Latest / CattleUSA Daily / 80: Screwworm Speculated in Missouri and Market Reactions Are Already Rolling In. What You Need to Know

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80: Screwworm Speculated in Missouri and Market Reactions Are Already Rolling In. What You Need to Know · CattleUSA Daily

• 0:00
  Hey y'all, welcome to another episode of the Cattle USA Daily
• 0:03
  podcast. Today we are bringing back Dan
• 0:05
  Gearholt and we are going to be discussing the markets and what
• 0:09
  is happening today. It's a rough one out there
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  y'all. We are recording this day of on
• 0:14
  Tuesday and bringing you guys what we're seeing.
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  As many of you know, or if you haven't already seen the year,
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  there were some reports that were released this morning by
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  some news reporters that we have potentially seen an outbreak of
• 0:31
  screwworm in Missouri. And that has obviously caused a
• 0:34
  lot of distress in the markets today.
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  And we are going to be discussing all of that together.
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  Dan and I discuss our opinions on it, what we're seeing right
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  now in the moment, some speculation on what we could be
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  seeing in the future. If this report is correct, we
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  are recording this in the morning on Tuesday.
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  And so the USDA report has not come out and has not been
• 0:54
  confirmed yet. So please take that into
• 0:56
  consideration that we are not 100% positive if this is a
• 1:00
  report, but we do want to be giving you guys some timely
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  information on what is happening in the markets because of a news
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  report that got released and the speculation that is out there.
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  So without further ado, let's go ahead and jump into this podcast
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  with Dan. Welcome to the Cattle USA Daily
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  Podcast, your go to source for the latest livestock markets,
• 1:21
  industry insights and the updates shaping agriculture
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  today. I'm your host Lauren Moylan, a
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  passionate advocate for agriculture, here to keep you
• 1:29
  informed and connected. Now let's dive into today's
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  episode. Probably notice.
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  That's good. That's good.
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  We love that. At least we are not going for us
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  today. Well, OK.
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  I wish it was up. If it was up, I'd feel better,
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  yeah. OK, valid.
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  I think I would rather have nothing to talk about than down
• 1:55
  markets. Yeah, this is something.
• 1:59
  This is something else. Wow.
• 2:01
  A. Hell of a spring.
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  It's been a hell of a spring. Yes, it has.
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  It just it's got something for everyone.
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  The longs are loving it, the shorts are loving it.
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  Everybody is having fun. See you a few weeks ago were
• 2:14
  saying like I love this for everyone else and the cattle
• 2:17
  producers out there, but I'm kind of hating this right now.
• 2:20
  And now I mean you can at least afford to buy cows again.
• 2:24
  Yeah, I this is, you know, last, what was it last Monday, Tuesday
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  we had a big sell off and then or no, that was two weeks ago.
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  Remember that they shut down the border market, rallied the new
• 2:39
  all time highs, got wrecked and then turned on a dime.
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  You know, feeders softened in a couple barns early on and I
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  thought, okay, we'll get to buy some cattle here pretty quick.
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  Then last week happened and we were, you know, a little more
• 2:53
  than halfway back trying to get to those new highs again and
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  inevitably here we are getting wrecked again.
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  Say this market is something else is an understatement of the
• 3:03
  light of my life. You know, cash feeders were
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  strong again in the barn last week.
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  I didn't get anything bought. Just scratch my head.
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  It's spring is interesting. It's been a crazy few months.
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  It has. This is going to be one for the
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  record books. They are going to five years
• 3:20
  down the road. There's going to be a textbook
• 3:21
  out there for our AG econ kids that is going to recap what the
• 3:27
  hell happened in 2025, right? And they're going to have to
• 3:30
  write papers over it and we're. Agreed in.
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  It so it's yeah. Let's hope we're not talking
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  about this year for the next decade, in the next year or two.
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  That'd be OK. But I want to forget about a
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  market like this because hopefully the market's still
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  good a couple years from now. Yes, yeah.
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  Precisely. No how?
