uh is important as it relates to to uh the current weather forecast uh down there.
• 12:46
  SPEAKER_01: Um bigger picture longer term, I would just make the observation as it relates to South America is um their rate of increase recently over the last four or five years has bumped up as it relates to their ability to be a more reliable exporter uh in in the world market.
• 13:06
  SPEAKER_01: And so again, if you sort of reflect back and look back 20, 25, 30 years, the potential of South America has always been there.
• 13:16
  SPEAKER_01: But for a long, long time, their ability to perform, right?
• 13:20
  SPEAKER_01: Think trucker strikes, mud roads, you know, all of those things that that we always hear about through the years, we seem to be hearing less of that recently in the last couple of years, let's just say.
• 13:31
  SPEAKER_01: And and so they have become a more reliable supplier to the world as it relates to to exports, and their crops have become more consistent as well, I would argue, and increasing at a faster rate than what ours our.
• 13:44
  SPEAKER_01: So again, just a bit of an observation as it relates to a primary competitor there.
• 13:48
  SPEAKER_01: And I would just say real quick, um I uh we had uh Rob in our office uh uh looked up some of this data for us the last couple weeks.
• 13:58
  SPEAKER_01: Um, on the protein sector, pork specifically, Jeff, as the European Union has started to decrease production and provide um less supply to the world market, um just ab it's almost equivalent to the number of pounds that they've stopped selling on the world market, Brazil has has increased.
• 14:21
  SPEAKER_01: And so um their rate of increase in terms of exportable product in on the pork side of things, um, they've really performed quite well relative to that really long ramp that I was just trying to describe on the green side of things.
• 14:37
  SPEAKER_01: And so as a pork producer here in the U.S., that's one of the things that I'm gonna want to be keeping an eye on is is as the European Union constricts and and and I would argue on purpose becomes less competitive on the global market, um, is that a is that an opening that the U.S.
• 14:54
  SPEAKER_01: pork producer is able to capture, or is is Brazil going to be there to fill in that gap?
• 14:59
  SPEAKER_00: Well, you have to, I mean, I think you're right, and that's a bit disappointing um for us here in the U.S.
• 15:05
  SPEAKER_00: But you do have to fold back into that the Chinese conversation, not to dwell on that, but they are importing less stuff today.
• 15:14
  SPEAKER_00: Um, and top of that list would be pork, and one of their suppliers that they've reduced the imports from the most has been Brazil.
• 15:23
  SPEAKER_00: So whether we can get them guys to come back in or at least flatline, hopefully we can see a little bit more of that European shortage um come over to the U.S.
• 15:32
  SPEAKER_00: side of the state.
• 15:33
  SPEAKER_01: Yeah, and and that's a great point.
• 15:34
  SPEAKER_01: I appreciate that.
• 15:35
  SPEAKER_01: And I and Brazil and China are in the middle of a developing relationship, and it's which makes some obvious sense from the Chinese geopolitical perspective, uh, of course, right?
• 15:47
  SPEAKER_01: But if if if Brazil ends up being uh uh more part of just China's ecosystem and the US can can engage with the rest of the planet on business loss from Europe, that's not the worst thing in the world either.
• 16:03
  SPEAKER_00: Almost ideal.
• 16:03
  SPEAKER_00: Exactly.
• 16:04
  SPEAKER_00: Absolutely.
• 16:05
  SPEAKER_00: Well, guys, if we're gonna do a recap of 2023, I think we we have to spend a little bit of time on the stock market and that putting in some new highs here, you know, recently um and tracking a lot of the outside capital and some things like that.
• 16:22
  SPEAKER_00: But you know, as you think back about with the managed money positions throughout the year and such, you know, what what strikes me, um, be interesting if you agree with this or not, but as you watch that over the year, the commodities, like the managed money and the index funds, they they wanted to be in commodities in a in a fairly decent-sized way.
• 16:45
  SPEAKER_00: I wouldn't say they were just like blowing the doors off investing in it.
• 16:50
  SPEAKER_00: To me, they were looking for commodities that had a supply story.
• 16:55
  SPEAKER_00: So if think about soybeans and thinks about soybean meal, when Argentina had a crop failure last year, they went into a huge long position on beans and meal.
