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Cattle: Cut It Out · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_01: Welcome to the Cattle Market Talk Podcast with Professional Ag Marketing.
• 0:04
  SPEAKER_01: Come here to get your fresh updates on what's happening week to week within the cattle market.
• 0:09
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_01: Today is December 24th.
• 0:17
  SPEAKER_01: I've got Jace back with us here today.
• 0:19
  SPEAKER_01: Uh well, Merry Christmas, Jace.
• 0:22
  SPEAKER_00: Merry Christmas, Mike.
• 0:23
  SPEAKER_01: Alright, well, we're gonna talk about a cattle market which isn't so merry these days here.
• 0:27
  SPEAKER_01: We had the worst print day over day for the year on Choice Beef last night, down over seven dollars.
• 0:35
  SPEAKER_01: I wanted to touch on that right away, Jace, because it it seems like that shook things up here a little bit.
• 0:41
  SPEAKER_00: Yeah, it definitely did, and a lot of it comes from the ribs.
• 0:46
  SPEAKER_00: So the ribs overnight or yesterday afternoon were down sixty-two dollars.
• 0:51
  SPEAKER_00: Um big drop there.
• 0:52
  SPEAKER_00: We had a similar drop last year to this, but a little difference in that rib prime year over year is usually leading up to the holidays, we see that thing rally and it puts in highs for the year in um November there, late November, early December.
• 1:11
  SPEAKER_00: And it is it's lower, it was lower all the way through Nov Dis than it was in September.
• 1:18
  SPEAKER_00: It made its high in September there, and then just stayed flat through the holidays here, and now we're dropping.
• 1:23
  SPEAKER_00: So maybe a little cause for concern on that front.
• 1:27
  SPEAKER_01: Gotcha.
• 1:28
  SPEAKER_01: And right now it seems somewhat relevant because uh if you're looking right now, about 87% of the cattle last week, graded choice or prime.
• 1:37
  SPEAKER_01: That was a new all-time record as well, Jace.
• 1:39
  SPEAKER_01: So it looks like they're heavy, and we got a lot of choice meat out there.
• 1:43
  SPEAKER_01: So uh really, really wanted to focus on this here.
• 1:47
  SPEAKER_01: Um you know, if you look at some of the surveys, I know if you uh just look out, uh there's not very much optimism rebar uh regarding beef producers going into 26 right now.
• 1:59
  SPEAKER_01: The the conditions just in the industry are they're both not fantastic from an economic perspective, which I want you to get into right now on buying feeder cattle, and also just from a political perspective as as well, with the war on on beef prices basically to get those down.
• 2:16
  SPEAKER_01: So uh choice was kind of the first big thing here yesterday that I that I noticed in a while at least after uh after we posted the uh the cold storage report as well.
• 2:29
  SPEAKER_00: Yeah, so and choice choice being lower and select being almost steady, that spread has narrowed in quite a bit.
• 2:36
  SPEAKER_00: That's maybe a little cause for concern as well on the just a consumer willing to trade down for a lower quality product, but they want to stick with beef for now.
• 2:46
  SPEAKER_01: And cho uh the cutout on pork side seems to be holding in really well as well.
• 2:51
  SPEAKER_01: That's a pretty strong market lately, so maybe folks are trading down in in quality of meat down to something like pork or chicken instead, or maybe select for some of this higher end, really expensive stuff.
• 3:04
  SPEAKER_01: And from a seasonal perspective, I know you mentioned a little bit.
• 3:07
  SPEAKER_01: I mean, it's Christmas.
• 3:08
  SPEAKER_01: We pretty much got our holiday buying done.
• 3:10
  SPEAKER_01: We didn't really get the pop like we wanted to see from a seasonal perspective on on cutout, did we?
• 3:15
  SPEAKER_00: No, that's that's definitely correct.
• 3:17
  SPEAKER_01: What do you want to hit on next here, Jace?
• 3:20
  SPEAKER_01: What uh where where do you want to go?
• 3:21
  SPEAKER_00: So I guess what I've been looking at quite a bit here is we've been with the lack of optimism here in the live cattle futures out into 26, but yet these high-priced feeders has been causing a little bit of stress on the on the feeder side where we're we're dealing with a lot of cattle that come in that lose a lot of money.
• 3:46
  SPEAKER_00: So that that relationship between the fats and feeders is a little bit out of whack, and it's it's simply the the feeders getting pinched now for the first time in this in this cycle where we're dealing with a lot less inventory available, and they're dealing with higher prices because you've got a lot of yards, especially up north here, that they have to be full.
• 4:11
  SPEAKER_00: You know, they've got a lot of concrete, they've got buildings over them, so you're dealing with too few of cattle and too many producers trying to buy them.
• 4:20
  SPEAKER_01: Interesting.
• 4:21
  SPEAKER_01: So it it it's a tough position to be in, especially when trying to manage risk regarding that as well.
