Latest / CattleUSA Daily / 328: High Prices Cure High Prices? What Comes Next for the Cattle Market with Dan and Samantha

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328: High Prices Cure High Prices? What Comes Next for the Cattle Market with Dan and Samantha · CattleUSA Daily

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In today's episode with Dan and Samantha, we are covering
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everything that is happening in this wild cattle market right
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now. There has been so much happened
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over the past week and we are covering every single one of
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those topics that have been hitting the cattle market over
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the past week. And what does that mean for us
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as we go into the rest of summer and into fall as well?
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Before we hop into today's podcast episode with Dan and
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Samantha, if you're watching on YouTube, make sure you take a
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second to hit that subscribe button.
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Without further ado, let's go ahead and hear from Dan and
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Samantha. Welcome to the Cattle USA Daily
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podcast, your go to source for the latest livestock markets,
1:03
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
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informed and connected. Now let's dive into today's
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episode. Dan, Samantha, welcome back to
1:24
the podcast once again. It's nice to have you both back.
1:28
Yeah, you sound like a game show host just a little bit.
1:31
You can tell Warren's very excited to have us on today.
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I agree. I agree.
1:36
Welcome back. Come on down.
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I. Know what voice I'm going to
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bring out? Like I've just, I've got a cat
1:43
in the log full of them. Every once in a while I'll bring
1:45
one out with John and he's like, you just totally put on a
1:48
completely different face than you had on three seconds ago
1:51
when we were talking off camera. But OK, we'll pretend that
1:54
didn't just happen. I'm wondering when we get some
1:56
of these cool hats you got, how do we get our hands on those?
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Samantha I. Don't know Lauren, I don't have
2:01
one either. You suck it up to Lauren and
2:03
she'll send you one in the mail. You.
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Got to be nice. You got to be nice to me.
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Samantha is on the train to get in one.
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We'll see how Dan sitting after this episode, but Dan and John
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and their little beat up on Lauren team match they got going
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over here. I don't know if you guys deserve
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a hat. So sorry.
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OK, I don't know what to say. All right, all right.
2:34
We'll try to do better. I won't eat bacon on the show
2:36
anymore. I'm sorry.
2:37
You know, it's, it's OK, it's OK.
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I this is like no one gives a crap.
2:43
But I also now can't eat eggs and dairy for the next month
2:47
either. So you could essentially just
2:48
eat beef for the next month. Yeah, which out works out great
2:51
because it's beef month. Yeah.
2:53
Perfect, Yeah. Represent it's grilling season,
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right? Let's go.
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I about sent you a text last night, Dan.
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My husband put fillets on the Traeger and then seared them on
3:04
the Blackstone and they were amazing and delicious and
3:06
perfect. And I about sent you a picture
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last night and was like, you'll be proud of us for not cooking
3:11
these in there, for not cooking them in the air fryer.
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So I'm very proud. It's it's a world of difference,
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isn't it? Way better, right?
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Admit it, Lauren, admit it. No, I'm not going to admit it.
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They're fillets. They deserve to be cooked on the
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grill. I'm not going to say that the
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grill or the air fryer or better the grill probably is better,
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but the air fryer also creates a delicious steak.
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And I will stand on that, that I'm not afraid to put a sirloin
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in the air fryer and it's going to come out delicious.
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And I'm going to serve you on one of these days, Dan, and
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you're not going to have any idea that I cooked it in an air
3:43
fryer. And you'll be like damn on
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that's a good steak. Perfectly medium rare with a
3:47
nice crisp on it. OK, you can try.
3:50
It's OK. Yeah.
3:52
All right. I've never turned down a steak
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no matter how it's cooked, as long as it's not microwaved but
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or boiled. But I guess I would probably
4:02
include microwave boiled and air fried, the same category.
4:05
We'll see. We'll see.
4:06
You can stand in that, that's OK.
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That's OK, we'll see. I've dug my own grave, Dan, at
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this point and now I have to stand in it and I'm going to
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proudly with my megaphone stand in this grave because it's
4:18
already been dug, so I can't do anything for it.
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So all. Right.
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All right. I'm glad you enjoyed a a very
4:24
nice strip yesterday. I'm glad your husband prefers to
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cook it correctly. I'm very happy to hear you're
4:30
supporting Beef and Beef month. So thank you.
4:33
Thank you. If I tried to cook a steak in
4:35
the air fryer it would so take my air fryer like 35 minutes.
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My air fry is comparable to an easy bake oven, so I hope that's
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not the case for you. It's like 4 minutes aside maybe.
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Wow, that is fast, Yeah. So confused.
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All right, all right, you. Just sit over there and you're
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confusion, Dan, you've got your nice little beef month shirt on.
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You're representing beef today. You've got all the corn planted.
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We're in a good mood. You just, you let yourself sit
5:02
over there and that and we're not going to.
5:04
We don't have to go into it anymore.
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Good. I like, like it.
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Let's do that. You won't rub salt in the wound.
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OK. Wow, beef month.
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Happy Beef Month. Absolutely happy beef month.
5:16
It's a great month. It's a favorite.
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Month. Yep, absolutely.
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I love it. Well, what are the markets doing
5:21
in beef month? Who wants to give us the
5:23
rundown? Go ahead, Samantha.
