October 8, 2025 • 24 mins
Supply tightens even as front‑end cattle grow heavier and packers pace kills, creating a bullish medium‑term picture with choppy, risk‑heavy near‑term price action. We lay out why feeder highs may persist, how data gaps from the shutdown complicate decisions, and where heifer retention is starting to bite.
• counter‑seasonal decline in fed slaughter and record‑low August–September marketings
• heavier carcass weights and front‑end burdens into OND
• blended cutout rally then retracement with limited upside into holidays
• feeder highs, border closures, smaller calf crops, cheaper feed costs
• why 2014–15 comparisons fall short this cycle
• heifer retention signals and early cow herd bottoming
• government shutdown data gaps and trade flow shifts
• Brazil tariffs vs Australia/New Zealand supply
• risk management, hedging discipline, and margin awareness
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Thank you, Tommy G
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:13):
Wow we doing everyone, time Grossafi Aggbow
Media Ag Bull Trading.
Another week has come by andwe're here to talk cattle with
the one and only Mr.
Mike Sands with MBS Research.
What an exciting time to talkcattle for everything we're
saying in this video.
By the time we get it boxed outand put out to you, who knows
where cattle will be trading.
But upon filming this video, uhsome of the back months and
(00:34):
feeders are making new contracthighs, and the uh front months
are just a touch away.
So let's bring in the starsshow, Mr.
Mike Sands.
Mike, good to have you on.
We're getting more comfortabledoing this every week.
And the only thing I'm notcomfortable doing is trying to
answer when's a top.
And that's probably what uh youhear what's going to top these
things out, correct?
SPEAKER_00 (00:53):
Well, and no question about that.
That's obviously a majorquestion going forward.
But when we look at overall beefsupplies and the size of the
cattle inventory, the prospectthat we are going to see some
heifer retention, uh, theMexican border remaining closed,
chances are pretty good that weare in fact going to see smaller
(01:14):
beef supplies, smaller fedcattle supplies going forward
from here.
So our real tightness innumbers, despite all of the
discussion during the course ofthis year about a small
inventory, small calf crops, uh,it sure looks to me, Tommy, like
they get tighter going into nextyear and maybe the year after as
(01:35):
well.
SPEAKER_01 (01:36):
With that, we got Thanksgiving and Christmas
coming up.
Pretty soon people are gonnahave to start buying their needs
for that, right?
The big box stores andeverything else.
They uh I know when I go to I'mkind of a Costco guy, and every
once in a while you you knowthat I don't feel like beef's
out of control.
I mean, it's expensive, but forsome reason, sometimes there's
still good deals at the retaileronce in a while, isn't there?
SPEAKER_00 (01:58):
I surely believe that's the case.
They do feature a good a goodbit of the product that they
move.
The old rule of thumb years agowas something on the order of 40
to 50 percent of the beef movingout of traditional retail
stores, moved on some kind of afeature price.
It's probably it's probably alittle bit less than that now,
(02:21):
but it's still a prettyprominent part of their overall
feature program.
Now, I think for the most part,Costco is a little bit like
Walmart in the sense of theyreally try to put together
everyday low prices rather thandoing a lot of featuring like
(02:44):
traditional retailers do.
SPEAKER_01 (02:46):
Yeah.
All right, we're gonna have anaction pack show.
I'll give you a couple oftouches what we're gonna talk
about.
We got a government shutdownthat's still going on.
We might talk a little bit aboutuh with the government shutdown.
We got website shutdowns.
Uh, we might talk a tiny bitabout Trump payments.
Uh, everyone's uh wanting toknow what's going on with farm
raid.
But uh most importantly, we'regonna talk very in detail.
I'm not gonna talk.
(03:07):
I'm gonna click the buttons.
Mr.
Mike Sands is gonna talk hereabout cattle, in particular
feeder cattle.
This show is called Fat Tuesday.
Real quick uh about the show.
I want to thank you forwatching.
I want you to tell friends aboutit.
But I gotta tell you, in thenext few months, you won't be
able to find the show.
This show's going behind thepaywall.
So only people receiving thisshow in the next few months will
be friends and family of MBSResearch, Mr.
(03:28):
Mike Sands, and then friends andfamily and subscribers of AgBill
Trading, clients of AgBillTrading and Agvil Media.
So if you're interested inpremium content like this,
you'll have to subscribe.
$25 a month,$250 a year.
With that, let's get in theshow, Mr.
Mike Sands.
I'll go full screen on you.
Well, let's bring in the secondstart of the uh show, the uh
(03:50):
charts.
Let's see here.
Chart number one.
Want to talk about this a littlebit?
SPEAKER_00 (03:54):
Sure do, Tommy.
It's been an ongoing theme ofmine, at least in recent weeks,
that we've seen pretty much acounter-seasonal decline in Fed
cattle slaughter.
Basically, going back to thebeginning of the year, if you
look at that solid red linearrow, uh, you can see that our
biggest numbers this year interms of weekly average Fed
(04:16):
slaughter occurred back inJanuary.
