Latest / CattleUSA Daily / 198: Beef Prices, Packers, and the Battle Over Cattle Market Control with Samantha Cozza-Wright

Transcript

198: Beef Prices, Packers, and the Battle Over Cattle Market Control with Samantha Cozza-Wright · CattleUSA Daily

• 0:00
  In today's episode, we are talking cattle markets.
• 0:03
  What is going on in the world of the cattle industry?
• 0:06
  Samantha Kosarite and I are breaking it all down for you
• 0:10
  guys today. We are talking everything from
• 0:13
  current events and how that is affecting the cattle market to
• 0:16
  just the cattle market fundamentals in general and what
• 0:19
  we are seeing right now and what we anticipate to continue seeing
• 0:22
  for this cattle market as we go forward.
• 0:24
  We're talking volatility. We're talking the southern
• 0:27
  border, we're talking Trump's tweets on truth so social, we're
• 0:30
  talking our packing industry. We're talking everything today.
• 0:34
  Samantha and I cover it all for you guys today.
• 0:37
  So before we hop into this episode, if you guys could take
• 0:41
  a second. If you're watching on YouTube,
• 0:42
  make sure that you subscribe and that you like this episode.
• 0:45
  And if you're watching on any of our podcast platforms, make sure
• 0:47
  that you're following the show, share it with a friend and go
• 0:50
  right and review it as well. We really appreciate it here at
• 0:53
  the team and helping us reach new audiences and more people
• 0:56
  within the cattle industry. Without further ado, let's go
• 0:59
  ahead and hear from Samantha. Welcome to the Cattle USA Daily
• 1:06
  podcast, your go to source for the latest livestock markets,
• 1:10
  industry insights and the updates shaping agriculture
• 1:13
  today. I'm your host, Lauren Moylan, a
• 1:15
  passionate advocate for agriculture, here to keep you
• 1:18
  informed and connected. Now let's dive into today's
• 1:21
  episode. Samantha, welcome back to the
• 1:30
  podcast. We are kicking Dan to the curb
• 1:35
  today. He he was supposed to be here
• 1:38
  with us but then got busy and was like, you girls can handle
• 1:41
  it. So we're kicking him to the curb
• 1:44
  with joy today. And we're going to talk all
• 1:46
  things Marcus today. But how are you?
• 1:48
  How is life in western Kansas? Do you consider Colby, western
• 1:53
  Kansas? Northwest, yeah, we're about.
• 1:56
  Yeah. How's life?
• 1:57
  How's life in northwest Kansas? I guess, how's harvest?
• 2:00
  I hear you guys are kind of starting to wrap things up.
• 2:03
  So how's everything going? It's going good.
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  Like I said, we'll probably finish up harvest today.
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  I know there's bigger farmers in our area that still have two
• 2:12
  3000 acres left. So I mean, we could be getting
• 2:15
  our first snow before some of these guys finish up crazy.
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  Absolutely crazy seeing like Chicago and was caught like all
• 2:24
  of those places up there get their first snow this week.
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  I was like, Oh no, I'm not ready for it.
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  Not yet. Guys, please like give me three
• 2:32
  more weeks, two or three more weeks without any snow.
• 2:34
  Give us some nice rain so we can get some of that fall grass
• 2:37
  going and just I'm not ready for the.
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  Snow, I hear you. I hear you.
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  Yeah. Oh geez, got to love it.
• 2:45
  Well, what's going on in the world of the markets?
• 2:49
  Oh my gosh, what's not going on, right?
• 2:52
  Yeah. There's been a lot of recent
• 2:54
  news obviously in the media surrounding the cattle industry.
• 2:58
  I think taking a step back for a minute, there's a lot that goes
• 3:02
  into it. So let's kind of look back a
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  little bit towards last week, mostly mid last week, we looked
• 3:08
  at the possibility of the South border reopening, how that would
• 3:11
  have a play on the market and it definitely had a negative of
• 3:14
  effect to your board midweek. No definitive date was ever
• 3:17
  mentioned about when the border would reopen, but there was a
• 3:21
  lot of premature push for it from certain parties.
