October 17, 2025 • 23 mins
We walk through a fast-moving cattle market as futures flip to a premium over cash, spreads widen, and feeders gain leverage to push bids or wait. We also weigh packer margins, rising carcass weights, retail features, and why alternative meats are losing steam.
• Futures premium over cash reshapes feeder incentives
• October–December spread widens and implies stronger mid‑November values
• Government shutdown delays key data and clouds signals
• Carcass weights climb toward records and lift beef tonnage
• Quality grading improves with longer days on feed
• Packer margins turn negative and risk slaughter cuts
• Retail features drive meat case movement and pricing
• Alternative meats struggle against price and clean label trends
• Structural tight supplies favor firm beef prices into 2026
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:14):
Happy Friday, everyone.
Tom Grissopi with Agbol Media,Ag Bull Trading.
We got Fat Tuesday show comingto you on a Friday.
That's how busy cattle's been.
Now we're going to bring in MikeSands, but I want you to I want
you to get to know Mike a littlebit better, like I've gotten to
know him.
Mike's in Memphis.
He's with Nesvik.
He is MBS, which I, if I had toguess, is his initials.
(00:35):
Pretty tricky name there.
Research.
He knows the cattle industry.
As best he told it to me lastweek, was better that he paid
for this education than you payfor this education.
So listen up.
Class is about to start.
We'll bring in Mike to the show.
Mike, every time we do one ofthese, I say to you at the end,
I can't imagine where cattlewill be when we record next
(00:57):
week.
Welcome to the show.
Stage is yours, sir.
What's going on?
SPEAKER_00 (01:01):
Well, the bottom line, each week, it seems to be,
at least over the last two orthree weeks, you just call the
next week's cattle markethigher, and uh you're gonna be
in the ballpark at least.
It may not be right on themoney, but gonna be close.
SPEAKER_01 (01:17):
Yeah.
The press has been calling meand they're like, hey, Tommy,
you want to give a comment oncattle?
I'm like, sure.
Like, why are cattle?
I go, because it's open, becausethe market opens at 8 30, and
that's what we do.
We listen to Mike's morningconference call.
We know the fundamentals, weknow we should buy the dip, we
don't, and then it closes fivedollars higher.
Last week, correct me if I'mwrong, did we put$20 freaking
(01:39):
dollars on feeder cattle?
SPEAKER_00 (01:41):
Yes, pretty darn close to that on feeder futures.
Feeder futures, right?
I think the index was upsomething less than that.
We went from maybe the upper250s to the low to mid two, I'm
sorry, three fifties to three,two, one, yeah, yeah, yeah.
SPEAKER_01 (02:00):
Kind of kind of lose the the You're talking about six
individuals price.
That's what you're quoting sixmonths ago.
Now, I've been listening to yourmorning conference call.
Let me see if I'm getting thisstraight.
The cash market let up cattlethe whole way, but did the
futures now eclipse the cattlein some of the contracts?
Absolutely.
I've been listening, you can'tfool me, no sir.
SPEAKER_00 (02:22):
Back in the middle part of September, we had the
board a$10 discount to uh theSouthern Plains cash trade.
And over the last week or 10days, we went, or middle part of
September, we went from that$10discount to uh at times today a
five or six dollar premium.
So we've seen a huge shift inthe basis here over the last few
(02:43):
weeks.
Okay, what's that mean?
And I'm not I'm not saying thatlike to set you up.
What's that mean, Mike?
Seriously.
Well, I think it provides areally strong incentive for the
cattle feeder um to either pressfor higher bids or to delay his
sales.
When he's looking at, forexample, an October contract
that uh expires in two weeks,it's trading at times of five,
(03:08):
six, seven dollar premium tolast week's cash trade.
The incentive to the cattlefeeder uh is is to delay sales
and wait for the cash to catchup with futures.
Um, so looking at futuresimplied prices, uh, you'd be
looking at say an Octobercontract trading at 242, 243 if
(03:32):
it expires at par.
That's a good seven dollarsabove last week's Southern
Plains cash trade.
Not much doubt that the cattlefeeder is gonna press for higher
bids.
Unbelievable.
SPEAKER_01 (03:46):
Unbelievable.
All right, everyone, you listento Mr.
Mike Sands.
This is the Fat Tuesday podcast.
I am Tommy Grossaffi of AGBOMedia.
If you enjoy this podcast, well,good news.
If you're a client of mine,client of Mike's friend of
Nesvik, you'll get it for free.
But moving forward in the monthsto come, you're gonna have to
join premium www.agbull.com.
Of course, people at MBS,Nesvik, and Agbol will be
(04:07):
getting it.
But if you're on the outsidelooking in, you're probably
gonna have to swipe that creditcard and pay 25 bucks.
We hope to see you on thepremium side.
Back to the show.
Mike, you're too good to notcharge, my friend.
You're too good not to charge.
And and and you did say it lastweek.
You said, you know, you can goto college to learn, or you can
learn it the hard way.
But the the mistakes, you know,when when a father tells a son,
(04:29):
don't do that, I've done that,it doesn't work.
I mean, they're not kidding,right?
SPEAKER_00 (04:32):
Yeah, absolutely not.