And typically, as we go fromJanuary into the late spring and
summer months, uh you can seethat solid black arrow at the
top.
We see a seasonal increase inFed cattle availability going
from January into the spring andsummer months.
(04:40):
This year, however, we arelooking at and have looked at a
counter-seasonal decline in fedcattle slaughter, with our peak
numbers in January declining allthe way into July, August, and
September.
That's a counter-seasonaldecline.
There was an incentive there forthe cattle feeder to delay
(05:04):
marketings, to put uh days onfeed, to push cattle forward.
Uh, and from a packerstandpoint, they basically
enabled that set of decisions.
And the end result is we'vebuilt a front-end supply of Fed
cattle here, of market-readycattle, uh, that is uh
(05:26):
counter-seasonally larger herein the OND quarter compared with
the summer.
That's a huge red flag, I think,in terms of thinking about Fed
cattle prices movingsubstantially higher here into
the fall.
I've I certainly have a forecastin place for bigger Fed cattle
(05:50):
supplies going into the next sixto eight weeks.
That's highly questionable.
I think the risk is that thePacker keeps a pretty firm thumb
on what those kill numbers looklike, and that for all practical
purposes enables that front-endsupply to stay fairly large.
We're going to string thesenumbers out for a bit.
(06:12):
This second chart reallyconfirms that.
If we look at Fed cattleslaughter in August and
September, they were record lowfor those individual months.
Not just low, but the smalleston record on a weekly average
basis, going back to 1985.
(06:34):
And it sure looks like we havedone more of the same type of
thing here in the very earlypart of October.
So August marketings were down10%, September marketings were
down about 9% on a weeklyaverage basis, and it sure looks
like October is going to be downsomewhere in the area of 7%.
(06:56):
All of that suggests that westill have a relatively large
front-end supply of fed cattlehere to work our way through.
And of course, that thatslowdown in marketings does
culminate into heavier weightcattle.
So if we look at the next chart,Tommy, you can see that uh
(07:20):
carcass weights here for lateSeptember, uh, middle part of
September are record heavy.
Now, with the governmentshutdown, we don't get actual FI
slaughter data.
And along with that, no actualcarcass weight data.
But a reasonable proxy is theweights on formula and contract
(07:46):
cattle.
They represent somewhere in thearea of 80 to 85 percent of the
cattle that we slaughter on aweekly basis, and you can see
that top line is movingprogressively higher toward a
fall peak.
You can pretty well bet that FIweights are moving higher as
(08:07):
well.
My point is we got a big numberof front-end cattle, uh,
front-end market ready cattle atrecord heavy carcass weights.
And that, in in my estimation,poses a bit of a red flag as far
as the cattle feeder isconcerned moving forward.
(08:29):
Very good.
This chart, Tommy, is uh just aconfirmation.
Maybe to some extent of um ourdiscussion last week, we saw a
huge run-up in beef prices.
And this is the blended cutout.
You can see that very sharprally that we had during the
course of the month in August.
(08:51):
And now we're in the early partof October, and for all
practical purposes, we haveretraced all of that August
rally with a very sizabledecline in price levels here in
the early part of October.
Uh, it's not unusual if you lookat uh the last two or three
(09:13):
years to see a little bit of adead cat bounce, if you will, in
beef prices in late October,early November, and then maybe a
little bit of a retracement interms of that limited price
increase here over the next fewweeks.
So that's kind of what I've gotin mind.
(09:34):
It does look like we've seen alittle bit of firmness in the
beef market here over the lastfew days.
Obviously, from a buyerstandpoint, uh looking at a
blended cutout somewhere in thearea of 360 to 365 certainly
looks more attractive than thatplus four dollar area that we
(09:55):
were in at the end of August andvery early September.
But I think their enthusiasm andinterest in pushing beef prices
higher is going to be prettylimited.
SPEAKER_01 (10:09):
And uh upon filming this, Mike, uh, we have feeder
cattle, November feeder cattlejust hit 369.
I believe that's a new contracthigh in feeders.
Does that uh sound like a newhigh?
SPEAKER_00 (10:20):
Yeah, it surely does.
We did get a report to the earlypart of this week with regard to
another screw worm case,confirmation of a screw worm
case in Mexico.
I think the perception had beenthat maybe the border might
reopen later this year.
It sure looks like with this newconfirmed case, about 170 miles
(10:45):
south of the U.S.
border, uh even though it lookedlike and or sounds like it was
an animal that was trucked northfrom southern Mexico, it sure, I
think, from a trade standpoint,reaffirms the notion that this
border is going to stay closed.
So uh this chart is is simply acomparison of the feeder index
(11:10):
relative to the Fed cattlemarket.
And you can see the last coupleof weeks, uh the feeder index
has been around 150 to 155percent of the Fed cattle
market, uh, and that basicallymatches up with the kind of peak
feeder prices that we saw backin 2014 and 15.
(11:33):
That would suggest that maybefeeder prices are in the process
of peaking out.
However, I think this timearound is is substantially
different than where we wereseveral years ago.