• 4:27
  SPEAKER_01: You you don't know what that first step should be.
• 4:29
  SPEAKER_01: So it seems like still obviously really expensive.
• 4:32
  SPEAKER_01: So there's a ton of capital risk there that you need to take care of, but it it's not like it's an easy decision on on what kind of hope you're looking for for any any upside here out of this futures market to get something protected, or uh what losing strategy do you kind of pick first, Jace?
• 4:48
  SPEAKER_00: Right.
• 4:49
  SPEAKER_00: Yeah, it it has been it's difficult from a profitability standpoint, but it's still a pretty easy discussion when you when you get into the risk.
• 5:00
  SPEAKER_00: You gotta do something.
• 5:01
  SPEAKER_00: It's just yeah.
• 5:02
  SPEAKER_01: What is something?
• 5:03
  SPEAKER_01: So that's something to talk to Jace about for sure.
• 5:05
  SPEAKER_01: He's got some stuff.
• 5:07
  SPEAKER_00: Yeah, we're we're glad to have the insurance products for sure.
• 5:10
  SPEAKER_00: Yeah.
• 5:11
  SPEAKER_00: With our with our board CME options and that sort of thing, but yeah, it's it's been a struggle here.
• 5:18
  SPEAKER_01: So yeah, right away the cutout, I wanted to talk about the box beef prices being uh being lower um in some small volumes too.
• 5:26
  SPEAKER_01: So I don't want to maybe say we're gonna be down super hard from here on out because we were down seven yesterday on some smaller volumes, but retailers are uh they're really balancing their needs with some buying interest kind of waning before the holidays here.
• 5:40
  SPEAKER_01: Um you know, we've seen some improved quality grade, more prime cuts will be uh on the shelf this season as well.
• 5:48
  SPEAKER_01: And uh it just something I want to talk about from a demand perspective with super low consumer sentiment right now and and some fears on uh on that side of things.
• 5:57
  SPEAKER_01: But where do you want to wrap this podcast up today on for the cattle?
• 6:02
  SPEAKER_00: Well, I'd just say as we as we go into the new year, look at look at cash and how that shapes up.
• 6:09
  SPEAKER_00: You know, we've got Lexington, Nebraska's closing down sometime in January here, maybe a little bit before when they when they thought that it would be around the 20th.
• 6:19
  SPEAKER_01: We've seen that with other packing plans too.
• 6:21
  SPEAKER_01: They'll have a hard time keeping people going to work to to get to the end, right?
• 6:25
  SPEAKER_00: For sure, for sure.
• 6:26
  SPEAKER_00: And then I guess we'll we'll watch we'll watch these primal values and the cutout here going into going into the spring, just seeing if we if we trade seasonal or if we're or if we're really struggling on the on the demand side.
• 6:40
  SPEAKER_00: But I will just add quickly that we we do recently, we've recently added some nice charts on our website.
• 6:48
  SPEAKER_00: So we can we can get everybody that wants to see them uh a login there, but it's just a couple clicks away to see individual primals and all that sort of thing.
• 6:57
  SPEAKER_01: It's super easy to log into.
• 6:59
  SPEAKER_01: It doesn't require double authentication or any of that crap.
• 7:01
  SPEAKER_01: It's a super easy login, doesn't have to be X amount of characters, and once you get the login, the charts are awesome.
• 7:07
  SPEAKER_01: You can go back seasonally, you can see tons of info, whether it be cattle, hogs, etc., uh all the way across those two complexes.
• 7:15
  SPEAKER_01: So that's important to mention there, which did get some cash trade last night, buck lower kind of area, 229 out of the north.
• 7:22
  SPEAKER_01: Not a whole lot there, but at least it finally traded 356 in the north.
• 7:26
  SPEAKER_01: Yep.
• 7:26
  SPEAKER_01: Kind of steady.
• 7:27
  SPEAKER_00: Well it was it was maybe even a little surprising to see cash as much inventory as they've bought here.
• 7:32
  SPEAKER_00: But we've got large show lists in the in Kansas and Nebraska.
• 7:36
  SPEAKER_00: Um, and it does look like we could see a little more cash trade today, but we'll see how that shapes up.
• 7:42
  SPEAKER_00: For sure.
• 7:43
  SPEAKER_01: Yeah, looking at our website on those charts, you can track some of that cash stuff.
• 7:46
  SPEAKER_01: Uh pretty cool, Jace.
• 7:48
  SPEAKER_01: All right.
• 7:48
  SPEAKER_01: Well, thank you for your time today.
• 7:50
  SPEAKER_01: Merry Christmas for everybody.
• 7:51
  SPEAKER_01: It will be open again on Friday.
• 7:53
  SPEAKER_01: We will be coming back.
• 7:55
  SPEAKER_01: So please, if you need anything during the market trade on Friday, let us know.
• 7:58
  SPEAKER_01: Thanks again.