Latest / CattleUSA Daily / 253: Why the Cattle Market Feels Strong and Fragile at the Same Time with Dan and Samantha

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253: Why the Cattle Market Feels Strong and Fragile at the Same Time with Dan and Samantha · CattleUSA Daily

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Today, Dan and Samantha are coming back on once again to
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talk about the cattle market and everything that we have seen
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over the past week and what we can anticipate going forward.
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For a lot of the United States, we have finally fully jumped
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into winter and Dan and Samantha take some time to talk about
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historically, what has February looked like for us as producers
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within the cattle industry? What can we anticipate going
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forward? We touch on international
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markets, We touch on trade. We're also talking about the
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Catalan feed report that came out last week.
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Their thoughts on that We go into heifer retention.
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We talked about cows today. We're we're kind of covering a
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lot of bases today within the cattle industry across the
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board. Before we hop into today's
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podcast, if you are watching on YouTube, make sure you take a
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second to hit that subscribe button right above here.
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And also like this episode. And if you're watching on any of
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Without further ado, let's go ahead and hear from Dan and
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Samantha. Welcome to the Cattle USA Daily
1:04
podcast, your go to source for the latest livestock markets,
1:08
industry insights and the updates shaping agriculture
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today. I'm your host, Lauren Moylan, a
1:13
passionate advocate for agriculture here to keep you
1:16
informed and connected. Now let's dive into today's
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episode. Dan, Samantha, welcome back to
1:25
the podcast. How are how's everyone doing?
1:28
How are our lives going? Dan, I hear it was still
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miserably cold in Iowa this last weekend with no moisture.
1:36
Yeah, yeah, it was brutal. I this morning was the first
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time doing chores. I did not have to put 17 layers
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on. So I'm pretty, pretty pumped
1:43
about that. Feel like a brand new man.
1:45
Summer's coming. It was 32° yesterday and my
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husband was like, it's summer, It's summer guys.
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Like this is amazing, this is awesome.
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And I'm like that's, that's still really freaking cold, but
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OK. And he's like, it's not -10 so.
2:01
Exactly. Yeah, that 40° swing makes it
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feel like a heat wave. Swear to God.
2:05
Who's awesome? Yeah.
2:07
Yeah, we're to get into the 50s on Thursday.
2:11
That's crazy to me. We were negative 18 last week.
2:15
How does that? How does it make that transition
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so quickly? We live in Kansas.
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That's that's how, that's how, that's my answer for everything.
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We live in Kansas. Fair enough.
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I remember an Easter where it literally snowed and then it was
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like 80°. So you never know what to expect
2:32
in this state, but we're here. It's awesome.
2:35
How are the cattle markets doing guys?
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Doing all right, I mean, I think all eyes are on cash.
2:41
So just waiting for some movement.
2:42
You know, feeders got a late start to the week, weather,
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clothes shop on a huge slew of barns across the country and
2:49
especially on Monday, but even into Tuesday.
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So we're kind of waiting to see if see them show face in the
2:54
market, see what they can get accomplished.
2:56
Still pretty steady. Don't even trade up to this
2:58
point. I saw Missouri posted gains of
3:01
$25 on six to seven weight steers Monday, but I think
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that's really top of the market. North Central region, the
3:08
country, the yearlings were anywhere from, you know, 15 to
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$30 lower and three to $5 higher on Tuesday.
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So pretty uneven. The South was pretty
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consistently 1 to $4.00 lower on feeders, steer calves as much as
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20 dollars lower, you know, 10 to $15 higher on better quality.
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But like I said, pretty uneven. Weathers obviously played a big
3:30
hand in all of this and most of those sales were pretty lightly
3:34
tested. So to compare them, you know,
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week over week isn't isn't much of A comparison.
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So I think most that weather is going to persist into February.
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So we might not see cash snap out of this for a little while,
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but still seeing some good highs.
3:48
Think of those way UPS though, God that'd be epic.
3:52
Way UPS are awesome after a blast like this now.
3:55
No I agree it's choppy trade in the barns.
3:59
Honestly, it's you got the guys that can handle bringing new
4:02
cattle in with with weather like this and then other guys just
4:05
stay home so it gets a little choppy.
4:08
Yeah, for sure. What are we seeing?
4:10
What are our thoughts as we kind of go forward?
4:12
We're going into winter, we're doing all the things like, how
4:14
are we feeling about all of that?
4:17
I mean, you got your normal winter blast that typically
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brings the the hoarding or the grocery store runs that come
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with it. That of course went down,
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especially on the east side of the country, a little bit in the
4:28
South, you know, and there's always a little bit of follow
4:31
through it. You know, guys try to restock,
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people get cleaned up from the mess.
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Typically you get into this this February time frame, there's
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still not a lot to look forward to.