First of all, feeder cattleimports from Mexico, if we go
back to the initial borderclosure in late November of last
(11:57):
year, feeder cattle imports aredown somewhere in the area of a
million two hundred and fortythousand over that time frame.
So we've got fewer feederimports.
We've had smaller calf crops inboth 2024 and 2025.
And in addition to that, I thinkwe're probably in the process of
(12:19):
holding back a few more heifersat this point in the cattle
cycle, which also furthertightens that feeder cattle
supply.
So my point is that feedersupplies are going to remain
tight going forward.
And if you combine that withexcess feeding capacity along
(12:40):
with considerably cheaper feedcosts relative to the last
couple of years, I'm certainlynot at this point going to argue
that the feeder market is in theprocess of peaking out.
SPEAKER_01 (12:54):
And I've traded a few markets on big peaks, Mike,
like Minneapolis wheat, forexample.
Talk about dramatic or corn whenit goes above seven or eight.
Just because it's in the processof peaking out doesn't mean it
won't blow you up for uh a wholenother couple days or weeks or
whatever.
Margin calls do need to be made,correct?
Yeah, absolutely correct.
No question.
(13:14):
You better run that banner.
Future options have risk downthere.
We're talking uh with Mr.
Mike Sands with MBS Research.
This show's called Fat Tuesday,but I think we're filming it on
a Wednesday because that's justhow the schedule went.
But uh, this is uh Mike'sinformation here.
Uh if I could find it, he wassomewhere over here.
I lost him.
But interesting because uh Iwant to ask you a question and
(13:37):
we'll get to our last slide.
With the uh government shutdownand the uh website shutdown, how
how much are you dependent on uhthat information that they
provide?
SPEAKER_00 (13:48):
Well, USDA basically is a source of of a great deal
of the information that we workwith from an analytical
standpoint, and as a result, ashortfall in that information
does leave some holes.
Um I mentioned earlier that theoverall FI slaughter data and
(14:09):
carcass weight data is is nolonger available as long as uh
the government is shut down ourweekly trade data, both in terms
of export sales and shipments,is also a casualty.
And the monthly trade data thatwas due to be released yesterday
or today will not be released.
(14:31):
And of course, uh we have acatalog and feed report coming
up, scheduled to come up uhtoward the end of the month, I
think the 24th.
That could be a casualty of thegovernment close down as well.
And next week, um from a moremacro standpoint, the CPI data
and associated with that is ourretail beef price data, um,
(14:57):
could also be casualties of thisgovernment shutdown.
So uh the data that we depend onfrom an analytic standpoint is
starting to show bigger andbigger holes, which uh for all
practical purposes get worse aslong as as the shutdown
(15:17):
continues.
Yep.
SPEAKER_01 (15:18):
Soybean farmers, Mike, we're hoping for uh big
talk of a big payment forsoybean farmers.
That doesn't look like it'sgonna happen anytime I know they
had talked about giving it, butthe government shut down.
They just can't write a checkwhen the checkbook's in the
safe, right?
SPEAKER_00 (15:32):
Uh that's what it sounds like, that they don't
have the personnel in place andand the capability of of getting
that done here in the short run.
And of course, one other part ofthat, there has been some
ongoing discussion with Braziluh about maybe relaxing some of
those trade disruptions, atleast on beef imports from
(15:55):
Brazil at this point.
Uh the tariff rate is over 75percent.
So imports from Brazil uh havecome to a virtual standstill,
uh, and that uh does pose somelimitations on domestic
manufacturing type beefsupplies.
But at least here in the shortrun, uh we're more than uh well
(16:19):
supplied in terms of largeincreases in production coming
in from Australia and NewZealand and even Mexico and
Canada for that matter.
SPEAKER_01 (16:29):
I'm just gonna put it out there.
Well, let's talk about it afterthe slide, but I think this is
gonna come back to haunt us inyears forward, and I think
you'll have a spin on that.
All right, heifers and weeklyfeed summary declines.
SPEAKER_00 (16:42):
Yeah, we talked a little bit about uh heifer
retention, and I think we're inthe process of beginning to see
a little bit of growth uh inthat regard.
We've been reducing the size ofthe cowherd since 2019.
I think we're slowly in theprocess of beginning to hold
(17:04):
back a few more heifers now andand rebuild that cowherd, but
it's off to a slow start.
Uh, if we look back at thenumber of heifers on feed back
in July, they were down 5%,while the number of steers on
feed was up two, uh, indicatingthat that maybe there was some
(17:25):
early indication of heiferretention.
In addition to that, there werea number of key cow states at
the beginning of 2025 that werereporting slightly larger, a
slightly larger cow herd andholding back a few more heifers.
And last but not least, a dataseries that I track fairly
(17:48):
closely is a number of heiferson in the weekly feeder cattle
summary.
And if you look at that blackline with the triangles in it
going across that chart, thosenumbers of heifers in that
feeder cattle mix are well belowwhere we've been the last two or
three years.
(18:09):
So when you take all of thattogether, I think we are slowly
putting in place a bottom inoverall beef cow numbers that
may culminate in at least asmall increase in the beef cow
herd come January 1 of nextyear.
