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They Came for Soccer... Stayed for Beef · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_00: Welcome to the Cattle Talk Podcast.
• 0:06
  SPEAKER_00: Your weekly breakdown of cattle market fundamentals, key news, and the insights shaping the industry.
• 0:12
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_02: All right, today is June 26th.
• 0:23
  SPEAKER_02: I've got Jace with us here today.
• 0:25
  SPEAKER_02: We're going to talk about the cattle market.
• 0:27
  SPEAKER_02: How's it going, Jace?
• 0:28
  SPEAKER_02: It's going good.
• 0:29
  SPEAKER_02: Awesome.
• 0:30
  SPEAKER_02: Well, let's get started.
• 0:31
  SPEAKER_02: I want to talk a little bit about the futures trade here on the cattle side recently.
• 0:35
  SPEAKER_02: Tell me what you're seeing because I'm looking at feeder cattle and we're near the old highs, Jace.
• 0:41
  SPEAKER_01: What do you think?
• 0:42
  SPEAKER_01: Yeah, we've we've definitely made some strides in the feeder cattle, especially.
• 0:47
  SPEAKER_01: Live cattle haven't really gone anywhere the past little bit here, but feeder cattle definitely trying to get back up towards these those old highs.
• 0:55
  SPEAKER_01: And you know, has you wondering if we're nearing a triple or quadruple top on this thing?
• 1:02
  SPEAKER_02: Is that some of the reason we've probably seen a little bit of sluggishness the last two days of the week here?
• 1:07
  SPEAKER_01: It kind of seems like it.
• 1:08
  SPEAKER_01: We get so close to the old highs and act like I mean that becomes significant resistance, and we just don't feel like we can go through it yet.
• 1:17
  SPEAKER_02: It seems like it.
• 1:18
  SPEAKER_02: Any other separation or things to take note about futures, some of the technicals or uh divergence between the live cattle and feeder cattle?
• 1:26
  SPEAKER_01: Yeah, I think um I don't have a lot on the divergence there.
• 1:31
  SPEAKER_01: It seems like these feeder cattle are extremely expensive, but that that spread there, I don't know that that matters a ton right now, but the managed money is um they're they're staying long, these cattle right now, and that's that's important, but it's also pretty easy for them to do when they're when the deferred months are twenty dollars lower.
• 1:57
  SPEAKER_02: So you've got uh futures month at a pretty severe discount versus where current market cash is sitting.
• 2:05
  SPEAKER_02: Keeps the funds in pretty good for a while, doesn't it?
• 2:08
  SPEAKER_01: Yep.
• 2:08
  SPEAKER_02: Easy to stay in.
• 2:10
  SPEAKER_02: They've liquidated a little bit, but they still have a pretty massive long position.
• 2:14
  SPEAKER_02: Uh it would it would seem like.
• 2:16
  SPEAKER_02: Uh uh what can you tell me now?
• 2:18
  SPEAKER_02: We talked just briefly about it.
• 2:20
  SPEAKER_02: Tell me about the cash market that we're seeing towards the end of the week here.
• 2:23
  SPEAKER_02: Seems like even last week we were having trade going into the weekend.
• 2:26
  SPEAKER_02: So tell me a little bit about what you're seeing here.
• 2:29
  SPEAKER_01: Yeah, the Packers have been reluctant to buy cattle early on in the week, hoping for some news event that's gonna drive it lower or some change.
• 2:38
  SPEAKER_01: But what um what's interesting about this week is we've we've we never traded.
• 2:45
  SPEAKER_01: I kind of thought we'd get to today and trade higher if we started seeing some cash, and we haven't seen we haven't seen a calf trade yet in the north.
• 2:54
  SPEAKER_01: Um we started out thinking that we were possibly gonna get some 255 trade if things were went poor and nobody nobody bit there, and now the now the bids are up to near the 260 level and still no taker.
• 3:10
  SPEAKER_01: Yeah, still getting past.
• 3:12
  SPEAKER_02: So we did have a little bit of trade, I think, at 260 early this week, but yeah, pretty much getting passed on here, which is a good deal.
