Latest / Professional Ag Marketing Podcast / Late Summer Cattle Supply Combined With Weights May Be Burdensome | Cattle Market Talk May 29, 2026

Transcript

Late Summer Cattle Supply Combined With Weights May Be Burdensome | Cattle Market Talk May 29, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_01: Welcome to the Cattle Talk Podcast.
• 0:06
  SPEAKER_01: Your weekly breakdown of cattle market fundamentals, the news, and the insight in the industry, trading commodity future and options involved in difficult that is not suitable for all investors.
• 0:22
  SPEAKER_00: Today is May 29th.
• 0:24
  SPEAKER_00: I've got Nick here with us today.
• 0:25
  SPEAKER_00: How's going, Nick?
• 0:26
  SPEAKER_02: Good.
• 0:26
  SPEAKER_02: Thanks, Mike.
• 0:27
  SPEAKER_00: Good.
• 0:28
  SPEAKER_00: Well, we're going to talk about the cattle market today on this podcast.
• 0:32
  SPEAKER_00: Let's focus on a few things.
• 0:33
  SPEAKER_00: We're going to just go over the uh the cattle on feeder port last week and talk about weights here a little bit in LRP and some things like that.
• 0:42
  SPEAKER_00: Uh, but let's start with this.
• 0:44
  SPEAKER_00: Let's let's start with just what in the heck happened to close out our week on the cattle market, Nick, because holy cow, uh down another five on feeder cattle today.
• 0:53
  SPEAKER_00: Uh down two bucks across most of the board and the fat cattle.
• 0:57
  SPEAKER_00: Uh no, what was some of the reasoning for such a weak close going into the end of the week, you think?
• 1:02
  SPEAKER_02: Yeah, it just feels like a lot of pressure on everything here today, Mike.
• 1:06
  SPEAKER_02: I think uh the cattle market, especially though, has certainly has some some fundamental stuff that's going on, probably pushing this thing a lower a little lower, you know, and causing some fun liquidation.
• 1:18
  SPEAKER_02: Uh certainly the cattle on feed number that we saw there last week, Friday, you know, that continues to put some pressure on.
• 1:25
  SPEAKER_02: We got just just shy of 11.6 million head on feed now.
• 1:30
  SPEAKER_02: That's actually slightly higher than than what we would have had on feed in May of 24, right?
• 1:35
  SPEAKER_02: So even though we're harvesting a lot less cattle uh today than what we were last year, um, we're actually harvesting fewer cattle the past number of months than than than what we actually had placed for those months.
• 1:49
  SPEAKER_02: And that's I think you know, we've built up the supply a little bit here, and uh it's gonna be really interesting going forward into you know into June and July, uh, if we're if packers are gonna pick up the pace or not.
• 2:01
  SPEAKER_02: There, the you know, certainly the margins as we're gonna see here late later, but the marge packer margins definitely are deep, deep in the red, right?
• 2:11
  SPEAKER_02: And uh so they continue to try to push cash lower.
• 2:14
  SPEAKER_02: Not hearing much cash trade at all uh to speak of really yet.
• 2:20
  SPEAKER_02: Um the bids out there are 255, 256.
• 2:25
  SPEAKER_02: Did hear of a little bit of 258 stuff picked up in uh or um uh yeah, picked up in in eastern Iowa, but really the cash trade hasn't developed much.
• 2:35
  SPEAKER_02: Uh, we're not, you know, we thought maybe there would be some more basis trading cattle uh today, just given you know, June board around 248 and cash at 255.
• 2:47
  SPEAKER_02: Yet basis certainly has strengthened here in the past few weeks, but not seeing much cash trade develop.
• 2:53
  SPEAKER_02: Uh that basis, you know, would be considered strong uh for right now, which it usually is right now, here in the last week of May.
• 3:01
  SPEAKER_02: But um uh yeah, for for what it's come from, you know, we we had a terrible basis there early, you know, kind of that late April, early May time frame, and certainly has come up now.