Now, I presume, Tommy, thatwe're gonna have the we're gonna
(18:31):
have the government back workingby the time we get to January 1,
right?
SPEAKER_01 (18:35):
Yeah, we had a little breaking news while you
and I were recording, or I don'tknow if it's breaking news, but
the the betting services, youknow you could bet on anything
right now, like sure when am Igonna sneeze again?
But the betting services just upthat this will go down is the
second largest government uhshutdown here in history.
That's coming from the bettingservices.
And people are placing theirbets, like who's gonna be
(18:55):
president, who's gonna be vicepresident, who's gonna be this.
They're they're making thesebets.
And these prediction sites arebecoming a lot more uh
mainstream, like exchanges arebuying them.
These betting sites are likegetting interwoven into our
futures markets and our CFTCregulation here.
So it sounds like gambling, andyou know what?
(19:18):
It is gambling, and you can doit.
Speaking of gambling, uh the CMEannounced last week that they're
going to, and they were at ahuge disadvantage, they're gonna
start opening 24 hours a day,seven days a week, because they
have these crypto productslaunched.
Well, you can't trade Bitcointell people to put Bitcoin
futures on and say, hey, it'sFriday at four, we'll see you at
Sunday at five.
(19:38):
Like that doesn't work in amarket that never stops, right?
And so now the exchanges are uhslowly moving to that.
To note, just on a side note,goats gold, the goats, gold is
the goat, it's the greatest ofall time.
New all-time highs today in goldabout$4,025, gold up another$65.
(19:59):
It's nothing for you to walk inthe morning, look at your quote
screen, and uh see gold at$4,000.
I imagine most of your life youthink gold was a three, four
hundred dollar item, correct?
SPEAKER_00 (20:11):
It was thirty-eight dollars an ounce when I was in
grad school, uh, and theyrelaxed the uh uh trading on
gold back in the 70s.
And and that was it was at afixed price up till that point.
Uh so it's changed prettydramatically over the course of
my career.
Unbelievable.
Any other uh closing thoughts orideas before we get out of here?
(20:33):
Well, we talked a little bitabout uh the Brazilian
situation.
Apparently, there is someongoing discussions there, but
with between the the twoadministrations, but I haven't
heard anything at this point interms of relaxing on those
tariff rates on on Brazilianbeef imports at this juncture,
Tommy.
SPEAKER_01 (20:53):
All right, yeah, we'll uh keep an eye on that.
Stay close to our our uh quotescreen, and if news comes out,
probably the market will moveinstantly.
I I feel like the more cattlegoes up, the more risk there is,
and I don't say the harder riskis to control.
Maybe if you're just open longcattle, if you own them, you
almost I got I got a feelingpeople are starting to feel like
(21:14):
there's not risk because it'sjust working.
Does that make sense?
I know it scares the hell out ofyou, but does that make sense?
Hey, I've been for a year, whyshould I now?
SPEAKER_00 (21:24):
I I I believe that's the case when we're at the top
of the market, uh, and andbullish attitudes certainly
prevail.
Uh I think there's less of aninterest, if you will, uh,
particularly with regard tofeeder cattle, about doing any
hedging.
Uh, and to some extent, to be alittle bit trite, feeder cattle
(21:44):
are almost as valuable as goldat this point.
SPEAKER_01 (21:48):
Yeah, interesting.
Interesting comparing feedercattle to go.
Hey, speaking of feeder cattleto gold, I saw a friend of mine
on X put up a chart that thesetwo markets have gone lockstep
the last two years.
If you overlay a feeder cattleon gold, they they've had
similar dips, they've hadsimilar rallies, and they keep
spiking to highs.
I'm not saying there's anycorrelation between gold and
(22:08):
feeder cattle.
And one market's so big andginormous, and one market's so
small.
But you know, people are alwayslooking for correlations.
And and you just mentioned that.
I'm like, I just saw a chart ofthat two days ago.
So all right, everyone, youlisten, Mr.
Mike Sands, MBS Research, TommyGrossofi, AgBOL Media, AgBull
Trading.
Mike always does a great job.
(22:29):
We're doing the show uhhopefully once a week.
And uh with that, for folks outthere listening on the podcast,
on any podcast, if you'd like tosee the six slides that Mike
presented, email me, TG at AGBull.
I will send those six slides toyou.
Of course, if you'd like to callus, 1855-737 Farm.
We'd love to have you over onthe uh premium side here to uh
(22:52):
continue viewing videos likethis.
But Mike is by far a legend.
Is that is that what you getcalled?
A legend in the industry?
SPEAKER_00 (23:01):
I I don't know, Tommy, that I would say famous,
maybe infamous would be a moreappropriate term.
I've just been around a longtime, is all.
SPEAKER_01 (23:11):
I hit the wrong button.
I started to laugh.
I well, you know, with uh likeyou said, you could pay for a
lot of college with all thatexperience, right?
SPEAKER_00 (23:20):
Yeah.
Uh uh the markets do chargetuition, and I've I feel like
I've paid my dues.
