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Cattle: Dead Cat Bounce · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_00: Welcome to the Cattle Market Talk Podcast with Professional Ag Marketing.
• 0:04
  SPEAKER_00: Come here to get your fresh updates on what's happening week to week within the cattle market.
• 0:09
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_00: Today is October 30th.
• 0:18
  SPEAKER_00: I've got Jeff with us.
• 0:18
  SPEAKER_00: How's it going, Jeff?
• 0:20
  SPEAKER_00: Good afternoon, Mike.
• 0:21
  SPEAKER_00: Well, we have had some fun in all of these markets.
• 0:25
  SPEAKER_00: I am ready for the weekend.
• 0:26
  SPEAKER_00: It's Thursday, but let's just skip tomorrow, Jeff.
• 0:29
  SPEAKER_01: Yeah, cattle can't go up or down$6 on Saturdays.
• 0:33
  SPEAKER_00: No, they can't any markets.
• 0:35
  SPEAKER_00: It's been a doozy here.
• 0:37
  SPEAKER_00: Let's talk about this cattle market.
• 0:39
  SPEAKER_00: So we stopped going down, and that's about as good a news as I can come up with.
• 0:46
  SPEAKER_01: Yeah, I I think that's exactly right.
• 0:48
  SPEAKER_01: And um, you know, we're going on just about a week here now with no real announcement coming out as far as the border opening to Mexican feeder cattle, right?
• 0:59
  SPEAKER_01: Yep.
• 1:00
  SPEAKER_01: Um that was last weekend's Friday into Sunday, I believe, is kind of when that was those uh discussions were taking place, and Mexico was gonna come here this week, and that happened, correct?
• 1:13
  SPEAKER_00: And that news basically comprised of the Mexico people wanted to meet in DC and talk about reopening the border, and basically the US was like, sure, come on over.
• 1:24
  SPEAKER_00: And then the the Mexicans, when they left, they were like, Yeah, we don't have a date to reopen the border.
• 1:29
  SPEAKER_00: And that's kind of the last that we've heard on it.
• 1:31
  SPEAKER_00: And since then, all of the news has been all about trade deals.
• 1:35
  SPEAKER_01: Yeah, Trump's been a little busy over there in the Pacific Rim signing these uh excellent bean deals.
• 1:43
  SPEAKER_01: All worried about the grain producer again.
• 1:45
  SPEAKER_00: More Japan, South Korea, China, I would argue, in this, which had less to do with the beef side than last week.
• 1:52
  SPEAKER_00: It seemed like he was all talking about importing beef from Brazil and Argentina and those items.
• 1:56
  SPEAKER_00: But it sounds like uh him and Lula have to meet yet, don't they, to have uh some discussions on Brazil?
• 2:02
  SPEAKER_01: Yeah.
• 2:02
  SPEAKER_01: So I I mean I think that sums up the marketplace today, though, is we had a lot of activity going in the first part of this week and not much in the past two, maybe two and a half days here.
• 2:15
  SPEAKER_01: And the only concrete thing we have is um probably going to pull off a good portion of the tariffs coming out of Argentina.
• 2:26
  SPEAKER_01: Yep.
• 2:26
  SPEAKER_01: We've really just heard very much rumors about anything as far as tariffs being removed from Brazil, very much rumors about anything on uh, hey, the border's gonna open up to Mexican feeder cattle.
• 2:37
  SPEAKER_00: I feel like Trump's gonna get back, look at the beef market, and be like, crap, that thing's still not going down.
• 2:43
  SPEAKER_00: I better say something again, I feel like, is how this is gonna go.
• 2:47
  SPEAKER_00: He's probably gonna be like, Man, I gotta make a tweet about everything every day.
• 2:52
  SPEAKER_01: I told these guys their prices were gonna go down.
• 2:55
  SPEAKER_01: It only worked for about three days.
• 2:57
  SPEAKER_00: Yeah, gosh, it the the days I tweeted something on truth uh social was basically heavily correlated with the downward market.
• 3:06
  SPEAKER_00: Then I stopped saying anything and the those guys ran the market back up on me.