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  Fun. So I'm assuming you caught this
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  big move this morning and saw the feeders were down 6 and fats
• 3:56
  were down three to four? Yeah, this is and now we are off
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  our lows. Fats are down buck $80.90 and
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  the feeders are down 3/3 and 1/2.
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  This is did you you also probably caught why this is all
• 4:11
  happening. I did, but would you like to
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  explain for everyone else listening?
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  To this, I normally don't like to spread rumors because I don't
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  want to be that guy without confirmation.
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  But a news article broke that the USDA has confirmed that
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  there is a case of the screw worm in the state of Missouri.
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  That's what the news article says.
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  I have yet to see the USDA release that does confirm it.
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  Maybe you caught that because I have not yet.
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  I have not caught it yet. I saw the news article in my
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  notifications when I woke up this morning though, so.
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  Yeah. So all of a sudden you have
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  400,000 contracts of open interest in the live cattle and
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  you know funds. Well, what did I catch there?
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  Managed money is a big part of the open interest in feeder
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  cattle. That's that's a problem.
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  You get them trading headlines like this, and if they think
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  that this is bearish news, they're going to blow out pretty
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  quick. And that's what's happening.
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  It's also not surprising to see algorithm traders, you know,
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  those algos will kick out of positions as well, extenuating
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  the circumstances or not extenuating making it more
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  extreme, let's say. So like I said, we're off our
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  lows. Gives me a little bit of relief.
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  Cash cattle were expected to be higher this week.
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  Depending how we settled today and trade, you know, tomorrow
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  and Wednesday might be a big, big factor, you know, deciding
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  what cash cattle are going to do.
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  If the rumor is true and screw worm is here, then cattle men
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  and cattle women are going to have some work on their hands.
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  But inevitably, it's not damaging to our meat.
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  It does not transfer through consumption of meat.
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  It is a family transferring the larvae.
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  I don't know about you, Lauren, but I typically don't let flies
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  land and stay on my skin long enough to Burrow in under the
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  skin. I can't say that that's a common
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  occurrence for me either, but you know.
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  That's the news. Their own.
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  I have caught different news articles that claim this is
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  detrimental to human welfare well-being.
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  I think they're just pushing fear as usual.
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  Yes, yes. Not a believer in pushing that.
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  Like I said, I haven't haven't caught the full confirmation
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  from the USDA. So I'm waiting to see that.
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  And I think the market is too. I'd like to close off of our
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  lows to make this thing look a little healthier.
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  If we don't we close near our lows today, we have caused a lot
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  of chart damage That is going to be hard to you know it's, it's
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  going to take higher cash this week to turn this this futures
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  market. Yeah.
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  So if theoretically we're not feeding into it yet until we get
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  the official report, but theoretically, if it's here,
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  what are we going to be seeing in the markets?
• 7:06
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  to learn more today. If it is here and it continues
• 7:38
  to spread, you're going to see managed money, you're going to
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  see some of this open interest go away.
• 7:44
  Traders are going to walk away from cattle cost futures to
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  continue to sell off. You got to remember, you know,
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  it's not necessarily them selling per SE, because I think
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  the market's going to 0. It's just them taking profit on
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  their long positions. In order to do that, they
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  obviously have to sell out of them.
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  So you know, a big problem and the reason the market goes down
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  so fast like this is because there's nobody on the other side
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  willing to buy what they're selling.
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  So they have to move their offers lower in order to get
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  that filled. So, you know, let's say a trade,
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  a managed money trader, you know, was sitting on, let's just
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  say $10 million on his cattle desk.
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  If he decides he wants to get out of half of those positions
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  and take, you know, $5,000,000 away from this market, that's a
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  big number of contracts that we have to find a buyer to take
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  those, otherwise this market will go lower.
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  What levels are we going to go is actually the question I think
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  you were really asking. Feeders have some pretty
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  significant risk down to two, 83284.
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  There is a gap down there that I'm watching.
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  I would like, I would like it if we touched it and don't fill it
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  and leave it in the dust. But that was an island bottom
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  put on the chart and that was bullish enough.