• 3:13
  SPEAKER_02: So uh hopefully that that will drive some sales here yet.
• 3:17
  SPEAKER_02: But I think just the overall, you know, lower cash trade, the lower offering just isn't isn't uh bringing much cash sales around here yet.
• 3:27
  SPEAKER_00: Let's talk about this catalon feed report.
• 3:29
  SPEAKER_00: What were some of the takeaways you had from it?
• 3:32
  SPEAKER_00: It seemed like we fell within the range of expectations on most of the categories, but not exactly the most friendly either, was it?
• 3:39
  SPEAKER_00: So what can you tell me about what you saw out of the report?
• 3:42
  SPEAKER_02: Yeah, I think the report kind of pretty much all came in within expectations, but the you know, the placement number being being higher, uh certain, and that's what caused is causing our on-feed number to be a little higher now, but but that was you know, probably going into the report, I think that's why the market sold off a little bit with those higher placements.
• 4:02
  SPEAKER_02: We haven't seen higher placements than a year ago for quite some time.
• 4:06
  SPEAKER_02: Uh, but there's there's quite a quite a few cattle probably that uh that are actually getting taken off grass or maybe intended to go to grass that are not going to grass now because of the drought situations kind of in the west and the south there.
• 4:20
  SPEAKER_02: So uh placement numbers are up a little bit, causing a higher on feed number here.
• 4:26
  SPEAKER_00: Uh what can you say about the year-over-year comparisons of fed cattle?
• 4:31
  SPEAKER_02: Yeah, I mean, just you know, when you look at that on feed number, um, and and what are you know, weights are down here a little bit this week, you know, down seven pounds, but uh it's you know, we definitely gotta have a supply of cattle out there that's that's not as current as what our our our uh you know our slaughter would show, I guess.
• 4:53
  SPEAKER_02: And so going forward here, and and certainly the the market too is steep, steep discount, right?
• 5:01
  SPEAKER_02: Like we got a nine dollar spread here between uh June and August, and then another close to nine dollar spread between August and October.
• 5:09
  SPEAKER_02: So the the market definitely is is kind of envisioning this this thing to eke lower too as we as we start to work into kind of a more non-current supply.
• 5:21
  SPEAKER_00: I'll have Cade pull up a basis chart here to uh just want to talk about that a little bit.
• 5:26
  SPEAKER_00: You think there's been some basis getting played here recently?
• 5:29
  SPEAKER_02: Well, not as much this week.
• 5:30
  SPEAKER_02: You know, this week we're we're the cash sales just aren't happening so far.
• 5:35
  SPEAKER_02: Um we'll see if they start to bid for them here yet, but not much happening at this 256-255 area.
• 5:42
  SPEAKER_00: Seems like the asking is sticking around that 260, and they're not wanting to break much below that for the time being, are they?
• 5:47
  SPEAKER_02: Right, right.
• 5:48
  SPEAKER_00: Um so you talked about the August to October spread there.
• 5:52
  SPEAKER_00: That's getting pretty wide at this time as well.
• 5:55
  SPEAKER_00: Uh Packer margins are incredibly in the red.
• 5:58
  SPEAKER_00: Uh uh, what can you tell me about how just overall profitability looks going into next October?
• 6:04
  SPEAKER_02: Well, we definitely are um think that you know our cattle feeders should utilize that spread a bit here just as a basis play, right?
• 6:12
  SPEAKER_02: I mean, if if that uh if cash is gonna stay decent going into August, uh, you know, we we ought to probably be putting some hedges there in August versus that October deal.
• 6:25
  SPEAKER_02: And and and either that spread is gonna narrow or or cash is gonna stay high right right you know towards the end of August.
• 6:33
  SPEAKER_02: Could even be you know higher in that first couple weeks of September.
• 6:37
  SPEAKER_02: So we definitely um think there's a place for utilizing that spread, probably not every you know, dumping everything there, but uh um the the you know the market dynamic has changed considerably just here in the past couple weeks with the steep discount to the to the fall and winter cattle there.
