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Cash Cattle · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Miner.
• 0:22
  SPEAKER_00: Let's get started.
• 0:24
  SPEAKER_00: Today is April 6th.
• 0:25
  SPEAKER_00: I've got Nick with us here today.
• 0:27
  SPEAKER_00: How's it going, Nick?
• 0:28
  SPEAKER_00: Good, Mike.
• 0:29
  SPEAKER_00: Awesome.
• 0:30
  SPEAKER_00: Well, we're gonna talk a little bit about cattle today.
• 0:32
  SPEAKER_00: That's why I brought you in.
• 0:34
  SPEAKER_00: The cattle market has been incredibly hot here, but we're gonna start off with the grain market.
• 0:40
  SPEAKER_00: A little bit of a poor week here, performance-wise, corn down about 10 cents on the December contract here on the week, uh, down about nine on the soybeans.
• 0:51
  SPEAKER_00: Short week, only about four days of trading.
• 0:54
  SPEAKER_00: Friday, no trade tomorrow there, so uh we got a three-day weekend coming at us, saw some positioning ahead of that weekend.
• 1:02
  SPEAKER_00: But a few of the things that really pushed the grain market around this week, I think, Nick, was the better weather forecast that looks like they could get some more planting done, uh warming up quite a bit here, get some of the snowpack melted, and uh really look at some better planning progress going forward, hopefully, as it was really looking uh a little bit dark and uh dim here for a while on planning progress to start off with, especially with this week's big storm that kind of rolled through and missed us and went mostly north of us anyways.
• 1:33
  SPEAKER_00: But that got talked about a little bit, and then we're looking at a situation uh, you know, that they'll continue to trade that going forward uh more frequently here, especially towards uh the middle of April to the end of April.
• 1:45
  SPEAKER_00: So starting to trade more of a weather market here finally, it's been a little while.
• 1:49
  SPEAKER_00: And then we're gonna talk about uh the geopolitical tensions currently going on as well.
• 1:55
  SPEAKER_00: I don't think the market really liked the fact that uh uh China, Taiwan, U.S., we had some political tensions there.
• 2:02
  SPEAKER_00: So I think they uh were taking some risk off the table there as well.
• 2:05
  SPEAKER_00: But I really uh I'm interested in the future of these energy prices right now, though, Nick.
• 2:12
  SPEAKER_00: When I look at the uh Monday or the Monday trade, uh the open we saw Sunday night on crude oil popped$5 higher on the open after the OPEC announcement that they're gonna make a surprise cut.
• 2:24
  SPEAKER_00: I I'm really looking at that and saying we're above$80 again, made a really substantial rally uh on the energy complex here.
• 2:33
  SPEAKER_00: And looking forward, it's the right time of the year to see a seasonal increase in both grain prices and energy prices.
• 2:40
  SPEAKER_00: And I think if you start to see an increase in the energy prices here, uh that'll support ethanol, soybean oil, as we've seen over the past couple years, there's a pretty strong correlation between crude oil price and corn and soybean price.
• 2:52
  SPEAKER_00: So going forward, if we do see a uh do see a bounce in that energy market and uh we get a bounce in that corn market, maybe we trade some weather at some point here on the grains to get them fired up, uh, that's gonna provide some selling opportunities here uh come end of April and May time frame.
• 3:12
  SPEAKER_00: What do you think about all that, Nick?
• 3:14
  SPEAKER_01: Yeah, absolutely.
• 3:16
  SPEAKER_01: Um one thing though I do think I I mean it was nice to see that crude bounce, you know, and that were you know we got some lift on these energies after after kind of the whole banking deal and some fallout there in in in crude.
• 3:31
  SPEAKER_01: But um I do wonder if if crude really has bounced up enough to reflect uh the the large cut in production, meaning I think it has been a little bit resistant to go where it would have gone had we not um been you know seeing some some kind of some economic turmoil yet.
• 3:52
  SPEAKER_01: I wonder if we'd be significantly higher yet in crude.
• 3:55
  SPEAKER_01: But um either way, it is good to see.
• 3:57
  SPEAKER_01: I think that is gonna, you know, give us some support on the grains uh short term here.
• 4:02
  SPEAKER_01: Yep.
• 4:03
  SPEAKER_00: Definitely, I agree.
• 4:04
  SPEAKER_00: A lot of analysts here think there could be some more room room to run in this crude oil market up towards a hundred dollar bill again.
• 4:10
  SPEAKER_00: Uh looking at the forecast of our second half of the year, which is already quickly approaching us and these summer months of uh higher demand periods.
• 4:19
  SPEAKER_00: But this cattle market, this is uh really what I wanted to talk about today.
• 4:23
  SPEAKER_00: We saw some awesome cash here this week.
• 4:25
  SPEAKER_00: Really strong uh strength and uh really nice record prices getting posted.
• 4:31
  SPEAKER_00: Talk to me in general about the uh futures trade of uh of the cattle market right now.