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Man, I think you can pretty much pick any direction to go as far
5:28
as why these cattle markets don't make any sense right now.
5:31
I mean, if you're a hedge cattle feeder and you're in the right
5:34
position, this basis is probably working for you.
5:37
If you're not, these margin calls suck.
5:39
But realistically, I mean, nothing's really lining up.
5:42
We're seeing cash is super, super strong.
5:44
We're seeing futures tailback quite a bit, talking $1012.00
5:47
basis. But you know, Packers are still
5:49
very desperate for cattle, their eagle eager to get cattle bought
5:52
and delivered as quickly as they can.
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Even though slaughter's back. I mean, the demand is still
5:58
there. We've already had 260 trade this
6:00
week from all your, all your states out of the primary
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feeding region, those ones that we get reports from.
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So Kansas and Texas have already traded as much as they do for
6:09
the week just through Tuesday, all while box beef prices is
6:12
still kind of tailing back a little bit.
6:14
So like I said, nothing's really lining up.
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I, I mean, you can make your own conclusions there because I
6:19
think a lot of us are pretty perplexed just as far as why the
6:22
futures market is tailing back so far when a lot of the
6:25
indicators are pretty bullish, except for some media things
6:29
going on with the, the tariffs and different things.
6:31
But I mean on the weighted average last week we seen cash
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258 on a weighted average. I mean that is insane.
6:37
We're just we're hitting record highs and we're passing them
6:40
like it's nothing. I mean the last 3-4 weeks cash
6:42
has been so strong. You've got four O 2 dress that
6:46
makes 1000 LB carcass worth $4000 and then some.
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I mean, who would have thought you seen the day of not only
6:52
$4000 a carcass, but 1000 LB carcasses.
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I mean it's both both crazy things.
6:57
Heard of a quote out of Yankton, SD last week.
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Someone bought a 1400 LB steer for 270 and it and it was going
7:05
back into the feed yard. I mean, not only is there a lot
7:08
of risk behind that, but it's just insane.
7:10
One, that's going back into the feed yard and two, especially
7:13
paying 274, it's just crazy. And it makes you think is that,
7:16
is that the new benchmark? Are we tapped out?
7:19
Are we sustainable at 260 cash? Kind of what's going on here?
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And then even the feeder kettle market is been insane.
7:26
I mean, cash market has been crazy.
7:27
Some of these feeder kettle prices are just absolutely
7:30
unheard of. They're astronomical.
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It's crazy. We're setting records, you know,
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Monday we the futures, they started the session up and then
7:37
they fell off due to Trump's announcements about lowering
7:40
beef prices. And we've seen a lot of back and
7:43
forth. He was originally going to sign
7:45
an executive order on Monday to bring beef prices down by
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suspending that, that after quota tariff on all countries
7:52
that we import beef from. And don't get me wrong, I'm not
7:55
for government intervention, especially around beef prices
7:58
and different things. Let the market work the way it's
8:00
supposed to. But you're talking about 8384%
8:03
of US beef consumption supplied domestically versus probably 16
8:07
to 17% from import. So this increase probably would
8:11
have likely only accounted for less than 1% of total US beef
8:15
consumption is the mindset that a lot of analysts are in.
8:18
And I'm in that too. And so I think there was a lot
8:21
of speculative trading going on there, a lot of fear mongering.
8:24
But then Trump came out and he said he was going to delay that
8:27
executive order to basically encourage the market to work for
8:29
itself, can encourage her rebuilding all the things.
8:33
There's an old saying high prices cure high prices, and
8:36
there's absolutely truth in that.
8:38
Let markets work the way they're supposed to.
8:40
They're supply and demand markets for a reason.
8:42
But you know, after that, we thought that we'd see a big
8:45
recovery in the board from this yesterday, especially after cash
8:48
came out trading 260 set in line with the week before.
8:52
A lot of people thought that he wasn't going to go through with
8:54
that executive order to go back on the first one, but he did.
8:57
And then even with this volatility, like I said, beef
8:59
demand has been the foundation of this market.
9:02
We're in, in beef month, May, we're going into grilling
9:05
season. And Packers are short cattle.
9:07
Summer is always a time where cattle numbers are down from
9:11
what they usually are every time, every other time of the
9:13
year. So there's not much for the
9:15
Packers to grab at. And a lot of people are of the
9:17
opinion that maybe 260 fats is sustainable for the next few
9:20
months. And the thing about it is, you
9:22
know, the Packers have to be aggressive to get these cattle
9:24
bought. There's not a lot of them.
9:26
Foreign militaries are down huge.
9:28
And this is a rare occasion in the beef sector where there
9:31
actually is some competition in these cattle markets to get
9:33
these cattle bot, even though slaughter's been somewhat down
9:36
last week. So I think short term, we just
9:39
really need to be watching the basis levels like Dan said in
9:41
the commentary before to see if if cash comes down to meet
9:44
futures or futures goes up to meet cash.
9:47
So I think that's kind of where we're at.
9:49
Agreed. Yeah, No, that was spot on.
9:53
Yeah. There's been a lot of talk.
9:55
Trump comes out, obviously says stuff.
9:58
What was it last fall? Yeah, I think it was last fall.
10:01
Trump came out and made similar comments.