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  That's what took us up to that 300 and five 307.
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  Now we all of a sudden have some gaps up above it that we tried
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  filling Friday and today did and were unsuccessful.
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  So if we leave those gaps in place above us, that's an even
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  worse look because then we're going to trend towards that 285
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  level, 284 in the next probably very, very near term, you know,
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  this week or next week. We can see that pretty easily.
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  Below that, your next support levels are all the way down to
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  275. Now that's probably more
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  realistic going to happen in June.
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  We get past this week depending how we trade with that first
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  gap, but that's a that's a big problem.
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  Those target areas, like I said, causing that damage on this
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  chart up above where we're at now.
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  If you leave that damage in those gaps in place, you have a
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  potential for a, you know, a much longer term high in place.
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  It's anybody's guess. You know, we could go down,
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  touch that gap, not fill it, bounce right back and trend back
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  towards new highs. I mean, the bolt story hasn't
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  changed. We're still tight on supplies,
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  demand is still strong given obviously may beef month.
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  But if we don't bounce off that gap in the event we touch it and
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  we actually fill it and still continue to trend lower, that's
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  a very, very ugly look. You're going to see all traders
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  exiting cattle. Not is this something that we're
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  you can't say. All traders, sorry.
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  OK, maybe not all traders you're.
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  Going to see a lot of traders running for the war.
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  Yeah. Is this something that we're
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  going to be seeing like extended long term, this is going to be
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  something we're dealing with for a while if they don't kind of
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  nip it in the butt or what are what are our thoughts there?
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  Is this going to be a market correction that we're going to
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  be able to see here in a few months, especially once people
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  understand that like, hey, it's not actually like it is a big
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  deal. This, this is not something that
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  we need to take lightly. But there's no human welfare
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  issues. There's no like there are ways
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  that we can manage this as a cattle industry and there are
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  precautions that are being put into place.
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  Are we going to be seeing market corrections or is this something
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  that you're going to see thinking that we're going to be
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  seeing for a long period of time?
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  You know, in the event that it spreads beyond this case we just
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  found out about in Missouri, if you know, let's say it becomes
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  more of a national issue and you know, it's it's going to cause
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  huge cost to the ranchers because A, they have to hire
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  more help to mitigate it, treat it.
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  B, you know, in the event they don't catch it, you're going to
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  have cattle desk. That's a problem.
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  Inevitably it does not, you know, long term it doesn't solve
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  our current supply issue. In fact, I would say the
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  opposite. You know, it's it's making the
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  supply issue become even possibly a bigger deal because
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  of, like I said, the potential, you know, death possibility with
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  those cattle. So, you know, and the added cost
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  to the rancher, you know, it barriers to entry, you know,
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  with the cost of cow calf, with the cost of, you know, bread
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  heifers, breeding age heifers, it's going to make everybody
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  want to hit the pause button, not increase their herd size
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  right now. So that has the ability to
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  hopefully support these prices a little better.
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  But we all know how headlines and black Swans work.
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  Exactly, exactly. And like you said, a lot of
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  people are seeing a hot headline right now and not waiting for
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  the USDA airport to come out and to verify what we are seeing.
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  And we don't even really know a lot of what is going on from a
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  governmental standpoint of what exactly is the plan for this,
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  right? Like it's been something that
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  we've been anticipating has been a possibility for a few months.
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  So there have been some subcommittees put together of
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  disaster relief plans and what exactly that process is going to
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  look like from the USDA standpoint.
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  But we can't necessarily sit here and say this is how it's
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  going to go. We know this process because it
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  hasn't been shared with us yet. And so we don't we don't know
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  what that's going to look like. And is it a little concerning
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  that the first confirmed cases in Missouri and not Texas, not
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  southern Texas? Yeah, that's, that's a little
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  concerning. To me same.
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  Especially as a Kansas producer. Especially as an Iowa producer.
