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Cattle: Kriss Cross · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_01: Welcome to the Cattle 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 involves substantial risk of loss and is not suitable for all investors.
• 0:15
  SPEAKER_01: Today I have Jace with us here today.
• 0:17
  SPEAKER_01: We're gonna talk about cattle a little bit.
• 0:19
  SPEAKER_01: We're gonna talk about we're gonna talk about cutout, uh, index, uh, futures crazy movement the whole week, Jace.
• 0:25
  SPEAKER_01: How'd we end up the week?
• 0:27
  SPEAKER_00: Yeah, so I guess we ended here on Friday a little lower.
• 0:31
  SPEAKER_00: We've seen this week lose a little bit of steam in the front end of the live cattle there.
• 0:36
  SPEAKER_00: So right a right against the 40-day moving average on the D S Fats, I guess close below it here on Friday, but Yeah.
• 0:44
  SPEAKER_01: So pretty interesting week so far to say.
• 0:47
  SPEAKER_01: Bounced off some pretty serious support levels.
• 0:49
  SPEAKER_01: How do you how'd we close relative to those, you think?
• 0:53
  SPEAKER_00: Yeah, so on the live cattle, we closed in the December contract that has the most volume.
• 0:58
  SPEAKER_00: We closed just below the 40-day moving average there, so maybe a little bearish.
• 1:04
  SPEAKER_00: We've we have closed below that one once back in June.
• 1:08
  SPEAKER_00: The one thing I guess I was looking at is like November feeder cattle, they closed above it, and they closed above it back in June as well.
• 1:16
  SPEAKER_01: So feeder cattle have been the one really leading things, haven't they?
• 1:19
  SPEAKER_01: Yeah, they have.
• 1:20
  SPEAKER_01: So talk about that a little bit and the relationship between feeder cattle index and the futures.
• 1:24
  SPEAKER_00: Yeah, so the feeder cattle settle against an index, and they they've had they've had some really strong days recently, and actually like Wednesday of this week had the strongest day that we've or the highest print on the daily index that we've ever seen.
• 1:40
  SPEAKER_00: So it was it was a big sale in plat.
• 1:42
  SPEAKER_00: It was a special sale, and they they had an index of$376.91 on$5,500 head of volume.
• 1:50
  SPEAKER_00: So that's expensive.
• 1:51
  SPEAKER_00: That's a lot.
• 1:52
  SPEAKER_00: Those cattle break even at you know, if they're a steer and you take them to$1,550, they break even at like$249, so quite a bit above the board.
• 2:01
  SPEAKER_01: Well, what do you think about cutout this week?
• 2:03
  SPEAKER_01: We've uh we've really ripped a lot off here since our highs, haven't we?
• 2:07
  SPEAKER_00: Yeah, we have.
• 2:08
  SPEAKER_00: So I I went back and looked at just we've talked about this pork to beef cutout here, and so I looked back.
• 2:16
  SPEAKER_00: So today we we printed$372.47 on the morning cutout for beef and$114.50 for hogs.
• 2:23
  SPEAKER_00: And then I went back and looked at the 5th of September here when beef was at its high.
• 2:28
  SPEAKER_00: It was at 416 on choice there, and the pork cutout was 114, 114.16.
• 2:34
  SPEAKER_00: So that's that's an interesting shift that's happened there.
• 2:37
  SPEAKER_00: The pork has stayed really strong here late into the fall, and beef's fallen off a little bit, and maybe we're finally seeing a consumer that's shifting a little bit towards a cheaper protein.
• 2:48
  SPEAKER_01: Interesting.
• 2:49
  SPEAKER_01: Uh worth noting, anyways.
• 2:51
  SPEAKER_01: Uh what else are you following this week besides some of those things?
• 2:55
  SPEAKER_00: Yeah, I guess cash was an interesting, interesting trade this week.
• 3:00
  SPEAKER_01: How do we end up on that this week?
• 3:01
  SPEAKER_01: Because we started lower, didn't we?
• 3:03
  SPEAKER_01: Quite a bit lower in the beginning part of the week.
• 3:05
  SPEAKER_00: Yeah, and we're I it still looks like we're gonna end up being a little bit lower, but we started trading a little earlier than normal, like we have done these past couple weeks when it's been a little weaker.
• 3:15
  SPEAKER_00: And we started trading the north at like 232 and some as low as 230 on Wednesday to buy them in Nebraska.
• 3:24
  SPEAKER_00: And it took 237 to buy them in the south, which is about two to three weaker.
• 3:30
  SPEAKER_00: And it looks like they might get a little a little stronger as the day goes on here.
• 3:34
  SPEAKER_00: So we're inverted.
• 3:35
  SPEAKER_00: We're inverted.
• 3:36
  SPEAKER_01: Alright, Maverick.
• 3:37
  SPEAKER_01: We are inverted.
• 3:38
  SPEAKER_01: The south is higher than the north for the first time since what date do you think?
• 3:42
  SPEAKER_01: I know I'm really putting you on the spot here, but it's been a while, hasn't it?
• 3:46
  SPEAKER_00: It's been a while, and even like last year, it was mostly we just came together.
• 3:50
  SPEAKER_00: Came to even.