10:03
Then it was Argentina, right? We were going to import all this
10:05
beef from Argentina to cheapen up our beef price.
10:08
How'd that work out for him? Anybody know?
10:12
Argentina didn't have any beef to buy, Right?
10:15
So, so here we are now we're making the statements about
10:18
Brazil. Brazil is a little bit
10:19
different. They do have some beef we can
10:21
buy from them. Honestly, we were getting that
10:23
beef anyways. If you look at our import
10:25
record, we're on track. 5.5 to 5.8 billion pounds we're going
10:30
to bring in this year. Why is everybody freaking out?
10:32
I mean, we don't have £5.8 billion here.
10:35
That's why we're bringing it in. OK, so we dropped the tariffs on
10:39
it, so we get it in a little bit faster.
10:41
Here's where I'm torn because I can understand the frustration.
10:44
We're starting to see them bring in cuts, middles stakes, right?
10:49
That's a problem. That's competition that we don't
10:52
want, We can't afford to see because South America has
10:56
cheaper cost of production, forces us to be competitive with
10:59
the world. If we have to start selling
11:01
steaks a lot cheaper to be competitive with Brazil, that's
11:05
a problem. They are having some luck moving
11:07
that lower quality meat. If they're just going to bring
11:10
in grind, if they're going to bring in lean burger to mix with
11:13
all our fat, I really don't care.
11:15
We don't have enough right now. Beef cow slaughter still low,
11:17
dairy cow slaughters ticking up, but not enough to offset the
11:21
amount of demand for burger in this country.
11:23
So if I had to guess, you know, McDonald's, Burger King,
11:27
Wendy's, they're probably all in Trump's ear just going crazy.
11:30
Hey, we need to fix this burger price or we're going to end up
11:33
closing all these locations. If I had to guess, right, Burger
11:36
is burger is. What do I want to say?
11:40
It's the true problem here, right?
11:42
You know, if somebody can't afford to eat a $20 steak,
11:45
that's fine. They go out, they grill burgers.
11:47
There are people that can't afford to eat $20 steaks.
11:50
But when you can't afford to buy a $7.00 pound of hamburger,
11:53
that's a big problem. And I think that's what Trump's
11:55
objective is. Do I think that's what is
11:58
actually happening? No, because I think on the
12:00
backside of that, the people that are in his ear have
12:04
ulterior motives. Can they bring those metals in?
12:06
Can they mark those get more money for their product from
12:10
South America on those steaks, on those cuts?
12:12
That's my personal opinion. That's what I think is happening
12:15
when I look at demand as a whole and like Samantha just said,
12:20
high price, high prices cure high prices.
12:23
They always have they're always going to.
12:25
It was just like last October. Do you remember when he came out
12:28
and said that? I think I jumped on the show and
12:30
I'm like we were already in the process of curbing demand with
12:33
high prices. Then was the first time we
12:35
touched 2025 dollars steaks. They weren't selling.
12:38
The retailer had a discount just to move them.
12:41
Box beef went from 4:17 I think down to 380.
12:44
You know, high prices cured high prices back then.
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The same thing is happening right now.
12:49
The crappy part is it's happening during May our our
12:52
favorite month of the year peak grilling season.
12:55
High prices are cure curving. So if I look at at the weekly
12:59
beef feature from the USDA, what is the retailer featuring while
13:03
the retailer's featuring the loins, the retailers featuring
13:06
chucks, a lot of the stuff that they have better margins on,
13:10
they're not featuring the rib eyes, the T bones.
13:13
That's a problem for me. OK, so if they're not going to
13:16
feature them, they're not going to push them out the door.
13:18
They're going to mark them up. They're going to hold them at 20
13:21
bucks and they're going to say, well, we move them, we move
13:23
them. Oh well, what they are is
13:25
they're trying to make some money on the little bit of stuff
13:27
that they have better margins, the chucks in the in the loin
13:30
area and the burger. OK, so what's that doing?
13:34
It's because they're acting this way.
13:36
It's actually slowing down on the volume that we're moving.
13:39
That's a big that's the biggest problem in my book.
13:42
I never want to see that volume drop.
13:44
We can make that price fluctuate all we want, but I never want to
13:47
see that volume drop, especially in May, our favorite month of
13:51
the year. So that's a big problem.
13:53
If I go back and I'll throw give you some of these charts,
13:56
Lauren, you can throw them up here, but it then I go look at a
13:59
forward contracted beef. OK, So if you remember, was it
14:04
well a month or two ago I wrote a a pretty extensive newsletter
14:07
how I thought the Packer was gatekeeping some of the beef in
14:10
the spot market to force those prices higher and then the
14:14
intern they would get some really good contracts sent in
14:17
place for this May and June beef month.
14:18
OK, so that I still believe happened.
14:21
Now we look at we've got 38390 boxes flirting between 370 and
14:26
390. And I look at what they're
14:28
writing in meat contracts, you know that 45 to 90 days out,
14:33
once you get past beef month and and June, these this thing is
14:37
not shaping up to be good for the dog days of summer.
14:40
Yeah. Going back to what Samantha
14:41
said, high prices occur in high prices.
14:43
Am I frustrated with Trump once again?
14:46
Yeah. Did it work out very well for
14:49
him last time? No.