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And as far as beef demand, I mean, yeah, you got a little bit
4:46
of stuff for Valentine's Day. But overall, I mean, you're
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talking about fillets, right? It's it's not a big rib eye
4:54
grilling season, not big porterhouse season, whatever.
4:57
It's just kind of call it hold your ground is the hope that as
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you go through February, in the early March, you hold your
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ground in the cut out. You can hold your ground on the
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cash. You know, maybe I still think
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there's an opportunity we can push the cash for the next
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couple weeks. But you know, as we start
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getting in the back half of February, wouldn't surprise me
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if that cut out slides a little more Packers get a little more
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alley or growly about their margins.
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So but overall, nothing I'm I'm in absolute freak out mode about
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right now. Yeah, I would agree.
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I'd say, you know, looking back in the past, February has not
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been a great month for demand, obviously.
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And we're going to start to see maybe some colder temps going
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into February. So that's also going to play a
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part. That's kind of what I'm seeing.
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Sounds like, you know, a lot of feed lots are holding out for
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those higher bids later in the week.
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So like Dan said, we're nearing those maybe start nearing those
5:54
break evens that looks good. But Slaughter's been cut back
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pretty pretty significantly. Again, that has a lot to do with
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the weather shifts. Last week they had a shift cut
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on a lot of the plants that that's what brought slaughter
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back so drastically. And then of course, we figure in
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beef imports making up the difference and kill.
6:14
So all things to kind of be looking at as far as big picture
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demand going into February is going to maybe be pretty choppy.
6:21
Yeah, definitely. And I mean, I think like you
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guys have said it perfectly, that's a historic thing.
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It's not something to be unexpected or that we didn't
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really see coming as we kind of really go into these heavier
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winter months and everything as far as that is concerned.
6:38
What are thoughts on import, export, demand, all of those
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things, how those are kind of affecting the markets and just
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world standing within all of that as well?
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You know how it's funny? Bring that up, Lauren.
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The dollar just got shellacked the last couple days.
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I mean, that's all you hear and read about.
6:55
So bad. Yeah, it's, it's like what in
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the world just happened? I mean equities didn't change
7:01
much, bond market didn't change much and the dollar just falls
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out of bed. Well, I guess along with gold or
7:07
silver, silver has been pretty volatile.
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So you know that that's to our benefit.
7:13
You know, anybody in a commodity business wants to see a cheap
7:16
dollar, it helps them. Anybody in the equity business
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wants to see to see a strong dollar.
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So all of a sudden you push that dollar down to that 9596, it
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makes it easier to export, harder to import, right, The
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value of our dollars worth less. It's harder for us to buy it.
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So buy other people's products with it.
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Do I think that's overall going to be a trend?
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You know, we continue and push this dollar lower.
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If I was an expert in that, I would say no.
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I think, you know, it was a wicked volatile move.
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You made the move. You're probably going to
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stabilize here and and start to to work our way back up a little
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overall how that relates. And then in the coming months,
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you know, it comes down to price matters once again on the export
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side, you know, the the cut out, let's just say 36370.
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You know, we're not, we're not going to sell all the beef in
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the world at those prices. If it does start sliding as we
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come into late February and early March, yeah, I wouldn't be
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surprised if we see exports tick up right now.
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It it still makes sense to import more.
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But you know, price matters, the dollar matters.
8:26
All of the above matter. Yeah, I would agree.
8:30
Yeah, for sure. I have an international invoice
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due coming up soon. And so I'd really like the
8:36
dollar to bounce back on that because the transition, I don't
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know what. OK, Dan, stop giving me a look
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like that. All right.
8:44
My husband and I are going to Ireland in September and so I
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have some bills that I need to pay for Ireland, things we're
8:52
doing in Ireland, a photograph like some other things that
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we're doing in Ireland. And I looked at the conversion
8:58
recently and I was like, like, well, I'm getting screwed on
9:02
this end of things because this is not equating how I want it
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to. So I am in the boat that at
9:09
least like bounce back up for a little bit as far as world
9:12
standing goes because it does affect me right now very, very
9:16
personally in my life on invoices.
9:18
I have to. I yeah, yeah.
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So if it affects you on something like that, imagine you
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know, a meat importer that's bringing in, you know, 1,000,000
9:27
lbs of grind, what it would do to that.
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So no, I didn't know if you were importing some grass fed steaks
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out of Australia to put into your into your fryer, what the
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deal was there so. No grass fed steaks out of
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Australia? Dan, get your mind out of the
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gutter. OK?
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I'm I'm not doing anything silly like that.
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I was like jeez, Dan probably thinks I'm importing some crap
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from China or apparently some grass fed steaks from Australia.
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Never know. Little kid to mow your lawn this
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summer. I don't know.
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Yeah. Anyways, moving on.
