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Cattle on Feed · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: This is your host, Mike Minor.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is May 19th and I've got Jordan with us today.
• 0:26
  SPEAKER_01: How's it going?
• 0:27
  SPEAKER_00: Good.
• 0:27
  SPEAKER_00: How are you, Mike?
• 0:28
  SPEAKER_01: We're doing pretty good.
• 0:30
  SPEAKER_01: Had a rough week across many of the markets here, whether it was leanhog market, grains, uh pretty much whatever you're looking at in the egg sector took a hit this week, Jordan.
• 0:40
  SPEAKER_01: But uh looks like we had some good planning progress, good weather going forward.
• 0:44
  SPEAKER_01: Uh things are starting off pretty good.
• 0:47
  SPEAKER_00: Yeah, that's uh that's about right.
• 0:49
  SPEAKER_00: Uh the only thing uh kind of looking up on the commodities has probably been uh cattle, live cattle in another nice week, and feeder cattle a little bit of a rally there too.
• 0:57
  SPEAKER_01: Yeah, feeder cattle only about seven dollars off record highs from back in 2014, got up to about that 245 area.
• 1:05
  SPEAKER_01: And once we get May off the front month here, we'll be around that 233 or so, it looks like.
• 1:11
  SPEAKER_01: Uh so only uh only a little bit to go before some record prices here.
• 1:16
  SPEAKER_00: That is correct.
• 1:17
  SPEAKER_00: And yeah, a little bit higher with corn being down today and cattle on feed, right?
• 1:22
  SPEAKER_01: Definitely.
• 1:23
  SPEAKER_01: Well, let's take a look at cattle.
• 1:24
  SPEAKER_01: Uh since we're on the topic, we had a cattle on feed report this afternoon.
• 1:28
  SPEAKER_01: Start with that, and then we're gonna wrap up uh talking a little bit about the grain market.
• 1:32
  SPEAKER_01: Jordan, what did the cattle on feed report have to tell us this week?
• 1:35
  SPEAKER_00: Uh a little bit of a you know, kind of boring report here um to kind of end Friday.
• 1:40
  SPEAKER_00: Um Catalon feed report pretty much as expected.
• 1:43
  SPEAKER_00: 97 for uh cattle on feed, 96 uh percent for placements, which both were as expected.
• 1:52
  SPEAKER_00: Um no change there.
• 1:53
  SPEAKER_00: And then the market uh came in at 90% versus uh estimate there at 90%.
• 1:58
  SPEAKER_00: So um not a lot of change there.
• 2:00
  SPEAKER_00: Um, you know, heading into this report, the market uh had a pretty good rally, like I was kind of saying earlier.
• 2:06
  SPEAKER_00: Um you know, cash cattle this week continued to be pretty favorable.
• 2:11
  SPEAKER_00: Um in the south, kind of that 170 mark in Texas was you know pretty steady week over week is what we we seen there.
• 2:20
  SPEAKER_00: Um but in the north, you know, can continuing to see you know some some pretty good prices uh back up uh you know 177 to 180 type level, you know, maybe a couple bucks higher there on the north is what we're kind of seeing.
• 2:34
  SPEAKER_00: So, you know, beef production um year over year this week compared to to last year um at this time down uh 5.2%.
• 2:43
  SPEAKER_00: So you continue to have uh you know the tight uh significantly tight supply on that uh cattle market.
• 2:50
  SPEAKER_01: You know, the cattle and feed report came out today, but I'm afraid uh that's not really gonna be the main topic of discussion here today, Jordan.
• 2:59
  SPEAKER_01: A lot of movement in the grain prices here uh recently.
• 3:03
  SPEAKER_01: What do you have to say about some of the setback we have?
• 3:05
  SPEAKER_01: I know this morning we had a little bit of a rally trying to uh to find somewhat of a seasonal bottom here at some point, it would seem, but uh we struggle to really find that.
• 3:15
  SPEAKER_01: What do you think about the grain markets here after a little bit of a setback again today?
• 3:19
  SPEAKER_00: Yeah, the grain market's uh very much uh a lower move here this week.
• 3:23
  SPEAKER_00: Um, you know, kind of fighting to find a low.
• 3:26
  SPEAKER_00: Um this morning we started off a little bit higher and then we kind of fell back, right?
• 3:30
  SPEAKER_00: So, you know, I I think it all kind of starts with, you know, last week in that USDA report.
• 3:34
  SPEAKER_00: You know, we kind of sold off heading into that report and then added to it here this week.
• 3:39
  SPEAKER_00: But you know, 92 million acres on corn, um, a 181 and a half bushel yield um you know puts ending stocks with with the usage number there at uh 2.2 billion uh bushels.