• 3:10
  SPEAKER_01: That's pretty much the podcast right there.
• 3:12
  SPEAKER_01: That sums it up.
• 3:13
  SPEAKER_00: I am interested though, like on this feeder cattle, for example, we had two massive gaps that we put in here below.
• 3:20
  SPEAKER_00: We filled the first gap, we have the second gap just above us, and then right after that, you've got the 20, 50-day moving averages, and then that would be about 50 to 60 percent retracement as well.
• 3:31
  SPEAKER_00: So if that feeder cattle market does find another, you know,$20, but just not as crazy saying that as what many would seem.
• 3:39
  SPEAKER_00: Um, that we're gonna have some resistance points to kind of run through and some targeting spots, I think, to really focus on, Jeff.
• 3:44
  SPEAKER_01: Right.
• 3:45
  SPEAKER_01: It's incredibly hard to uh pick this market apart and figure out where it goes next, obviously, um, with the uh with the what you mentioned about the social media rampage, of course.
• 3:56
  SPEAKER_01: That and I'm guessing we're not done there, Mike.
• 3:58
  SPEAKER_01: I'm I'm guessing there will be more information out and probably uh in the coming week, would be my guess.
• 4:04
  SPEAKER_01: But yeah, you from a technical standpoint, you kind of like the idea that it is seemed like it's building a little bit of support here.
• 4:10
  SPEAKER_01: We also have a hundred-day moving average.
• 4:12
  SPEAKER_01: We've all been watching some.
• 4:13
  SPEAKER_01: Um that hasn't been super great, but we have can uh consecutively traded uh higher than that uh and closed higher than the 100 day, both on feeder cattle and the live cattle.
• 4:25
  SPEAKER_01: So there's some reasons why maybe we can hold some support here.
• 4:28
  SPEAKER_01: And then I think the most um logical uh action after that, if if we um can hold these type of levels, is to come back to the 50% retracement, some of those higher moving averages, fill one of those gaps at least in the feeders as well as the deferred live cattle here.
• 4:48
  SPEAKER_01: I think that all makes a lot of sense.
• 4:50
  SPEAKER_01: It's I got a feeling it's gonna be awful tough to push a lot higher than that.
• 4:55
  SPEAKER_01: Um if you want to call it, you know, fundamentals the wrong word, but maybe it's uh money flow.
• 5:01
  SPEAKER_01: You know, that's that's also something that we've spent a lot of uh time studying here in this past week and a half or so since the market started to implode.
• 5:11
  SPEAKER_01: Um and a few things that we we don't really like there, but maybe they're not catastrophic at this point, is obviously we were um pushing record longs going into uh uh a couple weeks ago um when that market was putting in its lifetime highs.
• 5:28
  SPEAKER_01: Um since then, you know, we we have lost some open interest, so that's the number one sign of uh long is probably liquidating out of this market, is open interest going down, and we've continued to lose a little bit of the open interest here in the past two or three days, even as we've stabilized.
• 5:46
  SPEAKER_01: So that's a little bit concerning.
• 5:48
  SPEAKER_01: It seems like the sell pressure maybe is still somewhat evident in the marketplace, um, but there's just enough buying, you know, uh at some of the levels that we've been talking about that help stabilize this market.
• 6:02
  SPEAKER_01: I got a feeling those are probably some fairly weak longs.
• 6:05
  SPEAKER_01: If we start putting on some pressure on this marketplace, some of them new longs are probably bailing pretty quickly.
• 6:12
  SPEAKER_01: Um but so you know, for the here and now, um, it seems like we're grabbing just a little bit of support here.
• 6:20
  SPEAKER_00: Basically the lowest open interest we've had since August in this cattle market.
• 6:25
  SPEAKER_00: So uh man, if we get the government back, I I'll be I will be fascinated to see what open interest looks like, not just for the cattle, but on the hog sides too.
• 6:34
  SPEAKER_00: Yeah, because alongside of the cattle, the hogs have sold off right alongside of it too, and they had a massive long position too.
• 6:41
  SPEAKER_01: Yep.
