Latest / Professional Ag Marketing Podcast / Historic Packer Margins | Cattle Talk February 20th, 2026

Transcript

Historic Packer Margins | Cattle Talk February 20th, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_00: Welcome to the Cattle Talk Podcast.
• 0:05
  SPEAKER_00: Your weekly breakdown of cattle market fundamentals, key news, and the insights shaping the industry.
• 0:12
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:20
  SPEAKER_02: Today is February 20th.
• 0:22
  SPEAKER_02: I've got Jeff with us here today.
• 0:23
  SPEAKER_02: We're going to talk about the cattle market.
• 0:25
  SPEAKER_02: How's it going, Jeff?
• 0:26
  SPEAKER_02: Thanks for having me around again, Michael.
• 0:28
  SPEAKER_02: Awesome.
• 0:28
  SPEAKER_02: Well, we've got some fun things to talk about.
• 0:30
  SPEAKER_02: We're going to talk about the tariff news a little bit today since that's new and fresh and it seemed to move things around a little bit for both the soybeans and the cattle market.
• 0:39
  SPEAKER_02: We're going to talk about the cattle on feed today, and then we're going to talk about some poor packer margins and a little bit of our harvest speed.
• 0:46
  SPEAKER_02: So where do you want to start, Jeffrey?
• 0:48
  SPEAKER_01: All good topics.
• 0:49
  SPEAKER_01: I think the let's just review the market here on the week because I think there's a few lessons to be learned just on to uh this week's futures trading activity.
• 0:58
  SPEAKER_02: Trade, pull up chart.
• 1:00
  SPEAKER_01: The uh so really actually a very calm week.
• 1:04
  SPEAKER_01: You're actually starting to see some of the volatility indicators uh go down a little bit here in the past couple weeks because it has been some of the calmest weeks that we've seen.
• 1:13
  SPEAKER_01: Um, you know, we've got uh go ahead and scrunch that thing in a little bit, Cade there.
• 1:18
  SPEAKER_01: But um last Friday you had a pretty nice uptick uh based on some quite a bit higher cash, right?
• 1:25
  SPEAKER_01: That's when we traded some of the 249 stuff down south, um 245-ish up in the north here in Nebraska.
• 1:34
  SPEAKER_01: Um and then uh what we've got going on this week is really a quite a flat market, and today's cash, if we can hit on that quick, is gonna be a little bit higher than last week.
• 1:45
  SPEAKER_01: Uh also I think the south is still trying to break loose a little bit.
• 1:50
  SPEAKER_01: North did a lot of 247 instead of 245 type of money.
• 1:54
  SPEAKER_01: So another big jump higher in the cash market, and we are ending the day lower, Mike.
• 2:00
  SPEAKER_01: And I I think there's a little bit of uncertainty around just a few items there.
• 2:06
  SPEAKER_01: Um the Greeley uh strike situation, to our knowledge.
• 2:11
  SPEAKER_01: I I've not seen any sort of announcement on that today.
• 2:14
  SPEAKER_01: They're supposed to be having that discussion today is whether the union's going to strike in Greeley, Colorado.
• 2:20
  SPEAKER_01: Um, but I think that ended up putting a little bit of pressure on the market, even though you know nearby fundamentals here from a cash standpoint were really excellent.
• 2:28
  SPEAKER_01: Uh as we and that probably started breaking loose, I would say afternoon.
• 2:33
  SPEAKER_01: Um, so fairly late in the day, I guess, is my argument.
• 2:36
  SPEAKER_01: And the future's kind of got a little bit weaker during that same time frame.
• 2:39
  SPEAKER_01: So the Greeley thing's out there yet.
• 2:42
  SPEAKER_01: Um watch for news here, you know, later today throughout the weekend on that topic.
• 2:47
  SPEAKER_01: Um, and then the tariff discussion, Mike.
• 2:50
  SPEAKER_01: Why don't you give us some insight on that here?
• 2:53
  SPEAKER_01: I think that was probably throwing a little bit of negativity at this beef market, also.
• 2:57
  SPEAKER_02: I'll cade pull up kind of the headline just with uh what it shows happened here.
