Latest / Professional Ag Marketing Podcast / Sell Off Pre Report | Cattle Market Talk May 22nd, 2026

Transcript

Sell Off Pre Report | Cattle Market Talk May 22nd, 2026 · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_02: Yeah.
• 0:00
  SPEAKER_02: Okay.
• 0:03
  SPEAKER_00: Welcome to the Cattle Talk Podcast.
• 0:06
  SPEAKER_00: Your weekly breakdown of cattle market fundamentals, key news, and the insights shaping the industry.
• 0:13
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:22
  SPEAKER_02: All right, I've got Jace with us here.
• 0:24
  SPEAKER_02: It is May 22nd.
• 0:26
  SPEAKER_02: It's Friday before Memorial Day weekend here.
• 0:29
  SPEAKER_02: Gonna be a long weekend.
• 0:31
  SPEAKER_02: No trade or markets on Monday there.
• 0:33
  SPEAKER_02: If you need any daily market commentary or other things, just please click on the link in the description below or other market research that you'd find interesting.
• 0:41
  SPEAKER_02: We're gonna have an interesting show today, big based on the markets here the last couple days, Jace.
• 0:48
  SPEAKER_02: So thank you for joining me.
• 0:50
  SPEAKER_02: Let's start off with a few different headlines here.
• 0:53
  SPEAKER_02: One, let's just start with futures.
• 0:55
  SPEAKER_02: We've seen a massive setback.
• 0:57
  SPEAKER_02: What's going on?
• 0:58
  SPEAKER_01: Yeah, we've seen a we've seen a big setback.
• 1:01
  SPEAKER_01: We have a couple news events this week.
• 1:04
  SPEAKER_01: So obviously cargill with that plant.
• 1:07
  SPEAKER_01: We have cattle on feed this afternoon.
• 1:10
  SPEAKER_01: Um and we've just we've just decided that we wanted to trade this thing a little lower.
• 1:15
  SPEAKER_01: So we've got we kind of made a head and shoulders formation there on the live cattle, and I think that's just adding to the the sell pressure there.
• 1:24
  SPEAKER_01: And um we've seen open interest decline and just seeing just seeing that all that together, a long weekend ahead of us.
• 1:33
  SPEAKER_01: I don't know.
• 1:33
  SPEAKER_01: I think it's I think it's making it making for a bigger sell-off.
• 1:38
  SPEAKER_02: So the weights are high, box beef isn't going up, uh, cattle on feed this afternoon, uh, and then we're which could be interesting based on placement data here.
• 1:48
  SPEAKER_02: We'll get into that in a bit.
• 1:49
  SPEAKER_02: And then uh futures are turning a little negative, and then the Fort Morgan uh plant is still shut down, probably for the foreseeable future.
• 1:57
  SPEAKER_02: So let's talk about some of the fundamentals first before we get into some of these other fun topics, but let's start with the weights.
• 2:04
  SPEAKER_02: We've been holding here pretty steady.
• 2:06
  SPEAKER_02: Uh what's going on?
• 2:08
  SPEAKER_02: Reasoning for that, or how big of a market impact do you think that's got on us?
• 2:12
  SPEAKER_01: I think it's I think it's big enough.
• 2:13
  SPEAKER_01: We've we're starting to see it matter in the beef production versus our versus our kill.
• 2:19
  SPEAKER_01: And so I think I think that I think that matters for just the futures trade, but also the the producer's not incentivized to keep feeding them, but yet cash stays strong.
• 2:32
  SPEAKER_01: So cash stays really strong here, and weather's making it pretty easy to make them bake.
• 2:37
  SPEAKER_01: I mean, you don't have any hot weather to deal with yet.
• 2:40
  SPEAKER_01: You don't have to worry about that 1700 pound steer having a heat stroke and just making it easier.
• 2:46
  SPEAKER_02: Is a cash market holding in here okay relative to this future setback, you think?
• 2:51
  SPEAKER_02: Absolutely.
• 2:52
  SPEAKER_01: A lot of basis plays out there lately.
• 2:54
  SPEAKER_01: Yeah, we've got uh like even today or yesterday, we had a plus eleven basis off of the June.
• 3:00
  SPEAKER_01: A lot of those guys would even be off the August.
• 3:02
  SPEAKER_01: So that's another it's another 10 bucks in your favor.
• 3:06
  SPEAKER_01: So we've had a very, very impressive basis here and just making for really good basis sales.
• 3:12
  SPEAKER_02: Looks like we're gonna wrap up the week here with pretty nice comeback for the day.
• 3:16
  SPEAKER_02: June cattle at around just under 250.
• 3:19
  SPEAKER_02: Uh, gonna be about a 10 buck basis there.
• 3:21
  SPEAKER_02: Not quite, I guess, by the time we've close out the week almost.
• 3:24
  SPEAKER_02: So keep an eye on that.
• 3:26
  SPEAKER_02: Let's go over to box beef.
• 3:28
  SPEAKER_02: I want to pull that chart up.