14:50
But if I actually step back and look at this thing objectively,
14:53
him or the government or whoever it is, is coming out making
14:57
these statements every time we're reaching these new
14:59
plateaus of this market. First it was 250, and we need to
15:03
get this under control. We're going to bring in more
15:05
meat, you know, blah, blah, blah.
15:07
Then all the sudden we poke through 250 and we blow right up
15:10
to 260. Trade last week.
15:12
What happens? Packers start chirping in
15:14
Trump's ear. Trump comes out, makes a
15:16
statement, market drops. He retracts it.
15:19
Market starts rallying, he comes out, puts it out again.
15:22
It's, to me, I don't know, it sounds like a conspiracy, but
15:27
legitimately, I think it's market related.
15:29
They're trying to keep a lid on this thing.
15:30
Now the big question is obviously, what's a feature
15:33
hold? That's what we're all here for,
15:35
right? It's a features market and we're
15:36
buying feeders, we're buying grass calves.
15:38
What, what is this going to look like 36812 months from now?
15:44
Like I said, I'm a little bit nervous about that beef
15:46
movement. So let's say we slow down on the
15:48
beef movement and there is a shift to pork and chicken and
15:52
there is a shift and somehow we get more of these imported
15:56
middles and we have to be more competitive with $10 rib eyes
15:59
from South America. Well, what's that going to do?
16:02
To be honest, that puts the regional Packer at a huge
16:05
disadvantage because they do not have the processing in the
16:09
packaging facilities to bring in some of this imported meat and
16:13
and blend it, do whatever, package it and push it out to
16:17
their customers, right? It puts the large Packers at a
16:21
huge advantage because they have those facilities in the means to
16:23
do that. Back to the cattle market
16:25
though, Let's say it puts those regionals, those smaller plants
16:29
at a disadvantage and knocks them out of the market.
16:32
If they're losing 300 bucks a head, they can't move 20 to $25
16:35
steaks. What happens?
16:37
Are we going to drop some of those plants?
16:39
Very easily we could drop those plants in the next 45 days, you
16:42
know, a couple, three of them we could drop a big one.
16:45
It's hard to say which one drops first.
16:47
But right now the Packer is losing money.
16:49
A correction is going to have to happen unless we're going to
16:52
bring more supply in via the Mexican border with those feeder
16:55
cattle, which I don't see happening personally.
16:57
So we drop a plan. Now all of a sudden we we've
17:00
lost some leverage on the feeding side.
17:02
We lose that leverage on the feeding side.
17:03
It's trickle down economics long.
17:05
I cannot stress this enough, the beef market, these high prices
17:09
are telling us be prepared. It's not all sunshine and
17:13
rainbows forever, people, right? I would love to say we're going
17:16
to have $800 a head. Margins on the finishing side
17:19
forever, not going to happen. I would love to say that the
17:21
background is going to make 600 bucks a head like they did last
17:24
summer. Crazy cabs, not going to happen.
17:27
Margins are tight. Be prepared for those tighter
17:29
margins. That was very long winded and I
17:32
need a drink of coffee. Holy moly.
17:34
Yeah, I think on the other end of that conspiracy too, although
17:38
I think it tends to happen at a time Trump comes out, at a time
17:41
when the market's rallying because beef's also rallying,
17:43
right? It's being brought to his
17:45
attention that it's high. He's got people in his ear on
17:48
the other end, and I think he's kind of getting seeing it from
17:50
both sides. For instance, he was in Brazil,
17:53
he was talking to the Brazilian President.
17:54
The Packers were probably in his ear, whether it was about $300
17:57
losses, a head on packing, whether it was about, you know,
18:01
different things. And so I think, and then he's
18:03
got them in his ear. And then he has Rollins in his
18:06
ear saying, OK, this is how it actually works, kind of bringing
18:08
all these things to his attention.
18:10
And I think people can say what they want about Rollins, but I
18:12
do think she works for the producer some.
18:14
We're seeing that. And really everything that she's
18:16
doing. I mean, I don't think a lot of
18:17
this stuff would be happening if she wasn't actively listening to
18:20
people with boots on the ground, skin in the game and different
18:23
things. So I mean, in Trump's
18:25
perspective, I think, yeah, he ran on lowering grocery prices.
18:29
And I can see that that's what he's trying to do.
18:31
And I think Rollins being here's why he kind of retracted that
18:34
executive order and came out that he was going to delay the
18:37
tariff removal. So I think that's a lot of it.
18:41
I don't know coincidence or what's going on, but I do.
18:44
Do you think it just perfectly times itself where the markets
18:47
rallying the same time beef is rallying and it's bad timing
18:50
too. I mean, we're going into big
18:51
summertime grilling season. It shouldn't be happening.
18:54
Let let demand, let that the market do what it's supposed to
18:57
do. High prices cure high prices.
18:59
I'm glad that he retracted it. I hope it holds for a while.
19:02
I hope that delay is holding for a while.
19:04
And on the conspiracy side, I just don't know if he has the
19:07
mindset of the time to really think that in depth about what
19:09
the markets doing and when it's rallying and when it's not.
19:12
I mean, he's got so many other things going on in the back end.
19:15
So I mean, I could see it either way.
