Latest / CattleUSA Daily / 273: Cattle Markets Stay Choppy and Dan Declares War on Nebraska with Dan and Samantha

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273: Cattle Markets Stay Choppy and Dan Declares War on Nebraska with Dan and Samantha · CattleUSA Daily

• 0:00
  In today's episode of the Cattle USA Daily podcast, we are
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  bringing on Dan and Samantha once again it to talk about the
• 0:05
  markets, everything that we are seeing across the cattle
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  industry and how that is affecting us and what we are
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  seeing in the markets right now. Dana and Samantha cover
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  everything in this episode, we're talking about the State of
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  the Union address. We're talking about all of the
• 0:20
  different factors going into the cattle market right now.
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  We are talking about our packing plants and some news and things
• 0:27
  that's happening with them and everything.
• 0:30
  Anything else that you could possibly need to know as far as
• 0:32
  the cattle market is concerned before we hop into today's
• 0:34
  episode? If you're watching on YouTube,
• 0:36
  make sure that you take a second to go hit that subscribe button
• 0:38
  and like this episode. If you're watching on any of our
• 0:40
  other podcast platforms, make sure that you take a second to
• 0:43
  go rate and review the show and make sure you're following it as
• 0:45
  well. Without further ado, let's go
• 0:47
  ahead and hear from Dan and Samantha.
• 0:53
  Welcome to the Cattle USA Daily Podcast, your go to source for
• 0:56
  the latest livestock markets, industry insights and the
• 0:59
  updates shaping agriculture today.
• 1:02
  I'm your host, Lauren Moylan, a passionate advocate for
• 1:04
  agriculture, here to keep you informed and connected.
• 1:08
  Now let's dive into today's episode.
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  Dan, Samantha, welcome back to the podcast.
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  How's everyone doing? Great.
• 1:22
  Good. Love it, love to hear it.
• 1:25
  Dan, are you like really just biting your tongue right now,
• 1:28
  waiting for the right moment or how you feeling over there?
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  I'm all right, I'm all right. You know it's Rock Chalk,
• 1:37
  Jayhawk and Hawkeyes all the way, so forget everybody else.
• 1:42
  Contacts for everyone listening to this episode.
• 1:45
  I am sitting in the car wearing a Cornhuskers hat right now and
• 1:50
  Dan is very butt hurt about it. So we've we really turned this
• 1:53
  into not a safe space for sports.
• 1:56
  So really just starting the pot. So there's a whole lot of great
• 2:01
  people in the state of Nebraska, but Lincoln is not my favorite
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  city in this world. I lived in Lincoln for 2 1/2
• 2:07
  years and so I drank the Kool-aid and what can I say, go
• 2:12
  big red. So.
• 2:15
  How about that USA Hockey team? Yes, there we go.
• 2:19
  I think we can all cheer for that and be on the same page
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  there. Absolutely, men and women's.
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  Agreed. Yeah, how about that?
• 2:27
  2 for two never happened has never happened.
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  Pretty and they were both overtime upsets too.
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  Like they were both scored in overtime.
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  How did this turn into a sports podcast?
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  I thought we were here to talk about cattle.
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  Those are important, too. Let's talk about cows.
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  What? What do we have going on with
• 2:49
  cows right now? Same old choppy trade we've had
• 2:52
  the last two months, not really doing much at all.
• 2:56
  Last night's State of the Union address, Trump briefly touched
• 3:00
  on beef prices. So we'll see what that does to
• 3:04
  our markets today. Let's hope nothing overall.
• 3:07
  He didn't come out with a plan, so I'm hoping nothing.
• 3:10
  Crossing my fingers, but we'll see.
• 3:14
  Cash with maybe I don't, I don't know, cash.
• 3:18
  Cattle last week was disappointing in some areas and
• 3:21
  and better in some areas, I would say.
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  What do you think, Samantha? I'm pretty pumped that we hit
• 3:30
  that record high on the CME Feeder Cattle Index.
• 3:33
  That was, I was pretty happy about that.
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  I mean, they just blew the doors off last week.
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  I don't think anybody was quite expecting that or or not that
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  soon anyways. But I mean, two years ago, heck
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  even a year ago, that 377 felt like a a fantasy land and now
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  here we are. So a year ago, the index was
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  around 270. It's crazy to think that most
• 3:54
  fat cattle are breaking even in that 270 range today where fear
• 3:58
  feeders were priced on the sea a year ago.
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  So just really crazy stuff happening.
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  Futures are still trailing behind the index.