• 3:30
  SPEAKER_02: When I look at this thing seasonally, it should be moving higher, and we just haven't yet.
• 3:35
  SPEAKER_02: Now, the supply obviously isn't there.
• 3:38
  SPEAKER_02: We've known about it.
• 3:39
  SPEAKER_02: What can you tell me about boxed beef and why this thing hasn't got some legs under it here, like it normally does from this time of the year?
• 3:47
  SPEAKER_01: Well, I I think a lot of outside market things are playing into this.
• 3:51
  SPEAKER_01: You've got high oil, so expensive gas at the pump.
• 3:55
  SPEAKER_01: People have less disposable income, and one of your first items to cut back on is your expensive protein.
• 4:01
  SPEAKER_01: So I think I think that's the first one.
• 4:03
  SPEAKER_01: And we've been importing a lot of beef.
• 4:05
  SPEAKER_01: So we actually have a higher beef supply available to the consumer than we have over the past year or so.
• 4:13
  SPEAKER_01: And I think all of that plays into this here, and yeah, it's just really not helping with with the consumer sentiment where it is.
• 4:21
  SPEAKER_02: Interesting.
• 4:22
  SPEAKER_02: And you know what won't help with consumer sentiment.
• 4:24
  SPEAKER_02: I went to Chipotle today and I got chicken in my bowl.
• 4:27
  SPEAKER_02: That won't help consumer sentiment because that tasted awful with Shigat's steak.
• 4:32
  SPEAKER_02: Um, let's talk about uh the the pork side too, along with that.
• 4:36
  SPEAKER_02: I think that's struggling a little bit in futures recently.
• 4:39
  SPEAKER_02: I think they've give given up on the protein markets just a little bit the last few days this week time of the year.
• 4:44
  SPEAKER_02: You normally start to see boxed beef cut out, start to go up.
• 4:48
  SPEAKER_02: And it it was last year by this time it already had now.
• 4:52
  SPEAKER_02: So they're giving up a little bit this week, I feel like, on the futures, just not seeing that advance.
• 4:57
  SPEAKER_02: And I think that's escalated uh this turndown here just a wee bit.
• 5:01
  SPEAKER_02: Uh let's talk about some of the other news about what we saw in the beginning of the week here.
• 5:07
  SPEAKER_02: Kind of the big elephant in the room right now is the Fort Morgan plant.
• 5:10
  SPEAKER_02: What can you tell me about the ongoing situation there from beginning to end?
• 5:14
  SPEAKER_01: Yeah, so April 23rd is when we saw the walkout of the employees.
• 5:19
  SPEAKER_01: So since Greeley had their plant strike, this this plant at Cargill, um, Cargill in Fort Morgan has just been dealing with sort of the same thing.
• 5:31
  SPEAKER_01: Um, it wasn't an official strike right away.
• 5:33
  SPEAKER_01: They voted to not extend the the agreement or not accept the agreement.
• 5:38
  SPEAKER_01: And so then Cargill was able to initiate a lockout.
• 5:43
  SPEAKER_01: And so it's it's essentially a strike, but maybe from Cargill's side a little bit right now.
• 5:48
  SPEAKER_01: And so they haven't killed any cattle since um April 23rd, and they were running not quite half of what they what they should have been.
• 5:58
  SPEAKER_01: So yeah, that there's a lot of there's a lot to digest there, but yeah, we have seen we see certainty around what's happening now.
• 6:06
  SPEAKER_02: About 4,700 head a day, something like that was full capacity for them.
• 6:10
  SPEAKER_01: Yep, and they were killing somewhere in the 2000s, not exactly sure where, but this does not seem like a situation that's gonna quickly get resolved.
• 6:18
  SPEAKER_02: I I've heard a lot of people talking about the the expectation is for this to potentially not reopen, and I think that's what's scaring the market today.
• 6:26
  SPEAKER_02: Uh, that would be a bigger sized packing plan, I I truly believe.
• 6:30
  SPEAKER_01: So that would that would do it.
• 6:32
  SPEAKER_01: It would be.
• 6:32
  SPEAKER_01: It would be similar to Lexington, and it's just it's just one of those things that adds a little bit more fluff to the to the packer side of things.
• 6:42
  SPEAKER_02: But absolutely.
• 6:44
  SPEAKER_02: Uh other than that, Catalon feed here this afternoon.
• 6:48
  SPEAKER_02: We can pull up those estimates uh from the slides from this morning's meeting.
• 6:52
  SPEAKER_02: But uh uh, what do you gotta say about this Catalan feed?
• 6:54
  SPEAKER_02: I'm I'm incredibly concerned that we're gonna see some higher placement numbers in this based on the drought in Calcav country.
• 7:01
  SPEAKER_02: What's your opinion on it?
• 7:02
  SPEAKER_02: Will this market even remember this report by the time Tuesday comes along?
• 7:06
  SPEAKER_02: Normally it never remembers it by the time we get to Monday, let alone a three-day weekend.
