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Cattle: Reverse · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_00: Welcome to the Cattle Market Talk Podcast with Professional Ag Marketing.
• 0:04
  SPEAKER_00: Come here to get your fresh updates on what's happening week to week within the cattle market.
• 0:09
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_00: Today is July 10th, Jeff, and we have some fun cattle stuff to talk about today.
• 0:22
  SPEAKER_00: How's it going?
• 0:23
  SPEAKER_01: It's going what is did something happen in the market today, Mike?
• 0:27
  SPEAKER_00: We had an incredible trading range today.
• 0:30
  SPEAKER_00: We had a key reversal on fat cattle.
• 0:33
  SPEAKER_00: I guess feeder cattle kinda did too, but I mean, like August live cattle today.
• 0:39
  SPEAKER_00: You had a l or August feeder cattle,$318.65 low, two$326.87 high.
• 0:47
  SPEAKER_00: So you had an eight dollar and twenty cent range on the August contract.
• 0:52
  SPEAKER_00: What in the world happened from yesterday to today?
• 0:55
  SPEAKER_01: Just another day on the ranch, I think, Mike.
• 0:59
  SPEAKER_00: So we opened the border Monday, Tuesday, and we let like a total of nine head through or something like that.
• 1:06
  SPEAKER_00: Okay.
• 1:07
  SPEAKER_00: The first day was nine hundred, I think.
• 1:09
  SPEAKER_00: And then the second was similar.
• 1:11
  SPEAKER_00: And then we found screwworm 370 miles south of the U.S.
• 1:16
  SPEAKER_00: border.
• 1:16
  SPEAKER_01: Which is quite a bit further north than where it had been.
• 1:19
  SPEAKER_01: Yes.
• 1:19
  SPEAKER_01: So that's definitely uh a development, I would fly for really far away.
• 1:25
  SPEAKER_01: Right.
• 1:25
  SPEAKER_01: Yes.
• 1:26
  SPEAKER_01: Right.
• 1:27
  SPEAKER_01: No, that's a that's a struggle.
• 1:29
  SPEAKER_01: Obviously, that's what we had going on in the open today.
• 1:32
  SPEAKER_01: Shut down the border.
• 1:33
  SPEAKER_01: Closed the border.
• 1:34
  SPEAKER_01: Yep.
• 1:35
  SPEAKER_01: Um, so it was never really open.
• 1:36
  SPEAKER_01: And what gets a little bit interesting about that is, you know, back up two weeks, for example, and the border was closed.
• 1:43
  SPEAKER_01: Yeah.
• 1:44
  SPEAKER_01: Um, so it's a little bit hard for me to say that this is brand new information.
• 1:50
  SPEAKER_01: Um, but I think the fact that the worm, the parasite continues to work its way north is is something that uh it just gets hard to deal with.
• 1:59
  SPEAKER_01: Like that border is gonna really struggle to open up.
• 2:05
  SPEAKER_01: And uh, you know, we're we're supposed to be bringing in about four percent of our supply from Mexico um almost on any given week, and you know, we're pushing on uh seven, eight months where that border has not been open.
• 2:20
  SPEAKER_01: So you're starting to have a lot of cattle that are gathered up around Mexico that should be in the United States by now.
• 2:29
  SPEAKER_01: Uh so there there's a storyline there, it's just not necessarily new information.
• 2:35
  SPEAKER_00: And that's mostly all upside, right?
• 2:37
  SPEAKER_00: Yeah.
• 2:38
  SPEAKER_00: I mean, that's all bullish stuff that you're doing.
• 2:40
  SPEAKER_01: You're cutting the supply on what's already a very short supply.
• 2:44
  SPEAKER_01: Yeah.
• 2:44
  SPEAKER_01: No doubt about it.
• 2:45
  SPEAKER_00: So why did we close like this today?
• 2:48
  SPEAKER_01: Well, I I'm not sure that we had to be charging higher at the rate that what as what we are to were this morning, Mike.
• 2:57
  SPEAKER_01: Um so you I mean, this thing has been a classic mm money movement market the entire time.
• 3:04
  SPEAKER_01: Um you know, the last maybe year for sure, three to six months for um, but you know, so that's kind of how these markets go to die, to be quite honest with you.
• 3:17
  SPEAKER_01: I'm not saying it's all over with or it looked like an exhaustive gap this morning.
• 3:21
  SPEAKER_00: I mean, it put in a big gap and then it filled the thing by the end of the day and put a key reversal in.
• 3:26
  SPEAKER_00: And if you wanted to blow off top, there's your there's your point, right?
• 3:29
  SPEAKER_01: That's a perfect recipe, right?
