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Cattle On Feed · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: This is your host, Mike Minor.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is June 21st.
• 0:25
  SPEAKER_01: I've got Jeff with us here today.
• 0:27
  SPEAKER_01: How's it going, Jeff?
• 0:28
  SPEAKER_00: Good afternoon, Mike.
• 0:29
  SPEAKER_00: I think things are going well.
• 0:30
  SPEAKER_00: We got a little bit of a slap around with the Cattle on Feed report this afternoon.
• 0:36
  SPEAKER_01: So let's talk about that here.
• 0:38
  SPEAKER_01: Gonna focus mainly on cattle on feed and then talk about weather here in the grain market and whatnot.
• 0:43
  SPEAKER_01: Let's start off with what the numbers showed us here this afternoon, what, two o'clock our time?
• 0:47
  SPEAKER_00: Yeah, so very surprising uh placement numbers, and that's of course the one that really varies the most and drives the cattle on feed results the most.
• 0:56
  SPEAKER_00: So the top end of the guesses was 102% of last year being placed.
• 1:00
  SPEAKER_00: Um the lower end of those estimates were at 95, with the average coming in uh with at 98.5, so a good percent and a half reduction compared to last year.
• 1:10
  SPEAKER_00: We came in at 4% more, 104 being placed, uh 104% being placed this year versus last year.
• 1:18
  SPEAKER_00: Last year went back and looked at that one to see if that was a bit of an anomaly.
• 1:23
  SPEAKER_00: Um, and it was really higher than 2022, so I think that number was 5% greater than the year before.
• 1:31
  SPEAKER_00: So you've this is really gonna be one of the higher placement months here um you know in the past couple of years, or or at least for the month of May, is what that would be for.
• 1:43
  SPEAKER_00: Um so not a huge placement month to start with, but and that makes the percentages swing a little bit more violently, right?
• 1:50
  SPEAKER_00: But either way, this has got to be a disappointment for the marketplace, Mike.
• 1:54
  SPEAKER_00: Um, you know, we've been doing all the math on this how many calves we got, and this is how they're gonna get placed, and you know, that everything had been really working uh in our favor as far as saying, all right, we are running out of calves available to be placed, and um that's starting to show up in the placement numbers.
• 2:13
  SPEAKER_00: And that is different on this report.
• 2:16
  SPEAKER_00: It's it uh took the total on feed percentage up to 100%, and that was uh at 99 there um at the end of April.
• 2:28
  SPEAKER_00: So now the end of May we're gonna be the same as what we were a year ago.
• 2:32
  SPEAKER_00: No doubt that's disappointing.
• 2:34
  SPEAKER_00: It's a little bit hard for me to figure out how the math works on that, because I I would be the first one to say that hey, our available supply should not be very high.
• 2:44
  SPEAKER_00: Um so we'll see if it's just a one-month situation or if we're just got a few more cattle around than what we thought we were going to.
• 2:53
  SPEAKER_00: The other big news on the cattle this week, and this is really a one-week trend, so we can't call one week a trend, but um, weights were down uh for the first time in quite some time, down significantly, steer weights being six percent less.
• 3:11
  SPEAKER_00: So what that that's either telling us one of two things or or maybe both items are are factoring.
• 3:18
  SPEAKER_00: Well, it's about time.
• 3:19
  SPEAKER_00: Yeah, that's about time, that's exactly right.
• 3:21
  SPEAKER_00: And season, meaning that the weights have been creeping up the whole time this all spring.
• 3:27
  SPEAKER_00: Um, and then seasonally, we're obviously getting into summer, so they should be dropping from that perspective.
• 3:33
  SPEAKER_00: But as we talked about a few weeks ago, you know, we are killing a few more cattle than what may maybe should be uh according to our math.
• 3:41
  SPEAKER_00: So it's also maybe suggesting that, hey, we're we've we are pushing some inventory backwards.
• 3:46
  SPEAKER_00: We've talked about that, but maybe we're not doing it uh, maybe we're catching up a little bit here in the past few weeks, um, which you know that's gonna be a good thing, especially if we're gonna place a few more cattle for like that September, October time frame than what we were originally anticipating.
• 4:06
  SPEAKER_00: It would be really nice to clean up a few of the cattle sometime here in in June or July.
• 4:12
  SPEAKER_01: What else do you think about the cattle market here before we work our way into weather?
• 4:16
  SPEAKER_00: Well, the other thing that we like to look at is the you know, the on the demand side of the equation, how is our choice beef and our select beef prices doing?
• 4:25
  SPEAKER_00: And that all seems to be um in really good shape.
• 4:29
  SPEAKER_01: Just clawing higher a little bit, isn't it?
• 4:31
  SPEAKER_00: Exactly.
• 4:31
  SPEAKER_00: And you know, the math that we did a couple weeks ago was hey, we're actually putting a little bit more choice meat out there today than what we were a year ago.
• 4:41
  SPEAKER_00: So that comparison is actually if you look at choice meat compared to choice meat, um, and we're getting a actually a tick more for it, and that too is kind of a just a weekly observation.
