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Transcript

Cattle: COF · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_00: Welcome to the Capital Market Talk Podcast with Professional Ag Market.
• 0:04
  SPEAKER_00: I'm here to give you fresh updates on what's happening week to week within the Capital Market.
• 0:09
  SPEAKER_00: Trading commodity features and options involve substantial risk of loss, and it's not suitable for all investors.
• 0:16
  SPEAKER_00: All right.
• 0:16
  SPEAKER_00: Today I've got Mike Fitzgerald on with us from the branch office over by Cedar Rapids.
• 0:20
  SPEAKER_00: How's it going, Mike?
• 0:23
  SPEAKER_01: Good.
• 0:23
  SPEAKER_01: How are you?
• 0:24
  SPEAKER_00: No, not too bad, not too bad.
• 0:26
  SPEAKER_00: Today we're going to talk about the cattle market.
• 0:28
  SPEAKER_00: We're going to talk about a little bit of the change week over week here, what influenced some of those, and then we're going to talk about the Catalan feed report that just came out moments ago.
• 0:37
  SPEAKER_00: Let's get into it.
• 0:38
  SPEAKER_00: What do you think happened week over week here in this cattle market besides us just continuing this trend higher, Mike?
• 0:46
  SPEAKER_01: What happened this week besides trending higher?
• 0:50
  SPEAKER_01: Um box beef values had another good week.
• 0:56
  SPEAKER_01: Yes, uh last week I think choice boxes were up a little more than$20 last week.
• 1:04
  SPEAKER_01: And I I we'll come out with uh we'll come out with the afternoon closes here, I'm guessing, in a few minutes, but I I would estimate that we're gonna be seven or eight dollars higher again on choice this week.
• 1:16
  SPEAKER_01: So we've seen a really big reduction in available cattle supply here over the last month.
• 1:27
  SPEAKER_01: I mean we're we're probably harvesting ten percent less animals than year-ago levels consistently here now.
• 1:35
  SPEAKER_01: We did not see much reduction this week compared to last week in cattle supplies.
• 1:42
  SPEAKER_01: Um so it's pretty consistent here this week if you catch my drift on that one.
• 1:46
  SPEAKER_01: But just just really tight supplies in general available to the consumers.
• 1:53
  SPEAKER_01: Um and we still have Labor Day approaching.
• 1:57
  SPEAKER_01: I'm not sure how much beef sales we can get anymore for Labor Day since that's next weekend.
• 2:03
  SPEAKER_01: But but that industry is really, really tight.
• 2:06
  SPEAKER_01: So less just continue to push that market higher.
• 2:10
  SPEAKER_00: So less supply based upon Brazil imports into the United States with the increased tariff, and less Mexican feeders imported into the United States, and then our own supply just being down.
• 2:22
  SPEAKER_00: That kind of cover it all.
• 2:25
  SPEAKER_01: That's exactly right.
• 2:26
  SPEAKER_01: Yep, our own supply is down six or eight percent.
• 2:29
  SPEAKER_01: The Mexico feeder cattle that we're missing probably shorts us another four.
• 2:35
  SPEAKER_01: Um, and we're bringing in a substantial amount of beef from Brazil, not probably here as of late.
• 2:42
  SPEAKER_01: The monthly data that we would have ended back in June, is the most recent import-export data we have.
• 2:50
  SPEAKER_01: And imports from them had slowed down, but since then we have a 50% tariff on Brazilian beef that went into effect here at the beginning of the month.
• 2:58
  SPEAKER_01: So I got and that that ties almost perfectly with this big box beef counter-seasonal rally that we've been having.
• 3:05
  SPEAKER_00: And especially with where it's been leading from, right?
• 3:07
  SPEAKER_00: Some of the cheaper cuts of meat that we would have probably been importing.
• 3:13
  SPEAKER_01: Yeah, the U.S.
• 3:14
  SPEAKER_01: consumer just seems like there's no amount of money they won't pay to have ground beef.
• 3:19
  SPEAKER_01: You and me included that you're seeing really take off.