• 3:51
  SPEAKER_00: So very, very large ending stocks, stocks to use ratio of 15%.
• 3:56
  SPEAKER_00: You know, that number in itself um you know probably would put uh corn in the low fours, right?
• 4:02
  SPEAKER_00: You know, if if uh if that number was realized.
• 4:05
  SPEAKER_00: So, you know, we've we've had some continuing selling going on.
• 4:09
  SPEAKER_00: Um started the week off with another uh cancellation there from China, right, on exports.
• 4:15
  SPEAKER_00: And uh Russia and Ukraine um decided to ext to extend uh that uh grain treaty there in the Black Sea region another two months.
• 4:24
  SPEAKER_01: So I think that was a shock to the markets a little bit.
• 4:27
  SPEAKER_01: I don't think many people expected that to get extended, but yes, that's correct.
• 4:31
  SPEAKER_00: You know, we have uh that presidential election going on in Turkey, and you know, it sounds like it's going to a runoff, right?
• 4:36
  SPEAKER_00: So pushed uh push that grain treaty back another two months before we kind of see what what happens there.
• 4:41
  SPEAKER_00: Um we also started the week off with you know really nice uh planting intention numbers, right?
• 4:46
  SPEAKER_00: Sixty-five percent planted on corn, forty-nine percent on soybeans, both well above the five-year average.
• 4:52
  SPEAKER_00: So you couldn't ask for a better start on uh this growing season, right?
• 4:57
  SPEAKER_00: Um you know, an inch of rain across the entire Midwest, Nebraska, Iowa, Illinois, Indiana, Minnesota, Missouri, South Dakota, all you know, receiving an inch of rain um over the past seven to ten days.
• 5:09
  SPEAKER_00: So, you know, really, really off to a really nice start to you know try to hit that 181.5 bush yield that the USDA's got figured in there.
• 5:16
  SPEAKER_01: And that's kind of what's going on with uh the corn market right now.
• 5:20
  SPEAKER_01: Right now, I mean, demand's been lousy and we haven't had any weather problems at the moment.
• 5:24
  SPEAKER_01: Uh could change maybe next week if the forecasts of uh these dry conditions prevail to push into June here.
• 5:32
  SPEAKER_01: But uh until we find a price that's gonna stimulate demand a little bit better, or weather becomes a little bit more threatening, you know, lower seems to be the path of least resistance here after the Friday Wazd Airport really opened up some downside to these grain markets going forward.
• 5:47
  SPEAKER_01: So it'll be interesting to see uh going against some seasonal patterns here in the grain markets.
• 5:53
  SPEAKER_01: I know it's only May 19th, so we do have a little bit more time here yet in June and July to get that seasonal weather rally here, but uh, you know, it's getting a little bit more concerning for some of these producers as we fall below uh breakeven levels across the board.
• 6:08
  SPEAKER_00: Yes, it is.
• 6:09
  SPEAKER_00: You know, um, you know, rallies are probably gonna need to be aggressively sold going forward here.
• 6:13
  SPEAKER_00: And like you said, you know, this is this is a seasonal time frame where you start to see, you know, this grain market pick up here a little bit, and you know, um a little bit of hope um, you know, is that uh you know, of the past 15 years, 13 years made it uh back to the March high.
• 6:30
  SPEAKER_00: And the March high on uh December corn is uh 576, so about a 75 cent rally from where we're at today.
• 6:36
  SPEAKER_01: Um that'd be a similar level to where we got to in 2013 from this point on, too.
• 6:42
  SPEAKER_01: We got right up to about that same level.
• 6:44
  SPEAKER_00: So very, very much, you know, and and 2013 is what you know a lot of people this year wanted to talk about, right?
• 6:50
  SPEAKER_00: I mean, we're correlating very strongly with that number.
• 6:53
  SPEAKER_00: Um we didn't trade this low prior to reaching back to that March high, which is very similar in that 575 area like you're talking, Mike.
• 7:02
  SPEAKER_00: But uh yes, that that's that's kind of the seasonal, and you know, that's that's where you know you need to be looking if uh you want to make some some more sales here uh prior to harvest, right?
• 7:13
  SPEAKER_00: Um the two years that uh you know we didn't make it, you made within five cents of that uh March high.
• 7:18
  SPEAKER_00: So you know, in in the shop we've been talking pretty hard about you know getting some orders working back up at those type of levels is uh probably a a a good target to kind of look for.
• 7:29
  SPEAKER_00: But uh, you know, right now everything is is bearish and has been pressuring the market.
• 7:35
  SPEAKER_01: You know, it looked today's sell-off looked pretty ag specific for the most part.