19:17
But yeah, it's tough. But I think one thing that we
19:20
really need to pay attention to when we're looking at beef
19:22
prices is that you can't expect cattle to be high-priced on the
19:27
hoof due to a 70 year low in domestic cattle numbers and
19:30
expect it to not hit the retail counter.
19:32
It's supply and demand. If the consumer can't afford it,
19:34
it's going to start to show up in the price.
19:36
Like I said, that's supply and demand markets.
19:38
And I'm still the party that will go to the grave arguing
19:41
beef isn't necessarily high. I mean, it's only as high as the
19:43
consumer thinks it is. And especially right now
19:46
figuring how much work, cost, time, effort is actually
19:49
warranted to get that beef animal from pasture to play, You
19:53
know, I can't, I can guarantee you it's much more warranted in
19:56
beef at than it is at Starbucks. And looking at the price of
19:59
coffees, one of those things to just really be cautious of.
20:03
And when you look at input costs and different things, we've
20:05
still got really high interest rates and sending his commentary
20:08
the other day was $5 corn to buy the century because you've got
20:12
all this E15 demand and different things that are going
20:15
to be driving corn prices this year likely.
20:17
So got a lot of different things going into this year.
20:20
One more quick hitter before we jump off the beef training and
20:23
the corn last year. If you look at last year's beef
20:27
demand, the last two years were great.
20:29
Spring weather wore all these fancy beef shirts just because
20:32
it was so awesome. And Hallelujah.
20:34
If you look at where we started late winter, we started down at
20:37
like 317. Sub 3/20 was our choice boxes.
20:41
And then if you look, not even going into late summer where we
20:44
peaked out at 4:17, but just going into end of May and first
20:50
part of June when beef demand is usually running at its high, we
20:53
put $53 on choice boxes during that period just because beef
20:59
demand and grilling season, right?
21:01
Fast forward, look at where we're at now.
21:04
We were up at 400 when the Packers were.
21:07
We're gatekeeping the the beef this winter.
21:10
Now all of a sudden we pull back to this 3738390 and we can't get
21:15
any traction. This is a problem for me.
21:17
You know, we should not be struggling to push beatbox beef
21:21
prices into the four hundreds right now.
21:23
It should not be an issue at all.
21:24
It is. Everybody wants to blame it on
21:27
gas prices because of the Iran conflict.
21:30
Yeah, maybe that is actually affecting some people out there.
21:34
Everybody wants to talk about, hey, beef demand is great.
21:37
You know, the Packers need the cattle and life is going to go
21:40
on forever. You know, the shortage of cattle
21:42
is is here. I don't know, I'm really, really
21:45
concerned. We're not seeing that
21:47
advancement in those wholesale prices.
21:49
We're not seeing the advancement in retail demand.
21:52
It's it's a big concern. This is the time of year where
21:54
we should not struggle to move meat and and the consumers kind
21:58
of pushing back or so like I said, the dog days of summer
22:01
still exist. It's been a couple years since
22:03
we've had actually experienced that, that climate and that
22:07
market sentiment once we get past June.
22:10
But I do expect that to hit a little different this year than
22:13
the last two years. It's a little bit different
22:15
going into the fall, whether it's not a lot of beef demand,
22:18
there's, you know, back to school.
22:20
It's a little different when we come into this winter.
22:22
Are we buying these, you know, 2900 to $3000 grass cabs?
22:27
Are we paying too much for those?
22:28
The markets, the market, right. So I can't say we are, that's
22:32
the market. Are we paying too much for a 33
22:34
or $3400 a yearling to throw on feed?
22:37
Well, right now that's the market.
22:38
So I can't say that. But does that mean we're going
22:40
to have good margins on them? Not necessarily necessarily.
22:42
I'm just saying I think we need to be prepared if this thing is
22:46
if these are the first signs in a fracture in our demand and
22:51
those high prices actually curing the high prices.
22:54
And I'm in of that opinion too, I've kind of gone back and forth
22:56
as far as beef demand goes because of where we're seeing
22:59
boxed beef kind of stagnant at. And we kind of talked about this
23:03
the last few times on the podcast, Lauren, about just
23:05
where beef prices are in comparison with beef demand,
23:08
specifically where boxed beef prices are.
23:10
And my mind wanders back to that that surge in March, that $4.00
23:14
surged in choice box beef, select box beef, cut out values
23:17
where we seen that surge in a very unseasonal time.
23:20
And again, everybody was wondering if we peaked early, if
23:23
we were going to hit that $4.00 mark and keep climbing at two
23:26
months later when we were going into grilling season.
23:28
And right now we're seeing, like I said, stagnant box beef
23:31
prices. As much as we would like to
23:33
believe that beef demand is alive and well, it kind of
23:35
varies week to week. Some weeks you kind of think,
23:37
OK, you know, maybe we're starting to see that surge going
23:40
into grilling season. And then other times Bock beef,
23:42
beef box beef values fall off 3-4 bucks or, or steaks fall off
23:46
$5 and different things in May and beef month.
23:49
And you think, well, maybe it's not as good as we thought it
23:51
was. So definitely something to be
23:52
watching as we go further into summer.
23:55
But like Dan said, definitely be cautious of that, be protecting
23:58
on that because we we are getting a little stagnant here.