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  It seems like they're keeping up a pretty good distance from
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  cash. March feeder cattle are still
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  about 11 bucks behind that index as of yesterday with that being
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  a one day lagging average. So that doesn't sit too
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  comfortable with me, especially only being four days away from
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  hitting a contract month. Like you said, Dan, I mean cash
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  was disappointing in areas. They gave up some 240 trade
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  early in the week and then we saw some 2:45 to 2:49 later in
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  the week. Market didn't really seem to
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  care that we gained about a dollar to $3.00 in the north.
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  Everyone was looking for that 250 trade or higher in and we
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  just fell short. Especially with futures down on
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  Friday that gave the Packers some leverage.
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  They got a decent amount of cattle bought last week, so they
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  might be sitting pretty comfortable on inventory this
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  week. Probably worth keeping a pretty
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  close eye on how that translates to cash trade later this week.
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  Agreed. Yeah, Open interest has been
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  dropping or sorry, open interest has been climbing in a down
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  market. It tells me there's a lot of
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  hedging going on. It's not managed money making
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  this thing go sideways. It's honestly and hedging is
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  probably warranted for certain people with break evens up at
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  those levels. So I I'm not saying that's a bad
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  thing. It's just it's a market that's
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  going nowhere. So another interesting thing is,
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  yeah, you bring up the feeder cattle and how high they are
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  compared to fat cattle right now.
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  This is like the most extreme I've ever seen this crush.
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  I've never seen, you know, 120 dollar spread between cash
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  feeders and cash fat cattle. You know, I remember back
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  between 2016 and 2020, it was a $30 spread pretty commonly, you
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  know, you'd have $1.60 yearlings and you'd have $1.30 fats and
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  then $1.30 yearlings and a dollar fat cattle.
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  So it's pretty wild that our crush is there cheap cost to
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  gain tight feeder supplies that that's what's causing it.
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  But someday that'll be a heck of a trade.
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  Yeah, for sure. Samantha, do you have any
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  thoughts on just kind of the, well, I guess or anyone any
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  thoughts on the just sideways action that we have seen over
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  the past three weeks, over the past month, just in general, we
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  haven't seen a ton of movement. I know it's just kind of that
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  time of year, but what are our thoughts on that?
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  I think when it comes down to it, this sideways movement, like
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  I said, they're keeping a pretty close far distance away from
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  cash. I mean, to me that tells me
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  they're anticipating A downfall somewhere.
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  They're still pretty weary. Like I said this week in
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  specific, seeing that distance of $11.00 from the index, I
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  think that they're kind of more anticipating that maybe that
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  leverage is going to shift more in the Packers favor.
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  Like I said, cash is really just leading this thing and all eyes
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  are on cash. So that's really what they're
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  going to be looking at. And if we don't get that 250 or
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  higher trade at the end of the week, I could definitely see
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  futures kind of play off of that.
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  Dan, do you have any thoughts on that?
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  Yeah, a lot of questions come this time of year, you know,
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  pretty much every year about the difference between, you know,
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  March feeder futures and that feeder cattle index.
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  You know it's pretty common this time of year, especially in
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  February to see a really wide gap, a positive basis.
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  Often times that's because you have a lot of seven way cattle
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  that are moving right now. So 7 weights are going to bring
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  more than their eight or nine weights that you know all three
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  of those categories go into that index.
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  So as we Fast forward into the month of March, you know,
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  particularly the back half of March when we settled the feeder
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  contract against that index, now you all the sudden start seeing
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  more 8 weight cattle, you know, knocking on 9 weights.
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  And that price is lower down there, you know, three 50s,
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  three 60s. So it wouldn't be surprising to
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  see that index start drifting back.
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  But, you know, to Samantha's point, if it's all dependent on
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  whatever cash cattle do, if cash cattle get pummeled here, you
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  know, going into March and April, you know, we're we're
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  lent, we shouldn't be surprised if things sift back a little
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  lower, you know, ignoring yesterday's action in the beef
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  beef market. But if things pull back in the
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  cash space, it wouldn't be surprised if that index comes
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  back down into this three 60s. Yeah, absolutely.
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  I mean, we've been talking a lot about how fragile the market is,
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  how volatile it is. Every little thing.
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  We've got headlines at play, whether it be screwworm, the
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  potential strike at the JBS plant and all these different
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  things at play. And it's just the market jolts
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  one way or the other with every comment that's made.
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  And like you talked about beef prices and the State of the
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  Union speech that Trump gave talking about lowering beef
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  prices. Hopefully it doesn't have an
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  effect today, but it might. We've seen him talk about beef
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  prices and getting them down before and the last few months
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  and it hasn't had a huge effect, but really just that that huge
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  play that the media in these headlines have on futures.