• 3:32
  SPEAKER_01: Almost almost perfect.
• 3:33
  SPEAKER_00: We've only been waiting for it for like three and a half years, something like that.
• 3:37
  SPEAKER_01: Well, knowing the cattle market, it will go down for about four days and about two and a half dollars, and then she'll just go back to new highs again.
• 3:45
  SPEAKER_01: Yeah.
• 3:45
  SPEAKER_01: Um, and in all seriousness, we've seen that.
• 3:47
  SPEAKER_01: Like I'm looking at a chart, shoot, you go back to like the 12th of May or so.
• 3:52
  SPEAKER_01: We had a very similar day, and it went down for a bit, and she fought her way right back towards the top.
• 3:59
  SPEAKER_01: What or in new highs, obviously.
• 4:02
  SPEAKER_01: But I think one thing that's different about this market, and no doubt the fundamentals are bullish.
• 4:08
  SPEAKER_01: Um, we all know that as far as the supply situation goes, and demand continues to hold up incredibly well.
• 4:13
  SPEAKER_01: But what's a little different here is pretty uh par for the course from a seasonal standpoint in today's world, and we've talked about that some in the past, but you know, we're big believers that everything has gotten shoved back at least 30 days, probably 45, um, you know, from a seasonal perspective.
• 4:34
  SPEAKER_01: So we are going we have gone through the time of year, which now, in my opinion, is uh May-June.
• 4:42
  SPEAKER_01: We've gone through that time of year where supplies are the shortest from a seasonal perspective, and we should continue to get into a few more numbers as the calendar goes here.
• 4:53
  SPEAKER_01: So, you know, you look back last year, we put a high, we had a hard break in the very end of July.
• 4:59
  SPEAKER_01: I was looking at some 2015 charts today, very similar timing.
• 5:04
  SPEAKER_01: Uh, as we got into July, we got into more numbers and we took a really hard break.
• 5:09
  SPEAKER_01: So I think that's very possible moving forward.
• 5:12
  SPEAKER_01: Um, you know, looking at the meat side of things, Mike, you know, we looks like we finally put a top in there.
• 5:21
  SPEAKER_00: Sure doesn't seem like we want to go over four hundred dollars on choice.
• 5:25
  SPEAKER_00: I mean, it's a right seasonal pattern.
• 5:27
  SPEAKER_00: It looks like it put a rounded top in there, and it's right at that right time of around the 4th of July, right?
• 5:33
  SPEAKER_01: Yeah, that's very strong seasonal back half of July to start losing some grip on the protein market as you get to the past the real you know vibrant uh May and June, as far as you know, really nothing compete compete with beef through that time frame.
• 5:51
  SPEAKER_01: But we see a lot of the you know the pork primals starting to build some strength this time of year in the belly and the trim and thing in the hand.
• 6:01
  SPEAKER_01: So I think some of those markets probably gonna give beef a pretty hard run for its money here in in the back half of July and into August.
• 6:10
  SPEAKER_00: That uh chart you talked about there, we've still held an uptrend for a long time in this cattle market.
• 6:15
  SPEAKER_00: And I argued this morning when we gapped higher, we were uh above that trend on the top side.
• 6:22
  SPEAKER_00: And when we closed today, we were below that trend.
• 6:26
  SPEAKER_00: Um something very different there.
• 6:28
  SPEAKER_00: I would argue that that break above it made me pretty nervous till it turned around today.
• 6:33
  SPEAKER_00: So that's something I'm gonna really be keeping an eye on in these cattle futures here at these levels.
• 6:38
  SPEAKER_00: Because historically, uh, you know, going way back, it seems uh like clockwork.
• 6:43
  SPEAKER_00: You get to the top end of that trend, you just sell it, wait for it to go back down at the bottom end of the trend, buy it.
• 6:48
  SPEAKER_00: And it seems like that keeps happening over and over and over again.
• 6:52
  SPEAKER_00: And uh today was a little different, Jeff.
• 6:54
  SPEAKER_01: Yeah, and you know, one of the other things to look for there is uh, you know, the August futures when it was when it had gap tired and was pushing on the highs of the day.
• 7:03
  SPEAKER_01: We had pretty much eroded uh you know all but a couple dollars of the basis um between where the south is at on cash and and where um the August futures are.
• 7:15
  SPEAKER_01: So I I think that's another signal that it's it's gonna be tough to push higher than that.
• 7:20
  SPEAKER_01: You're almost gonna have to have a change in fundamentals as far as you know that the cash market's been sideways to lower.
• 7:26
  SPEAKER_01: Yeah.
• 7:27
  SPEAKER_01: This week looks like it's gonna be fully side sideways.