• 3:20
  SPEAKER_02: The record would be what 264, something like that.
• 3:23
  SPEAKER_02: We haven't really had much over 260 historically.
• 3:26
  SPEAKER_02: It seems like that's where we've kind of bounced off of.
• 3:28
  SPEAKER_02: So pretty much at a record level here.
• 3:30
  SPEAKER_02: What can you tell me about just numbers getting traded there lately uh versus things like last year, for example?
• 3:36
  SPEAKER_01: You know, I'm not I'm not as familiar with that as I probably should be.
• 3:40
  SPEAKER_01: Um, but show lists have been bigger than previous weeks, but still way smaller than last year.
• 3:46
  SPEAKER_02: Gotcha.
• 3:47
  SPEAKER_02: That would make sense.
• 3:47
  SPEAKER_02: Still 32,000 or so uh kind of volume under uh year ago levels there.
• 3:53
  SPEAKER_02: Uh cutout, what can you tell me just about what we're seeing with uh recent levels kind of to set it up?
• 3:59
  SPEAKER_02: Cutout seems like on the choice side, it still bounces up against 400.
• 4:03
  SPEAKER_02: It's had a really hard time having that seasonal normal uh acceleration here through the summer, but it seems like it's still holding at 400, which is great.
• 4:12
  SPEAKER_02: Select, on the other hand, it seems like imports and maybe some questionable uh consumer sentiment in the lower classes, maybe pulling that select down a little bit.
• 4:22
  SPEAKER_02: We've seen it even below last year.
• 4:24
  SPEAKER_02: So, what can you tell me about uh the demand side?
• 4:27
  SPEAKER_01: Yeah, I think this demand story is very interesting.
• 4:30
  SPEAKER_01: So you've got choice right below 400.
• 4:32
  SPEAKER_01: It's kind of been steadily, slowly, very slowly, but steadily climbing since the end of April, that sort of time.
• 4:39
  SPEAKER_01: It had a blip higher in March, and then the war started, and we dipped a little bit, but strong demand on the choice side.
• 4:47
  SPEAKER_01: Um select has fallen, and that I wanted to draw a little bit of a parallel to the hogs there, too.
• 4:55
  SPEAKER_01: We've we saw the exact same thing on the hogs, where it should be seasonally going higher.
• 5:01
  SPEAKER_01: Um, this should this should be a pretty high point in both of those markets, and it's not, and it feels like feels like there's a big separation between who's buying choice beef and who's buying select and pork.
• 5:15
  SPEAKER_01: It's it's definitely I don't want to say a class thing, but it almost might be that that you've got you've got the people that are buying a steak, they're still buying a steak, but the people that were that were buying select and pork, they might be trying to trade for something cheaper.
• 5:32
  SPEAKER_01: I don't know what it is.
• 5:33
  SPEAKER_01: I don't know if it's as as significant as mac and cheese or you know something like that.
• 5:38
  SPEAKER_01: But I there's definitely a trade-down happening there.
• 5:42
  SPEAKER_02: And in general, consumer sentiment was up a little bit today, but it's still near record lows.
• 5:47
  SPEAKER_02: Uh, but it's summertime.
• 5:48
  SPEAKER_02: So it seems like in the summer people are gonna spend that money no matter what.
• 5:52
  SPEAKER_02: Uh they probably get to next fall and they're like, oh crap, I really got behind this summer.
• 5:58
  SPEAKER_02: Uh spending money uh really got out of hand.
• 6:01
  SPEAKER_02: But speaking of getting out of hand, I want to just talk about what we're seeing with the World Cup here and the potential impact that's having in the United States for good old beef demand.
• 6:12
  SPEAKER_01: Yeah, we've seen, we've seen we're seeing like a couple million people coming into the US because of that, um, and some ethnic backgrounds that don't don't eat pork and that sort of thing.
• 6:25
  SPEAKER_01: So you are seeing beef demand from that, but also they're not here, they're not here to buy select hamburger, they're here to enjoy a little American beef, you know.
• 6:36
  SPEAKER_02: Let's pull up the video, Kate, that you've got on the I found this hilarious.