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  And then just talking about beef prices, we've talked a lot about
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  seasonal lows in the cut out. We actually saw a huge jolt in
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  choice box be cut out values of $8.21 and that really just
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  significantly. Why did that spread to and that
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  spread to $11.42? A lot of people closely related
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  that to the potential strike at the JBS plant.
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  A lot of people have their own opinions on that.
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  I won't, I won't go down that rabbit hole.
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  I I did read a lot of those individuals, a lot of those
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  employees are undocumented people that probably should be
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  really happy that they even have a job.
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  And there's a lot of people that would trade positions with them
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  to have a job. But when we're looking at that
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  strike in different circumstances, if we were up
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  near that 600,000 a head a week slaughter level and we weren't
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  so tight on supplies, would this plant strike have, if it were to
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  happen have a huge effect on the industry?
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  Absolutely. I could see that happening
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  because a lot of these processing plants aren't running
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  to their full slaughter capacity.
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  And I think there's a lot of room where these other plants
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  could pick up a lot of that kill that they're going to be losing
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  if this plant strike was to happen and and it wouldn't have
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  that much of an effect. But that think the Packers are
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  going to use any leverage they can.
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  They've been looking for leverage to kind of switch the
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  buying power in the cash trade especially.
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  And this might might be the thing to do it.
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  I mean, they're just going to use any excuse and utilize it as
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  they can. Yeah, absolutely.
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  I can not agree more on that. And I think that it's a bigger
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  concern as we continue to look like you said Samantha, at the
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  volatility of the market that we're dealing with right now.
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  And I think that that has been proven to us over the past year
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  that any light thing really does affect that market.
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  I really hope that today we don't see a ton of effect based
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  off of the State of the Union address last night.
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  But like you've said before, it gets mentioned in the news,
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  something happens with the beef market and people react.
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  And I think that that's the reality of what we're dealing
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  with right now in today's market, especially when you take
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  into consideration just the hundreds of other factors going
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  into the market too. We've got tight supplies, we've
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  got high demand, we've got potential strike issues.
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  We've got the southern border issues.
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  We've got we've got a laundry list right now of things that
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  are affecting this cattle market.
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  And I think that it's important that we keep an eye on
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  everything and understand the risk and the volatility that
• 11:09
  we're kind of walking into with this cattle market, especially
• 11:12
  with what what we were talking about earlier, the price of
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  feeders and the price of fats right now and just the insane
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  amount of risk that we're putting in as we continue to
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  feed out this cattle. Absolutely.
• 11:23
  Dan, how are grain markets doing?
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  Actually, before we talk about grain markets, I want to talk
• 11:27
  about exports. Right now, the US dollar is
• 11:29
  still in the dumpster. So how's our export market
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  doing? Not great.
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  I mean overall not great. Do you really want to talk about
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  that overall? It's obviously, you know, we're
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  importing a lot, a lot of beef. We're not exporting it.
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  It's not great. I'm hoping that, you know, maybe
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  exports had something to do with that big jump yesterday to
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  Samantha's point, it, it very well could have been, you know,
• 11:54
  anticipation of, of some plants going down.
• 11:56
  You know, it's, let's not forget we're coming into the period of
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  cooler cleaning season. So sometimes that'll that'll
• 12:02
  spark a little fire temporarily. Overall exports are not a ball
• 12:07
  of fire. We're not, we're not seeing
• 12:09
  them, we're not increasing them. And and price matters, it always
• 12:12
  comes back to price matters. So until we get that, I would
• 12:16
  think that choice beef price down at 3:50 and maybe a touch
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  lower. I don't think we're going to
• 12:20
  ramp up exports in a big way. If we do get down there, I think
• 12:23
  you see the exports ramp up and hopefully stabilize beef there.
• 12:26
  But yeah, it's, it's not great. I mean, pork, pork exports
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  aren't great either, though, to be honest with you, you know, a
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  $95 cut out, We're not, we're not selling the heck out of pork
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  either. So overall, we're just really,
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  really we're priced high compared to the rest of the
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  world on proteins. Yeah, definitely another factor
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  when we look at just our import and export market and how those
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  continue to affect our domestic product.
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  Samantha, any thoughts? No specific thoughts on exports.
• 12:57
  Yeah, I agree with you, Dan. That's, that's exactly what
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  we're seeing and when we're talking about numbers and
• 13:02
  technicals here, Quick, I want to touch on that, that catalog
• 13:04
  feed report, not that the market probably much cares about it,
• 13:08
  but a few things worth mentioning.
