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Cattle On Feed · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: This is your host, Mike Minor.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is March 22nd.
• 0:25
  SPEAKER_01: I've got Nick with us here today.
• 0:26
  SPEAKER_01: How's it going, Nick?
• 0:28
  SPEAKER_00: It's going well, Mike.
• 0:29
  SPEAKER_01: Good.
• 0:29
  SPEAKER_01: We are going to talk about a couple things here.
• 0:32
  SPEAKER_01: We're going to talk about cattle mainly today.
• 0:34
  SPEAKER_01: We're going to start off by talking about a fire.
• 0:36
  SPEAKER_01: Then we're going to talk a little bit about the price reaction.
• 0:39
  SPEAKER_01: And then we're going to talk about the cattle on feed report that came out just under uh an hour ago.
• 0:46
  SPEAKER_01: So let's start it off with uh tell me a little bit about this fire and uh what all that had going on this week on Wednesday, Nick.
• 0:54
  SPEAKER_00: Yeah, so there was the fire in Liberal Kansas at the national beef plant there.
• 1:00
  SPEAKER_00: Um it didn't sound like that was going to be too big of an issue for the week, but yeah, they're still not harvesting cattle as of today.
• 1:07
  SPEAKER_00: We had thought that it was just gonna be kind of a half a day down, um and kind of had to clean some stuff up a bit as far as a truck trailer, and and now it's it's turning into a little more bigger deal than that, and uh and they're cleaning up more in the cold storage area.
• 1:24
  SPEAKER_00: So they plan to be going Monday, but either way, that uh that took two and a half days to kill from a reasonably sized plant there.
• 1:32
  SPEAKER_00: And then the question remains, well, will they actually go on Monday?
• 1:35
  SPEAKER_00: Because uh, you know, they were supposed to only be down a a half a day, and and uh it's taken longer than than expected so far already.
• 1:43
  SPEAKER_00: So but I think in general, you know, they that you know, sometime next week that plan will get going again.
• 1:49
  SPEAKER_00: And but I think it just echoes the the you know the theme that we've had in this cattle market here now for a few weeks really, with with weights now being on a on a steep trend higher when seasonally they should be working lower.
• 2:05
  SPEAKER_00: Weights are now above 2023, now above uh 2022, even.
• 2:11
  SPEAKER_00: And uh, and so you got these weights climbing up, you got a fire, and now add on that, which I think you're gonna talk about next, Mike, was this cattle on feeder port, which also is somewhat bearish from placements and uh and lower marketings.
• 2:27
  SPEAKER_00: Um, but altogether it's just been kind of a lot of bearish news thrown at this cattle market this week.
• 2:33
  SPEAKER_00: Um, and we it kind of hit home today in the futures market.
• 2:36
  SPEAKER_00: Heavy sell-off in feeders, uh, moderate sell-off, I think, in the live cattle complex.
• 2:42
  SPEAKER_00: Still are gonna have a pretty strong week cash-wise, right?
• 2:46
  SPEAKER_00: Um, I think 303, 304 in the meat is is happening out there, 191, 192 live.
• 2:54
  SPEAKER_00: And so uh pretty good week on the cash cattle side, but I there's gotta be some folks wondering out there if this is kind of getting pretty toppy here, even on the cash side with with uh you know lower kills down the road and and uh and and and not as aggressive buying as as Packers kind of take on their April contracts.
• 3:17
  SPEAKER_01: Well, it looks like so cash up two, three bucks, but the futures here, mainly uh June kind of on some of those back months, feeder cattle as well.
• 3:26
  SPEAKER_01: We floated lower here for a few days.
• 3:29
  SPEAKER_01: I mean, we've technically had about four straight days of lower closes now, but it's not a whole lot uh lower really.
• 3:36
  SPEAKER_01: Today was probably your biggest move recently, and we're still about a buck, almost two bucks away from that 20-day moving average, so it's not like we broke any uptrends or anything here real recently.
• 3:47
  SPEAKER_01: But uh yeah, feeder cattle took it pretty hard today.
• 3:50
  SPEAKER_01: How about the Cattle on feed report, Nick?
• 3:52
  SPEAKER_01: I know uh we are expecting a pretty big placements number going into it.
• 3:56
  SPEAKER_01: What did that report show us today at two?
• 3:58
  SPEAKER_00: Yeah, actually that placement data came in quite a bit higher than expected, um, came in at almost 110% of a year ago as far as placements for February.
• 4:09
  SPEAKER_00: We knew it was going to be higher a year ago than a year ago just because um uh you know the storm systems that we had in January and then uh um and then the storm systems that we had in February a year ago that that contributed to uh to lower placements that February.
• 4:26
  SPEAKER_01: But um so we were comparing to a r really low number uh from last year.
• 4:31
  SPEAKER_00: Yeah, yeah, and then and then but also you know we had some catching up to do as far as placing cattle this February from from January of 24, you know, that were pretty pretty light on numbers.
• 4:43
  SPEAKER_00: And then the marketings um also a little bit higher than a year ago.