Uh, it it there are alwaystuition bills that have to be
paid in virtually everythingthat we do.
Uh, and the cattle market is nodifferent, it does charge
tuition.
SPEAKER_01 (04:45):
Yeah.
Now, there's some things, folks,going on right now upon filming
this.
I just want to talk about.
We're probably gonna releasethis later this afternoon or
Friday morning, but uh gold wasup$110 new all-time highs,
silver up two dollars newall-time highs, extreme
volatility in the stock marketthis afternoon, extreme
volatility in Bitcoin.
Interesting to see gold andsilver hit all-time highs and
(05:06):
Bitcoin sell off.
What those two have to dotogether, I don't know.
But you you got some wild thingshappening here in commodities.
We had a big pop in uh soybeansand corn.
That was nice to see all thesepeople really bearish corn and
beans.
Oh, it's harvest, be bearishcorn and beans.
Listen, there's some biggerpicture things going on.
Let's get into the slides andthe stage is yours.
(05:28):
I'm gonna pop myself out, butuh, Mr.
Mike Sands, slide number one.
Go ahead, sir.
SPEAKER_00 (05:33):
Tommy, this is just what we were talking about a few
minutes ago in terms of thecattle market going back into
the middle part of September.
The board was trading anywherefrom a seven to a ten dollar
discount to what the SouthernPlains cash trade was at that
point.
And at that juncture, we werelooking at a at a Fed cattle
market that was something inexcess of 240, 241, 242,
(05:57):
somewhere in that area.
Uh, and the board was a hugediscount to that.
Uh, and over the course of thelast three weeks, we've seen the
board rally along with inresponse to the the very strong
basis levels that we saw in themiddle part of the month.
Maybe the cattle feeder was alittle bit more inclined to move
(06:17):
cattle given the strong basisand and the uh hedge situation
that he was in at that point.
We get into the early part ofOctober, specifically this week,
and we have the board at 242,34, somewhere in that area,
trading anywhere from a five toa seven dollar premium to last
(06:38):
week's cash.
Not much question in that kindof an environment for a hedged
situation where the cattlefeeder is gonna press for either
higher bids or he's going totell the packer, um, come talk
to me next week and bid a higherprice.
And that's exactly what we'veseen.
I haven't seen the cash tradeyet this week, but I fully
(07:00):
expect it's gonna besubstantially higher than what
we saw a week ago, and a goodbit of it is related to this
really weak basis that we'relooking at here, two weeks ahead
of expiration.
SPEAKER_01 (07:13):
Interesting, interesting.
All right, this next chart's gotme scratching my head.
What's going on here?
Wide ID spread.
SPEAKER_00 (07:20):
Yeah, it's a really wide spread.
All this line does is track thatOctober, December spread.
And typically, we might think ofOctober as it was back two
months ago, three months ago,trades about a$2 discount to
December, typically because wesee a higher cash trade going
(07:41):
from October into December.
Recently, that spread has beenanywhere from$4 to$5.
So besides the extremely weakbasis that we have, we have this
very wide spread between Octoberand December.
And it's another encouragementfor the cattle feeder to either
(08:05):
delay sales or press for higherbids.
As an example, if we're lookingat the December contract at$245
or better, and figure that basisin November is going to be
around$2 cash under the board,then the market's really
offering a cattle feeder out inmid-November, something on the
(08:26):
order of$243,$244.
And last week's cash trade inthe southern plains was$235.
Is there any doubt what he'sgoing to do in that kind of an
environment?
Uh, the Packer won't get thembought at steady money for sure.
SPEAKER_01 (08:43):
Interesting.
Uh, I'll throw you a curveballon the headline here before we
go to the next slide.
October 24th, Cattle on FeedReport vulnerable to government
shutdown.
What do you tell people?
SPEAKER_00 (08:52):
Yeah, well, um I think the odds are pretty good
that that report is not going tobe released, or it certainly
won't be released on time.
That presumes, of course, thatthe government shutdown does
continue.
But it's it's setting up asituation where we're seeing
(09:12):
less and less of the usualgovernment economic data that we
typically see and use to makesome of our forecasts and
marketing decisions.
And one of those is the slowdownin feedlot placements that we've
seen in recent months.
(09:33):
Along with that, overallmarketings have declined very
sharply as well.
And one of the side effects ofthat slowdown in marketings and
the cutbacks in slaughter ratesis that carcass weights, owing
to more days on feed, areheading toward a seasonal peak
(09:55):
that's going to be record high.
You can see that top line, thetop red line in that chart.
Those are contract and formulaweights coming out of the
comprehensive report.
They are at historic highs, andit surely looks like we are
going to see some additionalincreases in carcass weights yet
(10:17):
before they finally top out.
My point is that these heavycarcass weights running anywhere
from 2 to 3% above a year agoare adding to beef tonnage, and
overall supplies are not quiteas tight as the small kills
would suggest.
So I'll uh give you an analogy.
SPEAKER_01 (10:38):
The uh Southwest Airline plane still only has 250
seats, but the passengers likeTommy G got a little bigger,
right?