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  I think first and foremost, we have to address the threat that
• 3:27
  poses to obviously our domestic cattle herd and doing this
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  prematurely. But as we look further into the
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  first of the year, when it eventually does reopen, maybe
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  even further past that, who knows when it'll be.
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  But I want to point out, you know, initial import numbers
• 3:42
  being put out, they're so minor. I last week the initial report
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  was 250,000 head of live cattle imports from the South.
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  Like I said, minor numbers this year.
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  Anyway, we kill that in a few days here just in the United
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  States. So while again an over
• 3:58
  exaggeration in the market, it, it definitely scared traders on
• 4:01
  the futures board. And then we Fast forward a few
• 4:04
  days and come Sunday there was another screwworm case confirmed
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  600 miles South of the US border.
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  So up through Sunday when that was first reported that that's
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  85 cases confirmed just through 9 days into the month.
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  So I think that's crazy. It poses a real set back and and
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  rightfully so in the plans of reopening the border anytime
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  soon. So on as the focus on that has
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  become put to the back burner burner, we move on to more
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  recent news. We've seen Trump's true social
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  posts surrounding his order for DOJ to investigate the big four
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  Packers. That's the first time that he
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  came out with that after trading hours on Friday.
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  People kind of had a weekend to think about it.
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  There was a lot of questions how it would affect the market
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  opened on Monday and if you were watching the board, there wasn't
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  a lot of direction early on. We weren't really sure what it
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  was going to do and then boom, we were limit up hard gains,
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  very bullish come Tuesday and even through, you know, the
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  first part of the day here on Wednesday, there was a lot of
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  volatility. Like I said, you watch the board
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  periodically throughout the day. It was just all over the place,
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  very volatile. You know, we're just so worried
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  that any sort of fluctuation at this point is going to be a
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  limit down or a limit up move and there's just not a lot of
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  consistency and the the media poses such a huge spotlight on
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  the cattle industry. The board is just so touchy to
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  that and we just can't hardly take that sort of pressure on
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  the futures board. So bottom line, we look a little
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  more into that, into the DOJ order as cattle producers
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  investigating the big four. That's something we push for,
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  you know, for a very long time. We know our presidential
• 5:47
  administration now knows and the Packers control 85% of the
• 5:50
  market. They've been price fixing.
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  They've been manipulating the market for years.
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  Most recently they had market ready cattle backed up in the
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  north for months to where they became drastically over
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  finished. You see them hauling cattle 5 to
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  $6 a hundred weight further away to avoid bumping up the market
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  where it needs it. You know the list goes on.
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  We've seen Biden come out two or three times in his presidency
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  and say he was going to order investigation into the Big Four,
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  and nothing ever came of it. And I think part of the reason
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  that Trump's comments have such a heightened effect is because,
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  you know, he typically does what he says he's going to do.
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  Looking at that, Packer retaliation was a concern.
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  A lot of the concern I was hearing is that they would take
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  out long positions on the futures board.
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  So whether they never had them to begin with because they
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  didn't really want to put any pressure on an upward market and
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  sort of shoot themselves in the foot or if they never had them,
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  it had no effect on the market given limit moves, limit up
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  moves on Monday. So as we get further into the
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  week, we we're seeing more volatility.
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  There's just a lot of lack of direction.
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  I think a lot of it comes from uncertainty, you know, the
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  government reopening probably has something to do with it as
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  well. But looking from it at the from
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  the other side, you know, Packers can't really slash
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  slaughter any more than they already have given low slaughter
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  volumes. They're not running these
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  facilities efficiently as it is their price per unit cost.
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  You know, it's got to be through the roof and it's become such a
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  trend now that we'll finish out the week 50,000 head back and
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  slaughter than we were a year ago.
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  Like I said with my comment early earlier, although I heard,
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  you know, it's fundamentally or it's not like we don't have the
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  live cattle available because at one point they had market ready
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  cattle backed up in the North for months.
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  Regardless, there's still some skepticism.