• 4:47
  SPEAKER_00: That to me is a little bit surprising, but um, yeah, that's compared to a year ago again with some storm systems last February that that um uh you know contributing to a little less marketings.
• 4:59
  SPEAKER_00: So the total catalon feed uh came in at 101.3 percent, and um and that was you know about four-tenths of a point higher than the estimate as well.
• 5:11
  SPEAKER_00: So I think the report will be veer viewed as as somewhat bearish.
• 5:16
  SPEAKER_00: Um maybe they sold it off enough today here that that uh we don't have to be red on Monday, but I think for uh our guess is uh we'll be a little red Monday.
• 5:28
  SPEAKER_01: It is always interesting seeing the trade try to swallow this over the weekend, and it seems like a lot of Mondays you'll come out after this report, and it seems like uh you won't get much uh reaction out of it.
• 5:41
  SPEAKER_01: So I am curious to see, like you said, if us being down the past couple days here was enough or if they're gonna continue to trade that through the weekend.
• 5:48
  SPEAKER_01: Uh, but yeah, it seems like normally they like to forget about it here a little bit.
• 5:53
  SPEAKER_01: Uh any additional thoughts on that catalon feed report and anything if you dive in a little deeper to show us, Nick?
• 5:59
  SPEAKER_00: Well, I just think yeah, so we dive in a little bit deeper, you know, in the placement data.
• 6:04
  SPEAKER_00: Um that February cattle on feed report showed us that the May supply of cattle was gonna be quite a bit less than a year ago.
• 6:12
  SPEAKER_00: And now after this uh March cattle and feed report, June is gonna is showing us uh we're gonna have slightly more cattle available than a year ago.
• 6:23
  SPEAKER_00: So it'll be interesting how that all turns out, right?
• 6:26
  SPEAKER_00: Um with cattle getting bigger and and and the supplies going up, you know, supplies go up from here now till June as far as our Fed supply.
• 6:34
  SPEAKER_00: It'll be interesting how this all shakes out in the cash market.
• 6:37
  SPEAKER_00: But um I would it it's looking more and more like um that 185 area in June is is a good number to get some hedges on, I think, given this placement data, um, and that's kind of where our heads are right now, and and also getting fall cattle coverage on.
• 6:55
  SPEAKER_00: I think uh you know, with what beef exports can do yet this year, and what the size of our cattle can do this year, um we're really pretty interested here in getting fall coverage on.
• 7:09
  SPEAKER_00: I mean, historically, the last couple weeks in March here are uh have been an excellent time to get on fall cattle coverage, and I think we're gonna stick to our guns on that.
• 7:19
  SPEAKER_01: We are getting a little bit better at making these cattle a little bit heavier, pushing them back a little bit more, it looks like Nick.
• 7:26
  SPEAKER_01: Uh let's talk uh a little bit more about just our bigger picture here.
• 7:31
  SPEAKER_01: This doesn't necessarily change things in the longer run, does it?
• 7:35
  SPEAKER_00: Well, not not from our domestic supply, no.
• 7:38
  SPEAKER_00: I mean the the the the supply is kind of set.
• 7:41
  SPEAKER_00: It's just it's just kind of you know, but the cattle market is it lives and breathes by the leverage of the producer, right?
• 7:49
  SPEAKER_00: And and um as we make cattle bigger and or import more ground beef, which we're doing too.
• 7:57
  SPEAKER_00: Yep, we the the the feeder is either losing or gaining leverage, and in obviously in the in the examples we just said, he's losing leverage, and and so that you know just you know, even with what futures have done and and with these extremely high prices, um if the the we've gotten there because the feeder has leverage, and we are seeing things today going on that suggests he's losing leverage.
• 8:27
  SPEAKER_00: So that uh that's where the caution is.
• 8:30
  SPEAKER_00: It's not like we just all of a sudden created some some more beef here or or you know, or more well, we did really with weights, but we didn't create more cattle, right?
• 8:39
  SPEAKER_00: And and um and so I think that's that's what we gotta be focused on here for the for the at least for the next six months is is where's producer leverage gonna be because that's what it's really all about.
• 8:53
  SPEAKER_01: Any final thoughts for our listeners on cattle this week, Nick?
• 8:57
  SPEAKER_00: No, just that.
• 8:58
  SPEAKER_00: I mean the the you know the these fall feeders in the 260s and the 270 area, um, I think how calf guys really got to take a look at that, and especially for our guys that are are placing smaller calves, these these uh the you know, these dairy type cross calves, two-weight calves, um, definitely be looking at that fall feeder deal to get some coverage on there as well.
• 9:21
  SPEAKER_00: Um and and and also for the fall live cattle side of things, you know.
• 9:27
  SPEAKER_00: October still in this 185-186 area, I think is uh is gonna be a pretty good ticket by the time we get there, is our is our call.
• 9:36
  SPEAKER_00: So um that'd be my final thoughts.
• 9:38
  SPEAKER_01: All right.
• 9:38
  SPEAKER_01: Thank you for your time, Nick.
• 9:40
  SPEAKER_01: And thank you to all our listeners.
• 9:42
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 9:45
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 9:50
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 9:56
  SPEAKER_01: See you next time.