• 7:10
  SPEAKER_02: So, what can you tell me about this other than the fact that you won't have LRP or LGM available again tonight because we were locked limit lower last night, so you didn't have it.
• 7:19
  SPEAKER_02: And now you're not gonna have it again tonight because it's report day.
• 7:23
  SPEAKER_02: So, what can you tell me about this report and how much it's gonna matter?
• 7:26
  SPEAKER_01: Well, I think I think that goes back to maybe a little bit of the reason for the sell-off, is you've got you've got guys nervous about not being able to hedge cattle and a limit move yesterday just makes people nervous.
• 7:38
  SPEAKER_01: But this report has extremely wide range of estimates on the placements, anywhere from 96 to 108.
• 7:45
  SPEAKER_01: So, I mean that's that's a huge range when you talk about that.
• 7:48
  SPEAKER_01: And I I don't know exactly what to expect there, but placements because of the because of the drought that we're seeing, guys are selling lighter calves, they're placing them on feed instead of sending them to grass country, and you've got feedlots filling up a little quicker.
• 8:04
  SPEAKER_01: So I think I think that is going to matter.
• 8:06
  SPEAKER_01: I think it I think it matters on Tuesday if you're outside the range of estimates.
• 8:11
  SPEAKER_01: If you're within it, I don't know that it I don't know that it cares about it any more than what it's caring about it now.
• 8:17
  SPEAKER_01: Um but the on-feed number being above 100% for the first time in a while is kind of what what started the concern around this thing.
• 8:25
  SPEAKER_01: And it it I think same thing there.
• 8:27
  SPEAKER_01: If that's above 102, which is the top end of the estimates, I think that matters further.
• 8:33
  SPEAKER_01: But other than that, if it comes in at where the where the average estimates are, I think you I think it's business as usual.
• 8:41
  SPEAKER_02: In feeder cattle or live cattle, we've seen divergence today, to say the least.
• 8:45
  SPEAKER_02: Uh, we were down limit yesterday and feeder cattle not quite in live cattle across the board.
• 8:51
  SPEAKER_02: Let's talk about the difference.
• 8:52
  SPEAKER_02: We're seeing feeder cattle down about seven here going into the close around 1240.
• 8:57
  SPEAKER_02: The live cattle side is trading green as we speak in the front months.
• 9:02
  SPEAKER_02: So some divergence between the two there.
• 9:05
  SPEAKER_02: Uh some interesting spread action going on lately.
• 9:07
  SPEAKER_02: I mean, is that about as good of an answer as anything, Jace?
• 9:10
  SPEAKER_01: I think so.
• 9:11
  SPEAKER_01: I I mean feeders, feeders are the leaders on the way down.
• 9:15
  SPEAKER_01: Um, they have been on the way up too.
• 9:17
  SPEAKER_01: We're just kind of normalizing the spreads here again.
• 9:20
  SPEAKER_01: We we started this trend probably three weeks ago of feeder cattle lower or live cattle a little stronger.
• 9:27
  SPEAKER_01: And we're seeing that we saw that kind of go the opposite way at the beginning of this week or the end of last week, and now we're seeing that come into the balance again.
• 9:36
  SPEAKER_01: So I I think the spreads are as good of answer as any.
• 9:39
  SPEAKER_01: Where's support?
• 9:41
  SPEAKER_01: Support would kind of be, I guess I've looked at the at the live cattle more than anything, but in the low 220s, probably on those deferred contracts, October and December, and you probably got you've probably got a bit of air down to the 340 area on feeders.
• 9:59
  SPEAKER_01: So that's that's looking at August.
• 10:01
  SPEAKER_01: But I I think it's it definitely has a little bit of air beneath it right now.
• 10:04
  SPEAKER_02: On live cattle here, I was looking at some spots basically between that 240 down to about that 236 area.
• 10:12
  SPEAKER_02: There's quite a few spots where we could come back down and try to settle out at.
• 10:16
  SPEAKER_02: Um, I was hoping we'd find something along those lines, and not that wouldn't break the trends by any means.
• 10:22
  SPEAKER_02: It's gonna have to significantly go down more than that to do any true damage.
• 10:25
  SPEAKER_02: So keep an eye on that.
• 10:26
  SPEAKER_02: Any final thoughts before our listeners before the three-day weekend?
• 10:30
  SPEAKER_01: No, I think just reevaluating coverage, making sure that that cattle are covered that need to be, but I don't, I don't think, I don't think panic at this point is the right is the right decision.
• 10:41
  SPEAKER_01: So I think just watching and seeing how this how this cattle on feed report plays out and maybe maybe it gives you a good chance to adjust positions.
• 10:49
  SPEAKER_02: All right.
• 10:50
  SPEAKER_02: Well, thank you everyone for tuning into the show today.
• 10:52
  SPEAKER_02: We'll catch you next week, next Wednesday on the on the uh hog podcast there.
• 10:58
  SPEAKER_02: So thank you for uh tuning in and we'll catch you next time, Jace.
• 11:02
  SPEAKER_02: Thanks.