Latest / CattleUSA Daily / 193: The Cattle Market’s Rollercoaster: What Producers Need to Know

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193: The Cattle Market’s Rollercoaster: What Producers Need to Know · CattleUSA Daily

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In today's market episode with Samantha Kozar, right, and Dan
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Gearhold, we are breaking down the cattle markets.
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Everything that Dan and Samantha have been seeing over the past
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week, some indicators as we go into the remainder of fall,
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start out winter and into 2026, January is right around the
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corner. And so we start discussing all
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of those things as well. In today's episode, we are
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breaking down everything that you could possibly need to know
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about the cattle markets. Before we hop in today's
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episode, if you could take a second to like subscribe,
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subscribe, rate and review this episode, we would really
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appreciate it here at the team. Without further ado, let's go
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ahead and hear from Samantha and Dan.
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Welcome to the Cattle USA Daily podcast, your go to source for
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the latest livestock markets, industry insights and the
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updates shaping agriculture today.
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I'm your host, Lauren Moylan, a passionate advocate for
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agriculture here to keep you informed and connected.
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Now let's dive into today's episode.
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Dan, Samantha, welcome back to the podcast.
1:07
What is going on in the world of world of the markets?
1:10
Who would like to take the first swing at it this morning?
1:14
Samantha. All right, Well, we saw a lot of
1:17
sales last week on the negotiated fed cattle trade
1:20
range from two 28237 weighted average, kind of settled at
1:25
23045 S Southern Plains was definitely trading at a premium
1:30
to the Northern Plains, but just didn't have the volume to drag
1:34
up that weighted average. CME Feeder Cattle Index was down
1:38
hard last week. I think if we keep seeing green
1:40
on the futures board and the auction Barnes holds steady,
1:44
we'll hopefully see cash go higher towards midweek to the
1:48
late week. Dan, what are your thoughts?
1:50
I agree. I agree.
1:51
It's kind of a kind of amazing how everything flipped, you
1:55
know, last Monday, Tuesday, everybody was doing doom and
1:59
gloom. We were going to zero and then
2:00
by Friday, shoot, there was 8 weeks selling at record high
2:03
prices out West again. So it's pretty funny how how
2:07
fast we're willing to get bullish after how quick we got
2:13
bearish there. You know it, it just, it was
2:16
pretty incredible as far as the cash market was concerned,
2:20
futures, a lot of obviously we talked about it, a lot of damage
2:23
got done to the charts. You had four gaps put on the
2:27
charts on the way down. So a gap is, it's just a look on
2:31
the chart. If yesterday's low was let's
2:33
just say 360 and the following day you open up at 3:55, there's
2:38
a $5 gap on that chart. If you don't go back up and work
2:41
towards that 360, you leave a gap.
2:44
Those gaps are just an indicator as far as technical is concerned
2:47
that hey, we might go back up, revisit that level, hopefully
2:51
fill the gap and continue back higher again.
2:53
But inevitably with what happened or gaps becomes hard to
2:58
fill the all four of them. So Peter specifically, you know
3:03
that that very top gap I'm looking in January, we don't
3:06
even touch it until we hit 930. That's a big ask to get back up
3:11
to those levels. The next one below that is right
3:14
in that 355 area. And then that we filled the
3:18
first one, of course, right after I, I believe it was
3:21
Wednesday, we filled that first gap.
3:23
But the next one we've struggled so far.
3:26
The fill starts all the way up at 340 1/2, so that is a big
3:32
gap. I would like to see a spill it.
3:34
I don't want to see us run up here, touch it three times like
3:37
we have and inevitably not fill it.
3:40
That's a very, very poor look. As far as live channel
3:43
technical, same thing, except you only have 3 gaps in the
3:46
February and April and deferred contract.
3:50
December actually never gapped lower, mostly because cash was
3:53
not dropping as fast as futures were during that, you know,
3:58
bloodbath. So December never gapped.
4:01
We don't have to worry about that there.
4:04
There's quite a bit of consolidation on the December
4:06
daily chart, right at our current levels.
4:08
I don't like that consolidation after a big sell off because
4:12
it's places a fair flag on these charts.
4:14
Inevitably. It's not my favorite indicator,
4:16
but it's there and traders are watching it.