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So yeah, overall the dollar does matter to imports and exports,
10:07
of course. But you know, like I said, I, I
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don't see a reason. You know, you look at everything
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is just gotten so volatile when you look at currencies, whether
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that's metals, whether it's foreign currencies, whether it's
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our currency, everything's just got so volatile that I don't, I
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don't foresee that sticking around for, you know, an
10:25
extended period of time where it's, you know, up and down this
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much. You know, in a couple days it's
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it's probably just a one off if I had to guess.
10:33
Yeah, for sure. Can you try it in on how that
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kind of like affects the cattle market and how we move and like
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how those things kind of intersect and intertwine?
10:41
Well, inevitably, I mean the Packers, they're, they're a
10:44
margin business, You know, they're just like the rest of us
10:47
right now where we're living on trying to make pennies on our
10:49
margins. So as they are trying to export
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beef and trying to decide on on how much to import based on
10:58
domestic demand, they're also trying to decide what they need
11:00
for global demand. So you know the the value of
11:04
those currencies 100% matter to their business, which then
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trickles down to our business. So if all of a sudden the dollar
11:11
is cheap and, and let's say that cut out does slide in late
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February, you get it back to three 4350 and and the dollar
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stays here at 9495, it's going to become really enticing to, to
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sell more meat abroad. So that that's a positive.
11:27
That's an optimistic thing. The Packers would would be
11:30
inclined to I, I shouldn't say they would.
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The Packers would have the ability with better margins
11:37
because they're selling their meat easier.
11:39
They'd have the ability to all the sudden stabilize this cash
11:42
market, keep it here, inevitably just back to price and supply
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and demand. Yeah, for sure.
11:51
In the cattle market, is there anything else that happened last
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week or that we're anticipating or anything else that we haven't
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touched on today that you guys wanted to talk about?
12:00
A lot happening with the Catalan feed report, a lot of people
12:03
talking about it, mostly neutral compared to estimates.
12:06
But I'd say overall in my eyes, you know obviously that it
12:11
reiterated tight supplies. I mean Catalan feed were back 3%
12:15
of a year ago, placements back 5% from analysis estimates.
12:20
Like I said, from that standpoint, pretty neutral.
12:23
I think it's important to remember we're comparing to
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December of 2024 though, a time when we were also shut off to
12:31
live cattle from the South. So like I've been saying all
12:34
week, we aren't comparing aren't apples to oranges anymore.
12:36
So suddenly that 95% placement level holds a lot more stock.
12:40
For giggles, I kind of went back another year back to look at
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when the border was not shut off to imports in 23 and we are
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8.59% back from that. So definitely more substantial
12:52
pull backs and supply when you take that step back even a year
12:56
further and look at the big picture from you know, a 30 foot
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perspective. I also won't, you know, overall
13:01
analyze that higher placement numbers because cattle moving
13:05
through the sale barn right now in the past few months, they've
13:07
been unbelievable. I mean, there's been such
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incredibly high volume sales. Markets been good.
13:13
You know, in the last month, everyone's dumped a lot of
13:15
inventory at the same time looking further into marketing,
13:18
those also exceeded placements. So that tells us feeders have
13:21
still been in super high demand even despite higher price prices
13:25
and maybe more issues with cash flow and coming toe to toe with
13:28
high interest rates and things of that nature.
13:30
So that's kind of what we're seeing there.
13:33
Switching gears a little bit, I just want to talk about heifer
13:35
retention. Again, that's been a very hot
13:38
topic going on. I mean last few years even huge
13:41
focus. The big headline, you know based
13:44
on the USDA report is that heifers on a per head basis are
13:49
3% back year over year, meaning that number of heifers on feed
13:53
today is 3.88 million versus you know, the 44 million last year
13:58
down 3%. Yeah, that translates to 38 .7%
14:03
in the steer to head for ratio in the feed yard, meaning
14:06
heifers still and body 38.7% of feed lot inventory that's
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unchanged from last year. Take that a step further back
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and what the headlines didn't mention is that you know steers
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on a per head basis are also back 3% from a year ago.
14:22
So it stands to reason it's more likely that heifer numbers are
14:25
down in tandem with those steer numbers simply due to that
14:29
tighter supplies year over year. I mean, you can't retain what
14:32
you don't have. So are we holding back heifers?
14:35
Yeah, it's happening. Maybe not as much as we thought,
14:39
especially compared to what we retained in 2016 during the last
14:43
herd expansion when heifers made-up, you know, only 32% of
14:48
feed lot inventory versus 39% of what they make up now.
14:52
So something to toy around with anyways.