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  People are saying, well, you know, aren't lower beef prices
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  in the store are going to come back, hurt the price of the live
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  cattle? And I think from a speculation
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  aspect, clearly there's a lot of volatility in the market.
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  Fundamentally, I have a hard time believing that it will.
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  And that's just going back to the minimal correlation between
• 7:59
  the beef industry and the cattle industry.
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  You know, in a different world, sure, these two would have
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  worked in tandem given different circumstances.
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  But because of the Packers, they don't have and they haven't been
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  for an extremely long time. I mean, we've seen prices high
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  and untouched at the same time that live cattle prices were
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  limit down, you know, two to three times the same week.
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  And we've seen the same sort of trend back during COVID, but
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  even worse. The Packers set beef prices
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  based off, you know, what they think they can get and what the
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  consumers are willing to pay. When we go back and we look at
• 8:34
  live cattle prices, they're based off, you know, supply and
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  demand fundamentals. And had the price Packers not
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  been price fixing and manipulating the markets, I
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  strongly believe before the industry took the spotlight in
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  the media that we could have been driven to higher highs.
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  But you also have to think, sure, we are very short of
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  cattle, but we aren't necessarily as short of beef
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  that we are live cattle because we are efficiently producing
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  more beef per cattle ratio than we ever have.
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  And we, you know, with less land at that and then you factor in
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  beef imports which if we were to mandate country of origin
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  labeling would also have a play and a definite play in lowering
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  beef prices for the consumer. Beef imports were at an all time
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  high in 24. You know they're already higher
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  at this point than they were last time a year ago.
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  And looking at that, we import about half cattle, the half the
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  amount of cattle on a live basis.
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  Then we do beef, beef imports we're at an all time high in
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  2024. The price of feeder cattle and
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  live cattle still remain fundamentally high.
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  So given the minimal correlation, I think I don't
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  think it'll have a huge play. But we we also have to factor in
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  the cattle industry is such a unique market in comparison to
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  dairy and poultry and pork. And so it becomes a very unique
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  scenario. We'll see how it plays out.
• 9:53
  The Packers have been running a monopoly for so many years.
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  So and that aspect of things, we don't really know what a fair
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  market looks like from them. That is such a great point that
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  it's been happening for so long that we don't know what that
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  would look like. Like if this gets rocked,
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  changes, whatever happens and whatever comes out of it, we
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  don't know how to react to that. Like what would that look like?
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  What would that do to the cattle industry?
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  And you made so many great points along the line of we have
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  seen such a volatile cattle market in such a unpredictable
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  cattle market. Not just volatile like this is
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  volatility in an unpredictable standpoint that is being driven
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  by media and by tweets and by what the consumers are saying,
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  which historically has not been as big of a factor as it is
• 10:50
  right now. Right now, it is playing a
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  massive role in just the cattle industry in general and what we
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  are seeing in our markets and how everything is reacting.
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  And I'm really grateful that that Truth Social post went out
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  after markets closed on Friday and people had a whole weekend
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  to ruminate on it before they made any drastic changes.
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  Because sometimes, like I understand, people got to be
• 11:16
  quick to the trigger on these markets when they're trading and
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  when they're like holding or selling or like all of these
• 11:21
  different things. I understand that.
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  But I boy, oh boy, am I glad that that tweet got put out by
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  this little secretary that's sitting at the office in the
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  White House or whoever runs Trump's true social after the
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  markets closed on Friday. Very grateful for that because
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  like you said, Samantha, it ended up kind of playing in
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  favor. Now, whether or not it was like
• 11:45
  I kind of anticipated some retaliation from them as well.
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  And so very curious to see why. And we, we won't know the answer
• 11:53
  why that didn't happen, whether they just weren't holding those
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  positions in the 1st place or what that kind of was.
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  But it's been a very interesting time to sit back and see how
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  much the media and current events are playing into the
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  cattle market, which they always have.
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  But I feel like we can all sit back right now and say that
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  they're playing a bigger role than they have in years past as
• 12:16
  well. Yeah, for sure, for sure.
