October 1, 2025 • 20 mins
Record-tight feeder supplies meet record-heavy carcass weights and a falling cutout, creating a tense setup where front-end inventories swell just as seasonal patterns should ease. We unpack the Mexico border closure, regional cash spreads, demand risk at record retail prices, and the surprise shift in futures positioning.
• impact of Mexican border closure on feeder supplies
• divergence between Southern Plains and Northern on-feed inventories
• placements down, marketings down, front-end supplies up
• record carcass weights and feeder leverage erosion
• blended cutout’s sharp August rally and September slide
• Nebraska premium flipping to a discount versus Kansas
• consumer demand at record retail beef prices
• hogs open interest topping cattle and what it implies
• cheaper feed from larger corn, wheat, and sorghum supplies
• macro overhang from a possible government shutdown
Subscribe for $25/month or $250/year to access premium videos that the general public can’t get
Please like and subscribe @agbullmedia
Watch Us on U-Tube AG Bull Podcast
(105) AG Bull Podcast - YouTube
www.agbull.com
AG BULL Media
E-Mail tg@agbull.com
Thank you, Tommy G
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:13):
Well, good good afternoon, everyone.
Tommy Gersafi, Eggbo Media,Eggbo Podcast.
This is your Fat Tuesday showcoming to you on a Wednesday.
We got the one and only Mr.
Mike Sands.
Mike, we had a a little mishap.
I just spelt a drink, and so wehad to restart the show.
And you, from what I understand,that happened on your morning
(00:33):
call.
Anything you want to tell usabout on a coffee mishap this
morning?
SPEAKER_00 (00:37):
No, we had to delay it at least for a couple of
minutes.
One of the guys on the on thecall ended up wearing his
giant-sized cup of coffee thismorning.
So we had to we had to delay fora little bit for a cleanup.
That's what we did here.
SPEAKER_01 (00:51):
It was a good thing we weren't live.
I was like, I'll just let it sitthere.
I'm like, no, I got to cleanthis up.
Speaking of cleanup, we got wegot a cattle train that just
won't stop.
Yesterday afternoon, end of themonth, end of September.
Today is October 1st.
We had the cattle market tradeddown at one point yesterday, and
the feeder cattle, this showcalled Fat Tuesday, feeder
(01:11):
cattle rocketed back up, closedon the highs, traded up in after
hours, opened up lower today,and then rocketed back up.
Let's talk with a littlecommentary on just the overall
what's going on in the cattlemarket, and then we'll get to
the slides, Mike.
SPEAKER_00 (01:27):
Well, I think from an overall standpoint, we
continue to work withhistorically small supplies of
fed cattle available.
We've been reducing numbers uhfor five or six years now.
Uh and overall feedlotplacements over the last few
months have come down prettysharply.
Uh, the expectation is thatnumbers stay really tight, and
(01:50):
of course, the Mexican borderremains closed as a result of
the screw worm issue in Mexico,and that has significantly
reduced feeder cattle supplies.
Uh, the end result has been asharp drop in overall on-feed
numbers in Texas.
(02:10):
I think at the beginning ofSeptember, their on-feed numbers
were down pretty close to250,000 head.
It's historically small numbers,while at the same time in the
north, thinking about Nebraskaand Iowa, for example, we have
record numbers on feed.
So a huge divergence within theindustry in terms of fed cattle
(02:34):
availability.
SPEAKER_01 (02:35):
Mike, this kind of what happens to we've had, it
seems like every other yearwe've had major droughts, and we
have drought in Texas and wehave a lot of cattle up north.
And I remember North Dakota, Iwant to say in 21 up north, not
just North Dakota, but the northhad a big drought in 21, and
then all the cattle were downsouth.
But we locked all these cattleup in Mexico, and they're not
(02:55):
coming up anytime soon, it seemslike, correct?
SPEAKER_00 (02:59):
Surely looks like that's going to be the case or
has been the case.
The border closed initially inlate November of last year.
Uh, it opened for a little bituh in the spring months of this
year, uh, and then reclosedagain indefinitely at this point
in mid-July.
So if we go back to that lateNovember timeframe and count
(03:23):
from there to where we are inthe calendar here at the
beginning of October, totalfeeder cattle imports from
Mexico are down well over900,000 head over that
timeframe.
And of course, a lot of thosecattle are going to be fed in
the southern plains.
And that's what this chartreally reflects is that decline
(03:44):
in feedlot placements thatreally started uh in April and
is continued through the summermonths, just aggregating numbers
from April through August, totalfeedlot placements during that
time frame are down about 7%,somewhere in the area of 625,000
(04:04):
head.
And that's built that smallerfeedlot placement number is
built an expectation that Fedcattle supplies, as we move into
the fall and winter months, um,those Fed cattle supplies will
be substantially smaller.
But there is a big butassociated with that.
(04:25):
If we go to the next chart,Tommy, it will show us that
overall Fed cattle marketingshave declined basically in
lockstep with the decline infeedlot placements.
So from that April throughAugust timeframe, overall
marketings are also down about7%.