SPEAKER_00 (10:47):
Well, I I can't speci speak specifically to that
situation, Tommy, but I thinkthe analogy is good.
Very good.
SPEAKER_01 (10:56):
Hey, uh, speaking of good, the good news for farmers,
Rollins came out today and saidRollins states aids to farmers
as soon as government opens.
Uh Mike had stated that uh thegovernment is still closed,
which if you're just findingthat out from the show, uh you
took a heck of a nap.
All right, but with that, therethere was also a headline.
I don't think we saw it comeacross the Nesvik wires, but
(11:17):
Thun, Senator Thune from SouthDakota, who's extremely high up
the uh ladder, said we need toget emergency funding out to the
farmers while the governmentshut down.
It was suggested he walked inTrump's office and said, uh,
listen up, boss, you know, wegot a problem.
So the government shut down,it's creating chaos.
I I gotta tell you, Mike, theroad crop farmers not gonna be
(11:38):
too mad about it.
They're gonna be like, this wasgreat.
The government shut down, beansrallied, this happened, that
happened.
There, they're not overly uhupset about it, to be honest
with you.
But uh they're probably gonna bemore pissed off when we open up
and find out exports orsomething were bad.
But there could be somesurprises, and I will say I'm
not an analyst, but this givesevery analyst on the street
three to six months to say,well, my research was right, but
(12:01):
the the data from the governmentwas wrong.
So no matter what anyone comesout with or says, they always
have an out for a while, don'tthey?
SPEAKER_00 (12:07):
Absolutely, they do.
We can as a as an analyst, youcan kind of make up any story
you want when you don't havedata to pin it to.
SPEAKER_01 (12:15):
Uh uh and not be wrong or falsifying stuff.
Hey, real quick folks, if you'reout there, Mike brought six
awesome charts today.
And if you go to the Ag Bullwebsite, www.agbull.com, I'll
send you these six charts.
If you want to call me, 1855-737Farm, you can email me, TG at AG
Bull.com, and I'll get youMike's charts.
(12:36):
Because I know people arelistening on Spotify and all
that other stuff, and they'relike, what the heck was he
saying?
Hey, dumb question, TomGrassoffi, longtime listener,
first time caller.
What's the second red line underthe top red line, Mike?
SPEAKER_00 (12:47):
That's the actual FI data that the government
releases, typically on aThursday afternoon, and it's for
the the week, two previousweeks.
So the last actual FI data wegot was back in the middle part
of September.
Well, we're a month later, andthe odds are pretty good.
The carcass weights aresubstantially higher today than
(13:09):
they were a month ago.
Follows a seasonal pattern, andin addition to that, overall
kill numbers have been pairedback.
Last week's Fed cattle slaughterwas only 440,000.
That's like 88,000 a day, andour kill capacity is probably
somewhere in the area of 105 to107.
So packers are operating at areally slow or low capacity
(13:33):
rate, and it's leaving a lotmore cattle on feed, carried
over from week to week, and andthat front-end supply is getting
a little bit bigger.
Okay.
That's interesting.
Slide number four.
Yeah, that that relates to ourprevious slide.
We were talking about carcassweights getting heavier days on
(13:55):
feed.
Our cattle are being fed longer.
It's not at all unusual for uhfeeding times now to be 190 to
210 days.
Uh, and as a result of thoselonger days on feed and heavier
carcass weights, we're seeingcattle grade much better than
historically would be the case.
(14:17):
I think prime grading right nowis around 11.5%.
That's record high.
Choice and better, which wouldinclude choice and prime grade,
is running around 84%.
That's a good two percentagepoints better than what we were
a year ago.
So both the cattle feeder andthe packer is happy with that
(14:40):
result.
But the concern that I have, aswe alluded to earlier, is that
these carcass weights may begetting up to the point where we
start to see some biggerdiscounts coming from the
packer.
Hasn't happened yet, but it sureis a big red flag sitting out
there.
SPEAKER_01 (14:58):
Mike, while you're talking, I Googled what the
average price of ground beef istoday, and it said$662.
That's a little higher than theprevious few weeks, so it's
catching up a little bit to thestorefront.
Now, you and I spoke on lastweek's episode where a store
could put it at$599, make it alost liter.
So you come in the store and buya bunch of other stuff, right?
What's that called when they dothat?
(15:18):
Just discounting?
Yes.
Uh featuring.
SPEAKER_00 (15:22):
Feature.
That's what you call that.
Feature, feature, feature.
Something on the order of, say,30 to 40 percent of the beef
movement.
Traditionally, it may havechanged over time, but
historically, it was kind of therule of thumb that maybe
somewhere in the area of 30 or40, or at times as much as 50%
of the beef movement out of themeat case moves on some kind of
(15:44):
a feature program.
Whether it happens to be adiscount, or typically it's a
discount, or two for one, buyone, get one free, that kind of
thing.
Sounds good.
Slide number five, sir.
Yeah, this is this just tracksthe year-over-year change in
choice and better beefproduction.
(16:04):
It's the quality beef that thatwe all typically talk about.
And in recent weeks, it's beenrunning about five percent below
last year.
At the same time, we've beenlooking at fed cattle slaughter
that's been running anywherefrom seven to eight percent
below last year.