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  And you know, we're still kind of seeing cash strong in some
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  areas. A lot of barns, they're still
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  setting record highs. It's definitely softer for sure.
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  But cash buyers have become so dependent on the board to set
• 12:33
  their price. So that's where also we're
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  seeing the volatility trickle back into the cash market.
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  Yeah, absolutely. We're definitely seeing a lot
• 12:42
  more correlation as far as that goes and how much the board is
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  playing an impact on the cash market and what we're actually
• 12:49
  seeing in the sale barns for our cattle producers.
• 12:53
  At the end of the day, it's it's really intriguing and I'm very
• 12:56
  curious to see how this DOJ thing plays out with the big
• 13:00
  four. Again, like you said, you made
• 13:02
  some great points. It's been something that has
• 13:04
  needed to happen for a while. So I'm very curious to see how
• 13:07
  that plays out and how that investigation and then the
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  results of that investigation are going to affect the cattle
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  market. Screwworm, I'm tired of saying
• 13:17
  that damn word. I'm honestly tired of it like,
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  but you made some really great points there too.
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  Curious to see how that is going to continue to affect the
• 13:25
  markets because we need to open that southern border up as far
• 13:28
  as a supply and demand aspect goes.
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  But we also need to be protecting our domestic cattle
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  herd and we need to do it smart. We can't open that border back
• 13:36
  up, bring a bunch of feeders in and therefore potentially impact
• 13:40
  our domestic cattle herd. It just doesn't we, we can't
• 13:43
  risk that as far as the give and take of what that would look
• 13:47
  like. So we've got that in play.
• 13:49
  We've got so many other things in play.
• 13:51
  I know we've touched on a few other things, but I'm very
• 13:54
  curious to see how those are all going to continue to affect the
• 13:56
  markets as far as our just commodities go.
• 14:00
  Right. And kind of like you said, our
• 14:02
  heightened position as an industry in the media, I think
• 14:06
  people are definitely more aware of everything going on in this
• 14:09
  industry than they ever were. I talked to producers that maybe
• 14:13
  check the board, you know, once every couple of weeks and now
• 14:16
  people are glued to it, opening it up, you know, 3-4 times a
• 14:20
  day. People are just so invested and
• 14:23
  aware of what's going on. And there's been such a
• 14:26
  heightened focus on the markets and the cattle industry as a
• 14:29
  whole and the media, I think consumers and the producers are
• 14:34
  playing even such a bigger part today than they ever were before
• 14:38
  and definitely paying attention to that.
• 14:40
  Absolutely. I would agree with that too that
• 14:43
  I did not ever really check the board as a cattle producer.
• 14:47
  If I'm being completely honest, years ago, it was not something
• 14:51
  that I was extremely focused on. The correlation between the
• 14:57
  board and what we were getting at the sale barn was there, but
• 15:00
  it wasn't as drastic, right? And now it's one of those things
• 15:04
  that I'm that person too. Like I've got the widget on my
• 15:07
  home screen that shows the consistent results of what's
• 15:12
  going on at that moment. So pretty much every time I'm
• 15:14
  opening my phone, I can see it. And so it is really interesting
• 15:18
  to see how as a producer population we have changed and
• 15:21
  how we are focusing on the market and how all of that plays
• 15:25
  in to our daily lives, lives as producers at the end of the day
• 15:30
  and how that is affecting us on our home operations.
• 15:33
  And we also hear, you know, heightened talk of mandatory
• 15:36
  origin labeling. I think that's huge.
• 15:38
  I think that's something also that has been a heightened focus
• 15:41
  from the consumer standpoint and the producer standpoint and
• 15:45
  righteously so. You know, these people we're
• 15:46
  getting imports of beef from foreign countries and just
• 15:50
  because they may be, you know, packaged in the United States,
• 15:53
  they're labeled as US product. And there's definitely an issue
• 15:57
  with that had we have it out on the meat counter, as you know,
• 16:02
  foreignly imported, whether it's Argentina imported, Mexico,
• 16:05
  wherever. I think that'll definitely also
• 16:08
  have a plan on getting price down for the consumer.