4:18
So you've seen a market go sideways the last 5-6 trading
4:22
days and we can't get any real power to buy this thing and push
4:26
it back up towards those old highs.
4:28
We can't get any major selling pressure to sell it off because
4:31
we're already trading in that low two 30s, right with cash.
4:34
It's just a market that doesn't know where it wants to go.
4:37
And if we look at open interest, which I always like to bring up
4:40
because that tells us who's trading it and how you seen open
4:43
interest was was dropping big time towards the end of that
4:46
sell off. And then those first two days we
4:49
rallied, we lost open interest as well.
4:52
Well, that's not good. That's your classic dead cat
4:54
bounce short traders taking profit.
4:57
And then since then we've actually put a little open
5:00
interest back on the last several days and in a sideways
5:03
market, it basically tells you nothing.
5:06
So I'm glad we're talking about it.
5:07
It doesn't do any good. But Long story short is we we
5:12
still don't know what managed money is doing because the
5:14
government shutdown. I would like to see where
5:16
they're sitting at position wise.
5:17
But inevitably we need cash to give these traders the
5:21
confidence to go along again with power.
5:24
If we don't see cash turn the corner this week, we've got some
5:27
big problems. I I was in the camp Friday that
5:30
we were going to. We had the potential and and had
5:32
the power to go steady this week or sorry, higher this week.
5:36
Now looking at it and watching the board trade, I almost wonder
5:39
if we're just going to be more of a steady ish market.
5:42
You know that that 234 to 236 maybe in the South, they've got
5:47
the power in the South to push this up higher.
5:49
But like Samantha said, there's not a lot of volume in the
5:52
trades in the cash market down there.
5:53
So that's a struggle. The North was disappointing last
5:57
week. The very few that traded were, I
5:59
guess you would call him six days lower than the prior week
6:01
at that at that 2:30. That's not good.
6:04
We need the North to really step up the game here and force this
6:07
thing higher. So I'd like to see that Nebraska
6:10
do the work because they're the ones that have the opportunity.
6:13
You know, Texas, Kansas came up, cleaned up some of those fat
6:16
calves here a month ago. Iowa, on the other hand, has a
6:19
lot of big heavy cattle that we backed up, you know, during that
6:23
August, September and and early October time period.
6:27
Until we get those spats cleaned up in Iowa, Iowa can't be the
6:30
leader. So I think, I think the balls in
6:32
Nebraska's court, of course, the northern cash higher this week.
6:36
We really need the like I say, we really need it to go if we're
6:41
going to take 2:30 with the board trading at 2:31, we're
6:43
back to our negative basis. How many producers that are
6:46
enjoying that? So hopefully they step up.
6:50
I'd like to see some 2:30 maybe 234 trade in the north, probably
6:54
get the South at 230-6237 if that happens.
6:58
But inevitably I guess I'd I'd more think we're probably
7:01
trending towards that steady cash.
7:02
Samantha, do you have any other thoughts on what Dan just
7:04
discussed? Yeah, I think it's really crazy
7:07
to see how cash has fluctuated just in the past few weeks.
7:11
I mean, we were seeing on the feeder cattle market, we were
7:13
seeing $40 off the high and that's just, I mean, last year
7:17
you're, you're two years ago that would have been unheard of
7:21
for it to fluctuate to that magnitude.
7:23
I think it'll be interesting to see what the South border and
7:27
talks of it opening, you know, towards the first of the year,
7:30
what that'll have an effect on our markets if it will.
7:34
If it won't, I think it's still a little premature.
7:37
I've heard talk, you know, the sterile screwworm facility South
7:41
of the border is still only 30% complete.
7:44
I think we need to get some of these facilities more moving
7:48
further along before we can talk about opening the border.
7:51
You know, if you do open it prematurely, that's going to
7:53
threaten our domestic herd even more than where we're at.
7:56
So I think that's something we need to look at.
7:59
So that's kind of my thoughts on that, yeah.
8:01
It's definitely going to be interesting to see how what that
8:04
affects the market in the coming months and into the new year and
8:08
even just the talk of it affects the markets.
8:11
I think that that's kind of the trend that we've been seeing
8:13
over the past few weeks is how they talk of certain things has
8:16
been affecting the markets, not necessarily the outcome of those
8:21
events affecting the markets, but just the discussion of them
8:24
even happening. So it'll be very interesting to
8:27
see how that continues to to develop and just shape as we go
8:33
into December and into January as well.