• 3:24
  SPEAKER_00: What do you think about the Catalan feed report that came out this afternoon?
• 3:27
  SPEAKER_00: Is that gonna put a little bearish tilt to this thing to start off next week?
• 3:33
  SPEAKER_01: Probably a little.
• 3:34
  SPEAKER_01: Probably a little.
• 3:36
  SPEAKER_01: Um the estimates for this thing uh prior prior to today, we were expecting total inventory on feed, two percent down year over year.
• 3:48
  SPEAKER_01: Um placements during the month of July, they were expecting about a 9% decrease in placements.
• 3:57
  SPEAKER_01: And total animals marketed during the month of July was 94%, was the estimate.
• 4:02
  SPEAKER_01: So we came in right on top of the estimates when it comes to total cattle on feed.
• 4:09
  SPEAKER_01: And total cattle marketed during July.
• 4:13
  SPEAKER_01: Those were right within the range of estimates, um, right on top of the averages.
• 4:18
  SPEAKER_01: The one that did miss, though, is the placement number, and maybe they've been missing this all along.
• 4:24
  SPEAKER_00: Oh, they always miss a placement number, I feel like, too.
• 4:28
  SPEAKER_01: Yeah, it does seem like we do have less cattle.
• 4:31
  SPEAKER_01: I mean, we're 10% less animals year over year.
• 4:34
  SPEAKER_01: I know the placement data for right now didn't suggest we have 10% less.
• 4:38
  SPEAKER_01: And I like there's a compelling argument today that says maybe we're backing up a little bit of inventory going forward, trying to fill some future holes.
• 4:48
  SPEAKER_01: But but the placement number today came in at 94%.
• 4:53
  SPEAKER_01: The estimate was for 91.
• 4:56
  SPEAKER_01: Um, the way the market should trade come Monday morning would be trade the actual verse of the estimate.
• 5:01
  SPEAKER_01: And we we placed a few more cattle than what they were expecting.
• 5:05
  SPEAKER_01: Just a few.
• 5:19
  SPEAKER_00: At this point, too, I mean, if you look at uh stochastics or if you look at a lot of these technicals, we're getting to be enough or far enough away from this 20-day moving average that it seems like going back, if you get up to this level, typically you start to have a pullback somewhere close here.
• 5:37
  SPEAKER_00: So it'll be interesting to see if that happens yet again uh around here or maybe a couple bucks higher on this to see if we get a pullback or not technically.
• 5:46
  SPEAKER_00: So a few very interesting things there that we got to talk about in the cattle market this week that I thought have been relevant.
• 5:52
  SPEAKER_00: Is there anything you want to wrap up with here, Mike, about this cattle market or how to handle it?
• 6:00
  SPEAKER_01: No, I think that'll that'll probably cover it.
• 6:02
  SPEAKER_01: I I do know that if if we get a setback, it just seems like the setbacks we've seen in recent weeks have been very big.
• 6:12
  SPEAKER_01: This market is is really emotional about trying to everyone's trying to guess where the high of this thing is, and obviously none of us really know how high high could be for this thing when just haven't really shown a lot of signs of growing back the cow herd.
• 6:30
  SPEAKER_01: You you got Brazil tariffs in place, we got Mexico trade barriers in place, so it's it's it's pretty volatile times right now, but setbacks, especially in the feeder cattle world, I I think feeder cattle traded twenty-four dollars higher by the time we ended this week to where it was on Friday of last week at one point.
• 6:53
  SPEAKER_01: $24 in five days.
• 6:56
  SPEAKER_00: It doesn't make a option at the money look that cheap at twelve bucks.
• 7:02
  SPEAKER_00: I mean, really, if you're trading twice the amount of that in a week, it uh that seems pretty cheap actually by the end of it.
• 7:08
  SPEAKER_00: So all right.
• 7:11
  SPEAKER_00: Well, thank you for your time today, Mike.
• 7:13
  SPEAKER_00: I appreciate it.
• 7:15
  SPEAKER_00: Yeah, that sounded good.