My point is the differencebetween the slaughter rate and
(16:27):
this production number is theheavier carcass weights.
So the weights add to tonnageand it trims the year-over-year
decline in fed beef production.
But going forward, given whatwe've talked about in the past
with regard to cattle inventorynumbers, on-feed numbers,
(16:48):
placement numbers, these overallproduction numbers are going to
stay moderately below last year.
Interesting, interesting,interesting.
Slide number six.
Yeah.
We talk about front-end suppliesor fed cattle supplies with with
a good bit of regularity, ofcourse.
(17:10):
Uh, we think for the most partthat supplies are a big part of
the determination of what actualslaughter is.
But right now, perhaps the moredominant influence is packer
margins.
That red line that you seerunning across there above and
below the zero line is just acalculation of weekly packer
(17:33):
margins.
It's a packer margin index.
Doesn't represent an individualpacker by any stretch, but you
can see there have been weeks ofbig calculated losses, and there
have been weeks of some prettysubstantial profits.
Right now, that index wouldsuggest losses somewhere in the
(17:54):
area of 75 to maybe as much as$100 a head in that kind of an
environment.
We've just talked a little bitabout the packer paying up money
for cattle this week.
His choice then is to try andfigure out a way to support the
beef market to get some of thathigher purchase cost back.
(18:17):
And at least at this point, uhif we see cash prices move
substantially higher this week,I think a sidebar or an offshoot
of that is probably going to besome renewed cutbacks in Fed
cattle slaughter over the nexttwo to three weeks.
SPEAKER_01 (18:35):
Interesting.
Interesting.
All right, I'll pop myself backin the show.
You're visiting with Mike Sandsfrom MBS Research.
I do have a uh a chart of theday.
It's called uh Beyond BS.
Beyond Beef today went below onedollar.
That was a headline.
They're on their last leg, isthey would say this stock.
(18:56):
I'm gonna Google its range.
Talk to me about when you firstsaw Beyond Beef come on and you
know its life.
I'll tell you the highest thestock's ever been, and obviously
today's the lowest it's everbeen.
Beyond Beef trades one dollar.
Stage is yours, sir.
SPEAKER_00 (19:11):
I think it when when it was first introduced not too
long after they went throughtheir IPO, it traded somewhere
in the area of 258 to 279.
And there was a lot ofdiscussion, I think, at that
point.
There were a number of otheralternative meats that were
introduced at the same time.
I think there's always been alot of concern in the beef
(19:34):
industry in particular, but porkand chicken as well, that these
alternative meats would replacea significant portion of our
traditional red meat industry.
But price levels on thesealternative meats have been
historically, in the case ofbeef, much higher, for example,
(19:54):
than traditional ground beef.
And as a result, I think for themost part, has never gained the
penetration that the theinvestors originally had in
mind.
It's just been a situation whereconsumers, for the most part,
were not willing to pay a hugeprice premium for an alternative
(20:18):
meat.
And as a result, the success hasbeen certainly somewhat
questionable.
SPEAKER_01 (20:24):
Yeah, well said.
I I would also sum it up thatthree to four, caught five
percent of the population isvegan, caught 10% of the
population, but the wholecompany was based as if we were
all going to switch and starteating that as if it was a
healthy alternative.
And you'd mentioned to mybrother Joe and I before we
started the show.
Has anyone ever read theingredients of what's in that?
(20:47):
I want to say 16 to 18ingredients on the average pack.
You know, you look at thatlabel, you know why the label's
so big?
That's where they put all theingredients.
I mean, absolutely.
You flip that thing over and nosoy, no gluten.
They got all the stuff that thelittle TikTok mommies like so
much, but they don't explain tothem what's in there.
I mean, that looks like achemical bomb, if you ask me.
SPEAKER_00 (21:09):
Well, I think that's been part of the reaction that
that some consumers have had toalternative meat products.
The the ingredient list is aslong as your arm.
And uh in an environment whereconsumers in general seem to be
looking for more uh clean labelproducts, if you will, beef
(21:29):
stands pretty high on that listwhen you when you look at the
ingredients in beef.
So that may be one of thefactors that uh has contributed
to the uh less than optimalperformance of these alternative
meats as well.
SPEAKER_01 (21:44):
Yeah, absolutely.
All right, folks, Tommy Gersafi,Agbell Media AgBull Trading,
Mike Sands, MBS Research.
If you missed anything on theshow, email us, call us, text
us, hit us up on the website,Agble, get a hold of the folks
at Nesvig if you need Mike.
And uh with that, we'll meetagain next week.
Mike, tell me what you'reoptimistic about.
I'll let you close the show.
Tell me what you're optimisticabout here in the cattle
(22:06):
industry, sir.
SPEAKER_00 (22:07):
Well, uh, aside from the day-to-day and week-to-week
overall price level moves, uh,as you think about longer term
in terms of beef productionpotential, uh, it still looks to
me like we're looking at somepretty tight supplies for an
extended period of time.
So as we wrap up this year orhead into the latter stages of
(22:29):
this year into 2026 and maybe 27as well, for the most part,
we're not going to see bigyear-over-year or maybe even any
year-over-year increases inproduction.