8:35
Yes. For sure and your.
8:36
Thoughts. You know, I'd like to combine
8:37
something with Samantha. You know, she, she said, you
8:40
know, that's the talk of the border opening.
8:43
That's a big deal. And I think that's all either on
8:45
that right now when it comes to trade futures.
8:48
Let's combine that with the technical things we just talked
8:51
about those 3 three to four gaps we had you combine that.
8:54
If we don't fill all of those gaps and they open that border
8:58
up, there's potential, you know, May, August, October feeders
9:03
next year to be well under the $300 mark.
9:07
So to me, if I'm a producer and I want to combine a little bit
9:10
of technical knowledge with that possibility that we're going to
9:13
have more available feeders next year, if they leave that open,
9:16
I'd be stepping out covering next year's, you know, this
9:19
coming calf crop. What are we selling next summer,
9:21
next fall? You know, it's Long story short,
9:24
we had short supply brought to you partly because of that the
9:29
Mexican border shut down. So you bring 1.2 or three 4
9:32
million head in next year all of a sudden your supply is not
9:35
quite as short. Are we going to maintain that
9:37
$300 feeder mark? I think that's that's really a
9:41
good enough reason combined with those technicals.
9:43
I mean, are we going to get managed money to to push us new
9:46
all time highs with those gaps and that technical damage done?
9:51
Yeah, You know, if they're watching the fundamental side
9:53
and that border as well, I think it's a big struggle to hold this
9:56
32330 mark out in the next year. So I, you know, it's a big deal
10:02
and, and none of us are in that meeting tomorrow with Rollins in
10:06
Mexico. And you know, we don't have an
10:09
exact date. Yes, Rollins is concerned and
10:11
doesn't want to open the border, but the fact is it's going to
10:14
open someday. We just don't know when the
10:16
date. So we should be prepared and
10:18
don't sit around and wait for them to announce when it's going
10:21
to open because that's when the market's going to correct before
10:24
you can actually do any. That's just, I think we need to
10:26
be as producers looking further ahead because when it crashes, I
10:31
mean you've seen the last few weeks, it crashes hard.
10:34
So have that protection on there as soon as you can get it.
10:37
Yeah, absolutely. It's kind of one of those
10:39
instances of being proactive where we can.
10:42
Not everything in the cattle industry is a scenario or
10:44
situation where we have that opportunity to be proactive.
10:47
But the writing is on the wall for this scenario.
10:52
This is something that we have been talking about for a long
10:54
time. And like you said, Dan, it's not
10:57
a question of if, it's a question of when.
11:00
And so is it going to happen in January, February, Are they
11:03
going to wait until the spring? We don't know.
11:05
That's that's not something that we know the answer to at this
11:08
moment. But it is still one of those
11:10
situations that we can't wait until it does because then it's
11:14
going to be too late. It's like you said, Samantha,
11:18
being proactive, looking forward and how we can continue to
11:22
mitigate that risk where we can. Yes.
11:24
I think another thing we're seeing in the media right now,
11:26
USDA came out with a plan last week to fortify the American
11:31
beef industry, cattle industry. They came out with a lot of good
11:34
thoughts. So I think when we're seeing a
11:36
spotlight on the cattle industry, like the Argentina
11:39
thing posed to the media, Trump coming out with his comments,
11:43
whatever. However, I think it did actually
11:45
in the end, pose possibly a more positive spotlight onto the
11:50
cattle industry as far as what we need to fix.
11:52
They came out, talked about opening up grazing access on
11:55
federal lands, better access to capitals for producers trying to
11:59
get their foot in the door. You know, after we saw box beef
12:02
cut out values skyrocket the last few weeks while prices at
12:05
the producer level were plummeting, I think it opened up
12:09
the government's eyes from that standpoint as far as, OK,
12:12
there's really no direct correlation position between
12:15
beef at the consumer level and prices at the producer level
12:19
from a live standpoint. So I think we need to step back
12:21
and kind of re evaluate this. But going into that, you know,
12:25
less restrictions for local processors, open up grants for
12:29
small processors, low interest rates, loans to offset startup
12:34
costs for small processors. And overall, there's more
12:37
transparency and the beef industries.