• 4:54
  SPEAKER_00: Um but the important part is it's trending higher when the supplies are actually fairly high as far as what's coming out the back side of the packing plants today.
• 5:04
  SPEAKER_00: So there's some pretty big wins there.
• 5:06
  SPEAKER_00: Um hopefully some big wins from the hog producer's standpoint, too.
• 5:11
  SPEAKER_00: And we're just not seeing any give up on the demand as far as the actual real numbers on the beef side, as far as we can tell, Mike.
• 5:20
  SPEAKER_01: How about on the weather side uh here, Jeff?
• 5:23
  SPEAKER_01: Let's talk about it.
• 5:24
  SPEAKER_01: We have uh TL2 Cities, I mean, uh in the Western Corn Belt here.
• 5:27
  SPEAKER_01: We are swimming around today as we've uh received ample amounts of rainfall.
• 5:32
  SPEAKER_01: Been a cool sum uh spring so far, you know, yesterday being the first day of summer here, uh waiting for that heat to really warm us up going into the uh 4th of July time frame like we normally talk about.
• 5:45
  SPEAKER_01: Uh little bit of short corn around the neighborhood here, but it it looks good, and we've had ample rainfall for the first time in in many years uh around this part of the world, and probably a wee bit too much at this point, especially after today.
• 5:59
  SPEAKER_00: But the drought seems to be over in Laverne, at least, Mike.
• 6:02
  SPEAKER_01: That's safe assumption.
• 6:03
  SPEAKER_01: Look at the eastern corn belt, not so much over there.
• 6:06
  SPEAKER_01: We're starting to find a little bit more heat and a little bit more dryness after a wet start to the planting season.
• 6:12
  SPEAKER_01: They've uh really lacked some rainfall here and had some pretty hot tempts.
• 6:16
  SPEAKER_01: We had uh a couple fellas from Chicago in the office today, and I know they sure uh complained about some hundred-degree weather here lately and a whole lot of dryness.
• 6:25
  SPEAKER_01: So uh what do you got to say about the weather pattern that we're currently in and and kind of what we've got going on in the east versus the west and what the traders like to think about those two situations?
• 6:35
  SPEAKER_00: Well, if we if we can finish up the cattle situation for a minute, um you know, where the cattle are fed is in the western part of the corn belt, obviously.
• 6:45
  SPEAKER_00: So we haven't been turning on the heat in you know places like Nebraska and even Kansas all that much.
• 6:52
  SPEAKER_00: So that's what makes you the weights um if they continue to trend lower.
• 6:57
  SPEAKER_00: Um don't want to make too many assumptions there again, makes them a little bit interesting.
• 7:01
  SPEAKER_00: You know, one of the things that I find the most interesting about this week is there's that line that goes through Iowa and maybe catches a corner of Missouri, you know, it's basically from northeast Iowa to you know southwest Iowa, everything east of there, hot, rather dry, everything you know, north and west getting quite a bit of moisture.
• 7:26
  SPEAKER_00: That thing really hasn't moved all week.
• 7:28
  SPEAKER_01: No.
• 7:28
  SPEAKER_00: And that is what's really impressive and what's uh um creating these these two different situations, of course.
• 7:37
  SPEAKER_00: Um I don't know.
• 7:39
  SPEAKER_00: I I look at the gray market, Mike, and uh it's like it's there's seems to be enough stuff going on that uh I'm surprised the market doesn't care about it.
• 7:51
  SPEAKER_00: Uh I guess I would I would ask your uh thoughts on that.
• 7:55
  SPEAKER_00: Are what what we what do we have to take to take place here to really get the market carrying?
• 8:01
  SPEAKER_01: It feels like it depends on what way the market momentum has been shifting to how we trade weather here really recently.
• 8:08
  SPEAKER_01: So, like for example, you start to trade rain makes grain a little bit in the Western Corn Belt, we've g been getting some rainfall.
• 8:17
  SPEAKER_01: Uh you start to trade lower, but the dryness in the east keeps us buying a little bit here on some breaks on the corn side.
• 8:25
  SPEAKER_01: So so far that forecast has helped stop it from wanting to go down further than what we have on the corn market, I think.
• 8:33
  SPEAKER_01: Going forward, uh, we really to keep that floor in there, I think we need to keep some of that dryness and and kind of poor outlook in the eastern corn belt in it.
• 8:42
  SPEAKER_01: If you start to talk about perfect rainfall over there now, it's gonna be tough, I think, to keep this thing moving in an upward direction uh on the market.
• 8:50
  SPEAKER_01: So yeah, that's what I think.
• 8:52
  SPEAKER_00: And their forecast for next week looks like what again?
• 8:56
  SPEAKER_01: They plugged in a little bit of rainfall, but there's still not a ton of rainfall for the eastern corn belt after this, you know, after this, maybe a little bit this weekend, but it's not nearly sufficient by any means going forward.
• 9:09
  SPEAKER_01: And the the heat we'll see if they really stick by some really hot temps going forward, but uh that as well looks pretty much above normal temps and uh you know a little bit below normal rainfall there for the eastern corn belt.