• 17:06
  SPEAKER_00: You think about cattle, you know, the first eight months of the year, nine months of the year really, they just continued to plow into that cattle market because they could continue to have a supply story that just kind of seemed to get better and better.
• 17:23
  SPEAKER_00: So and I'm afraid that's gonna probably be their position going into 2024.
• 17:30
  SPEAKER_00: Um, you know, we've we've we were really been focusing on the interest rate shift and pivot.
• 17:36
  SPEAKER_00: I I think that's um a big deal.
• 17:39
  SPEAKER_00: I think you know that's gonna continue to shove a little bit of money into you know from the outside markets into ag.
• 17:46
  SPEAKER_00: But I wonder if it's gonna take still gonna take some sort of a story.
• 17:50
  SPEAKER_00: You know, we're gonna have to turn the corner on this hog market, for an example, before you get those guys coming in.
• 17:55
  SPEAKER_00: Once they come in, I I think they're gonna be there for a while.
• 18:00
  SPEAKER_01: I agree.
• 18:01
  SPEAKER_01: And I I I think the um the issue of money flow is one of the biggest things to watch as we look into 2024.
• 18:11
  SPEAKER_01: And and and I agree with your observation.
• 18:13
  SPEAKER_01: I I think um that that uh the 2023 there was better uses of capital, or at least not willing to accept the risk of being in commodities today.
• 18:24
  SPEAKER_01: And and uh um I also believe that as we work into the first quarter of 2024, there's gonna be less talk about whether or not there's going to be a soft landing, and more talk about there has been a soft landing, and and moving on to the next um the next point as it relates to to what's going on and on in with economic activity uh here in the U.S.
• 18:46
  SPEAKER_01: specifically.
• 18:47
  SPEAKER_01: And so um so I do believe that that um there should be or could be uh uh more uh hedgeable opportunities for road crop and livestock producers as we look into 2024 because of added volatility in these markets, um specifically because of of money flow from from outside markets.
• 19:08
  SPEAKER_00: So switch gears again, another thing I want to visit about back to the pigs here is the Prop 12 situation, Pat.
• 19:15
  SPEAKER_00: And you know, I don't want to over exaggerate because we we obviously had some pretty disappointing markets um throughout the first half of the year, right?
• 19:25
  SPEAKER_00: And to me, that came twofold.
• 19:27
  SPEAKER_00: One, it was like the beginning of the disappointing supply era, right?
• 19:32
  SPEAKER_00: Like we rolled into the new year a year ago, and we were all over this two percent less pigs because we're gonna have two percent less sows, and it's supposed to be like clockwork and that and it just didn't develop the entire year.
• 19:49
  SPEAKER_00: Um, we've spent uh you know most of our time at something north of what we were killing this year compared to last year, you know, a good percent and a half more um on the slaughter level.
• 20:00
  SPEAKER_00: So that's definitely a piece of it, and and the marketplace um took that by surprise too.
• 20:06
  SPEAKER_00: You know, they were ex they were they had less meat um sold into the s into the system beyond the Packers, and uh when we just didn't ever come up with some smaller supplies, I think that really weighed on that market into the months of March, April and and May.
• 20:22
  SPEAKER_00: But I also think there's a huge I don't know how far to draw it back, you know.
• 20:27
  SPEAKER_00: Do you say even in March and April, can I blame blame some of that disappointment on the fact that we had this looming Prop 12?
• 20:36
  SPEAKER_00: Or was that more just really a May, you know, first half of June?
• 20:40
  SPEAKER_00: Um, I'm really confident that Prop 12 put a bunch of weight on that market as we got really close to the deadline.
• 20:48
  SPEAKER_00: Um, didn't have a good solution until I mean I forget the date, but I think it was really just two or three weeks before the July 1st um due date.
• 20:58
  SPEAKER_00: So the next date, of course, is the first of January here.
• 21:01
  SPEAKER_00: I guess Pat, thoughts on that as far as how much that impacted us in the past 12 months and uh 2024?
• 21:10
  SPEAKER_00: Do we need how concerned do we have to be going forward?