• 7:39
  SPEAKER_01: Metals and soft commodities were higher across the board, but it was mainly the grains here.
• 7:44
  SPEAKER_01: I know the lean hog market kind of turned lower too.
• 7:46
  SPEAKER_01: Any thoughts about lean hogs here before we get into some outside markets?
• 7:51
  SPEAKER_00: Yeah, lean hogs uh continuing to push lower.
• 7:53
  SPEAKER_00: We had a you know a very strong cash rally uh this week that pushed the top up to$90.
• 7:59
  SPEAKER_00: But, you know, the main thing that continues to be looming um in the background is that Prop 12 decision there last week, right?
• 8:05
  SPEAKER_00: And uh, you know, if uh implementation comes uh July 2nd, uh that's gonna be pretty rough on the hog market.
• 8:12
  SPEAKER_00: And uh, you know, we're we're seeing uh selling because of that, right?
• 8:15
  SPEAKER_01: Definitely.
• 8:16
  SPEAKER_01: Uh we on some outside markets here, Federal Reserve Chair uh Jerome Powell on Friday said that the uh interest rates uh may not have m much more to rise as really previously expected uh given the the turmoil in the banking sector that we've been experiencing, but it did support uh gold hurt the US dollar a little bit, which that US dollar uh kind of been on a little bit of a tear recently, found its way up to uh 103.5 or so recently, you know, and that's maybe been putting a little bit of quiet pressure on these grain markets and whatnot as well.
• 8:51
  SPEAKER_01: So uh a little bit of uh impact from those outside markets here recently.
• 8:55
  SPEAKER_01: Uh crude oil market also tipped back a little bit too.
• 8:58
  SPEAKER_00: Yeah, and you know, with that dollar uh pushing a little bit higher, that continues to put pressure on the export market on the grains, right?
• 9:04
  SPEAKER_00: Yeah.
• 9:05
  SPEAKER_00: Um you know, this week's uh exports numbers continue to be, you know, quite a bit lower.
• 9:10
  SPEAKER_00: We had the cancellation there from China.
• 9:12
  SPEAKER_00: Um currently corn is down uh you know 117 million bushels from where we need to be to meet the USDA's estimate there.
• 9:20
  SPEAKER_00: Uh-and and soybeans down 75 million.
• 9:23
  SPEAKER_00: So, you know, it uh with a with a stronger dollar, that's definitely not helping us there.
• 9:28
  SPEAKER_00: On the ethanol front, you know, a little bit better numbers there for grind this week 99.2 up from 96.9.
• 9:37
  SPEAKER_01: Just still not where we need to be, is it?
• 9:39
  SPEAKER_00: No, that's exactly right.
• 9:40
  SPEAKER_00: We need to be, you know, up over 102 now, closer to 103 to meet the USDA's estimate.
• 9:45
  SPEAKER_01: So I don't know the exact number, but it's been a long time since we've hit the number that the USDA needs us to hit to even hit their number.
• 9:53
  SPEAKER_00: It's probably been six weeks or so from from when I last looked.
• 9:57
  SPEAKER_00: But uh, you know, from the end user side, the DDGs are getting a little bit cheaper.
• 10:01
  SPEAKER_00: So, you know, this week uh, you know, we've kind of seen some numbers, you know, under 220 now um there.
• 10:07
  SPEAKER_00: So about a hundred percent of corn is where we're looking at there.
• 10:10
  SPEAKER_01: Interesting.
• 10:11
  SPEAKER_01: Any final thoughts for our listeners this week, Jordan?
• 10:14
  SPEAKER_00: Yeah, so you know, like uh we uh we were saying there earlier, you know, rallies need to be sold this time of year.
• 10:20
  SPEAKER_00: So, you know, we just gotta get ourselves into a position, get a get a marketing plan in place, right?
• 10:25
  SPEAKER_00: Um time targets are you know probably something uh we should definitely think about as we start heading into these uh you know long weekends over the next uh six weeks that uh you know probably should be used uh as selling points.
• 10:38
  SPEAKER_01: Not just on this year either.
• 10:39
  SPEAKER_01: I think uh looking out to 24 here, and there might be some opportunities out there too on this.
• 10:44
  SPEAKER_01: So thank you for your time today, and uh uh we'll catch you next time.
• 10:47
  SPEAKER_01: Sounds good.
• 10:48
  SPEAKER_01: Thanks for having me, Mike.
• 10:49
  SPEAKER_01: And thank you to all our listeners.
• 10:51
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 10:54
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:59
  SPEAKER_01: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 11:06
  SPEAKER_01: See you next time.