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Trump, Funds, Cattle · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Today is January 24th.
• 0:25
  SPEAKER_00: I've got Jeff Hugendorn here with us.
• 0:27
  SPEAKER_00: How's it going?
• 0:28
  SPEAKER_01: It's going good, Mike.
• 0:29
  SPEAKER_01: How are you doing?
• 0:30
  SPEAKER_00: We're doing pretty good.
• 0:31
  SPEAKER_00: I would say this week was probably one of the first weeks we've seen some Trump trade, Jeff.
• 0:36
  SPEAKER_00: How's that sound?
• 0:36
  SPEAKER_01: Yeah, it was a interesting week on that front, no doubt.
• 0:40
  SPEAKER_01: Uh seemed like we started the week kind of slow based on from my expectations, at least, you know, compared to, you know, what maybe is a pretty major shift in uh administration there.
• 0:51
  SPEAKER_01: Maybe start picking up a little bit more trade from his um from that perspective later in the week, huh?
• 0:57
  SPEAKER_00: Yeah.
• 0:57
  SPEAKER_00: You know, you look at uh let's just take a quick look here from the World Economic Forum at their annual meeting for 2025.
• 1:05
  SPEAKER_00: Trump gave a speech yesterday, and I know a fellow colleague of mine uh and I were sitting in the office, and we saw Trump talk.
• 1:13
  SPEAKER_00: We saw red headlines come across the board as Trump talked about things like immediate interest rate drops and forcing OPEC to cut oil prices with higher production, and all of a sudden, Jeff, you saw oil prices immediately react.
• 1:28
  SPEAKER_00: You saw the dollar market react, you saw gold react.
• 1:31
  SPEAKER_00: It was like classic Trump trade.
• 1:33
  SPEAKER_00: And it it's really one of the first times I think that we've seen really a uh direct Trump talks, market moves, impact for quite some time.
• 1:43
  SPEAKER_00: I mean, we've had some here, there, terf this, terf that, but that was like wow, you could see it live real time.
• 1:50
  SPEAKER_00: He's up there talking, markets moved.
• 1:52
  SPEAKER_01: Yeah, I agree, and you know, one of the things I keep staring at is the crude oil market, the way that some of the stuff he said, you know, on Monday night and into Tuesday was like pretty bearish crude, and we're still in the mid-70s.
• 2:04
  SPEAKER_00: Worst week since November on crude oil.
• 2:06
  SPEAKER_01: Yep, but we did trend lower, so that's a that's exactly right.
• 2:10
  SPEAKER_01: But um, we're gonna need cheaper oil than$73 to$74, I think, to do some of the things that he's talking about doing on that front.
• 2:18
  SPEAKER_00: Yeah.
• 2:19
  SPEAKER_00: So that's one thing I've noticed this week.
• 2:21
  SPEAKER_00: The other thing I've noticed here, uh, we're awaiting the uh CFTC data for the commitment of traders, Jeff.
• 2:28
  SPEAKER_00: And one thing I was running over on numbers here is uh since our August low in corn, we've traded higher about 90 cents.
• 2:36
  SPEAKER_00: Oh, we've almost put on a buck there on March corn futures uh since our August low.
• 2:42
  SPEAKER_00: And uh during that time frame, if you go back to July, the managed m money funds were a record net short position on corn at 353,000 contracts.
• 2:51
  SPEAKER_00: Today they're estimated to be long over 312,000 contracts.
• 2:56
  SPEAKER_01: So 600,000 change, huh?
• 2:59
  SPEAKER_00: 600,000 change in uh relatively short time frame.
• 3:03
  SPEAKER_00: It it sure seems fast looking at the chart at least.
• 3:06
  SPEAKER_00: However, it doesn't seem like the rally has really lived up to that hype of uh contract covering to that extent, I would argue, Jeff.
• 3:14
  SPEAKER_00: Only a dollar seems relatively small for that type of change in scenery.
• 3:19
  SPEAKER_01: Well, you think about it, they're you know certainly not gonna go up another six hundred thousand contracts, maybe two hundred, right?
• 3:27
  SPEAKER_01: If they really get it's kind of hard to see them pushing that hard even, but if they really get excited about something.
• 3:41
  SPEAKER_01: So that's not gonna leave a ton of upside for corn.
• 3:44
  SPEAKER_00: That's gonna be a pretty good ceiling there if uh we can't add too many more contracts than that.