• 3:01
  SPEAKER_02: But basically the Supreme Court axed tariffs, Jeff, today.
• 3:05
  SPEAKER_02: They shut down Trump's tariffs.
• 3:08
  SPEAKER_02: So Trump responded with new global tariff rate.
• 3:11
  SPEAKER_02: So if you look at it, he pretty much had to salvage the signature tariffs after the Supreme Court struck down his global duties.
• 3:19
  SPEAKER_02: Uh pledge in he would basically use just different tools to work around the ruling and preserve the important taxes he has cast as essential uh to his economic and foreign policy.
• 3:32
  SPEAKER_02: Because this is what he's been running on, right?
• 3:34
  SPEAKER_02: It's all tariffs.
• 3:35
  SPEAKER_02: So when it when it comes down to it, he was really angry.
• 3:39
  SPEAKER_02: We watched his press conference.
• 3:40
  SPEAKER_02: He said it was just dumb, it was just stupid that he can destroy a country in his own words or put embargoes on them, which I am kind of that was my uh worry about this whole thing.
• 3:51
  SPEAKER_02: It's like that's why I feel like the markets reacted in such a negative way after this happened.
• 3:55
  SPEAKER_02: Because, well, if he can't do tariffs, what's the more extreme thing he's gonna do, Jeff?
• 4:00
  SPEAKER_02: Because in Trump's um psychology.
• 4:04
  SPEAKER_01: You don't think he'll just roll over and play dead?
• 4:07
  SPEAKER_02: No, that is not Donald Trump.
• 4:08
  SPEAKER_02: He's gonna take it as a win and he's gonna say, well, this just means I can bomb the country or I can put an embargo on them and say you can't do business with them at all.
• 4:16
  SPEAKER_02: And he even talked about this during his press conference just like that.
• 4:21
  SPEAKER_02: He said, like, I can destroy that country and blow them to Kingdom Come, but I can't do a little tiny tariff on them.
• 4:27
  SPEAKER_02: It's just dumb.
• 4:28
  SPEAKER_02: So the way he talked, I'm surprised when he talked, like we were watching the markets and they didn't bounce around even crazier when he was talking, especially in the language he used.
• 4:37
  SPEAKER_02: But basically, no major changes.
• 4:40
  SPEAKER_02: Um, he said that the Supreme Court did not overrule tariffs, they just merely overruled a particular use of uh the tariffs in the I AIPA is uh what he uh suggested.
• 4:53
  SPEAKER_02: So referencing this right now he's gonna go in a different direction.
• 4:58
  SPEAKER_02: He's gonna accomplish the same thing he was doing, just in a different way that takes more work.
• 5:03
  SPEAKER_02: And that's basically what he said.
• 5:04
  SPEAKER_02: He's like, I was told I should have done it this way the first time, but it was more work, so we're gonna do it this way till the Supreme Court told us we couldn't.
• 5:12
  SPEAKER_02: I'm gonna still accomplish the same thing.
• 5:14
  SPEAKER_02: Afterwards, so if you get past the whole like section 122 that you can look into from the Trade Act 1974, or uh, you know, the section 302, I believe, and th or 301 and 232, basically you get beyond all of that, Jeff.
• 5:31
  SPEAKER_02: And uh what we did see was Trump is basically putting a 10% global tariff on everybody.
• 5:38
  SPEAKER_02: Now the direction of where this can raise or lower tariffs for the entire world is yet to be known a little bit.
• 5:45
  SPEAKER_02: It could raise it up to like 16.5% from 13.6 that we're at, or it could lower global tariffs to eleven point four percent if some of the exemptions are still going to remain.
• 5:55
  SPEAKER_02: So it's uncertain, but the markets don't like uncertainty.
• 5:59
  SPEAKER_02: So that's why we sold off pretty hard for a while in soybeans and the meat markets, especially for meat.
• 6:04
  SPEAKER_02: So this cattle podcast, so we'll wrap it back to that.
• 6:07
  SPEAKER_02: The thing is, if those tariffs went away, Brazil is all of a sudden sitting in a pretty good spot to export a bunch of beef back to the United States again without having that extra 10% tariff on or whatever.
