Latest / Professional Ag Marketing Podcast / Cattle: Seasons Change

Transcript

Cattle: Seasons Change · 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 involve substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_01: Today is September 18th.
• 0:17
  SPEAKER_01: I've got Jeff with us here today.
• 0:19
  SPEAKER_01: How's it going, Jeff?
• 0:20
  SPEAKER_00: Good afternoon, Mike.
• 0:20
  SPEAKER_00: It's going well.
• 0:21
  SPEAKER_01: Awesome.
• 0:22
  SPEAKER_01: Well, I am most excited to be on the show with you today after our cool experiences on Agger Talk with Chip today or Mike Pearson with uh with that show.
• 0:33
  SPEAKER_01: So uh happy to have you on, Jeff.
• 0:35
  SPEAKER_00: I'm surprised that uh you'd stooped to my level after all that publicity.
• 0:39
  SPEAKER_00: Yeah, come on.
• 0:40
  SPEAKER_01: Well, I needed to talk to somebody smart about choice cutout today, some beef futures.
• 0:45
  SPEAKER_01: Uh, what is going on in this cattle market, Jeff?
• 0:48
  SPEAKER_01: A big sell-off here lately.
• 0:50
  SPEAKER_00: Big sell-off, uh, you know, starting with the meat prices, of course.
• 0:53
  SPEAKER_00: Um, get into the cash market here in a minute.
• 0:56
  SPEAKER_00: But you know what, we're just right around 14 bucks lower kind of on the week here so far, so we're seeing a fairly uh large setback.
• 1:06
  SPEAKER_00: I'm not sure that we're surprised by that, Mike.
• 1:09
  SPEAKER_00: We might be still just a little bit more surprised that it hung on as long as it did, but I think in general, this thing is pretty seasonal.
• 1:17
  SPEAKER_00: We like to see those big bumps right around the holidays.
• 1:21
  SPEAKER_00: We obviously saw that.
• 1:23
  SPEAKER_00: Uh, you still have to look at this marketplace, and you've heard me say this before.
• 1:27
  SPEAKER_00: Um, if you see the beef market rallying when it's supposed to, so around holidays, like what we saw around Labor Day, you gotta assume that the demand's probably still just fine.
• 1:43
  SPEAKER_00: So I think that's what we got going on here.
• 1:45
  SPEAKER_00: That all gets pretty cloudy with uh the lower kills that we continue to see.
• 1:50
  SPEAKER_00: Um, last week coming in, you know, total kills here, not separating out steers and heifers yet, but 560,000.
• 1:58
  SPEAKER_00: Um, so you got kills still at rock bottom.
• 2:01
  SPEAKER_00: That might be the only reason why you would say, oh, this is maybe a little interesting.
• 2:07
  SPEAKER_00: Um, I think the storyline's still being written here if if we're seeing some backup on the demand picture or not, Mike.
• 2:14
  SPEAKER_01: So if you're at uh backing off these prices on choice cutout today, and you're saying it's just a seasonal thing basically at this time of the year, how long does that continue for?
• 2:24
  SPEAKER_01: Like how much more does it have to go down, you think here?
• 2:28
  SPEAKER_00: It should have itself straightened out pretty uh rapidly.
• 2:30
  SPEAKER_00: That's what we've seen in both on the hog side and on the beef side here, when you get these seasonal adjustments, holiday-driven, higher markets, and then adjust lower.
• 2:40
  SPEAKER_00: That happens uh in in a week or so.
• 2:43
  SPEAKER_00: So, you know, I think if you get down, uh especially if you get towards the uh end of the month here, if we're still slipping, or I think at that time we'll just be talking about how much we went down, how much we slipped compared to prior years, and then staring at the you know production at that time or pounds out the back of the packing plant, trying to I think you'll have your answer by then as to whether, hey, did we fall all the way back to what we might have considered normal levels in the uh low to maybe mid 300s, then you gotta start to get a little bit concerned with that we took a chunk out of the demand.
• 3:25
  SPEAKER_00: And that's just simply saying, boy, if you're gonna kill seven percent less, you better have higher prices.
• 3:33
  SPEAKER_01: You think that's gonna happen soon?
• 3:35
  SPEAKER_01: That we're gonna find because up until this point it seems like prices have gone up, but not enough for anybody to stop buying stuff, it seems like I'll get a I'll get a Snapchat once in a while that's like, yeah, I'm I'm good, that's too expensive.
• 3:46
  SPEAKER_01: But not enough to actually see on a chart.
• 3:48
  SPEAKER_00: That's everything we've seen so far, and I be the first one to admit I can't hardly believe it.
• 3:54
  SPEAKER_00: Um but we are going to put that to the test in a pretty big way.
• 3:58
  SPEAKER_00: You know, retail the higher beef prices uh of this of late summer here are actively getting pushed into the retail market uh through the fourth quarter, probably, of twenty twenty-five here.
• 4:12
  SPEAKER_00: So we're gonna be jacking up retail prices, even though box beef is are going down this week.
• 4:18
  SPEAKER_00: You know, retail prices are gonna continue to go up for a couple months.
• 4:22
  SPEAKER_01: So that's we'll put the consumer to the test here soon.