• 3:49
  SPEAKER_00: So index fund positions quietly close to a record long as well on corn Jeff, and uh soybeans are making their way there as well.
• 3:56
  SPEAKER_00: One of the main themes there just being that, you know, if Trump is gonna cut interest rates, if we are gonna have cheaper crude oil, if we are going to do all these things he wants to do and have tariffs, that we are worried about inflation, and that's just the way it is.
• 4:10
  SPEAKER_00: And I think money flow's really been supporting that and uh hedging against inflation by buying commodities and uh particularly egg commodities.
• 4:19
  SPEAKER_00: Uh lean hog position, we've had a pretty good long position on for a while.
• 4:23
  SPEAKER_00: Obviously, live cattle and feeder cattle knocking on records about every other week on managed money and index long fund positions.
• 4:30
  SPEAKER_00: But that's where I wanted to really talk about this week, Jeff, was this cattle market.
• 4:34
  SPEAKER_00: Uh, what can you tell me about record prices across to cattle right now?
• 4:41
  SPEAKER_01: Well, what is there to really say, right?
• 4:43
  SPEAKER_01: That's it.
• 4:43
  SPEAKER_01: That's pretty much the interesting part is Mike, it's not the first time we've sat in here and talked about record prices on on this cattle market.
• 4:51
  SPEAKER_01: So yeah, it's it's been taking place for a couple weeks in a row now.
• 4:56
  SPEAKER_01: Did finally uh trade over top of uh two dollar futures.
• 5:00
  SPEAKER_01: Wow.
• 5:01
  SPEAKER_01: So we've had that's quite the statement.
• 5:02
  SPEAKER_01: Yeah, it's pretty impressive, no doubt.
• 5:05
  SPEAKER_00: Cash market well above that, it looks like.
• 5:08
  SPEAKER_01: Yeah, so cash market got really fired up today.
• 5:10
  SPEAKER_01: Um, you know, we were looking at earlier in the week.
• 5:14
  SPEAKER_01: There was some talk of maybe some 203 type money.
• 5:16
  SPEAKER_01: This is down south now, um, Texas, Kansas type area.
• 5:21
  SPEAKER_01: That was gonna be a dollar higher or so week over week, but obviously we came in here today.
• 5:26
  SPEAKER_01: Um, even Kansas was pushing 208, 209, um, had a lot of cattle selling up this way, you know, 210 to 212.
• 5:37
  SPEAKER_01: So uh our last record there was around 205.
• 5:40
  SPEAKER_01: So we've we've really took a big leg higher on the cash market.
• 5:46
  SPEAKER_01: Um and futures, you know, so if you call that uh a good eight dollars, maybe nine dollars higher week over week, um futures up you know, three and a half today, but up six kind of week over week.
• 6:04
  SPEAKER_01: So um they've they haven't went up quite as far um as what the cash rallied here this week, but they went quite a ways.
• 6:12
  SPEAKER_01: And now they're they're still trading a pretty huge discount.
• 6:15
  SPEAKER_01: So you know the futures market continues to believe that this cash market will break some um as you get closer to the end of February, right?
• 6:24
  SPEAKER_01: And so far it has not.
• 6:26
  SPEAKER_01: It's just been uh really pushing higher, incredibly strong market, obviously.
• 6:31
  SPEAKER_00: So not enough cattle out there, probably.
• 6:33
  SPEAKER_00: The prices are really high at the grocery store, and people just keep buying more and more and more, Jeff.
• 6:39
  SPEAKER_01: Yeah, every every data point that we've been able to gather up so far would suggest that demand um really isn't showing any signs of weakening.
• 6:48
  SPEAKER_01: Um, but you know, it's gonna I sooner or later it seems like that it would.
• 6:54
  SPEAKER_01: But so far it's been a huge success story.
• 6:56
  SPEAKER_01: And that's that's the one thing um, you know, if if the futures have some logic to them uh being here, you know, three to four dollars less than where the cash market is, you are going to uh trade um box beef and uh choice box beef uh for that matter and cash cattle pretty much the same money this week.
• 7:17
  SPEAKER_00: To put that into perspective, choice today was uh at 330, and I had some cash trade at 330 dressed today, Jeff.
• 7:26
  SPEAKER_00: Not a whole lot of uh give and take there at that level, is there?
• 7:29
  SPEAKER_01: Wouldn't think there'd be a ton of margin in that equation, Mike.
• 7:32
  SPEAKER_00: Not a ton.
• 7:33
  SPEAKER_00: So that's gonna slow that up a a whole lot, or at least throw a wrench in there on margins for sure for them, Packers.