And that's got to be prettysupportive as far as beef price
levels are concerned.
SPEAKER_01 (22:48):
Well said, my friend, Mike Sands.
You've been listening to FatTuesday Podcast.
We'll catch you all next week.
See ya bye.
Good to see you, Tommy.
SPEAKER_00 (22:56):
Looking forward to getting together again next
week.
Happy Friday, everyone.
Tom Grissopi with Agbol Media,Ag Bull Trading.
We got Fat Tuesday show comingto you on a Friday.
That's how busy cattle's been.
Now we're going to bring in MikeSands, but I want you to I want
you to get to know Mike a littlebit better, like I've gotten to
know him.
Mike's in Memphis.
He's with Nesvik.
He is MBS, which I, if I had toguess, is his initials.
(00:35):
Pretty tricky name there.
Research.
He knows the cattle industry.
As best he told it to me lastweek, was better that he paid
for this education than you payfor this education.
So listen up.
Class is about to start.
We'll bring in Mike to the show.
Mike, every time we do one ofthese, I say to you at the end,
I can't imagine where cattlewill be when we record next
(00:57):
week.
Welcome to the show.
Stage is yours, sir.
What's going on?
SPEAKER_00 (01:01):
Well, the bottom line, each week, it seems to be,
at least over the last two orthree weeks, you just call the
next week's cattle markethigher, and uh you're gonna be
in the ballpark at least.
It may not be right on themoney, but gonna be close.
SPEAKER_01 (01:17):
Yeah.
The press has been calling meand they're like, hey, Tommy,
you want to give a comment oncattle?
I'm like, sure.
Like, why are cattle?
I go, because it's open, becausethe market opens at 8 30, and
that's what we do.
We listen to Mike's morningconference call.
We know the fundamentals, weknow we should buy the dip, we
don't, and then it closes fivedollars higher.
Last week, correct me if I'mwrong, did we put$20 freaking
(01:39):
dollars on feeder cattle?
SPEAKER_00 (01:41):
Yes, pretty darn close to that on feeder futures.
Feeder futures, right?
I think the index was upsomething less than that.
We went from maybe the upper250s to the low to mid two, I'm
sorry, three fifties to three,two, one, yeah, yeah, yeah.
SPEAKER_01 (02:00):
Kind of kind of lose the the You're talking about six
individuals price.
That's what you're quoting sixmonths ago.
Now, I've been listening to yourmorning conference call.
Let me see if I'm getting thisstraight.
The cash market let up cattlethe whole way, but did the
futures now eclipse the cattlein some of the contracts?
Absolutely.
I've been listening, you can'tfool me, no sir.
SPEAKER_00 (02:22):
Back in the middle part of September, we had the
board a$10 discount to uh theSouthern Plains cash trade.
And over the last week or 10days, we went, or middle part of
September, we went from that$10discount to uh at times today a
five or six dollar premium.
So we've seen a huge shift inthe basis here over the last few
(02:43):
weeks.
Okay, what's that mean?
And I'm not I'm not saying thatlike to set you up.
What's that mean, Mike?
Seriously.
Well, I think it provides areally strong incentive for the
cattle feeder um to either pressfor higher bids or to delay his
sales.
When he's looking at, forexample, an October contract
that uh expires in two weeks,it's trading at times of five,
(03:08):
six, seven dollar premium tolast week's cash trade.
The incentive to the cattlefeeder uh is is to delay sales
and wait for the cash to catchup with futures.
Um, so looking at futuresimplied prices, uh, you'd be
looking at say an Octobercontract trading at 242, 243 if
(03:32):
it expires at par.
That's a good seven dollarsabove last week's Southern
Plains cash trade.
Not much doubt that the cattlefeeder is gonna press for higher
bids.
Unbelievable.
SPEAKER_01 (03:46):
Unbelievable.
All right, everyone, you listento Mr.
Mike Sands.
This is the Fat Tuesday podcast.
I am Tommy Grossaffi of AGBOMedia.
If you enjoy this podcast, well,good news.
If you're a client of mine,client of Mike's friend of
Nesvik, you'll get it for free.
But moving forward in the monthsto come, you're gonna have to
join premium www.agbull.com.
Of course, people at MBS,Nesvik, and Agbol will be
(04:07):
getting it.
But if you're on the outsidelooking in, you're probably
gonna have to swipe that creditcard and pay 25 bucks.
We hope to see you on thepremium side.
Back to the show.
Mike, you're too good to notcharge, my friend.
You're too good not to charge.
And and and you did say it lastweek.
You said, you know, you can goto college to learn, or you can
learn it the hard way.
But the the mistakes, you know,when when a father tells a son,
(04:29):
don't do that, I've done that,it doesn't work.
I mean, they're not kidding,right?
SPEAKER_00 (04:32):
Yeah, absolutely not.
Uh, it it there are alwaystuition bills that have to be
paid in virtually everythingthat we do.
Uh, and the cattle market is nodifferent, it does charge
tuition.
SPEAKER_01 (04:45):
Yeah.
Now, there's some things, folks,going on right now upon filming
this.
I just want to talk about.
