Latest / CattleUSA Daily / 94: What Producers Need to Know About Market Rumors and Price Pressures with Dan Gerhold

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94: What Producers Need to Know About Market Rumors and Price Pressures with Dan Gerhold · CattleUSA Daily

0:00
Welcome to another episode of the Cattle USA Daily podcast.
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Today we are bringing you guys at your weekly market report
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with Dan Gearhold and the Logic AG Marketing team.
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We are talking all things today, what is going on in the market,
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what is going on in the world, how everything is affected right
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now. We talk even heifer retention
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numbers and potentially what we are going to be seeing
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throughout the summer and into the fall, Our thoughts and
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opinions on those things as always.
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So without further ado, let's go ahead and jump into this this
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episode with Dan. Welcome to the Cattle USA Daily
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podcast, your go to source for the latest livestock markets,
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industry insights and the updates shaping agriculture
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today. I'm your host, Lauren Moylan, a
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passionate advocate for agriculture, here to keep you
0:47
informed and connected. Now let's dive into today's
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episode. Yeah.
0:56
How's everything going? It's nice, it's going good, it's
0:59
going good, it's warm, but I'm not going to complain because
1:02
I've asked for this, so I like the heat.
1:06
I would rather sweat my butt off any day than freeze, so I'm not
1:09
complaining. Otherwise it's good though.
1:11
We have a really busy week. I am in Dodge City tomorrow and
1:16
Friday for a like work thing and then my husband's birthday is on
1:22
Saturday and then on Sunday I leave for Denver and I'm in
1:25
Denver for five days so. Wow.
1:28
Go, go, go all. The time go go it's it's a busy,
1:32
busy couple weeks but looking forward to it.
1:34
How are things with you? Good, got some rain last night.
1:37
I. We did too.
1:39
That's good. Good.
1:41
Yes. Not sure how much I got because
1:42
the kids filled up my rain gauge yesterday with the garden hose.
1:46
So how much rain do we get, Kim? Don't know, but yeah, then.
1:50
Not the six inches the the kids had filled up.
1:54
No, that may be a little bit. Yeah, I was 6 inches.
1:57
I'm like, I look at it and then I look around and I'm like, no
2:00
way. Like that, that's, that's
2:03
pushing it, guys. I, I don't know if that's quite
2:05
accurate. That's funny.
2:06
We used to do that to my dad too, especially because like we
2:09
didn't have the small rain gauges.
2:10
We had the really, really big ones, like two of those.
2:13
And so we would go and fill them up with the water hose all the
2:16
time. And now as an adult, I
2:18
understand how infuriating that was for him.
2:21
But you know, he barely rarely ever said anything about it, so
2:26
Oh well. Kids will be kids.
2:29
Kids will be kids. Yeah, gotta love it.
2:34
No, we got rain too, which was a blessing.
2:37
We definitely needed that. I'm glad we didn't get the rain
2:39
that Wichita got, though, because like, that was like the
2:42
Tornadoes and the heavy winds. I'm OK with just rain, nice
2:47
light rain. I don't need the chaos that goes
2:51
longer, so yeah. Tough to hear that.
2:55
Hopefully nobody, nobody hurt. But yeah, yeah, Nope.
2:59
Absolutely love any rain we can get this time of year.
3:02
So crops are looking good. Yeah.
3:05
Yeah, it's it rains and corn goes up.
3:09
It doesn't rain and corn goes down.
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Well, we'll take the rain every time.
3:12
Just keep on raining, especially through like July when those
3:16
heat waves come. If we could keep some moisture
3:18
in the cycle, that'd be real cool.
3:21
Agreed. Much appreciated.
3:23
Yeah, awesome. Yeah, what?
3:26
Do you think, Well, I think a lot of things about a lot of
3:29
different things. What are you referring to in
3:31
particular about the markets? I didn't know what you wanted to
3:33
talk about today. I mean nothing.
3:35
Happening in the. Market, right?
3:37
There's nothing, nothing at all. What are you?
3:40
What are your thoughts? What are hot takes?
3:43
Any. Is that like Doctor Pepper at
3:47
7:00 in the morning? Oh, that is a coffee.