• 6:54
  SPEAKER_00: What uh where does LRP come into play here for like this October contract and some of the quotes you've been been getting out of that?
• 7:01
  SPEAKER_02: Yeah, if you want to go to that last slide there, Cade, or second to last.
• 7:06
  SPEAKER_02: Um, so what's really interesting here right now, and the and the you occasionally there's these nuances in the LRP offering, but uh like last night or the actually the past few days, I think, uh this has m been been one that's really interesting.
• 7:23
  SPEAKER_02: So the the LRP offerings here are kind of for late September.
• 7:27
  SPEAKER_02: Uh last night's was for September 24th.
• 7:31
  SPEAKER_02: And you could, you know, you could protect a late September animal there at 237 uh for about 682 a hundred, and the October board was trading two thirty-two.
• 7:45
  SPEAKER_02: So, you know, you could you could have a floor on those on those uh late September cattle five bucks higher than the October board.
• 7:55
  SPEAKER_02: So in our minds, it doesn't make a whole lot of sense to own any October puts these days.
• 8:00
  SPEAKER_02: Like if we're gonna if we if we own October puts, we really ought to be converting those to this late September LRP because you're only a you know a short couple weeks there from uh from October option expiration.
• 8:16
  SPEAKER_02: And uh, you know, I think that makes a lot of sense versus owning those October puts.
• 8:22
  SPEAKER_00: What else do you got for us here today on the cattle market to wrap up our uh podcast?
• 8:27
  SPEAKER_02: Well, uh if you I wanted to show that you know, that October crush number just here in the last week, that's lost a lot of ground uh just with because October live cattle has been down, and this is a little bit dated here.
• 8:41
  SPEAKER_02: I don't think that includes this today's numbers, even, but uh October cattle down about nine bucks.
• 8:46
  SPEAKER_02: You've had um other than today, we did have corn up about seven, and then the index down 250 week over week.
• 8:54
  SPEAKER_02: So that October crush really took a hit here recently, and just kind of showing that whole uh dynamic of you know futures moving lower, drastically lower, really into the fall and winter.
• 9:08
  SPEAKER_02: Also wanted to show kind of what with that cattle on feed report, um, that's the next slide lower there, Cade.
• 9:16
  SPEAKER_02: Uh, you know, the way these placements are coming in now, you know, we're we're even though the the supply of cattle uh is increasing, obviously going into July.
• 9:28
  SPEAKER_02: So, and the tightness between what we have available this year versus what we had available these same months last year is narrowing quite a bit.
• 9:38
  SPEAKER_02: And actually, by the time we hit August, now this does not account for any carryover cattle, does not account for any uh um cattle that uh that we're not current on, but but by the time we get to August there, we almost have the identical supply to to what we had last August.
• 9:57
  SPEAKER_02: So that's definitely, I think, out there in the marketplace too.
• 10:01
  SPEAKER_02: I mean, we saw that with higher placements this last cattle and feed report, and and as we go forward here, uh the supply situation, you combine that with what how big we're making cattle today, um you you you you really could have kind of a recipe for for what the market is suggesting today, right?
• 10:20
  SPEAKER_02: A twenty dollar drop in cash from now to to September.
• 10:25
  SPEAKER_02: So that's kind of all it's starting to make a little sense, but uh, you know, we'll see how that if if Packers are gonna increase the kills here with where their margins are.
• 10:36
  SPEAKER_02: It certainly doesn't like to look like that's gonna happen anytime soon.
• 10:40
  SPEAKER_02: But if they do start to increase the kill, it could be a little bit burdensome yet for this fall.
• 10:45
  SPEAKER_00: All right.
• 10:46
  SPEAKER_00: Well, thank you for your time today, Nick.
• 10:47
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• 10:55
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• 10:58
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• 11:06
  SPEAKER_00: So thank you for joining us all today.
• 11:08
  SPEAKER_00: And hopefully we will see you next week on Wednesday at the World Pork Expo.