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  Obviously, it was pretty bullish put to the estimates.
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  The thing is, I think when people already expect tight
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  supplies, it gets really, really easy to start picking that
• 13:19
  report apart and diving into it a little bit further.
• 13:22
  Two things in specific really jumped out to me that I guess
• 13:25
  were more cautionary to me than bullish, maybe not bearish, but
• 13:29
  just cautionary. When we place more cattle than
• 13:31
  we killed, that's obvious. 2 placements were way down.
• 13:34
  They are about 5% below last year.
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  To touch on placing more cattle than we killed, the marketings
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  were down 13%. So it really wasn't a huge shock
• 13:43
  with solder nearing, you know, now historic lows, but that's a
• 13:46
  big deal. I mean, even without the one
• 13:48
  less marketing day factor in July or July and January, that
• 13:53
  never would have been ugly. The only thing that's up in
• 13:56
  terms of of slaughter this year is dairy cow slaughter.
• 13:59
  So when we look at placements being down, you know, 5% below
• 14:03
  last year, I think that placement number has a lot to do
• 14:06
  with the cattle feeders keeping these cattle on feed longer.
• 14:09
  You figure at 2 1/2 LB daily rated game and an extra £100
• 14:14
  that adds 40 days on feed. So that timeline definitely
• 14:17
  matters. I mean, these carcass weights
• 14:19
  went from 900 lbs early last year to, you know, 980 lbs late
• 14:24
  last year, even touching 1000 lbs at times.
• 14:27
  So these cattle feeders are definitely going to be utilizing
• 14:30
  that feeds a little cheaper. The break evens are high.
• 14:33
  So they figure you put more pounds on, get a better bang for
• 14:36
  your buck, and suddenly, suddenly maybe that break evens
• 14:39
  a little bit more attainable. Yeah, definitely something to
• 14:43
  consider and continue to watch as we look forward into the rest
• 14:47
  of the market and as we look forward into the next few
• 14:50
  months, Dan, as we start to get into March, we're starting to
• 14:54
  round out February, which is crazy to even think about.
• 14:57
  I feel like it was just New Year's yesterday.
• 14:59
  But as we kind of get into the swing of March, what are your
• 15:02
  thoughts as we continue to look forward in this market like?
• 15:04
  I said we're, we're just coming into Lent here.
• 15:07
  I'd normally don't get all hot and bothered riled up about a
• 15:11
  big strong push on demand and and Packer demand.
• 15:15
  I noticed we have sold the heck out of contracted mate.
• 15:18
  So that's good. Particularly more of that, you
• 15:21
  know, for I would say late March, April, but it is an early
• 15:24
  Easter this year and hopefully the weather supportive overall
• 15:27
  nothing, nothing screaming at me that we're going to go rock
• 15:32
  skyrocketing the new highs in the short term.
• 15:34
  It's just it's a, it's a sideways action because the
• 15:38
  futures are very uncertain up here.
• 15:40
  It is a sideways action because they want cash to prove it that
• 15:43
  we can go to new epic eyes. It is a sideways market because
• 15:47
  every other complex has in, in the commodity world has
• 15:52
  struggled, Grains have struggled, metals have fallen
• 15:55
  back, softs have fallen back off their big boom markets.
• 16:00
  A lot of uncertainty in cattle right now.
• 16:02
  But yeah, America loves beef. I would also like to throw a
• 16:06
  little plug out there. You know, since COVID, you know,
• 16:10
  whatever, 5-6 years ago, but since COVID, there's been a big
• 16:14
  push for these keto and carnivore diets, right?
• 16:17
  All great things have happened since COVID, right?
• 16:21
  Hockey teams winning the Olympics.
• 16:23
  I mean, is this correlated or causation?
• 16:26
  I, I, I don't know, I'm just, I'm just saying a lot of good
• 16:30
  things have happened since America started eating more
• 16:32
  beef. So just wanted to make make sure
• 16:35
  everybody's aware of that. You make a very good point, Dan.
• 16:39
  I think the people need to listen to you as far as all of
• 16:41
  that goes. Eat beef.
• 16:43
  It's great for you. And I'm not saying that all good
• 16:47
  things happen because we're eating more beef as the US
• 16:50
  citizens, but it's definitely, it's definitely a factor.
• 16:54
  It's definitely a factor. Can't say it's not, can't say
• 16:56
  it's not a factor. So I love it.
• 16:58
  I love it. Are there any other things that
• 17:00
  we need to hit on today before we wrap it up, guys?
• 17:03
  I just want to touch on it here quick.