We're probably gonna releasethis later this afternoon or
Friday morning, but uh gold wasup$110 new all-time highs,
silver up two dollars newall-time highs, extreme
volatility in the stock marketthis afternoon, extreme
volatility in Bitcoin.
Interesting to see gold andsilver hit all-time highs and
(05:06):
Bitcoin sell off.
What those two have to dotogether, I don't know.
But you you got some wild thingshappening here in commodities.
We had a big pop in uh soybeansand corn.
That was nice to see all thesepeople really bearish corn and
beans.
Oh, it's harvest, be bearishcorn and beans.
Listen, there's some biggerpicture things going on.
Let's get into the slides andthe stage is yours.
(05:28):
I'm gonna pop myself out, butuh, Mr.
Mike Sands, slide number one.
Go ahead, sir.
SPEAKER_00 (05:33):
Tommy, this is just what we were talking about a few
minutes ago in terms of thecattle market going back into
the middle part of September.
The board was trading anywherefrom a seven to a ten dollar
discount to what the SouthernPlains cash trade was at that
point.
And at that juncture, we werelooking at a at a Fed cattle
market that was something inexcess of 240, 241, 242,
(05:57):
somewhere in that area.
Uh, and the board was a hugediscount to that.
Uh, and over the course of thelast three weeks, we've seen the
board rally along with inresponse to the the very strong
basis levels that we saw in themiddle part of the month.
Maybe the cattle feeder was alittle bit more inclined to move
(06:17):
cattle given the strong basisand and the uh hedge situation
that he was in at that point.
We get into the early part ofOctober, specifically this week,
and we have the board at 242,34, somewhere in that area,
trading anywhere from a five toa seven dollar premium to last
(06:38):
week's cash.
Not much question in that kindof an environment for a hedged
situation where the cattlefeeder is gonna press for either
higher bids or he's going totell the packer, um, come talk
to me next week and bid a higherprice.
And that's exactly what we'veseen.
I haven't seen the cash tradeyet this week, but I fully
(07:00):
expect it's gonna besubstantially higher than what
we saw a week ago, and a goodbit of it is related to this
really weak basis that we'relooking at here, two weeks ahead
of expiration.
SPEAKER_01 (07:13):
Interesting, interesting.
All right, this next chart's gotme scratching my head.
What's going on here?
Wide ID spread.
SPEAKER_00 (07:20):
Yeah, it's a really wide spread.
All this line does is track thatOctober, December spread.
And typically, we might think ofOctober as it was back two
months ago, three months ago,trades about a$2 discount to
December, typically because wesee a higher cash trade going
(07:41):
from October into December.
Recently, that spread has beenanywhere from$4 to$5.
So besides the extremely weakbasis that we have, we have this
very wide spread between Octoberand December.
And it's another encouragementfor the cattle feeder to either
(08:05):
delay sales or press for higherbids.
As an example, if we're lookingat the December contract at$245
or better, and figure that basisin November is going to be
around$2 cash under the board,then the market's really
offering a cattle feeder out inmid-November, something on the
(08:26):
order of$243,$244.
And last week's cash trade inthe southern plains was$235.
Is there any doubt what he'sgoing to do in that kind of an
environment?
Uh, the Packer won't get thembought at steady money for sure.
SPEAKER_01 (08:43):
Interesting.
Uh, I'll throw you a curveballon the headline here before we
go to the next slide.
October 24th, Cattle on FeedReport vulnerable to government
shutdown.
What do you tell people?
SPEAKER_00 (08:52):
Yeah, well, um I think the odds are pretty good
that that report is not going tobe released, or it certainly
won't be released on time.
That presumes, of course, thatthe government shutdown does
continue.
But it's it's setting up asituation where we're seeing
(09:12):
less and less of the usualgovernment economic data that we
typically see and use to makesome of our forecasts and
marketing decisions.
And one of those is the slowdownin feedlot placements that we've
seen in recent months.
(09:33):
Along with that, overallmarketings have declined very
sharply as well.
And one of the side effects ofthat slowdown in marketings and
the cutbacks in slaughter ratesis that carcass weights, owing
to more days on feed, areheading toward a seasonal peak
(09:55):
that's going to be record high.
You can see that top line, thetop red line in that chart.
Those are contract and formulaweights coming out of the
comprehensive report.
They are at historic highs, andit surely looks like we are
going to see some additionalincreases in carcass weights yet
(10:17):
before they finally top out.
My point is that these heavycarcass weights running anywhere
from 2 to 3% above a year agoare adding to beef tonnage, and
overall supplies are not quiteas tight as the small kills
would suggest.
So I'll uh give you an analogy.
SPEAKER_01 (10:38):
The uh Southwest Airline plane still only has 250
seats, but the passengers likeTommy G got a little bigger,
right?
SPEAKER_00 (10:47):
Well, I I can't speci speak specifically to that
situation, Tommy, but I thinkthe analogy is good.
Very good.
SPEAKER_01 (10:56):
Hey, uh, speaking of good, the good news for farmers,
Rollins came out today and saidRollins states aids to farmers
as soon as government opens.
Uh Mike had stated that uh thegovernment is still closed,
which if you're just findingthat out from the show, uh you
took a heck of a nap.