• 7:39
  SPEAKER_00: So your two main factors to worry about going forward right now in the cattle market sure looks like it's either the economy and people can't afford uh the expensive beef anymore, or uh the Packers having a tough time killing even the small supply that they've got.
• 7:54
  SPEAKER_01: Yeah, so I I think you know we'll we'll see how that materializes.
• 7:57
  SPEAKER_01: If they cut the kills back a little bit, um, you know, obviously that'd be a little bit hurtful on the cash market, probably, you know, based on everything that we've seen on demand so far, um, probably would generate some higher prices on the meat side.
• 8:10
  SPEAKER_01: So that's kind of how you can wiggle through these uh situations from an industry standpoint, I guess, Mike.
• 8:16
  SPEAKER_01: Um, you know, the one thing ourselves and along with everybody else uh has on the kind of the front of our mind is you know, are we gonna end up with a plant closure uh out of this situation?
• 8:28
  SPEAKER_01: You know, if you if you're this short cattle here in January, Packers gotta be looking at it um pretty pretty intently thinking, okay, how am I gonna get through the next twelve to maybe eighteen months here um before we can start to see some increase in in numbers after that, you know.
• 8:45
  SPEAKER_00: Especially another wrench in there is if we deport a good staff uh or a good portion of their staff, Jeff.
• 8:51
  SPEAKER_01: Yeah.
• 8:51
  SPEAKER_01: No, that's labor's certainly part of this equation, is if you start having to which you know from what we're hearing, past six months probably quite a bit better than the past twelve months before that, right?
• 9:02
  SPEAKER_01: So things from a labor standpoint seem to be uh as good as they've been since twenty twenty.
• 9:09
  SPEAKER_01: So maybe there's a little bit of fluff there, but always kind of depends how many folks leave.
• 9:14
  SPEAKER_01: Um and uh yeah, if labor starts to be a bottleneck, they'll have to pick and choose where they want to use that, right?
• 9:21
  SPEAKER_00: And well, and if any final thoughts for us today, Jeff?
• 9:24
  SPEAKER_01: Uh Kettle and Feed Report this afternoon as well, Mike.
• 9:28
  SPEAKER_01: Um this is it's a little bit bullish.
• 9:30
  SPEAKER_01: You know, we were we're expecting just a little bit more placements than last year, which last year was really low through uh November and December.
• 9:39
  SPEAKER_01: Um so that was lower than expected.
• 9:42
  SPEAKER_01: That's gonna put us right up against the lowest that we've seen in the past five years for this for the month of December.
• 9:49
  SPEAKER_01: Um so it'll be a little bit bullish.
• 9:51
  SPEAKER_01: Uh cattle on feed, just one percent lower than last year.
• 9:56
  SPEAKER_01: They were expecting something, you know, just maybe a third to half percent lower than last year.
• 10:01
  SPEAKER_01: So maybe a little bit friendly on that front as well.
• 10:04
  SPEAKER_00: All right.
• 10:05
  SPEAKER_00: Well, thank you for your time.
• 10:06
  SPEAKER_00: We have a cattle inventory report a week from today, Jeff.
• 10:09
  SPEAKER_00: That one's always a fun one.
• 10:10
  SPEAKER_00: Only get that one once a year now, don't we?
• 10:12
  SPEAKER_01: Yep, they've canceled the survey that they usually do in July, so it's January only.
• 10:17
  SPEAKER_01: But no, well, we definitely like to pick that one apart a little bit.
• 10:20
  SPEAKER_01: Um, that one was always more accurate than the July one, anyhow, in most people's opinion.
• 10:24
  SPEAKER_01: So, yeah, stay tuned for that.
• 10:26
  SPEAKER_01: We'll have a lot of information out on cow herd and are we retaining heifers and calf crop, things like that'll be interesting.
• 10:34
  SPEAKER_00: Well, one thing seems certain here that changes uh happening uh ever since that January Wazda Airport.
• 10:41
  SPEAKER_00: We have seen uh immense volatility through the grain markets and now uh through some of the other markets as well as Trump has taken the White House.
• 10:48
  SPEAKER_00: So if you need anything, please give us a call here and thank you for your time, Jeff.
• 10:52
  SPEAKER_00: Thank you.
• 10:53
  SPEAKER_00: And thank you to all our listeners.
• 10:55
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 10:58
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:03
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 11:09
  SPEAKER_00: See you next time.