• 6:41
  SPEAKER_00: Our sauce here, like this, like this, oh my god!
• 6:48
  SPEAKER_01: And uh how big is that barbecue as your first ever bite of Texas barbecue, what do you think?
• 7:02
  SPEAKER_02: Hey, that's a shark.
• 7:04
  SPEAKER_02: That right there is what we're talking about, right?
• 7:07
  SPEAKER_02: Somebody coming into the United States trying Texas barbecue for the first time, and he has a reaction that all of us still do each and every day, and getting to enjoy these wonderful um beef meals.
• 7:18
  SPEAKER_02: So I uh that impact it it doesn't just change demand in the United States, but also when he comes, he's gonna want that again, right?
• 7:26
  SPEAKER_02: So, I mean, maybe different cultures, especially around the world, they'll have a little bit different taste buds going forward, different palate, I think that uh is worth mentioning as well.
• 7:35
  SPEAKER_02: That's good for beef demand in the United States, but also globally as well.
• 7:40
  SPEAKER_02: Any other any other final thoughts on on uh cutout man that side?
• 7:44
  SPEAKER_02: I don't think so.
• 7:45
  SPEAKER_02: All right, feeder cattle sales have been red hot.
• 7:49
  SPEAKER_02: What can you tell me about those?
• 7:51
  SPEAKER_01: Yeah, so this week we've seen, I know I saw a group of Charlet calves on a video sale that for fall delivery that were bringing like um they're bringing 438 for eight weights, which is just outrageous.
• 8:05
  SPEAKER_01: And we've seen we saw Bassett this week, which I think was on Wednesday their sale there, averaged four and a quarter for an eight weight.
• 8:13
  SPEAKER_01: So just really hot sales.
• 8:15
  SPEAKER_01: We had our highest daily number um at 396 that went into the index.
• 8:20
  SPEAKER_01: We had our highest average at 381.
• 8:23
  SPEAKER_01: I mean, it just really impressive on the cash feeder side, and they they do not work against the the futures board.
• 8:30
  SPEAKER_01: I mean, they're they're pricing, they're betting on the cum of about to the tune of about$25.00 on some of those really high priced ones.
• 8:40
  SPEAKER_01: So you're talking three, four hundred dollar losers.
• 8:43
  SPEAKER_02: And they're just having to do that because of the infrastructure they already have in place that they've got to place cattle there, or why is that?
• 8:50
  SPEAKER_01: It almost I I think that's a part of it, but it's it's worked for the past for the past five years.
• 8:57
  SPEAKER_01: So it is um, it's just a little bit of guys having money, having made money, and they really don't want to sit with empty pens.
• 9:06
  SPEAKER_01: And you know, some of them really can't sit with empty pens.
• 9:09
  SPEAKER_01: We've seen new infrastructure being built in the north here, and when you see when you see a slap barn being built, that is not gonna sit empty.
• 9:17
  SPEAKER_01: It can't.
• 9:18
  SPEAKER_01: So rightfully.
• 9:20
  SPEAKER_02: So all right, any other final thoughts on cattle here before we wrap up for the week?
• 9:25
  SPEAKER_01: No, I just think with these feeder cattle sales being being hot, um, making sure, you know, where where they go out, what their what their break even is, and making sure there's some sort of price protection there, because that is a big concern of mine that it goes down a little bit, and we feel like we can't protect them because they've they're already losers where this market's still really high.
• 9:49
  SPEAKER_02: All right.
• 9:50
  SPEAKER_02: Well, thank you for joining us.
• 9:51
  SPEAKER_02: Please click the link on the description or the description below.
• 9:55
  SPEAKER_02: That's going to take you to things like our daily market commentary, other market research.
• 9:59
  SPEAKER_02: You can go to professional marketing.com and get a hold of us.
• 10:03
  SPEAKER_02: Please uh reach out.
• 10:04
  SPEAKER_02: We'd love to hear your feedback on both the podcast and if you need any help with marketing.
• 10:09
  SPEAKER_02: Thank you, Jace, for a wonderful show yet again.
• 10:11
  SPEAKER_02: Thanks, Mike.