3:51
OK, I was going to judge you really like a lot if that was
3:56
like a Coke or Doctor Pepper at 7:00 in the morning.
3:59
I know all you southerners only drink Doctor Pepper, but up here
4:04
they offer more. Yeah, hostility.
4:11
I don't like Doctor Pepper. I don't like Doctor Pepper.
4:14
I I'm a Diet Coke person through and through.
4:17
Why you can't live where you live and through You don't like
4:20
Doctor Pepper? I know everyone likes Doctor
4:22
Pepper. It's crazy.
4:23
Not me though. Great flavors.
4:25
Pretty much, pretty much, yeah. Markets, markets, markets.
4:29
What is, what is happening in the markets, what, what has
4:33
happened in the past week? Do you have any hot takes?
4:35
Do you have any controversial opinions?
4:38
I'm tired of rumors. If it's, we all are.
4:40
It's wow I wish or let them drop a rumor that's bullish cattle
4:45
instead of all these bearish rumors.
4:47
Yeah, that'd be cool. Yesterday I believe the rumor.
4:53
Well I think there was multiple rumors.
4:55
There's a story came out saying that we're going to have the
4:57
screw worm here in a couple months.
4:59
Don't disagree, easily be here in a couple months.
5:02
I mean it is a pest with went then flies on the back of a wink
5:06
of a family. But you know it might be
5:08
inevitable. But that was 1 rumor.
5:11
The other rumor was they might open the Mexican border and let
5:14
start letting feeders in. And then there was another rumor
5:18
that the feeders were already coming in, that they're
5:21
bootlegging them across the border doing some real, what is
5:25
it, Gus McRae type stuff? Well, some dove.
5:30
Yeah, Yeah, they lots of stuff going on, but inevitably, I
5:36
think it might have been a factor to get an algorithm to
5:38
trade it to the downside. But when it comes to the last
5:42
week and a half of trading action, it's plain and simple
5:45
been losing open interest. So when we talked about that, if
5:49
people aren't aware, one contract of open interest would
5:52
be a buyer and a seller combined holding a position on the board.
5:56
So if you're losing open interest, you're having one of
5:58
them step away. The markets going up on lower
6:02
open interest, that means we're losing sellers.
6:05
But if the market's going down on lower open interest, we're
6:08
losing our buyers because they have to sell out of that
6:10
position. So when we see the last week and
6:13
a half of trading lower and open interest dropping substantially,
6:17
you know, we lost 2025 thirty thousand contracts in the last
6:22
week and a half, that's not a good look.
6:24
You know, the bulls are walking away from the cattle market.
6:27
They've made their money. They're nervous, scared,
6:29
whatever the reason is they're leaving.
6:31
So I never like to see that, that plain and simple.
6:34
That's why the market's dropping profit taking as of last
6:37
Tuesday. It wasn't managed money.
6:39
I think it was more small specs and actually could be your
6:42
Packers too. You know, your commercials were
6:44
walking away as well. So that would generally lead me
6:47
to believe if a Packer was long, they were probably taking profit
6:50
on their longs. And I don't like to see that.
6:53
So it I'm unsure, you know, sale barn cash is higher this week.
6:59
You've got boxes higher this week.
7:01
I've got reasons to believe that cash could remain steady.
7:04
I don't think it's going to be higher this week because I think
7:06
there's a little bit of supply around that the Packers can
7:09
choose from and they cut their kills.
7:11
I'd I'd like to see a steady market.
7:14
I think by and large the feed yards know that their numbers
7:18
are still tight and they're going to fight for that steady
7:20
cash. But when you start taking four
7:24
or five bucks out of a market, the hedgers are willing, willing
7:27
to dump early at lower money just to take that basis.
7:31
So it's been extremely, extremely good positive basis
7:36
here the last well, two months just from the standpoint,
7:39
nobody's willing to buy June futures at record high prices.
7:43
And even though cash is going higher, I mean, 1520 dollar
7:46
positive basis is just insane. And right now, you know, it's
7:50
sitting at 17 bucks if we have 240 trade this week.