12:40
I think if we can get in the wheels in motion on that, it's
12:43
all going to be very positive things for the American cattle
12:46
rancher. And your thoughts?
12:48
I agree, yeah, I'm glad they're they're working on these topics.
12:51
I mean, it's done something that has needed to been talked about,
12:55
you know, 10 years ago and here we are.
12:58
So I'll just hope the government does screw it up.
13:02
I mean, I it is good. They're talking about it.
13:04
Inevitably you've got a government that wants to make
13:08
our cattle herd more resilient longer term better.
13:11
So that's good. The devil's in the details for
13:14
me, though. I never believe it till I see
13:17
it. So I'm optimistic.
13:18
I think it is in the spotlight enough If we get the right
13:21
people, you know, surrounding Rollins, if we get the right
13:24
people surrounding Trump and the rest of Congress, that'd be a
13:28
good thing. I'll just see how it all shakes
13:30
out, yes? Absolutely.
13:32
I think that I follow your sentiment there as well, Dan.
13:34
We'll see how it all shakes out. I'm kind of more on the side of
13:38
the cattle industry that the less government intervention,
13:41
the better on certain situations and scenarios.
13:44
But I think everything that they put in this plan that they are
13:46
rolling out has the potential possibility to be really great
13:50
for our cattle herds for what we've been asking for for a
13:54
while. These are not any new topics
13:56
that are in there. These are topics that we've been
13:58
discussing within the cattle for a long time that hey, if we want
14:03
to continue to be a self reliant as we possibly can within the
14:06
United States cattle industry, these are asks, these are what
14:09
we need to continue to develop and grow that where we can.
14:13
Any other thoughts on the markets?
14:15
Any other highs lows that we're seeing this week?
14:17
How's everything kind of outside of the feeder cattle market?
14:20
I know that's what we've been talking about quite a bit, but
14:23
is there anything else outside of that market that we need to
14:26
discuss? Been getting hammered, not
14:29
surprising. Managed money went to a new all
14:31
time record long decided they were going to take their ball
14:34
and go home. Since then, you know, February
14:36
hogs went from 92 down. Our lowest trade today was 81.
14:41
I mean you take 10 bucks out of the hog market, that's a big
14:44
deal to a hog producer. A lot of lot of these hogs are
14:47
now getting bought at at break even levels as we start to look
14:50
in the spring and summer. So that's concerning.
14:52
I hope we turn the corner here and get this chart looking
14:55
higher. Inevitably the cut outs been
14:57
relatively stable right here around 100.
15:00
I, I want to once again, we don't have the, the export
15:04
numbers with the government shutdown, but my hope is, you
15:08
know, we've had good load counts on that side of things.
15:10
You're coming into that holiday demand.
15:12
You know, hopefully the hams prop us up.
15:14
If if some of these consumers cannot afford to buy prime rib,
15:18
if we can turn this ham around and start pushing that thing
15:21
higher, hopefully, you know, maybe we see that 105110 cut out
15:24
come back. I'd love to see that for these
15:27
producers, give them an opportunity to get hatched up.
15:30
It's been a lot of talk around the hogs, you know, this big
15:32
hole coming in December because the disease pressure and
15:35
everybody's been sitting and waiting, you know, buy the
15:38
rumor, sell the facts. So we we bought that rumor, you
15:40
know, all the way from back this summer when we saw that disease
15:43
pressure and that market up to those highs in the 90.
15:47
Now here we are, you know, so I'd like to like to see the
15:52
proof, you know, see those still numbers drop back and weights
15:54
come down at the same time to prove that that holds there.
15:57
You know, this summer, we, we knew there was a hole.
16:00
We thought it was in May, June, it turned out to be June, July.
16:03
So I'd like to see I'd like to see that hole start opening up,
16:08
you know, as we get towards the end of November and prove that
16:10
it's in December hogs. But if cash hogs rally, if the
16:14
cut out stabilizes, hopefully 1105110 here in December, use
16:19
that as an opportunity to get next summer's hogs hedged up
16:23
because I haven't heard of a lot of disease pressure lately.
16:25
So I'm very, very concerned we're going to see an increase
16:28
in numbers. At the same time, I believe I
16:30
was reading something somewhere that China's actually going to
16:34
downsize their hog herd. So it's hard for me to believe
16:38
that's going to happen and they're going to come over here
16:39
and buy a bunch of airport. So thankfully we've got Mexico,
16:43
they've been buying a lot of pork over the last year.