• 6:41
  SPEAKER_01: Now there is just a few fundamental pieces that are that have came up this week that are somewhat interesting and probably also helping grab some support here on these on the on the live cattle futures for sure.
• 6:54
  SPEAKER_01: Number one is with the Packers are back uh with some margin in the business compared, especially compared to where they were two weeks ago.
• 7:03
  SPEAKER_01: Now we we're struggling to get the biggest.
• 7:04
  SPEAKER_01: They're making money.
• 7:05
  SPEAKER_01: I I think so.
• 7:06
  SPEAKER_01: At least the proxy sure looks better.
• 7:09
  SPEAKER_01: Um, you know, at least they're paying less for the cattle than what they're selling the meat for, for an example, right?
• 7:15
  SPEAKER_01: And we have to be a little bit careful up here in the north.
• 7:17
  SPEAKER_01: You know, our prices now are getting a fairly large discount to those in the south, a good five bucks a hundred in the in the live, the way it's looking.
• 7:27
  SPEAKER_01: Um we're seeing some 235 trade, you know, as far north as Kansas, those cattle are probably heading south, and and that bid seems to be quite a bit better than what it is in the north.
• 7:38
  SPEAKER_01: Probably gonna stay that way for just a bit here.
• 7:40
  SPEAKER_00: 360 in the north, which is still like ten bucks lower.
• 7:43
  SPEAKER_00: But I mean if yeah, if we're talking 380 carcass, that that doesn't pencil out too bad.
• 7:49
  SPEAKER_01: I would agree with that.
• 7:49
  SPEAKER_01: Yep, I would agree with that.
• 7:51
  SPEAKER_01: So and we actually are seeing uh we're seeing some signs of maybe the shackles uh speeds starting to ramp up a little bit, Mike.
• 7:59
  SPEAKER_01: So this week so far, um, looks like we're gonna kill you know a few more cattle than what we saw last week.
• 8:07
  SPEAKER_01: Um I had that number here.
• 8:10
  SPEAKER_01: Looks to be roughly about uh ten thousand more uh or so.
• 8:16
  SPEAKER_00: So it's it is we're gonna gain some leverage back, it looks like.
• 8:20
  SPEAKER_01: Yeah, I I think we probably have, and that's what's part of what stabilized this marketplace here so far.
• 8:27
  SPEAKER_01: Um, is a little bit of margin in there, speed up the shackle a little bit.
• 8:31
  SPEAKER_01: Have to come uh grab some cattle that maybe you've had on the shelf for a week or so, have pull a few of them ahead as you've increased your speeds a little bit, and uh I think you have to buy some cattle here in the coming weeks to to help satisfy that additional demand.
• 8:47
  SPEAKER_01: So clearly the biggest driver on cash prices has been the um futures prices so far.
• 8:53
  SPEAKER_01: You know, see the northern bid seems to line up pretty well with whatever the front month futures are, unfortunately.
• 8:59
  SPEAKER_01: That's part of the part of the marketplace we're all involved in, I guess.
• 9:03
  SPEAKER_01: But in the background there, um they're gonna they need some cattle, probably gonna need some cattle in the coming weeks, and uh that should help at least stabilize, maybe add some fuel to the flame here a little bit if we can get this market moving higher.
• 9:18
  SPEAKER_00: Alright, any final thoughts for our listeners today?
• 9:21
  SPEAKER_01: I don't think so, Mike.
• 9:23
  SPEAKER_01: It's uh it's an incredibly tough market, um, obviously.
• 9:28
  SPEAKER_01: I think uh it's gonna be one for the history books for sure, so we'll try to keep our head in the right spot and and really try not to misstep in uh too many times and too too big of uh uh steps in the wrong direction here.
• 9:43
  SPEAKER_00: Yeah, volatile, volatile, volatile, uncertain, all of the things right now.
• 9:47
  SPEAKER_00: This is gonna be a historic time to look back at.
• 9:51
  SPEAKER_00: Thank you, Jeff, for your time this week.
• 9:52
  SPEAKER_00: Thank you, Mike.