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So that's, that's, that's a fun time.
7:56
You know, you're over 200 bucks a head, the gain on just the
8:00
basis alone. So happy to see that for the
8:02
hedgers. And at the same time, it still
8:04
makes me nervous because once again, it doesn't mean strong
8:07
things are coming to the cattle market.
8:09
It's, you know, traders are nervous about these cattle
8:12
prices, like I mentioned, you know, the rumors, blah, blah,
8:17
you got a you got month end quarter.
8:19
And that's always a factor to to money managers.
8:23
Anybody trading this thing on the spec side, you know, they'll
8:25
want to reposition up, balance up before they go into quarter
8:29
end, might take some positions off the box and if things still
8:32
look good after the 1st of July, they might put them back on.
8:37
You know, it's we're going to see a real test of beef demand
8:40
here in about a month. You know, with these insanely
8:44
high beef prices, we're going to find out if the consumer really
8:47
doesn't care about the price and if they're going to continue to
8:49
buy it through the dog days of summer.
8:51
So that'll be interesting as we go forward.
8:55
Feeder cattle, I mean they've softened a little bit in the
8:58
barns. I none of them really make a ton
9:01
of sense yet because the deferred future sold off in the
9:04
fat cattle yesterday. So we still can't pencil break
9:07
evens, you know, hedge cattle off.
9:10
But inevitably, you know, the softer feeders get, the cash
9:15
feeders get, you're going to bring some buyers back to the
9:18
market. There's been a lot of a lot of
9:20
cattle finishers tell me over the last two months that they're
9:22
just they're stepping away. They think feeders are too
9:25
overvalued compared to where fats are.
9:27
I mean, yeah, it's fun to sell 240 fats and buy a yearling back
9:31
at, you know, 3 bucks. But when you can't manage any of
9:34
that risk with record prices, it's it's scary for a lot of
9:38
guys. So I, I still believe that our
9:42
biggest risk to this feeder cattle market to risk would be
9:46
screwworm coming in temporarily, you know, scaring some traders
9:50
away. But the other one is if they do
9:55
open that Mexican border, what, what does that look like?
9:58
I mean, how many feeders are ready to cross?
10:00
There's my gut says there's probably a few of them ready to
10:03
come over. Yeah, definitely.
10:05
If they get that border opened, I think it's going to be again,
10:08
another balls to the wall scenario because like we
10:11
discussed previously, they have already said with this
10:14
situation, it's probably going to be an open and closed border
10:17
for a while. Like if they are in a situation
10:19
where they feel like they can open the border for a little
10:21
bit, we're in the clear, we're not at risk.
10:23
They're going to bring those feeders in and then the risk is
10:26
going to kind of it's going to come back and they're going to
10:28
close the border again. So it's going to be one of those
10:31
situations where OK, everyone like get there, we're lining up,
10:35
get them across because we don't know how long it's gonna stay
10:38
open. And that's gonna continue to
10:41
disrupt the market in a lot of ways because it's an unsteady
10:45
supply. We're, we're getting big and
10:47
fluctuations in during certain times, which is great when we
10:51
need it, but also getting everything planned of where's
10:55
everything going and keeping everything.
10:57
Cuz you can't plan that. You can't plan two months in
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advance. Hey, we're getting our feeders
11:02
in from Mexico. No one can plan that right now.
11:06
We have, we have no idea when that's going to happen.
11:08
And we understand them wanting to keep the border closed and
11:11
keep screw worm out for as long as possible and everything that
11:14
goes along with it. But good Lord, it's going to be
11:16
a wild next few months along with all of that.
11:20
It is agreed. You know, one of the things to
11:22
go along with that, I mean, watching this board ever, you
11:25
know, the big question is, is it going to continue to go lower?
11:27
Is that long term high end? You know, I mean, it's anybody's
11:31
guess if that was the long term high last week or or not, but
11:35
inevitably with that border band shut, I'm actually calling for a
11:38
little bit ahead of retention. We have this spring traveling
11:42
around. I've seen a little bit of it.