• 4:37
  SPEAKER_01: Yeah, well it certainly start wherever you want.
• 4:40
  SPEAKER_01: Yeah, yeah.
• 4:41
  SPEAKER_01: It it absolutely, you know, is a cash-led market here right now.
• 4:45
  SPEAKER_01: Uh producers got leverage, and it's pretty astonishing to see these the you know very special days here of two weeks in a row now with with cash being up five bucks basically by Friday.
• 4:59
  SPEAKER_01: Um really seeing history here, I guess, with with prices and um price movements back to whack back weeks, I guess.
• 5:10
  SPEAKER_01: So it's been fun.
• 5:11
  SPEAKER_01: I think uh I think producers gotta be eyes wide open here though, because these, you know, these kind this kind of market action is is simp can be kind of indicative of of toppiness, right?
• 5:25
  SPEAKER_01: And and although we don't ever want to talk about that, like this thing's got a long ways to go yet, potentially, but uh we we got some definite things going on today that are concerning.
• 5:37
  SPEAKER_01: I mean to have choice beef approaching 290 here and and pork at 75 cents is i is very puzzling, and uh, and I think uh you know that that alone is cause for concern here and and to get some coverage on as these back months and futures rally along with cash.
• 5:58
  SPEAKER_00: Very nice.
• 5:59
  SPEAKER_00: A cash rally is a real rally, one would say.
• 6:03
  SPEAKER_00: It uh I'm looking forward to seeing how much more this has in it.
• 6:06
  SPEAKER_00: Any future indications of what this market's got left in it?
• 6:09
  SPEAKER_00: I mean, I think we can all agree this probably happened a little bit quicker than we thought it would based on heifer retention and all of that fun.
• 6:16
  SPEAKER_00: Um what kind of legs does this market have potentially under it, you think?
• 6:22
  SPEAKER_01: Yeah, that's a good question.
• 6:23
  SPEAKER_01: I mean, I we are, I think in the cattle deal right now, we're finally experiencing kind of the perfect storm of leverage for the producer.
• 6:30
  SPEAKER_01: You know, we're coming off one of the worst winters we've had in in a long time, which which you know oftentimes we would have said that you know the winter kind of drives the spring cattle market, and and not only do we have a horrendous weather this winter, but also um short supplies.
• 6:49
  SPEAKER_01: That was we've seen on numerous cattle and feeder ports we're placing less cattle every month than what we did a year ago, and and now we see too from the placement data, you know, May and June from that placement data look like they're gonna have at least five and a half to six percent less cattle available for for those months versus.
• 7:10
  SPEAKER_00: And that's not regular, right?
• 7:12
  SPEAKER_00: To have that big of a drop in the second quarter.
• 7:14
  SPEAKER_01: No, no, I mean that'd be substantial drop for those months.
• 7:18
  SPEAKER_01: Um it is the stage of the cycle we're in, though, right?
• 7:21
  SPEAKER_01: I mean, we're as we get into the new calf crop, where we're do we're reducing the the numbers for for when them uh new calves are available for slaughter.
• 7:30
  SPEAKER_01: But what uh what's really gonna shape this thing up, I guess, is if we you know, is is w our packers willing to make the margins or less that they are right now, because uh yeah, you know, I even heard a low 280s being offered in the meeting in the country, and you got choice at 288.
• 7:50
  SPEAKER_01: Um we'll see what it turns out here to be here this afternoon, but not a lot of packer margin there, and so are they gonna continue to to pay at this money or or and we are seeing some strength in the cutout too, so if we can keep that going up, they'll they'll be able to hopefully keep paying up as well.
• 8:07
  SPEAKER_00: What else you got on the cattle market for us here, Nick, before we wrap up?
• 8:12
  SPEAKER_01: Well, I just I would just echo, you know, I think we gotta we gotta um remember where we're at and and and how quickly things can change.
• 8:22
  SPEAKER_01: Um and and you know, cattle that are on feed today, there is probably some pretty gar darn good margin there.
• 8:29
  SPEAKER_01: And so um, you know, these are the times probably to add some coverage yet.
• 8:36
  SPEAKER_01: There, you know, certainly uh we gotta be careful we all know what the cattle market can do come August, October, right?
• 8:43
  SPEAKER_01: I mean as bullish as we want to be today, uh those months can can t be kind of disappointing.
• 8:50
  SPEAKER_00: So um I think little bit of seasonal versus cycle coming forward, isn't there?
• 8:55
  SPEAKER_01: Yep, and and reward the rally.
• 8:58
  SPEAKER_00: All right.
• 8:58
  SPEAKER_00: Well, thank you for joining us here today, Nick.
• 9:00
  SPEAKER_00: Have a fantastic three-day weekend.
• 9:03
  SPEAKER_00: Happy Easter, and uh thank you for joining us here today.
• 9:06
  SPEAKER_00: And thank you to all our listeners.
• 9:08
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 9:11
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 9:16
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 9:23
  SPEAKER_00: See you next time.