• 6:21
  SPEAKER_02: So for a while there through most of the trading session, cattle sold off pretty hard at nine o'clock when that news came out Central Time.
• 6:27
  SPEAKER_02: Soybeans sold off pretty well.
• 6:29
  SPEAKER_02: Uh we saw a few different things come out on all of that.
• 6:32
  SPEAKER_02: So what's your take through the day?
• 6:34
  SPEAKER_02: The massive uh news with the tariffs and kind of market reaction so far.
• 6:38
  SPEAKER_02: I have a feeling this is far from over.
• 6:40
  SPEAKER_01: Yeah, that that would be my guess too.
• 6:42
  SPEAKER_01: I've been uh I don't need to repeat what you said, but no doubt I was impressed um that the markets didn't have a lot more volatility around them.
• 6:50
  SPEAKER_01: So I I think it's because it's maybe just a lot of uh what happens next is going to what's gonna be what kind of drives the direction here.
• 6:59
  SPEAKER_01: So um could we end up with some less, you know, fewer tariffs on the Brazilian beef?
• 7:05
  SPEAKER_01: I think you have to recognize that as a real possibility here.
• 7:08
  SPEAKER_01: Um, I don't think they'll go down to zero or even ten percent.
• 7:12
  SPEAKER_01: You know, we've had um tariffs on Brazil for for decades um as far as the beef coming in here.
• 7:17
  SPEAKER_01: So I'm assuming all of those won't go away.
• 7:20
  SPEAKER_01: Um they are currently, it's probably just wrapping up, you know, they would uh have their quota, um, South American quota.
• 7:28
  SPEAKER_01: Brazil shares it with a few other countries, um, but not Argentina.
• 7:33
  SPEAKER_01: Uh um, you know, Argentina uh just to for interesting uh observation there.
• 7:38
  SPEAKER_01: But um so I'm sure that is now full.
• 7:41
  SPEAKER_01: They usually get that filled up uh in January, first half of February.
• 7:45
  SPEAKER_01: Um so this year I'm guessing they were more aggressive than what they have been.
• 7:49
  SPEAKER_01: So that so far, that's what you're gonna see here you know as more information comes out here in the coming weeks about what are we importing from Brazil specifically.
• 7:58
  SPEAKER_01: Um I'm sure you'll see some really big numbers because of that quota.
• 8:03
  SPEAKER_01: Um going forward here.
• 8:04
  SPEAKER_01: It'll be interesting to see what the tariffs end up being here in the weeks to come.
• 8:08
  SPEAKER_01: Um and you know, that would be the big one, right?
• 8:12
  SPEAKER_01: We've talked about that a few times before.
• 8:14
  SPEAKER_01: Whatever we're doing with Argentina, probably not enough supply there to really move the needle in a big way.
• 8:21
  SPEAKER_01: Um, or that in itself fix our shortage of beef is probably a better way to say it.
• 8:27
  SPEAKER_01: Um, Brazil could have the potential to, you know, greater potential to get that job done.
• 8:32
  SPEAKER_01: I'm not suggesting that that would be the end all to the cattle market or anything like that, because right now, Mike, it is all about the supply side of market ready cattle.
• 8:43
  SPEAKER_02: For sure.
• 8:44
  SPEAKER_02: I know to quote our very own president here from today after these things all came out, and he said, foreign countries have been ripping off uh the US for years, and they are ecstatic.
• 8:54
  SPEAKER_02: They're so happy they're dancing in the streets, but they won't be dancing for long, Trump said.
• 8:59
  SPEAKER_02: That doesn't sound incredibly bullish on soybeans, for example.
• 9:03
  SPEAKER_02: We'll see on some of the other things, but Trump has a way with words, Jeff.
• 9:07
  SPEAKER_01: Absolutely.
• 9:08
  SPEAKER_02: What else can you tell us about?
• 9:09
  SPEAKER_02: You mentioned the supply side here.
• 9:11
  SPEAKER_02: Pretty low kill lately.
• 9:13
  SPEAKER_02: What can you say about our harvest rate?
• 9:14
  SPEAKER_01: Yeah, we're looking at a 516 kill.