• 21:13
  SPEAKER_01: Yeah, so I it's a a great question, and and as as it relates to Prop 12 specifically, um no question that it had a negative impact in our markets in 2023.
• 21:27
  SPEAKER_01: No question that when you have 12 or 13 percent of the market have a significant uh disruption to how that product is priced, there's there's no question that it's going to to uh create ripples um throughout the whole pricing and the throughout the whole complex.
• 21:47
  SPEAKER_01: Um I would say though that that this industry um once again uh we learn how adaptable it is.
• 21:55
  SPEAKER_01: Uh this industry we learn again its ability to to um um change um and provide for uh different uh uh diff different types of product pricing and and and all sorts of different attributes.
• 22:10
  SPEAKER_01: And so and so as I look into 2024 Jeff and this Jan 1 date of of uh third party auditing and all of that, I I think that that a pretty big chunk of what needed to get um adjusted for has happened and and that uh the the the most significant market disruptions hopefully are behind us and it's uh incredibly unfortunate uh which this is an understatement it's incredibly unfortunate that that all of this had to happen this year right and and in when it was uh the challenges the the most challenging margin environment anyway and so um and so as we just sort of think about that Jeff I think at a at a little bit higher level above Prop 12 um you know the last Hogan Prug report told us that our industry is becoming um more efficient right we're becoming more productive with with the uh um breeding stock inventory that we have and it also told us that we're looking liquidating breeding stock and so we would just say that um in order for the industry to get back to profitability what we saw in that last hog and pig report is what needed to happen it's um it's unfortunately um at least based upon those numbers it isn't going to provide for an incredible amount of less pork in in the in the near future but eventually um it it should or will as as uh we continue to to see liquidation in the breeding herd.
• 23:40
  SPEAKER_00: Yeah and it's it's always hard for me to swallow the idea that we had to get rid of some more of the sow herd pat.
• 23:48
  SPEAKER_00: You know in my mind give or take uh ever since 2020 you know we've been kind of slowly eroding away at those numbers and that's that's disappointing to me from a higher level standpoint you know but we're just we're not making huge strides on the demand side are we?
• 24:06
  SPEAKER_00: I mean we we eat the same amount of pork that we've always eaten here in the U.S.
• 24:11
  SPEAKER_00: We end up with a few more people um that end up eating just a little bit less pork and we end up being pretty stagnant.
• 24:18
  SPEAKER_00: So it's been you know is we we really had some good export years back in 2021 and you know the dollar index was closer to 90 than 105 back then so um I think that all had something to do with it.
• 24:34
  SPEAKER_00: But um that's that's still at the end of the day where we're gonna have to get our demand set right side from is the exports and we haven't gotten that job done apparently in the past few years so we have to have a little bit smaller sow herd to be able to feed five dollar corn.
• 24:49
  SPEAKER_01: Yeah that's right and and but all of those things um all of those things together can work us into profitability what this isn't is one silver bullet but it is cheaper corn it is more reasonably priced inputs it is a more efficient um more productive uh production system it is better exports and it is improving domestic demand per capita consumption as we go forward here and all of those things are efforts that the industry is doing um I I think a tremendous job in in terms of of trying to get better at but it's uh it's a process and and it's a process that takes time and and and uh um and we're we're on the right path it's just uh it's a it's just incredibly painful because it's uh it takes a long time to get there.
• 25:37
  SPEAKER_00: Talking about the supply side um I'm gonna bounce back to the beef industry real quick here guys if you don't mind but you know obviously a historic um year again in the beef supply standpoint and you know we've continued to have a reduced kill compared to anything that we've seen in any recent history.
• 25:57
  SPEAKER_00: So you compare this year's you know total cattle slaughter including cows even uh compared to the five year average obviously we're well below that we've been killing a good five percent less um all year long pretty much and it turned out you know through uh August and September and October that probably wasn't enough we had a where if chain speed was running a little bit too slow pushing some cattle back in the timeframe that we're dealing with right now but you know that and that looks pretty uh clear on a kill chart um that I was looking at earlier today but you know then you go back and look at like 2015 2014 the last bottom of the cycle actually a similar number of cows we were down like another you know almost 5000 uh per week so we the the amount that we can kill on the beef side most likely has to continue to decrease in 2024.