All right, but with that, therethere was also a headline.
I don't think we saw it comeacross the Nesvik wires, but
(11:17):
Thun, Senator Thune from SouthDakota, who's extremely high up
the uh ladder, said we need toget emergency funding out to the
farmers while the governmentshut down.
It was suggested he walked inTrump's office and said, uh,
listen up, boss, you know, wegot a problem.
So the government shut down,it's creating chaos.
I I gotta tell you, Mike, theroad crop farmers not gonna be
(11:38):
too mad about it.
They're gonna be like, this wasgreat.
The government shut down, beansrallied, this happened, that
happened.
There, they're not overly uhupset about it, to be honest
with you.
But uh they're probably gonna bemore pissed off when we open up
and find out exports orsomething were bad.
But there could be somesurprises, and I will say I'm
not an analyst, but this givesevery analyst on the street
three to six months to say,well, my research was right, but
(12:01):
the the data from the governmentwas wrong.
So no matter what anyone comesout with or says, they always
have an out for a while, don'tthey?
SPEAKER_00 (12:07):
Absolutely, they do.
We can as a as an analyst, youcan kind of make up any story
you want when you don't havedata to pin it to.
SPEAKER_01 (12:15):
Uh uh and not be wrong or falsifying stuff.
Hey, real quick folks, if you'reout there, Mike brought six
awesome charts today.
And if you go to the Ag Bullwebsite, www.agbull.com, I'll
send you these six charts.
If you want to call me, 1855-737Farm, you can email me, TG at AG
Bull.com, and I'll get youMike's charts.
(12:36):
Because I know people arelistening on Spotify and all
that other stuff, and they'relike, what the heck was he
saying?
Hey, dumb question, TomGrassoffi, longtime listener,
first time caller.
What's the second red line underthe top red line, Mike?
SPEAKER_00 (12:47):
That's the actual FI data that the government
releases, typically on aThursday afternoon, and it's for
the the week, two previousweeks.
So the last actual FI data wegot was back in the middle part
of September.
Well, we're a month later, andthe odds are pretty good.
The carcass weights aresubstantially higher today than
(13:09):
they were a month ago.
Follows a seasonal pattern, andin addition to that, overall
kill numbers have been pairedback.
Last week's Fed cattle slaughterwas only 440,000.
That's like 88,000 a day, andour kill capacity is probably
somewhere in the area of 105 to107.
So packers are operating at areally slow or low capacity
(13:33):
rate, and it's leaving a lotmore cattle on feed, carried
over from week to week, and andthat front-end supply is getting
a little bit bigger.
Okay.
That's interesting.
Slide number four.
Yeah, that that relates to ourprevious slide.
We were talking about carcassweights getting heavier days on
(13:55):
feed.
Our cattle are being fed longer.
It's not at all unusual for uhfeeding times now to be 190 to
210 days.
Uh, and as a result of thoselonger days on feed and heavier
carcass weights, we're seeingcattle grade much better than
historically would be the case.
(14:17):
I think prime grading right nowis around 11.5%.
That's record high.
Choice and better, which wouldinclude choice and prime grade,
is running around 84%.
That's a good two percentagepoints better than what we were
a year ago.
So both the cattle feeder andthe packer is happy with that
(14:40):
result.
But the concern that I have, aswe alluded to earlier, is that
these carcass weights may begetting up to the point where we
start to see some biggerdiscounts coming from the
packer.
Hasn't happened yet, but it sureis a big red flag sitting out
there.
SPEAKER_01 (14:58):
Mike, while you're talking, I Googled what the
average price of ground beef istoday, and it said$662.
That's a little higher than theprevious few weeks, so it's
catching up a little bit to thestorefront.
Now, you and I spoke on lastweek's episode where a store
could put it at$599, make it alost liter.
So you come in the store and buya bunch of other stuff, right?
What's that called when they dothat?
(15:18):
Just discounting?
Yes.
Uh featuring.
SPEAKER_00 (15:22):
Feature.
That's what you call that.
Feature, feature, feature.
Something on the order of, say,30 to 40 percent of the beef
movement.
Traditionally, it may havechanged over time, but
historically, it was kind of therule of thumb that maybe
somewhere in the area of 30 or40, or at times as much as 50%
of the beef movement out of themeat case moves on some kind of
(15:44):
a feature program.
Whether it happens to be adiscount, or typically it's a
discount, or two for one, buyone, get one free, that kind of
thing.
Sounds good.
Slide number five, sir.
Yeah, this is this just tracksthe year-over-year change in
choice and better beefproduction.
(16:04):
It's the quality beef that thatwe all typically talk about.
And in recent weeks, it's beenrunning about five percent below
last year.
At the same time, we've beenlooking at fed cattle slaughter
that's been running anywherefrom seven to eight percent
below last year.
My point is the differencebetween the slaughter rate and
(16:27):
this production number is theheavier carcass weights.
So the weights add to tonnageand it trims the year-over-year
decline in fed beef production.
But going forward, given whatwe've talked about in the past
with regard to cattle inventorynumbers, on-feed numbers,
(16:48):
placement numbers, these overallproduction numbers are going to
stay moderately below last year.