24:01
And I don't think that it is, it isn't indicating that it's as
24:05
beef demand is as strong right now as we maybe thought it was
24:07
to begin with. It is a little concerning.
24:09
Well, and I mean, in a consumer population where where we
24:12
constantly have our consumers wanting the next discount, the
24:16
next deal cheaper. Like everyone is pushing for
24:19
cheaper everything right now and beef is taking a really big hit
24:25
on the consumer demand portion of they want to see more
24:28
discounts follow everything else that they're seeing.
24:32
Like the thing about grocery prices is once grocery prices go
24:36
up, they're never going to go back down to where they used to
24:39
be. Like even if the retailers would
24:42
put them down to where they used to be strategically, they're not
24:45
going to like, that's just not how it works.
24:48
And so our consumers are looking at grocery prices and looking at
24:51
beef prices and saying, well, why are beef prices this high?
24:55
Like in a consumer market where people are going online and
24:59
buying things from foreign markets and getting them shipped
25:02
here at pennies on the dollar cheaper.
25:04
As far as like just consumerism goes in a hole, I'm concerned
25:09
about just our overall consumer market and the points that you
25:12
made earlier, Dan, about our foreign entities.
25:16
And like, so our southern continent, South America, all of
25:20
these places being able to produce beef at a cheaper rate
25:24
than we're able to here in the United States.
25:25
And the fact that they're now starting to export actual cuts
25:29
of beef and not just ground. Because if that competition goes
25:33
up, then we're going to see a really weird restructuring
25:37
happen here in the United States because no one eats beef like we
25:40
do here in the States. No one, no other country eats
25:43
beef like the United States does.
25:45
And so I'm concerned like what does it look like in 10 years
25:50
when they really start to get their genetics, their
25:54
production, their everything else figured out?
25:57
And how does that play into our consumer demand and then our
26:01
import versus export markets and how we play in the world market?
26:06
Because you made so many good points to Samantha of we're
26:09
finally at prices. We're pretty much everyone is
26:12
making money right now. The Packer was making money a
26:15
few months ago. So like we're the Packer needs
26:17
to be making money too. I fully acknowledge that.
26:20
But we're finally at prices were pretty much everyone's making
26:23
money in the United States, States beef like market.
26:25
And I'm just concerned for, OK, so this is this is what we have
26:29
to be at for everyone to be making money.
26:31
Where do we go from here as far as consumer demand goes, as far
26:34
as foreign markets go, as far as competition on a world scale?
26:38
Like what does that look like over the next 5 to 10 years?
26:42
I'm I'm really curious to see how that shakes out.
26:44
And the thing about it is we have such great quality in the
26:47
US, but the demand for burgers, like Dan said, the demand for
26:50
burgers and ground beef is absolutely surging.
26:52
And that's what push it is. Push and you select spark tea,
26:55
cut out values, these ground beef prices, all the things.
26:58
But the thing about it too is everything is so high.
27:01
I mean you've got what minimum wage in California is like 25
27:05
bucks an hour or something like that.
27:06
I mean you've got high cost of living, higher wages.
27:09
The average person probably makes 1000 a year.
27:13
I mean everything is just, but you need that because of the
27:15
cost of living. Everything is just so high.
27:18
And the producers that I talked to, they all say at some point
27:21
everything has to meet and you don't at that point WAC crash in
27:25
the market. I mean, what happens from there?
27:27
But why is beef, beef such in high focus beef prices in such
27:32
high focus when out of all of those things, that's probably
27:35
where it is actually warranted the most when you look at supply
27:38
and demand? I know I got this answer.
27:40
Thank you for asking that question because it is a huge
27:43
question that not everybody I don't want.
27:45
How do I say that? Yeah, we're getting way too much
27:47
of the focus, right? That's all we're talking about
27:49
is beef this, beef that it's gas prices and beef only.
27:52
Those two things are high. Shit bag of potato chips is
27:55
stupid and the candy bar is stupid.
27:57
It's all done right. The reason we're getting the
28:00
Focus is because we're a staple that nobody wants to give up.
28:03
Just like nobody can walk away from the gas pump because they
28:06
can't get to work without driving there, they can't walk
28:09
away from hamburger because they don't want to give it up.
28:12
I don't know about you, but I don't want to eat chicken and
28:14
pork every night of the week, but I can sure as heck eat beef
28:17
every night of the week. So that's why we're the hot
28:19
topic. Does it fix the problem?
28:21
No, I mean, it's it's going to be a hot topic as long as they
28:24
keep putting pressure on Trump and as long as inflation is an
28:27
issue, I don't want to see inflation continue because it's
28:30
not healthy for the economy. But at the same time, if we lose
28:34
inflation, it's not good for the cattle market.
28:36
So it's kind of a double edged sword there.
28:38
Yeah, it really is. And I feel like there's no like
28:40
crystal ball that we can start to like really see the future or
28:45
magic wand that we can wave to have it all figured out.
28:48
Because like, the reality of it is there's always going to be
28:51
something battering the beef market.
28:54
It's just whether it's going to be politics or whether it's
28:57
going to be foreign entities or like what there's always going
29:00
to be something that's going to take a battering ram to our beef
29:03
market and try and knock it down.