11:44
I'm not saying mass amounts, but a little bit you can make a
11:48
pretty, pretty, pretty strong case We can rebound this thing
11:51
coming into that third and fourth quarters, you know,
11:55
optimistic. But once again, we're going to
11:57
find out what the demands like, you know, on the consumer side
12:00
with these higher prices because beef is only going to get
12:04
tighter here this fall. So, yeah, yeah, lot of
12:09
volatility, lots. Of fun.
12:13
You know what, I think that's our word for the year.
12:15
When we're talking markets, I think that's probably the word
12:17
we have said the most. It's just whether it's high,
12:20
whether it's low, it's been volatile, it has been all over
12:24
the place and really unpredictable.
12:27
There's been a lot of things happened this year that none of
12:29
us could have rubbed our crystal ball and thrown out the window.
12:34
But Dan, I think we need to start some positive rumors, some
12:38
like bullish rumors here on the podcast every week that some
12:42
reporters can pick up on or some AI platforms can pick up on and
12:45
that are going to start helping the cattle market.
12:48
And every, all of our listeners that are listening to this are
12:50
just going to know that like, hey, that's just like another
12:53
bullish rumor that they're starting so that the cattle
12:55
market can recover a little bit from all of this other crap
12:57
that's being sent out, right? You know, I think, I think
13:00
that's our new thing. I would like to learn, but
13:03
unfortunately with my profession it's quite illegal for me to do
13:07
that. Quite.
13:09
It's quite frowned upon for me as well.
13:11
But you know, girl can dream. No, I'm just going to continue,
13:16
continue the sentiment. Like I said, I do believe that
13:19
Heifer retention is going on. So because that's that's not a
13:22
rumor, I've actually seen that take place.
13:24
That is true. And I would second that as well.
13:27
We, I like here in Kansas and a lot of producers, you have to
13:31
play that line, right. Like calf numbers have been
13:34
really high. So a lot of people want to sell,
13:37
but we also have very smart producers that are like OK, we
13:41
also have to play that line of keeping enough back in order to
13:45
continue to grow. And I think we've been lucky in
13:48
the aspect that kill cow numbers have been really good recently
13:53
because it makes it so that it's a little easier to get rid of
13:57
that older cow and keep a couple heifers this year than it is.
14:00
That if something is tight, people are leaning towards,
14:04
producers are leaning towards that older cow that maybe she
14:07
sloughed her calf last year, but you wanted to give her another
14:10
year or something like that, sending her to the sail barn
14:13
rather than sending a group of heifers to the sail barn and
14:16
just keeping those back. So I think that because the
14:19
market has been so good, because we've been seeing such high sail
14:21
bar numbers with everything. Gosh, I went to the sail Barn
14:25
with my dad on Friday last week. Bonkers, bonkers.
14:28
We took two bowls to the Sail barn. 1 was just an old bowl and
14:31
one was one of our cleanup bowls.
14:33
And he was a cleanup bowl that we went and put up on pasture
14:36
just down the road. And my dad gets a phone call at
14:39
like 10:00 at night from the sheriff and he's like, hey, you
14:41
have a cow out. And that bull went to the sail
14:44
barn the next day. He said, we don't need you.
14:47
You if you're going to start crawling fences, you can, you
14:49
can go to the sail barn. It was insane what they brought
14:52
and then kill cows. We sat there and watched them
14:54
for a while because cows sold before the bulls did.
14:57
Bonkers, Lee, bonkers what everything is going for right
15:01
now. Like you just sit there and you
15:02
look at that. And then you look at the like
15:04
you look at what's in the ring and then you look at the numbers
15:06
and you're like these, these don't compute.
15:08
What do you mean? That cow that is the size of my
15:12
pinky finger is going for $3000. Yeah, it's wild.
15:17
Yeah, no, it's really crazy. But I think going along with
15:21
that sentiment, because of that, we are able to see how her
15:24
retention numbers go up, which is something that we have been
15:27
pushing for for a while because we've seen a really big decline
15:31
and our herd numbers were at one of our lowest lows in herd
15:35
numbers that we've seen in generations.