• 26:54
  SPEAKER_00: Um you know it it makes it kind of tough on the cattle side what that really means because two things you know from a really big picture according to history once you've topped this beef market on a on a supply cycle like this it doesn't come back it just it goes up and then it goes down for a couple of years.
• 27:13
  SPEAKER_00: So most likely that's the most um prevalent scenario going forward but yeah it is interesting to look at the supply as it's probably going to continue to reduce and I gotta believe that's a good guy for the hog complex as well as well Pat I don't think beef prices are going to go down for sure whether they can maintain you know these type of levels or higher um that might be a little bit of a tough story.
• 27:39
  SPEAKER_01: Yeah I agree and I do think as we look into next year the the the story is going to be is when do we start um retaining heifers and and start to rebuild uh that cow herd again and and that's gonna provide for another round of tighter uh feeder cattle availability as as as we look into 2024 which I would expect that to be to be happening at some point here especially uh given uh uh better grass uh in in rangeland areas of the U.S.
• 28:13
  SPEAKER_02: gonna talk a little bit about a conclusion now uh when we look at this last year I think it's pretty easy to see you know you can talk about supply on on a lot of the categories that we've talked about whether it was bad weather in the United States which uh caused a ruckus in the summertime or whether it was production on the hog side or whether it was um supply slipping on the cattle side I think the the real thing that started everything off was that inflation peaked last June uh in 2022 and if we would have had this podcast or when we did at the end of last year, you know we were starting to take inflation down.
• 28:51
  SPEAKER_02: It was just kind of the beginning.
• 28:52
  SPEAKER_02: We were still at like six and a half percent and today now you're at just over three percent we've really got rid of it and you can tell money flow we talked about it in every category money flow had a major impact on all commodities this year on just the way out so there's a huge correlation between you know um inflation going up and and buying commodities.
• 29:13
  SPEAKER_02: That's your hedge against inflation um going into this next year uh we're focused more on uh you know recessionary talk things like that probably still or maybe this off landing is is gonna end up happening like it were happened like you said Pat um there's no there's no real hedge for a recession like there was with inflation but we did see that money flow came in to hedge against inflation and and now it's came back out in a pretty dramatic way.
• 29:43
  SPEAKER_00: So I think as a conclusion of this last year um money flow had a lot to do with uh a lot to do with the major price moves and then we gave it some feed here or there with different uh supply events it seemed like here but what conclusion do you folks have on uh on that or the proteins here as we wrap up well I would I would just say on that it's certainly uh lower on the list of of uh of priorities for most of the big money folks but it is additive you know we had 8% increase in inflation a year and a half ago we got three percent today so to me it's still gonna be on the radar it's not gonna be like it was probably the first you know back half of 22 for an example or the first half of 22 for sure but it's still going to be on the radar a bit.
• 30:36
  SPEAKER_00: But I would just say you know my conclusion um Pat and you you and Mike can join in but you know I think we're gonna take just a quick minute just whether you're customer obviously we appreciate our customers otherwise you wouldn't here be here but we also have a lot of folks in the industry that we get to interact with um you know on a week to week month to month even day to day type of basis and we definitely don't take all those relationships for granted we very much appreciate all the folks we get to to work with here on a daily basis.
• 31:07
  SPEAKER_01: Yeah thanks for that Jeff and thank you Mike and and Jeff for for for everything that you do for for our clients and and for the industry and and thanks for putting this podcast together and I would just echo those comments thanks to everyone that places their trust in us we we take that incredibly seriously and and as we wrap up a challenging 2023 year in the in the in the hog sector at least and and uh look for prospects of 2024 um we're looking for opportunities and looking for opportunities to to help us manage risk in our production systems that that uh allow for us to to uh to pass a uh uh our our businesses on to the next generation so with that uh thank you everyone uh merry christmas happy new year and have a great 2024 that wraps it up for 23 next time we'll talk to you will be next year thanks guys and thank you to all our listeners please reach out to us at professionaleggmarketing.com check out our other podcast as well professional egg marketing that's released every Friday trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 32:19
  SPEAKER_02: See you next time