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Cattle: Front End Fun · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_01: Welcome to the Capital Market Talk Podcast with Professional Ag Marketing.
• 0:04
  SPEAKER_01: Come here to get your fresh updates on what's happening week to week within the cattle market.
• 0:09
  SPEAKER_01: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_01: Today is October 10th.
• 0:17
  SPEAKER_01: I've got Jordan with us here today.
• 0:18
  SPEAKER_01: How's it going, Jordan?
• 0:19
  SPEAKER_01: Good.
• 0:20
  SPEAKER_01: How are you, Mike?
• 0:21
  SPEAKER_01: We're doing pretty good.
• 0:22
  SPEAKER_01: This cattle market, what a day.
• 0:24
  SPEAKER_01: Uh what a week, actually.
• 0:26
  SPEAKER_01: I mean, it just has been incredibly volatile.
• 0:28
  SPEAKER_01: But today we had some interesting trade, didn't we?
• 0:31
  SPEAKER_01: Started lower right away, and then the market kind of came back towards middle to end of the day, continuing uh pretty much a higher close every day this week.
• 0:39
  SPEAKER_00: Yeah, no doubt about it.
• 0:41
  SPEAKER_00: It's been volatile.
• 0:42
  SPEAKER_00: And and like you said, you know, you came in today and the market was pretty red.
• 0:45
  SPEAKER_00: Um feeders, I believe, uh front month there was down over five bucks at one point.
• 0:50
  SPEAKER_00: And uh by the time we closed here this afternoon, we're we're back to being green, and and green kind of heavily is where where we kind of showed.
• 0:57
  SPEAKER_00: Um and then you kind of flip over to the uh stock market, and you know that uh that was pretty red today.
• 1:04
  SPEAKER_01: It was a rough day on the stock market, down 150 points on the SP 500 as we do this podcast at 244 uh this Friday.
• 1:13
  SPEAKER_01: So the outside markets definitely had uh played uh impact, at least earlier on in the day, into some some of those lower cattle prices too.
• 1:22
  SPEAKER_01: But uh wow, about 10 a.m.
• 1:24
  SPEAKER_01: this morning that uh that cattle market definitely kind of diverged from those outside markets, didn't they?
• 1:31
  SPEAKER_00: Yes, yeah, that was about the time you know we started seeing some some cash numbers kind of coming in.
• 1:36
  SPEAKER_00: Um so this morning, right away, you know, 238 was getting paid in the south.
• 1:41
  SPEAKER_00: Um, or sorry, it was getting bid.
• 1:43
  SPEAKER_00: Maybe a couple, you know, took that bid.
• 1:46
  SPEAKER_00: But um, you know, later on um in the day, you know, around that 10 o'clock, like you were kind of saying, um, 240 started getting paid.
• 1:53
  SPEAKER_00: So, you know, that really, you know, kind of flipped a switch and you know, things started started changing here.
• 1:59
  SPEAKER_00: Um now in the north, however, we continue to hear pretty soft bids.
• 2:05
  SPEAKER_00: You know, 230, 231 um is all we're kind of seeing here in the north.
• 2:10
  SPEAKER_00: Um, haven't really seen anything trade yet today that's been any higher.
• 2:15
  SPEAKER_00: Um but you kind of work a little bit south and into Nebraska, and you know, there 234, 235 is what what we're kind of seeing there.
• 2:24
  SPEAKER_00: So that would be four to five higher than last year.
• 2:27
  SPEAKER_00: And you know, the market really, really like to see that.
• 2:30
  SPEAKER_01: Yeah, so front-end fundamentals pushing these markets around quite a bit here, at least at the end of the week with some stronger fundamentals, especially the feeder cattle.
• 2:39
  SPEAKER_01: It seemed like they've really been the leader out of the two lately, haven't they?
• 2:42
  SPEAKER_01: I mean, the uh the upward moves of feeder cattle have been like three dollars compared to one dollar out of the live cattle.
• 2:48
  SPEAKER_01: Really strong cash feeder prices, but here front-end fundamentals on the live cattle side, you've uh got some interesting things going on there, don't you?
• 2:57
  SPEAKER_00: Yeah, for sure.
• 2:58
  SPEAKER_00: Um, you know, like you said, the the feeder cattle seem to kind of be leading this thing.
• 3:02
  SPEAKER_00: They they have been, right?
• 3:04
  SPEAKER_00: Um, but the front end uh on the live cattle market, um, you know, we we have a pretty big premium now to December, and um, you know, it seems like a lot of fund uh traffic there is what we're kind of seeing.
• 3:17
  SPEAKER_00: They uh you know like to be long um that December market.
• 3:22
  SPEAKER_00: And um you know, if we kind of you know flip back a little bit to the to the cash side, you know, what we're what we're seeing there and and why we're seeing a little bit of a bump is you know the Packer was working through a lot of contracted cattle here in October.
• 3:37
  SPEAKER_00: And um, you know, it's that time of year, right, where you kind of have have a lot of those con those cattle contracted.
• 3:44
  SPEAKER_00: But it seems like, you know, we're two weeks into that and now they're kind of starting to run out of it.
• 3:49
  SPEAKER_00: So that is a pretty bullish um indicator.
• 3:52
  SPEAKER_00: And you know, with the cash getting a little bit stronger in the south and and um kind of in that Nebraska-Kansas area getting quite a bit stronger, that's that's really signaling that.
• 4:01
  SPEAKER_00: And you know, as you look to that December um contract, it is quite a bit of a premium.