• 4:25
  SPEAKER_00: I think so.
• 4:26
  SPEAKER_01: Not like supplies getting bigger by any means.
• 4:28
  SPEAKER_01: We still haven't reopened the border to Mexico yet, which keep an eye out for that in tomorrow's Catalan feeder port, and then also uh beef from Brazil.
• 4:38
  SPEAKER_01: It looked like I saw something that with U.S.
• 4:41
  SPEAKER_01: tariffs on Brazilian beef imports, Brazil's been finding new outlets to Mexico and China now, Jeff.
• 4:47
  SPEAKER_00: Yep.
• 4:48
  SPEAKER_00: No, I think that's gonna continue to happen.
• 4:50
  SPEAKER_00: And that's that's I've uh you know, I forgot to mention that when we were talking about the rally that we saw late in the summer, and that's obviously part of it.
• 4:58
  SPEAKER_00: We've been able to peel back the layers on that, look at some things like you know, the chuck and uh the round, some of those items that I think would be a little bit easier to replace um with the Brazilian meat isn't taking place.
• 5:11
  SPEAKER_00: So we are we're seeing some higher prices from that uh standpoint for sure.
• 5:16
  SPEAKER_00: Yeah, you mentioned the cattle and feed report, Mike.
• 5:19
  SPEAKER_00: Um, expectations for placements.
• 5:21
  SPEAKER_00: So that's coming out on this Friday, that's tomorrow already, I guess.
• 5:24
  SPEAKER_00: Expectations for placement is going to be down about 9%.
• 5:28
  SPEAKER_00: Probably not surprising to the marketplace considering uh the closure on the border.
• 5:33
  SPEAKER_00: And you know, each month that goes by, we get another cattle and feed report.
• 5:38
  SPEAKER_00: Uh we remind ourselves that we have backed up that many more cattle south of the border, you might say.
• 5:45
  SPEAKER_01: Well, I am I am curious to see what we're gonna do here.
• 5:48
  SPEAKER_01: Uh just the questions coming in about how long this is gonna continue, for instance.
• 5:53
  SPEAKER_01: Um, if you do say it's you know a pretty short time frame, you normally have this corrective seasonal time frame just after a holiday like this.
• 6:01
  SPEAKER_01: On the chart wise, you're also looking at the 50-day moving average just below where we're at, the bottom Bollinger Band right there.
• 6:08
  SPEAKER_01: Stochastically, some of the technicals we look at, you're probably slightly oversold here the last week or so.
• 6:14
  SPEAKER_01: We'll we'll see how this futures market reacts, but I'd say you're at the bottom end of this trend.
• 6:20
  SPEAKER_01: Normally, as we've experienced this, it's been pretty quick even to bounce back to the top end of the range or at least head for it.
• 6:27
  SPEAKER_01: So uh I'm gonna be very curious at this bottom end what the futures reacts like.
• 6:32
  SPEAKER_00: Yeah, today was a good day for the charts.
• 6:35
  SPEAKER_00: Um, we were we were trading lower for a while, things were looking pretty ugly.
• 6:39
  SPEAKER_00: There's some rumors floating around that we had some 240 cash trading down south, didn't pick up any of that uh on the reports here.
• 6:47
  SPEAKER_00: Uh we did see some 239 out there though, so still um gonna be steady to a little bit higher down there than last week, might be just a smidget weaker um up in the north here, but you know that southern bid kind of pushing on the futures a little bit today, and then you know from a technical standpoint, you're right, Mike.
• 7:07
  SPEAKER_00: I mean, if we can hold these gains uh through Friday here and maybe add a little bit to them, that's gonna be a big deal.
• 7:15
  SPEAKER_00: That chart's gonna look fairly optimistic at that point.
• 7:18
  SPEAKER_00: Um, then the next question is gonna be do you just bounce up to the 20-day moving average and and hit your head on that again, or do you do something a little bit more special and and get yourself you know rallying back towards the high end of the range, like you like you mentioned.
• 7:34
  SPEAKER_00: That'll be a couple important days in the cattle market moving forward.
• 7:38
  SPEAKER_01: Yeah, that range has kind of been consolidating a little bit between the highs, that like 243 on D's ten bucks higher, and and kind of right below today's low here.
• 7:48
  SPEAKER_01: So thank you for joining the show today.
• 7:50
  SPEAKER_01: Any final thoughts?
• 7:50
  SPEAKER_01: Are you good?
• 7:52
  SPEAKER_00: No, I think we're good.
• 7:53
  SPEAKER_00: Just uh you know, let's not get complacent.
• 7:56
  SPEAKER_00: Um we're not hitting new highs as far as hedging goes anymore, and that's okay.
• 8:00
  SPEAKER_00: Um, but yeah, I think you still gotta just keep our eye on the ball.
• 8:05
  SPEAKER_00: Busy time of year for a lot of us up here as we're putting feed away, but it's no excuse to let go of the marketing side of it.
• 8:11
  SPEAKER_01: Well, if you got a cow calf operation, if you got a feedlot operation, please reach out to Jeff here.
• 8:17
  SPEAKER_01: We'd love to work you with you on some risk management processes for your operation.
• 8:22
  SPEAKER_01: Thanks, Jeff.