• 17:04
  I had to pull up exactly what their name was because it kind
• 17:07
  of tripped me up a little bit, but I thought it was really
• 17:10
  interesting. I came across a reel on Facebook
• 17:12
  the other day and it was O'Keefe Media Group.
• 17:17
  They were Media Group. They were investigating price
• 17:20
  fixing and market manipulation in the beef industry.
• 17:23
  They actually went undercover at Cattle Con.
• 17:26
  I think if you look up O'Keefe Media Group, you can you can
• 17:28
  find the video. It was a really interesting
• 17:30
  watch. But yeah, they went undercover
• 17:32
  at Cattle Con. They went around and they
• 17:34
  interviewed, they talked to multiple vendors, producers and
• 17:38
  even the big 4, the JBS, Cargill National Beef.
• 17:41
  National Beef was one that was actually in a clip.
• 17:44
  And so, yeah, I mean, insiders across every level of the cattle
• 17:48
  business pretty much agreed that there was there was price fixing
• 17:52
  and market manipulation going on.
• 17:54
  Comes as no surprise to anyone, but it was kind of interesting
• 17:57
  that even even the BIG4 admitted to it.
• 18:00
  I mean it was interesting to see everyone's feedback and I mean
• 18:04
  what better place to go do that then cattle con?
• 18:07
  But it was it was really interesting.
• 18:09
  One of the most interesting conversations I thought was one
• 18:13
  they had with his name was Sheldon Bloom and he's a farm
• 18:16
  software consultant and he said that when he goes into these
• 18:18
  these slaughter plants, he's not allowed to have anything on him.
• 18:22
  They take away everything. You're not allowed to have your
• 18:24
  phone, you're not allowed to have your glasses in case like
• 18:27
  there's like camera in them. Another gentleman had talked
• 18:30
  about the Baptista brothers and their actual documented history
• 18:34
  of bribing government officials. So it was just really, really
• 18:39
  interesting. I usually don't get get too much
• 18:41
  into that, but it really was interesting and and it's only
• 18:44
  like a 15 minute watch. So if that's something that
• 18:46
  you'd be interested in, it was definitely worth watching.
• 18:50
  So interesting that they were able to do that and put that
• 18:55
  video together because typically like they scan like people as
• 19:01
  they're like registering for cattle con and things like that.
• 19:04
  To my knowledge, to make sure to make sure we don't have like
• 19:07
  Gita people show up and like get registered tickets to cattle con
• 19:12
  and like go make a big mess in the middle of it or things like
• 19:16
  that. But very interesting.
• 19:18
  I'm going to have to go get that a watch, Samantha.
• 19:21
  Yeah, it was kind of funny because you could tell that main
• 19:25
  guy, he wasn't very like, I guess cowboy or anything like
• 19:29
  that. So I mean, he went full blown.
• 19:31
  He's got the cowboy hat on. They show a clip of him getting
• 19:33
  dressed to go undercover. It was it was a good watch.
• 19:37
  Is it like the cattle Industries version of like, Undercover
• 19:39
  Boss? Do you remember that?
• 19:40
  Like reality TV show that used to air?
• 19:43
  Yeah. Oh, that's funny.
• 19:46
  That's funny. Yeah, definitely.
• 19:48
  I'm going to have to go give that a watch and see what all of
• 19:51
  that is about. So thank you for sharing.
• 19:53
  Dan, any other closing thoughts? Any other things we need to chat
• 19:57
  about today before we wrap it up?
• 19:58
  I'm good. You don't have any like other
• 20:00
  heartbreaking news or super great news to share with us?
• 20:05
  I'm just hoping you can find a different hat for our next talk.
• 20:08
  So yeah. I think that I'm going to have
• 20:11
  to specifically go get another Cornhuskers hat to wear for our
• 20:15
  next meeting. I got to go, everybody.
• 20:18
  I got to go. Yep, Yep, okay.
• 20:22
  Good time, I guess, before Dan hangs up on us.
• 20:25
  Thank you, Dan and Samantha. I appreciate your time.
• 20:29
  Even if Dan is being a little Cornhuskers hater over there.
• 20:33
  It's fine. It's fine.
• 20:34
  I'll let it go to all of our listeners out there.
• 20:36
  Thank you for listening to another episode of the Cattle
• 20:38
  USA Daily Podcast. We appreciate you guys being
• 20:41
  here and listening to the three of us come on and talk about the
• 20:45
  markets every single week. So have a good rest of your day
• 20:48
  y'all, and we will see you guys next time.
• 20:50
  Have a good one.