Interesting, interesting,interesting.
Slide number six.
Yeah.
We talk about front-end suppliesor fed cattle supplies with with
a good bit of regularity, ofcourse.
(17:10):
Uh, we think for the most partthat supplies are a big part of
the determination of what actualslaughter is.
But right now, perhaps the moredominant influence is packer
margins.
That red line that you seerunning across there above and
below the zero line is just acalculation of weekly packer
(17:33):
margins.
It's a packer margin index.
Doesn't represent an individualpacker by any stretch, but you
can see there have been weeks ofbig calculated losses, and there
have been weeks of some prettysubstantial profits.
Right now, that index wouldsuggest losses somewhere in the
(17:54):
area of 75 to maybe as much as$100 a head in that kind of an
environment.
We've just talked a little bitabout the packer paying up money
for cattle this week.
His choice then is to try andfigure out a way to support the
beef market to get some of thathigher purchase cost back.
(18:17):
And at least at this point, uhif we see cash prices move
substantially higher this week,I think a sidebar or an offshoot
of that is probably going to besome renewed cutbacks in Fed
cattle slaughter over the nexttwo to three weeks.
SPEAKER_01 (18:35):
Interesting.
Interesting.
All right, I'll pop myself backin the show.
You're visiting with Mike Sandsfrom MBS Research.
I do have a uh a chart of theday.
It's called uh Beyond BS.
Beyond Beef today went below onedollar.
That was a headline.
They're on their last leg, isthey would say this stock.
(18:56):
I'm gonna Google its range.
Talk to me about when you firstsaw Beyond Beef come on and you
know its life.
I'll tell you the highest thestock's ever been, and obviously
today's the lowest it's everbeen.
Beyond Beef trades one dollar.
Stage is yours, sir.
SPEAKER_00 (19:11):
I think it when when it was first introduced not too
long after they went throughtheir IPO, it traded somewhere
in the area of 258 to 279.
And there was a lot ofdiscussion, I think, at that
point.
There were a number of otheralternative meats that were
introduced at the same time.
I think there's always been alot of concern in the beef
(19:34):
industry in particular, but porkand chicken as well, that these
alternative meats would replacea significant portion of our
traditional red meat industry.
But price levels on thesealternative meats have been
historically, in the case ofbeef, much higher, for example,
(19:54):
than traditional ground beef.
And as a result, I think for themost part, has never gained the
penetration that the theinvestors originally had in
mind.
It's just been a situation whereconsumers, for the most part,
were not willing to pay a hugeprice premium for an alternative
(20:18):
meat.
And as a result, the success hasbeen certainly somewhat
questionable.
SPEAKER_01 (20:24):
Yeah, well said.
I I would also sum it up thatthree to four, caught five
percent of the population isvegan, caught 10% of the
population, but the wholecompany was based as if we were
all going to switch and starteating that as if it was a
healthy alternative.
And you'd mentioned to mybrother Joe and I before we
started the show.
Has anyone ever read theingredients of what's in that?
(20:47):
I want to say 16 to 18ingredients on the average pack.
You know, you look at thatlabel, you know why the label's
so big?
That's where they put all theingredients.
I mean, absolutely.
You flip that thing over and nosoy, no gluten.
They got all the stuff that thelittle TikTok mommies like so
much, but they don't explain tothem what's in there.
I mean, that looks like achemical bomb, if you ask me.
SPEAKER_00 (21:09):
Well, I think that's been part of the reaction that
that some consumers have had toalternative meat products.
The the ingredient list is aslong as your arm.
And uh in an environment whereconsumers in general seem to be
looking for more uh clean labelproducts, if you will, beef
(21:29):
stands pretty high on that listwhen you when you look at the
ingredients in beef.
So that may be one of thefactors that uh has contributed
to the uh less than optimalperformance of these alternative
meats as well.
SPEAKER_01 (21:44):
Yeah, absolutely.
All right, folks, Tommy Gersafi,Agbell Media AgBull Trading,
Mike Sands, MBS Research.
If you missed anything on theshow, email us, call us, text
us, hit us up on the website,Agble, get a hold of the folks
at Nesvig if you need Mike.
And uh with that, we'll meetagain next week.
Mike, tell me what you'reoptimistic about.
I'll let you close the show.
Tell me what you're optimisticabout here in the cattle
(22:06):
industry, sir.
SPEAKER_00 (22:07):
Well, uh, aside from the day-to-day and week-to-week
overall price level moves, uh,as you think about longer term
in terms of beef productionpotential, uh, it still looks to
me like we're looking at somepretty tight supplies for an
extended period of time.
So as we wrap up this year orhead into the latter stages of
(22:29):
this year into 2026 and maybe 27as well, for the most part,
we're not going to see bigyear-over-year or maybe even any
year-over-year increases inproduction.
And that's got to be prettysupportive as far as beef price
levels are concerned.
SPEAKER_01 (22:48):
Well said, my friend, Mike Sands.
You've been listening to FatTuesday Podcast.
We'll catch you all next week.
See ya bye.
Good to see you, Tommy.
SPEAKER_00 (22:56):
Looking forward to getting together again next
week.
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