• 3:52
  SPEAKER_01: Came to even, and that spread was I mean a pretty big, wide ten bucks for a lot of the year, wasn't it, so far through the summer and whatnot?
• 3:59
  SPEAKER_00: Yeah, it was ten dollars almost all of the summer there.
• 4:02
  SPEAKER_00: And yeah.
• 4:02
  SPEAKER_01: Now this has been accelerated based upon no Mexican fake feeder cattle imports into the South, mainly Texas.
• 4:09
  SPEAKER_01: So that market now has caught up relatively well, been strengthened versus the north uh in in one instance.
• 4:15
  SPEAKER_01: What are some other th reasons why that has come together now?
• 4:19
  SPEAKER_01: Is it just a seasonal thing mixed in with that, or what are you seeing?
• 4:22
  SPEAKER_00: Well, I guess I'm not sure how much bearing it has on it, but they don't take their cattle as big down there.
• 4:28
  SPEAKER_00: You know, you might and we've been taking them big.
• 4:30
  SPEAKER_00: We've been making them big.
• 4:31
  SPEAKER_01: Yep.
• 4:32
  SPEAKER_01: And weights are going up at a normal seasonal pace, but we're just very, very big.
• 4:38
  SPEAKER_00: Yep.
• 4:39
  SPEAKER_00: Normal seasonal pace at record levels.
• 4:41
  SPEAKER_00: Packers are sitting how right now, you think?
• 4:44
  SPEAKER_00: I think Packers have quite a bit bought up north here, especially.
• 4:49
  SPEAKER_00: Margins are margins are that's hard to tell on the Packers, but they're they're narrowing significantly over the past couple weeks with a$40 drop in cutout from highs to most recent levels here has put that in a tough spot.
• 5:03
  SPEAKER_01: Cash is going down, just probably not as fast as that has, has it?
• 5:07
  SPEAKER_01: That's correct.
• 5:08
  SPEAKER_01: Interesting.
• 5:09
  SPEAKER_01: Um what other observations do you have for the cattle market this week that's worth noting in today's podcast?
• 5:15
  SPEAKER_00: I guess I don't I don't have anything too significant other than I would I would like to see what these sales of feeder cattle do in the in the next few days as we've we've seen this index really high here and the the futures have been dropping, so you wonder if that'll have any impact on those sales coming up here.
• 5:35
  SPEAKER_01: Also, I'm uh very curious to see.
• 5:37
  SPEAKER_01: Now, this is probably a little ways in the future, but uh 70 miles away from the border is the latest screwworm case that has been uh notified.
• 5:47
  SPEAKER_01: So it's basically right at the border of Mexico to uh I don't know where from Mexico.
• 5:52
  SPEAKER_01: Is it Texas basically is right where it's across.
• 5:54
  SPEAKER_00: Yeah, so it's actually north of the southernmost point of Texas.
• 5:59
  SPEAKER_00: It's just 70 miles from the closest border.
• 6:01
  SPEAKER_01: Gotcha.
• 6:02
  SPEAKER_01: Well, flies do not know borders, obviously, so uh it there's a high likelihood of us at some point soon here having something in the United States.
• 6:10
  SPEAKER_01: We'll see how that goes.
• 6:11
  SPEAKER_01: I know they've been ramping up with three-point Rollins plan, which is with flies and whatnot.
• 6:16
  SPEAKER_01: Um, I will just be curious if or when we do get it in the United States, how that works with uh keeping borders, whether whether it be in a state or the south where they draw lines at and say don't transport cattle past this point, how those logistics will work, because in other areas, whether it be uh, you know, the the dairy situation that we recently had with something there, uh trying to not get dairy herds to cross states, or uh whether it be you know segregated uh separated uh like areas for birds for essentially um for bird flu uh and not letting them out of certain areas even within states.
• 6:55
  SPEAKER_01: So I'll be very curious if it does come across how we handle it from that point on, Jace, if you have any other comments on that one.
• 7:02
  SPEAKER_00: Yeah, I guess the USDA's been the forefront of this week for the for the cattle news.
• 7:08
  SPEAKER_00: I guess there was that that case on Monday with the screw worm, and then they also had their their plan to revitalize this cattle herd or this cow herd.
• 7:18
  SPEAKER_00: So there have been a few interesting things there.
• 7:21
  SPEAKER_00: No direct payments, it sounds like no direct payments, regardless of the rumors.
• 7:25
  SPEAKER_00: Yep, and it it looks like they're what they're trying to do is just deregulate you know the CRP managed land areas, I guess.
• 7:33
  SPEAKER_01: Gotcha.
• 7:34
  SPEAKER_01: Well, thank you for your time today coming on the show.
• 7:36
  SPEAKER_01: This live cattle market, feeder cattle markets awfully volatile.
• 7:40
  SPEAKER_01: I mean, eve even today here, November feeder cattle had uh almost a$6 range on futures.
• 7:47
  SPEAKER_01: So uh a lot going on here recently in these markets.
• 7:50
  SPEAKER_01: Something we'll have to keep up to date on.
• 7:52
  SPEAKER_01: A decent close for what it probably could have been this week.
• 7:55
  SPEAKER_01: Uh, thank you for taking your time, Jace.
• 7:57
  SPEAKER_01: This won't be the won't be the last time we get to talk about some of these topics, I have a feeling.