• 9:17
  SPEAKER_01: I know with I know um we've been talking about this for a number of weeks, but it is the news.
• 9:23
  SPEAKER_01: I mean, it is absolutely incredible.
• 9:26
  SPEAKER_01: You Cade's got the chart up on the screen there.
• 9:29
  SPEAKER_01: Um so latest data point there is gonna be last week at 540.
• 9:35
  SPEAKER_01: Take that back down to uh a little bit lower than that lowest mark there is what we're sitting at.
• 9:43
  SPEAKER_01: So under 520, that's gonna be competitive what with what we used to um kill on a holiday, a four-day holiday week, right?
• 9:52
  SPEAKER_02: So now it's the norm.
• 9:54
  SPEAKER_01: Yeah, it's it's really incredible.
• 9:56
  SPEAKER_01: Um and they're not incentivized to kill anymore, are they?
• 9:59
  SPEAKER_01: Well, packer margins, that's why I wanted to talk about it again on this podcast.
• 10:03
  SPEAKER_01: I know we hit it on last week, but they are record low here.
• 10:07
  SPEAKER_01: Um, our the data set we looked at today goes back 15 years.
• 10:11
  SPEAKER_01: Um, Cade's got that on the screen now.
• 10:14
  SPEAKER_01: Just incredible.
• 10:15
  SPEAKER_01: Um, you know, whether that's the perfect number or not, we can argue about that you know, as far as the$400.
• 10:21
  SPEAKER_02: But um This is supposed to include everything, right?
• 10:25
  SPEAKER_02: Right.
• 10:27
  SPEAKER_01: The Packer Margin thing, and maybe this is a good time to talk about this.
• 10:30
  SPEAKER_01: Um the way we look at it, we wouldn't say um, you know, is it really important that it's a negative$400 or if it's a negative$365?
• 10:42
  SPEAKER_01: I would strongly argue no.
• 10:44
  SPEAKER_01: And and the reason for that is everybody's got their own cost structure, um, you know, on variable cost, even before you start to contribute anything to the fixed item, and then go into that discussion.
• 10:55
  SPEAKER_01: Well, everybody's got a huge spread as far as their fixed um you know depreciation and or principal interest, right?
• 11:02
  SPEAKER_01: Yeah.
• 11:03
  SPEAKER_01: But just so we look at all this stuff as a on on the relative um factor.
• 11:09
  SPEAKER_01: So it's four hundred dollars today, it was two hundred two weeks ago.
• 11:14
  SPEAKER_01: That to me is what matters.
• 11:16
  SPEAKER_01: Um, and those are negative numbers, obviously.
• 11:21
  SPEAKER_01: It's as bad as it's gotten, um, I think maybe forever.
• 11:24
  SPEAKER_01: Um, but so it's yeah, that's severely negative margins.
• 11:30
  SPEAKER_01: We are deeply concerned that Packers will want to do something about that, Mike.
• 11:37
  SPEAKER_01: Um, it's it's got to be getting to the point where we are gonna start throwing some straws on here that breaks the camel's back, type of a thing.
• 11:45
  SPEAKER_01: So we're gonna be watching that information, that news storyline very closely in the coming weeks, even I dare say, um, as far as another packing plant shutting down, something taking place here um that changes the the leverage a bit or has the potential to change it uh even later in the year.
• 12:06
  SPEAKER_01: Maybe there's nothing they can do today.
• 12:08
  SPEAKER_01: Um if you have a 515 kill this week, that's suggest and cash is still higher uh week over week, that suggests that there's just nothing that can be done from the pack or margin standpoint today.
• 12:21
  SPEAKER_01: But there will be from a seasonal standpoint more cattle coming in here um as we get into later spring and into the summer and certainly into the fall.
• 12:29
  SPEAKER_01: So announcement today maybe doesn't even change the cash price tomorrow or next week, but the futures will still react as they try to consider uh what's gonna happen in June, what's gonna happen next August.
• 12:41
  SPEAKER_02: So that's the thing, because people keep asking, like, what can break the cattle market lower and whether it's truly bearish or not, because we're so far below capacity, you could probably shut down a plant today and still be fine.