• 9:23
  SPEAKER_01: So they they're not in a spot where they're in a massive drought already or anything like that.
• 9:27
  SPEAKER_01: It's just kind of the forecast for it.
• 9:29
  SPEAKER_01: Like they had a little bit of a wet start, now we've transitioned, it they could use a rainf rainfall coming up.
• 9:36
  SPEAKER_01: Uh they kind of want to get it.
• 9:37
  SPEAKER_01: Yeah, so it it's more of a weather scare by far than a weather problem at this point for the United States in that part of the world.
• 9:45
  SPEAKER_01: Now, talk about the Western Corn Belt, yeah, yeah, there'll be problem areas, people are gonna come on and say we've had uh too much rain in too many areas.
• 9:53
  SPEAKER_01: Uh agreed.
• 9:54
  SPEAKER_01: But the traders look at it from a perspective of rain makes green, and I think the last time we really traded that was 19, and they really proved that, where it by the time we came around to it, it was too late, Jeff.
• 10:06
  SPEAKER_01: So I'm looking for the Eastern Corn Belt to really save us here rather than looking at the Western Corn Belt and saying it's too wet.
• 10:13
  SPEAKER_00: You're saying from a yield standpoint you would have larger expectations for the Eastern Corn Belt with a drier bias or the other way around?
• 10:21
  SPEAKER_01: Um, I it's gonna be tough because I didn't have the best planning conditions and now it got dry.
• 10:27
  SPEAKER_01: That's not exactly the best deal, but around here I know some of the top end is taken off for sure in these parts with the low spots and some of the replant things like that.
• 10:37
  SPEAKER_01: So it's gonna be tough.
• 10:38
  SPEAKER_01: Some of the yields taken off.
• 10:40
  SPEAKER_01: You know, there's gonna be probably a lot of people after this next week or going into July that are gonna try to say the 181 or better is probably gone.
• 10:50
  SPEAKER_01: That's what I think you're probably gonna take out of this, at least from my perspective.
• 10:54
  SPEAKER_00: That's just whether or not you start sneaking down oh, kind of in that 178, maybe 77, if it starts getting into that 177 and lower type of a corn yield, it might start that that gets to be it starts to get into the territory where it gets interesting, right?
• 11:11
  SPEAKER_01: Yeah, but to go lower for the USDA to try to go any lower than that at this point, I just don't think they have sufficient enough evidence at this point to make that case.
• 11:20
  SPEAKER_00: So acres report coming out uh a week from today.
• 11:24
  SPEAKER_00: Yep, a week from today.
• 11:25
  SPEAKER_00: Comments, expectations, what are people talking about on that front, Mike?
• 11:30
  SPEAKER_01: A little bit higher corn acres, maybe, uh smidge, and a little bit lower soybean acres.
• 11:35
  SPEAKER_01: And uh when Mark was in the office here today from Chicago, it sounded like that was very much the trend going back the last few years out of this report.
• 11:43
  SPEAKER_01: It's very common for us to see a little bit higher corn acres out of this report and a little bit lower soybeans.
• 11:49
  SPEAKER_01: And uh that's probably what I'm gonna assume.
• 11:51
  SPEAKER_01: I would say uh personally, I I wouldn't be surprised if we had very similar or the same corn acres and a little bit lower soybean acres in this report.
• 12:01
  SPEAKER_01: Um, gonna need it, I think, on the soybean side.
• 12:04
  SPEAKER_01: Uh, we've really taken off a lot here.
• 12:06
  SPEAKER_01: We could use a jump start on that.
• 12:07
  SPEAKER_01: We've bounced down to some very strong support levels.
• 12:10
  SPEAKER_01: We'll see if we can hold that until the report.
• 12:12
  SPEAKER_01: But uh these grain markets have broke pretty hard here recently, haven't they, Jeff?
• 12:17
  SPEAKER_00: They sure have.
• 12:18
  SPEAKER_00: And you know, soybeans, they're at pretty much at contract lows, aren't they?
• 12:24
  SPEAKER_01: Yeah, this 1120 area on November soybeans is about as bad as it's got going back to last May, and then uh here February, I believe, this year as well.
• 12:34
  SPEAKER_01: Uh very similar point.
• 12:35
  SPEAKER_01: So pretty strong bottom in this point.
• 12:37
  SPEAKER_01: Gonna need something to push it, push it either direction at this point, I think.
• 12:41
  SPEAKER_01: All right.
• 12:42
  SPEAKER_01: Well, if that's it for the week, uh, we'll catch you next week.
• 12:45
  SPEAKER_01: Uh Wednesday, we'll have the hog podcast, and then Friday, we'll probably be wrapping up with the Acreage Report at the end of next week.
• 12:52
  SPEAKER_01: So listen in then, and uh thank you for joining us.
• 12:55
  SPEAKER_01: And thank you to all our listeners.
• 12:57
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 13:00
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 13:06
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 13:12
  SPEAKER_01: See you next time.