SPEAKER_01 (23:26):
We all are.
Mr.
Mike Sands coming to you fromMemphis, Tennessee.
He's in the uh Nesvik tradingoffice.
Tommy Grossafi, I'm at the uhNesvik offices here in
Nashville.
Mike, we'll see you next week,my friend.
SPEAKER_00 (23:37):
Great to visit with you, Tommy.
Looking forward to gettingtogether again next week.
Wow we doing everyone, time Grossafi Aggbow
Media Ag Bull Trading.
Another week has come by andwe're here to talk cattle with
the one and only Mr.
Mike Sands with MBS Research.
What an exciting time to talkcattle for everything we're
saying in this video.
By the time we get it boxed outand put out to you, who knows
where cattle will be trading.
But upon filming this video, uhsome of the back months and
(00:34):
feeders are making new contracthighs, and the uh front months
are just a touch away.
So let's bring in the starsshow, Mr.
Mike Sands.
Mike, good to have you on.
We're getting more comfortabledoing this every week.
And the only thing I'm notcomfortable doing is trying to
answer when's a top.
And that's probably what uh youhear what's going to top these
things out, correct?
SPEAKER_00 (00:53):
Well, and no question about that.
That's obviously a majorquestion going forward.
But when we look at overall beefsupplies and the size of the
cattle inventory, the prospectthat we are going to see some
heifer retention, uh, theMexican border remaining closed,
chances are pretty good that weare in fact going to see smaller
(01:14):
beef supplies, smaller fedcattle supplies going forward
from here.
So our real tightness innumbers, despite all of the
discussion during the course ofthis year about a small
inventory, small calf crops, uh,it sure looks to me, Tommy, like
they get tighter going into nextyear and maybe the year after as
(01:35):
well.
SPEAKER_01 (01:36):
With that, we got Thanksgiving and Christmas
coming up.
Pretty soon people are gonnahave to start buying their needs
for that, right?
The big box stores andeverything else.
They uh I know when I go to I'mkind of a Costco guy, and every
once in a while you you knowthat I don't feel like beef's
out of control.
I mean, it's expensive, but forsome reason, sometimes there's
still good deals at the retaileronce in a while, isn't there?
SPEAKER_00 (01:58):
I surely believe that's the case.
They do feature a good a goodbit of the product that they
move.
The old rule of thumb years agowas something on the order of 40
to 50 percent of the beef movingout of traditional retail
stores, moved on some kind of afeature price.
It's probably it's probably alittle bit less than that now,
(02:21):
but it's still a prettyprominent part of their overall
feature program.
Now, I think for the most part,Costco is a little bit like
Walmart in the sense of theyreally try to put together
everyday low prices rather thandoing a lot of featuring like
(02:44):
traditional retailers do.
SPEAKER_01 (02:46):
Yeah.
All right, we're gonna have anaction pack show.
I'll give you a couple oftouches what we're gonna talk
about.
We got a government shutdownthat's still going on.
We might talk a little bit aboutuh with the government shutdown.
We got website shutdowns.
Uh, we might talk a tiny bitabout Trump payments.
Uh, everyone's uh wanting toknow what's going on with farm
raid.
But uh most importantly, we'regonna talk very in detail.
I'm not gonna talk.
(03:07):
I'm gonna click the buttons.
Mr.
Mike Sands is gonna talk hereabout cattle, in particular
feeder cattle.
This show is called Fat Tuesday.
Real quick uh about the show.
I want to thank you forwatching.
I want you to tell friends aboutit.
But I gotta tell you, in thenext few months, you won't be
able to find the show.
This show's going behind thepaywall.
So only people receiving thisshow in the next few months will
be friends and family of MBSResearch, Mr.
(03:28):
Mike Sands, and then friends andfamily and subscribers of AgBill
Trading, clients of AgBillTrading and Agvil Media.
So if you're interested inpremium content like this,
you'll have to subscribe.
$25 a month,$250 a year.
With that, let's get in theshow, Mr.
Mike Sands.
I'll go full screen on you.
Well, let's bring in the secondstart of the uh show, the uh
(03:50):
charts.
Let's see here.
Chart number one.
Want to talk about this a littlebit?
SPEAKER_00 (03:54):
Sure do, Tommy.
It's been an ongoing theme ofmine, at least in recent weeks,
that we've seen pretty much acounter-seasonal decline in Fed
cattle slaughter.
Basically, going back to thebeginning of the year, if you
look at that solid red linearrow, uh, you can see that our
biggest numbers this year interms of weekly average Fed
(04:16):
slaughter occurred back inJanuary.
And typically, as we go fromJanuary into the late spring and
summer months, uh you can seethat solid black arrow at the
top.
We see a seasonal increase inFed cattle availability going
from January into the spring andsummer months.
(04:40):
This year, however, we arelooking at and have looked at a
counter-seasonal decline in fedcattle slaughter, with our peak
numbers in January declining allthe way into July, August, and
September.
That's a counter-seasonaldecline.