• 16:12
  And I would be interested to see kind of what that looks like.
• 16:14
  As far as I, I think it'll kind of be a little bit of a 5050
• 16:18
  split. Will people be more willing to
• 16:20
  pay the extra couple dollars for US beef?
• 16:23
  And personally speaking, I of 100% I would and I think a lot
• 16:28
  of people will if they have the budget for it because there's
• 16:33
  just not a lot of transparency in the industry and that side of
• 16:36
  things. We don't know what's going on
• 16:38
  over there like we do in our US plants.
• 16:41
  It's just. Yeah, yeah.
• 16:44
  And I think like my biggest issue with the mandatory origin
• 16:48
  labeling is the fact that like, like you said, they were coming
• 16:53
  here as live cattle being processed in the United States,
• 16:56
  packaged the United States and being labeled as a product of
• 16:59
  the United States. You don't have to put that it's
• 17:02
  a product of Argentina on there. Just don't put that it's a
• 17:05
  product of the United States because it's not like I don't
• 17:09
  care if there is a label on there with a little country flag
• 17:12
  saying every single country that this animal came from.
• 17:15
  Just don't put a label on there, period.
• 17:17
  And then label the products that are US beef born and raised,
• 17:22
  processed here as US beef. And again, very curious to see
• 17:27
  how those negotiations continue to unfold.
• 17:30
  I'm excited. I'm going to have a few more
• 17:31
  conversations about that this week with some other people on
• 17:33
  the podcast. So very curious to see other
• 17:36
  people's thoughts on that. And again, I think it goes back
• 17:39
  to letting our consumers choose. I don't know if we're going to
• 17:43
  see a massive change in consumer behavior because of it.
• 17:47
  But again, it just goes back to that honest labeling standpoint
• 17:51
  of, hey, as a producer in agriculture, I don't want a
• 17:55
  product of the United States label on Brazilian beef in my
• 17:59
  beef counter. I also don't want a label on my
• 18:02
  orange juice that says GMO free. That is just simply misinforming
• 18:07
  the consumer and causing more issues at the end of the day.
• 18:11
  And it's just a big fat marketing ploy that isn't
• 18:14
  helping anyone other than the retailers.
• 18:16
  So. Yep, that's, that's exactly
• 18:18
  right. And that goes back to just more
• 18:21
  transparency in the beef industry.
• 18:23
  And you know, also going back to if you can buy your beef
• 18:26
  locally, great. And if you look at the price
• 18:29
  difference compared to what you're paying per pound based on
• 18:32
  carcass weight and having it cut and split the way that you want
• 18:35
  it versus what you're going to pay in the store is drastically
• 18:38
  different. So if you have that available to
• 18:40
  you and and much cheaper. So if you have that available,
• 18:44
  it's definitely an option to be looking at.
• 18:46
  We also see more small processors opening, a more small
• 18:50
  processors in the process of opening, which is also going to
• 18:53
  pose more competition to the big four.
• 18:55
  So I'm excited to see what that looks like and hopefully we can
• 19:00
  start to grow as an industry in positive ways.
• 19:03
  Absolutely, absolutely. Well, as we close out the
• 19:06
  podcast, Samantha, any other thoughts or anything else that
• 19:09
  we need to touch on our head on today that we haven't covered
• 19:12
  thus far? Think so.
• 19:13
  Perfect, awesome, awesome. Well, thank you for your time.
• 19:16
  This was a fun conversation. We're going to have to kick Dan
• 19:19
  out a little more often now. This was this was a lot of fun.
• 19:22
  I'm going to have to text him and give him a hard time about
• 19:24
  it. But thank you as always for your
• 19:26
  thoughts and your insight. To all of our listeners out
• 19:29
  there, thank you for listening to another episode of the Cattle
• 19:32
  USA Daily podcast. I'm your host, Lauren Moylan and
• 19:35
  with our guest Samantha Kozarite.
• 19:37
  Thank you for listening and we will see you all tomorrow on
• 19:40
  another episode. Have a good one y'all.