15:37
And so it's really positive to see people look at that and say,
15:41
OK, we can afford to do this because they can send a kill cow
15:46
instead of having to send a group of heifers or a group of
15:49
stairs or something like that to the sale barn.
15:51
And just approach business decisions differently from a
15:54
producer standpoint, which I it goes back to our, what are we
15:59
able to do as producers? How much are we able to pull?
16:02
How much are we able to push? And that's not a lot.
16:05
Unfortunately, cow calf producers, feeders like we're
16:09
not, we're not able to have a lot of push and pull in the
16:11
market all the time. A lot of that is up to what are
16:15
the Packers doing, what are the feedlots doing?
16:17
What how are they pushing and pulling one another.
16:19
And so I think my biggest hope is that these feedlots start
16:22
pushing our Packers a little bit more because I think we have a
16:25
little bit of room to start putting some pressure on them
16:29
like we kind of chatted about previously.
16:31
And I'm really hoping that we're able to start doing that to be
16:34
putting a little bit because like you said, we have high
16:36
demand right now because beef is still king.
16:38
We have great high demand. So let's continue to let that be
16:41
something that we see hit the producers and hit the people
16:46
that are in the earlier stages of the dollar of the cattle life
16:50
cycle rather than all of it be at the end.
16:54
Yep. No, I agree completely.
16:56
I mean, it's, it's good to see, it's good for rural America.
16:59
Bring the livestock back. Very happy the, the money's
17:02
trickling down to the Cal calf producer because they've,
17:06
they've earned it. There's quite a few bad years in
17:08
there that they, they sweated through.
17:10
So I'm glad it's getting there. Hope it stays too.
17:13
But yeah, it because of that retention, you know, like I
17:17
said, I, I, there's, there's quite a few out there that are
17:20
arguing that retention is not happening.
17:22
And I don't think it's happening like it did in 2014.
17:26
But you would not see bred cows, pairs, 3IN ones, bring the
17:32
prices that they're bringing today if retention, if
17:36
rebuilding was not happening. So it's good that we're
17:39
rebuilding. A lot of feed got put up last
17:42
year had some good rains and most places this year there are
17:45
a few dry areas. But like I said, all good
17:48
things. I want to see the herd get
17:50
rebuilt. I want to see beef demand stay
17:53
high, bring money back to rural America.
17:56
So be a good thing. So yeah, that's, yeah, that's my
18:00
opinion. It's not a rumor, but it is
18:03
definitely bullish for fat cattle as we look into that late
18:07
third quarter, early fourth quarters.
18:09
Absolutely. I wish we had our crystal ball
18:11
here where we could be the people that know exactly what's
18:15
gonna happen with everything in the world that's happening right
18:18
now. I think just puts people a
18:21
little trigger happy and a little bit more at like just
18:24
they're not as willing to put up with a ton of risk they're not
18:27
as willing to put up with. So when these rumors come,
18:31
people are much quicker to react right, because you don't know if
18:34
they're true. You don't know if they're false
18:36
and if they are true and you wait for it to be confirmed that
18:39
it's true, you're too late because then everyone knows that
18:42
it's true. So people are reacting to the
18:44
markets a lot quicker, which is a give and take It's positive
18:48
and negative all at the same time.
18:49
They're can be advantages for everyone, but also disadvantages
18:53
in the long run for a lot of things.
18:54
So it's gonna be super interesting to see how these
18:57
summer months, like you said, the dog days of summer play out
19:00
into our fall. And as far as calving and what
19:03
all of that looks like and how everything gets affected, it's
19:06
always, it's always fun to see the interconnection of things,
19:09
but it's also a little nerve wracking.
19:11
As far as anything else in the market right now, what else are
19:13
we seeing? Any other highs, lows?
19:16
I, I know everything else is pretty well the same as it was
19:19
last week. Has it changed a whole lot?
19:22
But is there anything else we need to point out before we
19:25
close out today? Men, for the most part, port
19:28
cutouts going higher, you know, finally catching up.
19:30
We're trying to catch up to beef.
19:33
December hogs have gone on one heck of a $20 rally since
19:37
they're low at 66. So starting to to look at
19:42
hedging off some some winter time hog prices.