There was an incentive there forthe cattle feeder to delay
(05:04):
marketings, to put uh days onfeed, to push cattle forward.
Uh, and from a packerstandpoint, they basically
enabled that set of decisions.
And the end result is we'vebuilt a front-end supply of Fed
cattle here, of market-readycattle, uh, that is uh
(05:26):
counter-seasonally larger herein the OND quarter compared with
the summer.
That's a huge red flag, I think,in terms of thinking about Fed
cattle prices movingsubstantially higher here into
the fall.
I've I certainly have a forecastin place for bigger Fed cattle
(05:50):
supplies going into the next sixto eight weeks.
That's highly questionable.
I think the risk is that thePacker keeps a pretty firm thumb
on what those kill numbers looklike, and that for all practical
purposes enables that front-endsupply to stay fairly large.
We're going to string thesenumbers out for a bit.
(06:12):
This second chart reallyconfirms that.
If we look at Fed cattleslaughter in August and
September, they were record lowfor those individual months.
Not just low, but the smalleston record on a weekly average
basis, going back to 1985.
(06:34):
And it sure looks like we havedone more of the same type of
thing here in the very earlypart of October.
So August marketings were down10%, September marketings were
down about 9% on a weeklyaverage basis, and it sure looks
like October is going to be downsomewhere in the area of 7%.
(06:56):
All of that suggests that westill have a relatively large
front-end supply of fed cattlehere to work our way through.
And of course, that thatslowdown in marketings does
culminate into heavier weightcattle.
So if we look at the next chart,Tommy, you can see that uh
(07:20):
carcass weights here for lateSeptember, uh, middle part of
September are record heavy.
Now, with the governmentshutdown, we don't get actual FI
slaughter data.
And along with that, no actualcarcass weight data.
But a reasonable proxy is theweights on formula and contract
(07:46):
cattle.
They represent somewhere in thearea of 80 to 85 percent of the
cattle that we slaughter on aweekly basis, and you can see
that top line is movingprogressively higher toward a
fall peak.
You can pretty well bet that FIweights are moving higher as
(08:07):
well.
My point is we got a big numberof front-end cattle, uh,
front-end market ready cattle atrecord heavy carcass weights.
And that, in in my estimation,poses a bit of a red flag as far
as the cattle feeder isconcerned moving forward.
(08:29):
Very good.
This chart, Tommy, is uh just aconfirmation.
Maybe to some extent of um ourdiscussion last week, we saw a
huge run-up in beef prices.
And this is the blended cutout.
You can see that very sharprally that we had during the
course of the month in August.
(08:51):
And now we're in the early partof October, and for all
practical purposes, we haveretraced all of that August
rally with a very sizabledecline in price levels here in
the early part of October.
Uh, it's not unusual if you lookat uh the last two or three
(09:13):
years to see a little bit of adead cat bounce, if you will, in
beef prices in late October,early November, and then maybe a
little bit of a retracement interms of that limited price
increase here over the next fewweeks.
So that's kind of what I've gotin mind.
(09:34):
It does look like we've seen alittle bit of firmness in the
beef market here over the lastfew days.
Obviously, from a buyerstandpoint, uh looking at a
blended cutout somewhere in thearea of 360 to 365 certainly
looks more attractive than thatplus four dollar area that we
(09:55):
were in at the end of August andvery early September.
But I think their enthusiasm andinterest in pushing beef prices
higher is going to be prettylimited.
SPEAKER_01 (10:09):
And uh upon filming this, Mike, uh, we have feeder
cattle, November feeder cattlejust hit 369.
I believe that's a new contracthigh in feeders.
Does that uh sound like a newhigh?
SPEAKER_00 (10:20):
Yeah, it surely does.
We did get a report to the earlypart of this week with regard to
another screw worm case,confirmation of a screw worm
case in Mexico.
I think the perception had beenthat maybe the border might
reopen later this year.
It sure looks like with this newconfirmed case, about 170 miles
(10:45):
south of the U.S.
border, uh even though it lookedlike and or sounds like it was
an animal that was trucked northfrom southern Mexico, it sure, I
think, from a trade standpoint,reaffirms the notion that this
border is going to stay closed.
So uh this chart is is simply acomparison of the feeder index
(11:10):
relative to the Fed cattlemarket.
And you can see the last coupleof weeks, uh the feeder index
has been around 150 to 155percent of the Fed cattle
market, uh, and that basicallymatches up with the kind of peak
feeder prices that we saw backin 2014 and 15.
(11:33):
That would suggest that maybefeeder prices are in the process
of peaking out.
However, I think this timearound is is substantially
different than where we wereseveral years ago.
First of all, feeder cattleimports from Mexico, if we go
back to the initial borderclosure in late November of last
(11:57):
year, feeder cattle imports aredown somewhere in the area of a
million two hundred and fortythousand over that time frame.
So we've got fewer feederimports.
We've had smaller calf crops inboth 2024 and 2025.
And in addition to that, I thinkwe're probably in the process of
(12:19):
holding back a few more heifersat this point in the cattle
cycle, which also furthertightens that feeder cattle
supply.