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  Absolutely. And here right in the Midwest
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  that that's kind of hitting the epicenter of where a lot of
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  these cattle are, where a lot of these feedlots are, things like
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  that. So if it is the first confirmed
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  case in Missouri, then I think just in my opinion, you can kind
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  of put two and two together that it's not the first one.
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  We've been seeing it somewhere else.
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  It obviously got brought up from the Southern states.
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  And So what does that look like? What testing are we going to see
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  coming out what, what protocols we're going to see.
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  And a lot of that is unknown right now, unfortunately.
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  But it is going to be something that I know I, I trust in the
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  USDA and there their protocols and what they're going to be
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  doing. But it also is just a little
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  concerning to the producers out there of the unknown and the
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  uncertainty of what the next potential few months is going to
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  hold, especially as we go into the heat of fly season and
• 14:03
  summer and everything else that goes with it.
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  And timing couldn't be worse. I mean, honestly, when
• 14:09
  everybody's in turn out phase of the year, you know, a lot of
• 14:14
  these cows are turned out, they're not seen, but maybe, you
• 14:16
  know, once every two weeks or once a month, you know, it's
• 14:19
  timing couldn't be worse. And it'll be interesting to see
• 14:22
  if this case actually is confirmed, you know, how fast it
• 14:27
  spreads, if it spreads, was it, you know, obviously flies have a
• 14:32
  pretty short lifespan, so it could have the potential to
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  breed and spread if we're just now catching it.
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  So like I said, I would like to see the USDA confirm it before I
• 14:43
  go ahead and. Go crazy.
• 14:45
  To conclusions because I mean trade in a fat cattle market
• 14:48
  that's down $4.00 on a rumor is a bad idea.
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  Trading feeder cattle down 6 bucks same thing.
• 14:55
  But if it is confirmed, it could get pretty bad.
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  To make it worse here, June 1st, the CME is raising their limits,
• 15:03
  their price limits. Don't want to see that.
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  But understandably, the price levels we're at, it makes sense.
• 15:09
  It's pretty normal. You know, we can't trade cattle
• 15:12
  and and nickels and Dimes like we did back in the the golden
• 15:15
  age. But yeah, fats go to seven and a
• 15:18
  quarter on 1st day and feeders go to 9 and a quarter.
• 15:20
  So you know it. I hope we never see those
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  especially really in either direction.
• 15:26
  You want calm, steady markets. You don't want to be touching
• 15:29
  those limits. And that does bring up one other
• 15:31
  thing I wanted to mention, one of the rules with LRP a lot of
• 15:35
  people aren't aware of. Not only can you not put LRPS on
• 15:39
  on report nights such as last Friday with Catalan feed report,
• 15:42
  they don't offer LRPS, but they also don't offer it on limit
• 15:45
  days. Use this product when the
• 15:47
  markets are good, not call us when the markets down 6 or 9
• 15:51
  bucks and say hey, I want to put LRP on tonight but you can't.
• 15:54
  So keep that in mind. Absolutely.
• 15:57
  Any other highs, lows, anything else that we need to head on
• 15:59
  with the markets today? Now I think all eyes are on
• 16:02
  Screw Worm. Well, I hate giving that thing
• 16:05
  attention, but at the moment that's what we have.
• 16:08
  Yeah, it absolutely is. And hopefully it's something
• 16:12
  that by the end of the day we have a report that comes out
• 16:14
  that's saying either yay or nay and we at least know what
• 16:17
  direction we need to be going as cattlemen and as people within
• 16:21
  the industry on all different levels and everything like that.
• 16:25
  So Dan, as always, thank you for your time.
• 16:28
  And to all of you listeners out there, make sure that you go
• 16:30
  check out our show notes and go see our Logic AG Marketing and
• 16:34
  Cattle USA insurance link that we have down there for you guys.
• 16:38
  Check out those RP rates, get a hold of Dan and his team, get
• 16:41
  yourself protected. And as always, we will see you
• 16:44
  all tomorrow on another episode of the podcast.
• 16:46
  Have a good one y'all.