Latest / CattleUSA Daily / 134: Markets Are Moving Fast Here’s What You Need to Know with Dan Gerhold

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134: Markets Are Moving Fast Here’s What You Need to Know with Dan Gerhold · CattleUSA Daily

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  Welcome to another episode of the Cattle USA Daily podcast.
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  Today we're welcoming back Dan Gearholt with the Cattle USA
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  insurance team. Today Dan is talking all things
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  markets, what is happening in the world right now.
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  We talk grains, we talk cattle, we're talking kill numbers right
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  now. We talk the hog market even a
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  little bit and just what is going on in the world that is
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  affecting markets and everything else in between.
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  So without further ado, let's go ahead and hop into this episode
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  with Dan. But before we, if you could take
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  half a second to go like subscribe rate review, we would
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  really, really appreciate it here at the team.
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  It helps us continue to grow, reach more people and just make
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  sure that we are providing content for you guys that is
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  amazing and relevant. So if you could take half a
• 0:45
  second while we do this intro to go like subscribe rate review,
• 0:48
  do all of the things, we would really, really, really
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  appreciate it here at the team. And let's get into this episode
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  with Dan. Welcome to the Cattle USA Daily
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  podcast, your go to source for the latest livestock markets,
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  industry insights and the updates shaping agriculture
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  today. I'm your host, Lauren Moylan, a
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  passionate advocate for agriculture, here to keep you
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  informed and connected. Now let's dive into today's
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  episode. Happy Wednesday.
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  How? How's life in Iowa?
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  Great. Yeah, it rains all the time.
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  The crops looking good other than the stuff that's going
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  backwards because it's raining every other day.
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  But overall, you don't want to complain about rain in August,
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  so we'll take it. Precisely, Precisely.
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  Love to hear it. Well, what is going on in the
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  world of the markets right now? Break it down for me.
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  And a fun, I, I guess fun couple of weeks, a lot of volatility
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  stepping into everything. You know, cattle set new all
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  time highs one week looking like they're going to 0 the next day
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  and then turn around and put it back on.
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  It's rinse and repeat over and over again.
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  It's, it's been a ride. You know, yesterday we had the
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  Wazi report that really rocked corn pretty hard with that a big
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  188 and change yield that the USDA threw with corn crops that
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  going to make some cheap feed here this fall.
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  You know, at this point now it's cheap enough where I think, you
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  know, these feed yard backgrounders, anybody that has
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  to buy their feed really needs to look hard to get to be locked
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  in. You know, we're we're coming up
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  against calendar here. We might put, you know, a low in
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  this market here late August, you know, sometime in September
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  free harvest low. I think it's it's worth edging
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  off some feedriff now that we would build in that big number
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  and you know, most years we don't achieve a big number like
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  that. So it would be an all time
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  record high if we do. I know there is a lot of great
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  nifty crops out there, but inevitably there is.
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  It takes a mat. It's just unbelievable what it
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  takes to hit that 188. So yeah, I think we should
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  really step in and look at the feed rift side of things here.
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  Cattle. Yeah, like I mentioned Friday,
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  we got rock pretty hard. Feeders were down, just about
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  all contract months were locked. The limit went lower on Monday
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  first thing and then turned around ended up right back to
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  where we opened, not really giving us a clear sign, but
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  nonetheless we put you know fair amount on yesterday two 3-4
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  dollars and and we're just about back to where we were last just
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  last Wednesday. So you know, a lot of
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  volatility. These options are extremely
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  priced and something I happen to notice Friday or Monday, you
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  know, stepping all the way out to the March or April, April, a
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  $400.00 feeder cattle call option for 2 1/2 bucks.
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  Market has to rally more than $70.00 to get to that level and
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  it's still worth that kind of money.
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  I mean, to buy an ad the month, but you're going to spend
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  $1516.00. You know, it used to be you'd
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  spend 6 to 8 and now it's doubled.
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  It's just volatility went through the roof, justifiably so
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  when you're talking about these kind of markets.
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  Buckle up is all I can say. Buckle up.
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  Indeed. It has been a wild ride.
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  And I, I don't know where we're at on the like scale, but we're
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  like that volatility scale just keeps on on rising and rising
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  and rising. It's yeah.
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  Clutch your pearls, guys. Clutch your pearls.
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  Yeah, no, it's I, I don't know, it's, it's kind of an
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  interesting spot here for fat cattle.
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  We know the supplies aren't there to really wreck this
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  market in a big way. But the challenging thing we're
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  experiencing right now is, you know, we've talked about retail
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  and what they're, they have the potential to do.
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  You know, improving their margins here in August,
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  September is pretty normal for them.
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  You know, we since the last time we talked, I think we put, you
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  know, 10, maybe $12.00 on, on wholesale boxes.
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  You know, it, it was nice to see that rally.
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  But the, the concerning thing is, is in order to do that, the
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  Packers had to cut the kills even harder.
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  So, you know, normal kill used to be 125 to 130.
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  You know, you'd sometimes push up to 135.