So my point is that feedersupplies are going to remain
tight going forward.
And if you combine that withexcess feeding capacity along
(12:40):
with considerably cheaper feedcosts relative to the last
couple of years, I'm certainlynot at this point going to argue
that the feeder market is in theprocess of peaking out.
SPEAKER_01 (12:54):
And I've traded a few markets on big peaks, Mike,
like Minneapolis wheat, forexample.
Talk about dramatic or corn whenit goes above seven or eight.
Just because it's in the processof peaking out doesn't mean it
won't blow you up for uh a wholenother couple days or weeks or
whatever.
Margin calls do need to be made,correct?
Yeah, absolutely correct.
No question.
(13:14):
You better run that banner.
Future options have risk downthere.
We're talking uh with Mr.
Mike Sands with MBS Research.
This show's called Fat Tuesday,but I think we're filming it on
a Wednesday because that's justhow the schedule went.
But uh, this is uh Mike'sinformation here.
Uh if I could find it, he wassomewhere over here.
I lost him.
But interesting because uh Iwant to ask you a question and
(13:37):
we'll get to our last slide.
With the uh government shutdownand the uh website shutdown, how
how much are you dependent on uhthat information that they
provide?
SPEAKER_00 (13:48):
Well, USDA basically is a source of of a great deal
of the information that we workwith from an analytical
standpoint, and as a result, ashortfall in that information
does leave some holes.
Um I mentioned earlier that theoverall FI slaughter data and
(14:09):
carcass weight data is is nolonger available as long as uh
the government is shut down ourweekly trade data, both in terms
of export sales and shipments,is also a casualty.
And the monthly trade data thatwas due to be released yesterday
or today will not be released.
(14:31):
And of course, uh we have acatalog and feed report coming
up, scheduled to come up uhtoward the end of the month, I
think the 24th.
That could be a casualty of thegovernment close down as well.
And next week, um from a moremacro standpoint, the CPI data
and associated with that is ourretail beef price data, um,
(14:57):
could also be casualties of thisgovernment shutdown.
So uh the data that we depend onfrom an analytic standpoint is
starting to show bigger andbigger holes, which uh for all
practical purposes get worse aslong as as the shutdown
(15:17):
continues.
Yep.
SPEAKER_01 (15:18):
Soybean farmers, Mike, we're hoping for uh big
talk of a big payment forsoybean farmers.
That doesn't look like it'sgonna happen anytime I know they
had talked about giving it, butthe government shut down.
They just can't write a checkwhen the checkbook's in the
safe, right?
SPEAKER_00 (15:32):
Uh that's what it sounds like, that they don't
have the personnel in place andand the capability of of getting
that done here in the short run.
And of course, one other part ofthat, there has been some
ongoing discussion with Braziluh about maybe relaxing some of
those trade disruptions, atleast on beef imports from
(15:55):
Brazil at this point.
Uh the tariff rate is over 75percent.
So imports from Brazil uh havecome to a virtual standstill,
uh, and that uh does pose somelimitations on domestic
manufacturing type beefsupplies.
But at least here in the shortrun, uh we're more than uh well
(16:19):
supplied in terms of largeincreases in production coming
in from Australia and NewZealand and even Mexico and
Canada for that matter.
SPEAKER_01 (16:29):
I'm just gonna put it out there.
Well, let's talk about it afterthe slide, but I think this is
gonna come back to haunt us inyears forward, and I think
you'll have a spin on that.
All right, heifers and weeklyfeed summary declines.
SPEAKER_00 (16:42):
Yeah, we talked a little bit about uh heifer
retention, and I think we're inthe process of beginning to see
a little bit of growth uh inthat regard.
We've been reducing the size ofthe cowherd since 2019.
I think we're slowly in theprocess of beginning to hold
(17:04):
back a few more heifers now andand rebuild that cowherd, but
it's off to a slow start.
Uh, if we look back at thenumber of heifers on feed back
in July, they were down 5%,while the number of steers on
feed was up two, uh, indicatingthat that maybe there was some
(17:25):
early indication of heiferretention.
In addition to that, there werea number of key cow states at
the beginning of 2025 that werereporting slightly larger, a
slightly larger cow herd andholding back a few more heifers.
And last but not least, a dataseries that I track fairly
(17:48):
closely is a number of heiferson in the weekly feeder cattle
summary.
And if you look at that blackline with the triangles in it
going across that chart, thosenumbers of heifers in that
feeder cattle mix are well belowwhere we've been the last two or
three years.
(18:09):
So when you take all of thattogether, I think we are slowly
putting in place a bottom inoverall beef cow numbers that
may culminate in at least asmall increase in the beef cow
herd come January 1 of nextyear.
Now, I presume, Tommy, thatwe're gonna have the we're gonna
(18:31):
have the government back workingby the time we get to January 1,
right?
SPEAKER_01 (18:35):
Yeah, we had a little breaking news while you
and I were recording, or I don'tknow if it's breaking news, but
the the betting services, youknow you could bet on anything
right now, like sure when am Igonna sneeze again?