19:45
Corn is just, yeah, like you say, hasn't really gone
19:48
anywhere. It's kind of lame and boring.
19:50
But inevitably I think we're going to start trading weather
19:53
here. July is a big month for the
19:56
corn, depending on on rainfall. Yeah.
19:58
I think obviously the war is, is something people are talking
20:03
about. And as we come into July, I
20:05
think we start talking tariffs again.
20:07
So I mean there's back to that volatility word.
20:11
It's it's going to get Western again.
20:14
So nice to see wheat finally doing something.
20:17
Keep you guys in business down there.
20:19
Yes, we appreciate it. That is for sure.
20:23
Wheat prices were a little concerning there for a little
20:25
bit for everyone. But you know, we're bouncing
20:27
back just in time. So yeah, we'll take it.
20:31
We'll take it where we can. Yeah, No, there's a lot of
20:34
volatility that is going to be happening over the next few
20:36
months and unfortunately just a lot of things up in the air.
20:40
And I think if we've learned anything this year from the
20:43
cattle market, it's that we can't predict it.
20:45
We can sit here and we can say all the things and think
20:49
whatever we want, but at the end of the day, and it's going to do
20:52
what it's going to do. And there's a lot of things that
20:55
we couldn't have seen coming 1,000,000 miles away.
20:57
And I didn't have them on my bingo card.
20:59
I can tell you that right now. And so protect yourself, put
21:01
yourself in a position for all of you listeners out there where
21:04
you you are protected and you are covered and make smart
21:08
business decisions because that is how we have a long term
21:12
sustainable cattle industry is producers and everyone at every
21:17
single stage of a cattle's life site, a cow's life cycle is able
21:21
to make smart business decisions.
21:23
And a lot of that starts with protecting yourself.
21:25
And so make sure you guys check out our show notes.
21:27
We have our AG link where we have our cattle USA insurance
21:32
with logic AG marketing. So make sure you guys go check
21:35
that out, get a hold of Dan's team and get yourself protected
21:39
as far as LRP rates and everything are going before we
21:41
close out today when I hit on those.
21:43
How's all of that looking right now?
21:44
Premium's gone up a touch just because the volatility has
21:47
increased so much. And that's a factor when they
21:49
set those prices. But inevitably they're still
21:52
phenomenal prices offered out there.
21:54
You know, $300 on that feeder cattle index is something else.
21:58
I'm, I know we've been above it now, but it, yeah, high prices
22:02
cure high prices, people. You know and.
22:06
I don't think there's many people out there that can argue
22:08
$300 Earlings or high prices. It's just that simple.
22:13
So yeah, it deferred fats, like I say, they're struggling, but
22:17
inevitably, once again, $2.00 fat cattle, still a good price.
22:21
I think we could have a $40 drop and still be happy with the fat
22:25
cattle price. But like I said, premiums have
22:29
gone up a touch. If we get a calm day, they'll
22:31
probably quiet down and get a little cheaper again.
22:34
But inevitably, for the amount of dollars you're insuring right
22:37
now in this market, it's still cheaper than your truck
22:40
insurance, it's still cheaper than your home insurance.
22:43
It's still worth looking into. So yeah, check it out.
22:47
Give us a call, because one of these days it's better to have
22:50
it and not need it than to not need it and not have it.
22:53
Yes, precisely. I could not agree more with a
22:57
sentiment on everything. It's one of those situations
23:00
that you don't think that you need flood insurance on your
23:02
house until all of a sudden Kansas decides to dump 7 inches
23:05
of rain on you and your house is flooding.
23:08
So one of those sentiments of rather have it and not need it
23:12
than not have it and need it. So get down to those show notes
23:15
everyone. Make sure you check out those
23:16
links and everything else that we have there.
23:19
As always, thank you guys for listening to another episode of
23:22
the Cattle USA Daily Podcast. I hope you enjoyed Dan and I's
23:25
commentary on what is currently happening in the world right now
23:29
as far as the markets go and just everything else as always,
23:32
like subscribe, rate, review, and we will see you all next
23:35
time on another episode. Have a good one y'all.