16:46
They've been holding us together.
16:47
So and there's other countries, the spotlight is always on China
16:51
and I get so tired of it. It's a big country, a huge
16:53
population. So of course we want to sell our
16:55
products into them, but it's the same time big, it's a big globe,
16:59
big world, we could sell to others.
17:01
So hopefully, hopefully we make that happen.
17:04
And if we ever get this government report, you know,
17:07
government back open, we can see those reports and prove that we
17:09
can sell to other countries. So as far as grains go back to
17:13
that big China word. So kind of bought some beans.
17:16
Basis is sperming futures made a rally.
17:19
Everybody's optimistic in the grains.
17:21
Caution everybody. The great big game of chicken
17:24
between Trump and President Dai, the waters.
17:28
Yeah. So we don't know who's going to
17:31
back out first or or tweak something.
17:33
Use these rallies to get some sales on.
17:35
Don't leave those bins locked until next summer because it's
17:39
they'll be a whole new crop coming next year.
17:41
Use these rallies and get some pricing in place.
17:44
So other than that, that's kind of been the markets lately.
17:47
I guess I let not forget the stepbrother week.
17:51
So we've made a nice impressive run once again.
17:54
It's if they're not great levels in this five and a half dollar
17:57
range, you know, on on Kansas City week, you know, Chicago
18:00
sitting here, you know, same thing 55560.
18:03
It doesn't seem like it's great, but how about next December at
18:07
six O 3 using that? So I like I like getting started
18:12
on these rallies. I'd like to see another 20-30
18:16
cent rally and then I'd be very, very aggressive.
18:18
Absolutely. Samantha, any closing thoughts
18:21
from you? To shift the focus a little bit,
18:24
I will mention, but in regards to risk protection PRF, the
18:29
deadline on that is coming up here in about a month.
18:31
December 1 is the deadline. If you guys aren't familiar with
18:34
PRF, it stands for Pasture, Ranch Land and Forge Protection.
18:38
Awesome asset to producers. I will say a lot of people have
18:41
a common misconception that this is drought insurance and I want
18:44
to make it very clear. This is rain index insurance.
18:47
You do not have to be in a drought for this to work in your
18:50
favor. It settles off the average rain
18:52
index in your 17 mile by 17 mile grid.
18:55
So very positive product. I think if you go back and look
19:00
at the historic loss ratios, they are extremely high and I
19:04
think it has a better, for sure a better indemnity rate, a
19:07
better historic loss ratio than any insurance product on the
19:10
market. So definitely something to be
19:12
looking at if that's something you're interested in.
19:15
You don't want to wait because it can be a little bit of a
19:18
process just as far as gathering 570 eighths and getting
19:22
application in. So just keep that in mind, yeah.
19:26
And we are not seeing super positive reports going out into
19:30
next year as far as the weather goes, as far as drought
19:34
mitigation goes. We're seeing a lot of reports
19:37
start to come out saying that we're not necessarily going to
19:39
see a bunch of shrinking drought spaces, but we're going to see
19:41
growth in those areas. It's still early for a lot of
19:44
that prediction to be coming out.
19:46
But definitely like you said, Samantha, one of those things to
19:49
not wait on and it's a great tool to utilize if it is
19:53
necessary for you in your operation.
19:56
Any other closing thoughts from either of you as we round out
19:58
the podcast today? Thanks.
19:59
Okay, awesome. Well, thank you both for your
20:02
insight and just thoughts on this crazy cattle market that we
20:07
are seeing right now and just the.
20:10
Absolute whiplash that it is to be a part of the cattle industry
20:14
right now. Thank you both for breaking it
20:16
down, showing what you guys are seeing on both of your sides.
20:19
To all of our listeners out there, if you are interested in
20:22
anything that we talked about today, make sure they check out
20:23
the show notes down below and get in contact with our team and
20:27
we would be more than happy to help discuss your options and
20:29
what you can be doing there as well.
20:32
Thank you so much for listening to another podcast episode of
20:34
the Cattle USA Daily Podcast. We will see you all tomorrow on
20:37
another episode. Have a good one y'all.