14:56
Dan, what are your thoughts? I, I agree the retention's
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happening. It's not the grand scale it was
15:02
a decade ago. But at the same time, we also
15:04
got to keep in mind on those numbers, they're skewed by the
15:07
dairy, the beef on dairy deal and they're also skewed by the
15:10
Mexican border closing. So we're not going to find out
15:14
until we get down the road, say August through October, what
15:16
that actually looked like and how much they're skewed because
15:19
that's when you get the true slaughter numbers and, and get
15:22
to see what our our heifer slaughter rate is once again,
15:25
compared to Steers. It's it's happening.
15:29
You could talk to them, you could talk to the vets, you
15:31
could talk to the sale. Barnsley, I'll tell you the same
15:33
thing. It's happening.
15:34
It's, you know, the region by region just decides, you know,
15:38
based on weather, based on, you know, those people in that area
15:42
over the last five years, what they did is deciding how fast
15:46
it's happening. But it's it's definitely
15:48
beginning, you know, to go along with that.
15:50
And another thing we're talking about is, is cows, you know, so
15:54
back it up to what Samantha was mentioning, you know, when we
15:57
were comparing these numbers to last year when that border
16:00
finally shut down for the first time.
16:02
Yeah, it shut down December, January reopened in February.
16:06
I want everybody to think ahead to the coming reports this
16:09
summer when that border was really shut down hard and, and
16:13
numbers stopped because that's when you know, you typically see
16:17
spring, late spring, summer, those, those Mexican feeder
16:20
imports go hog wild. So when we're comparing this
16:24
summer's Catalan feed numbers, remember that we're comparing
16:27
them against last year's lower import numbers, lower placement
16:31
numbers, again, right? At the same time, when our cow
16:35
slaughter the last two years has been drastically lower both on
16:38
beef and both and on dairy cows. So if you hold on to those cows
16:44
the last two years, now you got more calves available.
16:47
As we come into these Catalan feed reports late this summer,
16:50
this fall, you could start seeing a tick up in placements
16:55
just comparing to last year where we were short on those
16:58
calves and all the sudden we also shut off the border.
17:02
So last year's Catalan feed reports, you know, for the most
17:05
part they were all bullish, lower placements, lower
17:07
placements. Now all of a sudden you even
17:10
without opening that border, you can start to see higher
17:12
placements once we move past the spring time frame.
17:14
Because typically, you know, the big slug of your heifers that
17:17
get retained, you know, they start, you know, December,
17:21
you'll start pulling off the top and January, February, March, or
17:25
when those breeding age heifers that are, you know, your
17:29
yearling heifers going to the feed yard, if they're good
17:31
enough, that's when they'll get retained.
17:33
So you're going to see the drop in placements here in the next
17:35
2-3 months. If that heifer retention is
17:37
really going rampant. Now all of a sudden you get
17:40
moved past that and placement should start taking up and
17:43
becoming more normal because we're not going to, you don't
17:46
retain heifers, you know, in the summertime to breed for the most
17:49
part. So it I'm a little bit leery.
17:54
I don't know if you want to use that term or just on the edge of
17:58
my seat right now because I could see all of a sudden these
18:03
feed yard inventories could start going up with low
18:05
slaughter rates and we start placing more cattle late this
18:08
summer. So, but that's tomorrow's
18:12
problem. We're going to enjoy the next
18:13
two weeks of this cash market and Hallelujah.
18:17
Yeah, absolutely. Yeah.
18:20
And I mean, as far as a lot of people held back gold cows for
18:24
another year last year too. So we also need to be factoring
18:28
that into not just heifer retention, but also factoring
18:31
cows into rebuilding the herd. I mean, that's still another
18:34
calf that you're going to be able to keep back, so.
18:38
Yeah, for sure. Dan, what are your thoughts on
18:40
just the Catalan feed report in general?
18:41
Do you have any further comments on that or just?
18:45
Just trying to poke the bear. You want a headline?
18:47
No, no, I always there's a neutral report.
18:51
Really. There's there's not a lot to
18:52
talk about. If I had to guess, they probably
18:54
pulled their numbers out of the trade guesses.
18:57
So no, yeah, it was overall just a neutral report.
19:01
You got another report coming out this Friday, all inventory
19:04
report. That one will be cool because
19:06
that's where the USDA tries to guess what the national cow
19:10
herds like. So that's always a fun one.
19:13
You get those twice a year. Honestly, that's the one I've
19:16
always paid more attention to than the cattle on feed anyway,
19:18
so we'll see what that one says. If that one, Nah, that's like I
19:23
said, next week's problem we're going to enjoy.
19:26
Let's fight for higher cash this week.
19:29
Absolutely. I couldn't agree more.
19:30
Any closing comments from either of you guys before we wrap it
19:33
up? All righty.
19:35
Well, thank you both for your time.
19:37
As always, to all of our listeners out there, thank you
19:40
for listening to another episode of the Cattle USA Daily Podcast.
19:44
We will see you all on another episode next time.