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  You know, when they cut that kill down to 100,000 a day,
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  that's a big deal. And that's, if that's the only
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  way they're going to keep choice boxes up, you know, 38390 and
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  we've got a problem. That's when you officially know
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  you're dipping into the consumer's pocket a little too
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  far. But that being said, it's still
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  beef. People love buying it, people
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  love eating it. And I was at the grocery store
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  and it seems like, you know, they pulled back a little bit to
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  try and move some product and you could get rib eyes 12 to
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  $14.00 a pound. I think it, that was kind of a
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  fire sale deal. But nonetheless, it's still more
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  reasonable than the 2025 dollars that that we saw just 2-3 weeks
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  ago. So, you know, if we can get that
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  to happen, I think the volume starts improving on the amount
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  of meat we're shipping and consumers are buying.
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  So if at the end of the day, it all comes down to volume, the
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  Packers will have to increase the kills if we start moving
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  more volume of meat. Unfortunately, fortunately or
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  unfortunately depending on how you look at it, you know, we're
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  relying on the domestic consumer right now.
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  You know, there's there's no export market there to save us,
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  not at these prices and imports are sky high.
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  I don't think your burger demand is going to go anywhere.
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  It's pretty static. You know, it's just a matter of
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  the timing of the year trying to keep those metals moving so that
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  we can keep the Packers killing these cattle.
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  We don't want to see them at 100,105 thousand a day and
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  inevitably that'll back start backing up some cattle.
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  So it could be a a rough and rocky August.
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  We'll see what September brings. Good to know.
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  Yeah, it's one of those situations that we want our
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  Packers speeding up that chain speed and amount that we are
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  processing right now. And unfortunately it's kind of
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  going the other way and it's it's a trickle effect.
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  Yeah, absolutely. Yeah, they're not going to be
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  aggressive in the cash market and push prices higher if they
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  don't have a reason to, you know, increase the chain speed
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  and be more aggressive. A lot of those guys have two 3-4
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  weeks of inventory. You know, they got some
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  contracts they can burn up here in August, they're not going to
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  get aggressive. So things could change pretty
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  quick. We get into September, I am
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  looking for a hole in October, November, December on the fat
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  cattle side of things. That potential still there as
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  long as we don't back any any cattle up.
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  So just got to get there. Just waiting for that calendar
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  to turn over. Yes, just got to push through.
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  Just got to push through. What else is going on?
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  Is there anything else that we need to head on this week?
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  I know it's kind of one of those times a year where it's like
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  take what you can get. The grain market kind of sucks
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  right now, kind of markets holding on.
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  Anything else that we need to touch on?
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  I mean, hogs are doing, I guess what I kind of expected, you
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  know, with high beef prices, the court cutouts been holding in
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  there. We're still in August.
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  So that has a potential to turn over here this fall.
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  But overall, you know, what the disease pressure they've had in
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  the hog mark, you know, as producers, you know, we
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  shouldn't see this massive blood of hogs coming at us.
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  You know, in fact, I would say, you know, we get through August,
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  September, October, there's another hole opening up in that
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  space just from the amount of disease issues we've seen.
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  So December, you know, it's kind of like trying to row up river.
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  It's not a wise move, right? Go with the flow and the normal
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  flow says you're supposed to be hedging fall and winter time
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  hogs here. Have I have to look at $83 hogs
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  in December on the board and I have to ask myself, is it
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  already priced then? And what happens if beef stays
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  high and hogs, you know, the, the pork cut out stays high as a
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  result, you know, then 83 might look a little cheap.
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  So I think if a, if a person wants that winter time coverage,
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  I think they should look at options or LRPI really don't.
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  I really don't think we want to be straight futures Hedger, just
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  in case you know this, this pork cut out stays at 1:10.
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  That could really put a rally together by the time we get out
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  to December. Anything else?
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  Are we closing it out? I don't want to talk about the
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  screw worm. There's some rumors going
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  around, but let's not ruin a good one.
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  Let's not ruin a good day. Let's not ruin a good day.
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  Last time we talked about screw where we were wrong.
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  So let's just, let's not until it's confirmed, you know, we're
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  just going to live in ignorant bliss.
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  Yeah, that. Is where I would like to stay.
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  If anyone else has a different opinion, that's fine.
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  Yeah. I'm going to stay an ignorant
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  bliss. I talked about screwer Marty
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  this week. I've got my fault.
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  I'm good. I don't blame you.
• 9:58
  Yep, buy your LRP insurance and don't even worry if it gets
• 10:01
  here. Exactly, We're putting that on a
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  shirt, putting it on a shirt, that's just, that's all we have
• 10:08
  to say. Guys.
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  Buy your LRP and then don't worry about it and move on with
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  our lives and Hooray, love it. Amazing.
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  Well, Dan, thank you for your time.
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  As always to all of our listeners out there, make sure
• 10:22
  you check out the show notes down below.
• 10:24
  If you do need to get your LRP and get yourself covered, we
• 10:27
  have that Cattle USA insurance link where we partner with Dan
• 10:30
  and his team to be able to provide that for you guys.
• 10:32
  If you have any questions or just want to talk to someone
• 10:34
  about it, talk through all of your options.
• 10:36
  Give that link a click down below.
• 10:38
  Give our team a call, and we'll be able to help you out there.
• 10:41
  As always, thank you for listening to another episode of
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  the Cattle USA Daily Podcast. We will see you all tomorrow on
• 10:46
  another one. Have a good one y'all.