29:05
So I just hope that producers are prepared for the dog days of
29:08
summer and for like, yeah, we're living, we're living large right
29:11
now. We're feeling good where we're
29:13
at. But like, this does not last
29:15
forever. And that we are using this time
29:18
to prepare for what is ahead and everything like that.
29:22
So Dan, do you want to cover the grain markets for us?
29:26
Quick hitter on yesterday's report in the USDA decided that
29:31
they're going to acknowledge the drought, outlast how bad it is
29:35
in these wheat fields. We took a huge spike and at drug
29:39
corn with it a little bit yesterday.
29:41
It'll be interesting how we trade following this report,
29:45
especially next week. The Corn Belt is finally seeing
29:47
some relief in regards to the rain and actually starting to
29:51
dry out. So is this drought that is
29:53
handling everyone out West, is that going to shift into the
29:56
Corn Belt? I'd, I'm not the meteorologist,
29:59
but if it does, that should give us some support here.
30:02
If I look at old crop river bases is extremely strong in
30:06
comparison to other areas. It's the strongest we've seen in
30:09
almost a decade. So that's really bullish.
30:12
When we look at this old crop corn, if we're looking at new
30:15
crop corn, there was this huge, huge ceiling here at $5 December
30:20
corn, right? We poke through it and then all
30:23
the sudden pulled back. Now we're trying to poke through
30:25
it again. I think it's going to become
30:28
weather related. Concerning thing for me is if I
30:31
look at where managed money is positioned in the grain markets,
30:34
corn and soybeans very, very close to a record long and we're
30:38
not sitting at $7.00 corn or $6 corn or $1415 beans.
30:44
We're sitting at 5:00 and 12:00 and they're almost tapped out on
30:48
long positions they can put on now, they can continue to add
30:51
and go to a new record, but they've got to have a legitimate
30:55
reason to keep pressing the buy button.
30:57
All of a sudden that goes away, the forecast changes, something
31:01
else changes, could they liquidate and down our markets
31:04
go. So we're watching that the wheat
31:06
side of things. I'm really, really optimistic
31:08
yet because obviously the drought is holding back our our
31:12
potential production that we thought was going to be there.
31:15
Now it's not even going to be close.
31:17
And the USDA recognized that managed money was really, really
31:20
short the wheat complex and now all of a sudden, oops, we
31:23
screwed that up. So now they're flipping.
31:26
I think they continue to flip, if you ask me.
31:28
So there was a big balance sheet on the wheat side of things from
31:31
the last couple years that we needed to clean up.
31:33
I think that's going to happen. I think that balance sheet is
31:37
why the funds were so short in the wheat market.
31:39
But nonetheless, there's some opportunities here.
31:41
And if we poke through this $5 corn, let's get some hedges in
31:44
place. I know, you know, I was in the
31:47
camp that, hey, we need to buy corn sub $5.00 because of this
31:50
drought and the potential if it shifts, Yeah, we need to get
31:53
some feed needs booked. You know, if you look at hey
31:56
prices, they're starting to go higher out West and it's
31:59
starting to come east. So same thing with corn.
32:03
If corn is going to be higher out West where the drought is
32:05
bad and if wheat spikes up, people aren't going to be
32:07
feeding it, there's not as much there.
32:09
Is that going to start shifting E What does that look like a
32:12
month from now? I think we need to have a
32:14
percentage bought over feed needs.
32:16
Do I think we need to be 100% covered up on the long side of
32:19
corn? No, but yeah, I would get some
32:22
bought. A feed is in an interesting spot
32:25
for me with this drought. You know, you've got Cal calf
32:27
producers, first time in a decade that they've been this
32:30
profitable. I'm inclined to believe they're
32:32
going to dry a lot. Some of these cows, if their
32:34
pastures are burned up, I'm inclined to believe they're
32:36
going to send these efforts that they were going to breed to a
32:39
lot, have them lot, bread, pen bread, whatever you want to call
32:41
them, and they're going to hold on to them.
32:43
Obviously, they don't want the tax problem.
32:45
They sold high calves and they sold high steers.
32:47
You know this, if they sold them what you say in January,
32:50
February, they don't want to sell the cow this year too.
32:53
They want to hold on to her. That exists as long as cattle
32:56
prices stay high and feed prices stay relatively cheap, you know,
33:01
in comparison. They want to hold on to that
33:03
critter if they can. Things could look a lot
33:05
different in this landscape. You know, we get out to December
33:08
if we have a short crop, if you know, hey, especially like I
33:11
said, that's rallying. If we, if this drought holds on
33:15
all the way through summer, that can be very, very detrimental to
33:18
feed prices. You know, screaming iron.
33:20
I don't know, I don't know. This is I've, I've never seen a
33:23
drought hit us at all time record high market.
33:25
So it could be crazy. Like I said, get some feed needs
33:29
booked. If you're on the grower side of
33:31
things, get some hedges in place and puts in place just in case
33:35
some of the forecast changes or both wars come do an end.
33:39
Oil prices fall out of bed and all of a sudden corn goes with
33:42
it. So yeah, be prepared.