But the betting services just upthat this will go down is the
second largest government uhshutdown here in history.
That's coming from the bettingservices.
And people are placing theirbets, like who's gonna be
(18:55):
president, who's gonna be vicepresident, who's gonna be this.
They're they're making thesebets.
And these prediction sites arebecoming a lot more uh
mainstream, like exchanges arebuying them.
These betting sites are likegetting interwoven into our
futures markets and our CFTCregulation here.
So it sounds like gambling, andyou know what?
(19:18):
It is gambling, and you can doit.
Speaking of gambling, uh the CMEannounced last week that they're
going to, and they were at ahuge disadvantage, they're gonna
start opening 24 hours a day,seven days a week, because they
have these crypto productslaunched.
Well, you can't trade Bitcointell people to put Bitcoin
futures on and say, hey, it'sFriday at four, we'll see you at
Sunday at five.
(19:38):
Like that doesn't work in amarket that never stops, right?
And so now the exchanges are uhslowly moving to that.
To note, just on a side note,goats gold, the goats, gold is
the goat, it's the greatest ofall time.
New all-time highs today in goldabout$4,025, gold up another$65.
(19:59):
It's nothing for you to walk inthe morning, look at your quote
screen, and uh see gold at$4,000.
I imagine most of your life youthink gold was a three, four
hundred dollar item, correct?
SPEAKER_00 (20:11):
It was thirty-eight dollars an ounce when I was in
grad school, uh, and theyrelaxed the uh uh trading on
gold back in the 70s.
And and that was it was at afixed price up till that point.
Uh so it's changed prettydramatically over the course of
my career.
Unbelievable.
Any other uh closing thoughts orideas before we get out of here?
(20:33):
Well, we talked a little bitabout uh the Brazilian
situation.
Apparently, there is someongoing discussions there, but
with between the the twoadministrations, but I haven't
heard anything at this point interms of relaxing on those
tariff rates on on Brazilianbeef imports at this juncture,
Tommy.
SPEAKER_01 (20:53):
All right, yeah, we'll uh keep an eye on that.
Stay close to our our uh quotescreen, and if news comes out,
probably the market will moveinstantly.
I I feel like the more cattlegoes up, the more risk there is,
and I don't say the harder riskis to control.
Maybe if you're just open longcattle, if you own them, you
almost I got I got a feelingpeople are starting to feel like
(21:14):
there's not risk because it'sjust working.
Does that make sense?
I know it scares the hell out ofyou, but does that make sense?
Hey, I've been for a year, whyshould I now?
SPEAKER_00 (21:24):
I I I believe that's the case when we're at the top
of the market, uh, and andbullish attitudes certainly
prevail.
Uh I think there's less of aninterest, if you will, uh,
particularly with regard tofeeder cattle, about doing any
hedging.
Uh, and to some extent, to be alittle bit trite, feeder cattle
(21:44):
are almost as valuable as goldat this point.
SPEAKER_01 (21:48):
Yeah, interesting.
Interesting comparing feedercattle to go.
Hey, speaking of feeder cattleto gold, I saw a friend of mine
on X put up a chart that thesetwo markets have gone lockstep
the last two years.
If you overlay a feeder cattleon gold, they they've had
similar dips, they've hadsimilar rallies, and they keep
spiking to highs.
I'm not saying there's anycorrelation between gold and
(22:08):
feeder cattle.
And one market's so big andginormous, and one market's so
small.
But you know, people are alwayslooking for correlations.
And and you just mentioned that.
I'm like, I just saw a chart ofthat two days ago.
So all right, everyone, youlisten, Mr.
Mike Sands, MBS Research, TommyGrossofi, AgBOL Media, AgBull
Trading.
Mike always does a great job.
(22:29):
We're doing the show uhhopefully once a week.
And uh with that, for folks outthere listening on the podcast,
on any podcast, if you'd like tosee the six slides that Mike
presented, email me, TG at AGBull.
I will send those six slides toyou.
Of course, if you'd like to callus, 1855-737 Farm.
We'd love to have you over onthe uh premium side here to uh
(22:52):
continue viewing videos likethis.
But Mike is by far a legend.
Is that is that what you getcalled?
A legend in the industry?
SPEAKER_00 (23:01):
I I don't know, Tommy, that I would say famous,
maybe infamous would be a moreappropriate term.
I've just been around a longtime, is all.
SPEAKER_01 (23:11):
I hit the wrong button.
I started to laugh.
I well, you know, with uh likeyou said, you could pay for a
lot of college with all thatexperience, right?
SPEAKER_00 (23:20):
Yeah.
Uh uh the markets do chargetuition, and I've I feel like
I've paid my dues.
SPEAKER_01 (23:26):
We all are.
Mr.
Mike Sands coming to you fromMemphis, Tennessee.
He's in the uh Nesvik tradingoffice.
Tommy Grossafi, I'm at the uhNesvik offices here in
Nashville.
Mike, we'll see you next week,my friend.
SPEAKER_00 (23:37):
Great to visit with you, Tommy.
Looking forward to gettingtogether again next week.
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