• 4:09
  SPEAKER_00: The funds are in there, and you know, it does give the producer uh quite a bit of an incentive to you know continue to feed these cattle and and feed them at some higher weights, right?
• 4:19
  SPEAKER_00: Which should shorten the supply up front here.
• 4:22
  SPEAKER_00: So, you know, a nice bullish uh indicator for them.
• 4:25
  SPEAKER_01: Because we did just come into quite a few cattle here recently, probably didn't wait from a seasonal aspect, kind of got out of a hole.
• 4:31
  SPEAKER_01: Now you think maybe we could go bean back into one.
• 4:34
  SPEAKER_00: For sure.
• 4:35
  SPEAKER_00: Yep, that's exactly right.
• 4:36
  SPEAKER_00: You know, those those October cattle are usually contracted heavy.
• 4:40
  SPEAKER_00: That's where you normally have quite a bit of cattle, and um, you know, they the packer was able to kind of use that as a as a lever to gain a little bit of leverage, pull this cash down a little bit, and you know, now you're starting to see them run out of it and push it a little bit higher.
• 4:56
  SPEAKER_01: All right.
• 4:57
  SPEAKER_01: The cutout seemed to be bottomed uh from at this point.
• 5:00
  SPEAKER_01: We kind of work higher here till November, don't we, from a demand perspective.
• 5:03
  SPEAKER_00: Correct.
• 5:04
  SPEAKER_00: Yep, you'll start to see a little bit of a bump there.
• 5:06
  SPEAKER_00: Usually that run kind of happens through Thanksgiving, is when you kind of see that happen.
• 5:10
  SPEAKER_01: Cash picking up pretty quickly, though, out of that.
• 5:13
  SPEAKER_01: So it's not like packers are really going to get much of that advantage, it looks like, are they?
• 5:18
  SPEAKER_00: Correct.
• 5:18
  SPEAKER_01: Yep.
• 5:19
  SPEAKER_01: Yeah.
• 5:20
  SPEAKER_01: The outside markets here, obviously moving a lot as well today, but this live cattle, feeder cattle market, we've had incredible trading ranges.
• 5:27
  SPEAKER_01: I mean, like you said, at one point we were down a lot and we closed higher today.
• 5:31
  SPEAKER_01: Um, these outside markets, a lot of the craziness that we had occurred just before 10 o'clock a.m.
• 5:38
  SPEAKER_01: Central Time.
• 5:39
  SPEAKER_01: Uh, Trump came out with some truth posts and and press releases came out everywhere, just talking about US-China trade relations taking a turn for the worst, uh, along with soybean prices.
• 5:51
  SPEAKER_01: They immediately got whacked with that as well.
• 5:53
  SPEAKER_01: But Trump said he was supposed to meet with President Xi in two weeks time frame and in South Korea, and he said there's no longer a reason to meet with him, Jordan.
• 6:03
  SPEAKER_01: And he said that many countries, several countries, have been contacting him saying that China is holding them captive, basically, uh when it comes to rare earth uh minerals, things like that.
• 6:17
  SPEAKER_01: Um basically it does not look like we have positive trade news anywhere on our nearby horizon, does it, Jordan?
• 6:24
  SPEAKER_00: Yes, that's exactly right.
• 6:26
  SPEAKER_00: Um you know that that uh headline kind of you know started circle circulating pretty early this morning, right?
• 6:33
  SPEAKER_00: Um market you come in and beans are down ten um when that really hit the market when beans are down twenty.
• 6:39
  SPEAKER_00: Corn kind of followed down five.
• 6:42
  SPEAKER_00: Um you know, d definitely uh pretty negative to the market, right?
• 6:46
  SPEAKER_00: But not overly surprising.
• 6:48
  SPEAKER_00: You know, last week, you know, Trump's out there talking about, you know, some pretty big bailout money.
• 6:53
  SPEAKER_00: Um so you really can't have both, right?
• 6:55
  SPEAKER_00: You can't have the trade deal and have bailout money coming at you.
• 6:58
  SPEAKER_00: So I guess we weren't real surprised that you know these these headlines made their ways out today, because it really didn't seem like uh anything was going to happen with any of the trade talks that the US and China were were going to have.
• 7:11
  SPEAKER_01: And it sounded like there was a ticking time bomb there because US firms and individuals uh or those built in the United States that would fly the U.S.
• 7:21
  SPEAKER_01: flag, they'll be charged additional port fees uh starting on October 14th, China's ministry said there.
• 7:27
  SPEAKER_01: So those fees are a countermeasure against upcoming U.S.
• 7:31
  SPEAKER_01: port fees on Chinese ships.
• 7:33
  SPEAKER_01: So that was coming before the U.S.
• 7:35
  SPEAKER_01: was going to meet with China in a couple weeks, anyways.
• 7:38
  SPEAKER_01: So it sounded like by the time we got to next week, there could be some little back and forth out of this.
• 7:44
  SPEAKER_01: Trump just kind of got to it before the weekend here, it looked like Jordan.
• 7:47
  SPEAKER_00: Yep, that's exactly right.
• 7:49
  SPEAKER_01: All right.
• 7:49
  SPEAKER_01: Well, thank you for your time today.
• 7:51
  SPEAKER_01: A crazy end of the week, uh, everybody.
• 7:53
  SPEAKER_01: If you can just take a look at some of these charts.
• 7:56
  SPEAKER_01: It was a massive day and a lot of these commodities.
• 7:59
  SPEAKER_01: Uh really take a look and uh dive into these charts at this time of the year.
• 8:04
  SPEAKER_01: Hope all is well out in the fields.
• 8:06
  SPEAKER_01: Thank you for your time today.