33:44
That's exactly right. And when you zoom in a little
33:46
bit more on the drought, you figure about 60% of the
33:49
countries than a drought, but 80% of cattle country is
33:52
enduring a bulk of that drought. And so you really need to be
33:55
protecting for that. But also, like Dan said, I mean,
33:59
instead of culling those cattle, which normally in a time of
34:02
drought, you don't have grass, you don't you you're probably
34:05
not going to turn them out on summer pasture till, I mean,
34:07
likely July, late June, if you have the grass, probably going
34:11
to need to pull them early if we don't find some relief from this
34:13
drought. And a lot of people, like Dan
34:15
said, I talked to a lot of people that are going to dry
34:17
long through the summer because normally what would have been a
34:19
cold cow, there's so much incentive behind, behind keeping
34:22
them to get that high-priced calf.
34:24
So I was talking to a gallon Nebraska W Nebraska and kind of
34:28
the Panhandle and she was talking to me about I I asked
34:31
her specifically, I said, is there a lot of expansion
34:33
happening in your area, specifically around all the
34:36
fires? Are people liquidating?
34:38
You know, kind of what's the deal?
34:39
What are you hearing? You know, it's nice to get
34:41
incentive and best part about my career is that I get to talk to
34:44
people in the industry and that's and get their incentive.
34:47
And I think that's awesome. But she was talking about how a
34:49
lot of people, you know, don't have the grass, especially due
34:52
to the fires and there's not a lot of way around it.
34:54
Hey, it's so expensive, they can't afford it.
34:56
But if they can't afford it, they actually are bearing down
34:58
to dry Lotem again to get that high-priced cap.
35:00
But the ones that can't afford, they are liquidating.
35:03
But a lot of them, she said, are actually exchanging within an
35:06
hour radius of one another and they're going back into the
35:09
hands of producers that are actually going to keep them
35:12
back, feed them dry Lotem throughout the summer to get
35:14
that cap. She said the only ones that are
35:16
are really going towards cow slaughter or the ones that were
35:18
damaged due to longevity, whether it was, you know, lung
35:21
damage from the fires or different things like that, who
35:24
actually have poor longevity and probably won't be able to make
35:26
it another few years. But I thought it was interesting
35:29
to get that perspective and maybe that was something that
35:31
had to do with all the expansion that we're seeing within the
35:34
industry right now. We're seeing heifer retention.
35:36
We're seeing people buy replacement efforts at the at
35:39
the sale barn and breed them to sell his breads.
35:42
So I mean, we are seeing that. We're seeing it in the numbers.
35:44
We're actually seeing good incentives for expansion, but is
35:48
that sustainable long term with all the different things that
35:50
this that this industry is throwing at us right now?
35:53
Maybe not. I mean, you're talking 1,000,000
35:56
acres that go to development annually, and that's just
35:59
development. You're not talking about all the
36:01
other things that are pushing us out of the grass that we need.
36:04
So a lot of different things going forward.
36:07
I'd be interested to see if expansion persists as we go
36:10
further into this year and even next year in the years to come
36:12
because I just think it's really, I want to be optimistic,
36:15
but I think it's really, really hard to be.
36:17
Yeah, I, I could not agree more. And it's just going to be a
36:20
really interesting summer. I think a lot of us are kind of
36:23
holding out to see what the next few months hold.
36:26
And we've had a really good early spring and early start to
36:30
this year. But there's a lot of things
36:32
going at this cattle market right now and a lot of factors
36:35
that are at play that are so uncertain.
36:38
And I think a lot of us are holding our breath to kind of
36:40
see what the next few months have in store for us.
36:44
All this scuffle of Trump, but I will say there was some good in
36:47
the scuffle. I mean, he signed and this is
36:49
kind of been overlooked in the midst of all the the beef stuff,
36:53
but he signed an executive order to expand loans to producers,
36:56
specifically those beginning farmers and ranchers.
36:58
So that was good. And it's really hard for them to
37:00
get a leg up. But he also, and this is one
37:03
that I really haven't even seen. I really had to hunt for it.
37:05
He also pushed back the rules and regulations around, well,
37:08
not this one specifically, I'll get to that, but he pushed back
37:11
the rules and regulations around the wolf population.
37:13
You know, that threatened the cattle population for years.
37:16
These producers have had their hands tied lawfully as far as
37:19
what they can do to protect themselves, their cattle from
37:21
these wolves. But something that hasn't been
37:24
as in the media, I guess, and this is what I was saying I
37:27
really had to hunt for, is that he's actually taking steps to
37:32
deregulatory steps to scrap the ID mandates.
37:35
And I think that is huge. And so I think there is some
37:38
light at the end of the tunnel and there was some good that
37:41
also came out of that. So it's not all doom and gloom.
37:45
So I'm going to leave you guys with that closing thought.
37:47
I love it. I love it.
37:49
Well, Dan and Samantha, as always, thank you for your time
37:52
on the podcast today. We appreciate it.
37:54
As always, your thoughts, your opinions, your commentary,
37:57
everything like that. To all of our audience members,
37:59
make sure you check out the show notes down below.
38:01
If you need to get coverage booked.
38:02
Dan and Samantha's information is down below.
38:04
You can get a hold of either of them or another member on the
38:07
Cattle USA Insurance team to have those conversations and get
38:11
yourself covered in the markets that we're seeing right now.
38:14
As always, thanks for listening to another episode of the Cattle
38:16
USA Daily Podcast. We'll see you all next time.