• 12:53
  SPEAKER_01: Sure, you could.
• 12:54
  SPEAKER_02: But the futures, they may just say that doesn't matter, I'm gonna trade lower in a big way, fast way, and then that would be my opinion, Mike, and that's a debatable conversation.
• 13:02
  SPEAKER_01: Yeah, you're gonna find plenty of people um out there that are gonna suggest, hey, that that won't even get the job done.
• 13:09
  SPEAKER_01: And okay, I I get it, you might be right.
• 13:11
  SPEAKER_01: Um but it doesn't have to make sense to for the futures.
• 13:14
  SPEAKER_01: For sure not, for sure not.
• 13:16
  SPEAKER_01: And then, you know, do is there a little bit of is there a a camp?
• 13:21
  SPEAKER_01: I know there's a camp, um, because we would be in it that the border gets open in the next 12 months, right?
• 13:27
  SPEAKER_01: Um so if you if those two happened, if you had a plant go down plus the border open, certainly that would take the cattle market down.
• 13:35
  SPEAKER_01: I don't think you'd find too many people that would disagree with me on that.
• 13:39
  SPEAKER_01: Um so that all gets priced in, right?
• 13:41
  SPEAKER_01: In the in these type of events.
• 13:42
  SPEAKER_02: So these both seem like scenarios that are likely to occur within a year rather than a potential to happen over the next five years, so to say.
• 13:53
  SPEAKER_02: So when you talk about this cattle cycle, those are pretty short term in the grand scheme of things, I'd probably argue.
• 14:01
  SPEAKER_01: That is spot on.
• 14:03
  SPEAKER_01: That's exactly that's exactly my message today.
• 14:07
  SPEAKER_01: I would I would uh dare say that both of those are a win and not if.
• 14:11
  SPEAKER_01: Yep.
• 14:12
  SPEAKER_01: Um certainly the border opening, that's the way to think about that one.
• 14:15
  SPEAKER_01: When and not if.
• 14:16
  SPEAKER_01: Um plant closure, maybe you could, you know, I I don't have any insight.
• 14:20
  SPEAKER_02: Well, you stay down here long enough, it's gonna be it.
• 14:24
  SPEAKER_02: Yeah.
• 14:25
  SPEAKER_01: Seems like the math ain't mathing.
• 14:26
  SPEAKER_02: Yep.
• 14:27
  SPEAKER_02: All right.
• 14:27
  SPEAKER_02: Any other final thoughts before we wrap up this weekend?
• 14:30
  SPEAKER_01: Cattle on feed, we better hit on that here real quickly.
• 14:32
  SPEAKER_01: I don't think it's gonna be a big driver, but um did come out this afternoon at two o'clock.
• 14:38
  SPEAKER_01: Um, you know, same story here, Mike.
• 14:41
  SPEAKER_01: I I don't know that we're getting a lot of new information.
• 14:45
  SPEAKER_01: There was a neck uh uh one less day uh as far as business or slaughter goes in in the month of this year versus last year.
• 14:53
  SPEAKER_01: Um but yeah, about two percent lower on feed, um, five percent lower placements, um, you know, compared to the trade estimates there.
• 15:01
  SPEAKER_02: That's about as close as you get that estimate on placements there.
• 15:05
  SPEAKER_02: That yeah, as long as you keep that within a couple percent, that's normally about as good as it gets.
• 15:09
  SPEAKER_01: So I don't think there's new news here.
• 15:11
  SPEAKER_01: That's been those numbers have looked very similar for a long time here.
• 15:15
  SPEAKER_01: And that's okay.
• 15:16
  SPEAKER_01: Still indicating a few less uh on the supply side, that's for sure.
• 15:20
  SPEAKER_02: All right.
• 15:20
  SPEAKER_02: Well, thank you for your time today, Jeff.
• 15:22
  SPEAKER_02: Uh, thank you for everybody tuning in.
• 15:24
  SPEAKER_02: It's been a fun ride here already for the last few cattle podcasts.
• 15:28
  SPEAKER_02: Please hit the subscribe button and uh we'll see you next week.
• 15:32
  SPEAKER_01: Thank you.