• 7:30
  SPEAKER_01: So maybe maybe we'll put in some higher money this week, and and um I'll be wrong about that, but it it's it's looking as strong as it ever has here going home on a Thursday.
• 7:41
  SPEAKER_00: The protagonist in this would be the fact that are the cattle there or not going forward in the size or quantity that they need.
• 7:49
  SPEAKER_01: I think that's a big piece of it.
• 7:51
  SPEAKER_01: Will the uh demand give up like we're expecting, and will will meet trend lower?
• 7:57
  SPEAKER_01: Um, those are big question marks.
• 7:59
  SPEAKER_01: I tell you, the other question that I think was pushing the market some is uh, you know, we didn't get a lot of attention, but Trump put uh some the his letter out to Brazil yesterday.
• 8:11
  SPEAKER_01: I think it was in the afternoon or or evening, and that has a 50% tariff in it.
• 8:16
  SPEAKER_01: And he's citing a lot of political reasons for doing that.
• 8:21
  SPEAKER_01: He thinks the old president of Brazil um is getting mistreated or has gotten mistreated, and kind of likes that guy and doesn't seem to really like their current leader, so that that gets really interesting.
• 8:35
  SPEAKER_00: We uh don't just want to f import live animals into the United States.
• 8:40
  SPEAKER_00: Now they don't want to import beef either.
• 8:42
  SPEAKER_00: I saw that headline the other day and I was like, this is this is a very interesting time to take that stance, I thought, from from an export perspective.
• 8:52
  SPEAKER_01: So Yeah, I don't think we have much choice if we all want to eat a hamburger, I guess.
• 8:56
  SPEAKER_00: Yeah, if you could call McDonald's cardboard cheeseburger hamburger at this point.
• 9:00
  SPEAKER_00: But any final thoughts on cattle here before we wrap up today?
• 9:04
  SPEAKER_01: Stay tuned.
• 9:05
  SPEAKER_01: It's gonna be uh an interesting day tomorrow.
• 9:08
  SPEAKER_01: We didn't close anywhere close to the lows, so we almost turned well, we did turn some of the contracts green, um, August and October slightly lower.
• 9:17
  SPEAKER_01: Kind of puts it in no man's land, to be quite honest with you.
• 9:20
  SPEAKER_01: Um follow through either to the upside or to the downside tomorrow probably sets us up for a trend for the next few days, is my guess.
• 9:28
  SPEAKER_00: I'd agree to that.
• 9:29
  SPEAKER_00: One final question I have for you.
• 9:31
  SPEAKER_00: Uh feeder cattle have been in a lot of these days very separated from live cattle futures.
• 9:38
  SPEAKER_00: Today, for example, up a buck twenty on the September futures on feeder cattle.
• 9:43
  SPEAKER_00: If you look at October, fat cattle, you know, we were down in the front, let's say three, four months, maybe a little higher in the back.
• 9:50
  SPEAKER_00: What's been that separation there between those two?
• 9:54
  SPEAKER_01: I really think it's the supply side on the the Mexican situation as well as just where we're at in the whole cycle, Mike.
• 10:01
  SPEAKER_01: Like, you know, you hit on the Mexican thing, but obviously the underlying situation is we're coming into uh probably our second shortest um year on feeder cattle availability as far as you know as this cycle goes.
• 10:14
  SPEAKER_01: Um so you're just your short supply, short supply uh in a big way, and that's the cash market has represented that here in the month of June and into July, and we continue to be very impressed the way that market trades now seasonally it would be a very strong market right now.
• 10:33
  SPEAKER_01: But all the the fundamentals I think are they're just stronger on the feeder side than what they are on the live side.
• 10:39
  SPEAKER_00: And corn doesn't matter at this point, right, for that market.
• 10:42
  SPEAKER_00: I mean, I know corn has been a little bit lower lately, too.
• 10:44
  SPEAKER_00: Maybe that's helping some, but like I would have a hard time believing a change of five or ten or twenty cents in corn could try to impact cattle prices at this level.
• 10:54
  SPEAKER_01: I think I would be with you there, Mike.
• 10:56
  SPEAKER_01: Usually, usually corn's a pretty big driver, um, but it's definitely in the backseat today.
• 11:01
  SPEAKER_00: All right.
• 11:01
  SPEAKER_00: Well, thank you for your time today, Jeff.
• 11:03
  SPEAKER_00: We've got a fun one tomorrow, too.
• 11:05
  SPEAKER_00: We're gonna talk about the big beautiful bill with Lucas Peters.
• 11:08
  SPEAKER_00: All right, thanks, Jeff.