(04:45):
And that's pretty close to a675,000 head decline in overall
marketings.
So we put cattle on feed duringthat timeframe, reduced numbers
on feed, but we've also reducedmarketings.
And the end result is we'vesimply delayed that front-end
supply of cattle and pushednumbers forward.
(05:09):
So instead of looking at smallerfeedlot inventories and
declining Fed cattle supplies,we've kept that feedlot
inventory at some relativelyhigh levels.
At least we haven't seen thedrop in inventories that one
would anticipate as a result ofthe decline in overall feedlot
(05:33):
placements.
So this front-end supply ofcattle, as as noted in the next
chart, has moved substantiallyhigher going from August to
September, increased almost200,000 head during a time frame
when we'd expect those front-endsupplies to get smaller.
If you look at the seasonalpattern in terms of that
(05:57):
available supply of cattle, ittypically peaks out in April and
May and then declines all theway into the summer and fall
months.
This year we're looking at acounter-seasonal increase going
from August into September,October, and November.
As of October 1, it looks likethis cattle on feed over 150
(06:19):
days.
This front end supply is uppretty close to 500,000 head,
maybe a little bit more thanthat compared with a year ago.
It's record large for the date,and it's up over 21%.
So big numbers on feed, andthey're they're pretty heavy as
(06:44):
well.
Carcass weights are at recordlevels.
Uh as the next chart willsuggest and confirm, we're
looking at kind of a weightedaverage of fed cattle weights
here in late September, earlyOctober that are up around 925
(07:05):
pounds.
A seasonal increase would pushthose weights at the peak this
fall, somewhere in that area of940 pounds.
Obviously, those arehistorically heavy weights.
So we've got big numbers onfeed, we've got heavy cattle on
feed.
(07:25):
I think there's some risk thatit may continue to erode the
leverage that the cattle feederhas, has been able to enjoy in
recent months and reduce some ofhis flexibility in terms of
marketing those cattle.
The other part of the issue interms of the value of those fed
(07:50):
cattle, if one looks at uh ournext chart, which is the decline
in overall uh beef prices, uh wedid see a really sharp run-up in
the overall blended cutout.
That's the weighted average ofchoice and select cutout values
from around 360 at the beginningof August to something over$400
(08:17):
at the end of August and veryearly September.
At the beginning of September,from that record high level,
we've seen the blended cutoutdrop now by almost$40.
So, as far as the Packersconcerned, uh the value of that
animal out there is obviouslyworth less to him than it was 30
(08:41):
days ago.
So we got big numbers, we gotheavy weights, and we got a
declining uh beef market, all ofwhich likely translates into
some continued weakness here inthe near term as far as Fed
cattle prices are concerned.
One other thing from ageographic standpoint, and our
(09:04):
last chart here this afternoonis the price spread between
cattle on feed in or Fed cattleprices in Nebraska versus
Kansas.
At the beginning of July, wewere looking at price levels in
Nebraska, a$10 premium to whatthey were in the Southern
(09:28):
Plains.
By the time we moved to the endof September, price levels in
Nebraska had moved to about a$4discount to the Southern Plains.
Now that's we've been herebefore, but that's a relatively
wide discount, and it reflectsFed cattle availability.
(09:51):
We have record numbers on freeon feed in Nebraska and Iowa,
and historically small numberson feed in Texas, and that's the
key factor behind that that wideprice spread.
SPEAKER_01 (10:06):
Incredible.
I'm gonna ask you a couple sillyquestions, and maybe they're not
silly to people listening to thepodcast.
I'm gonna get rid of thesecharts and just put you up real
quick, folks.
We're we we're meeting with Mr.
Mike Sands, MBS Research.
Mike, I this is such a sillyquestion.
I hear you guys talk about it alittle bit on the morning call.
What's happening to all thesecattle in Mexico?
(10:28):
So they used to come over theborder and then we would take it
from there.
They're not coming over theborder.
Do they have the the processingability to uh take that fat
animal and uh package it up andturn it into ground beef, etc.,
and steaks?
SPEAKER_00 (10:43):
Is that a silly question?
No, it's not a silly question.
SPEAKER_01 (10:46):
And well, then I'm gonna keep going until I ask
Paloozy.
SPEAKER_00 (10:52):
Well, from an overall standpoint, over the
last couple of years, we'vebrought in um somewhere around a
million two feeder cattle eachof the last two years.
And as alluded to earlier,numbers this year are down well
over 900,000 since the borderinitially closed in in late
November of last year.
So obviously, those cattle arestill in Mexico.
(11:14):
Now, total supplies down there,since they've been under drought
conditions over the last two orthree years as well, total
supplies might not have been asbig to begin with as they were
the last couple of years.
But the bottom line is they areeither on grass still in or in a
(11:35):
backgrounding program in Mexico,or they have put been put into a
feed yard in Mexico per se.
So the end result is maybe tosome extent, the we are
developing a fed beef productioncompetitor, if you will, in
(11:57):
Mexico over time because of theborder closure.
They're going to, in alllikelihood, develop their
feeding expertise on prettyconsistent with with how we feed
and produce fed cattle in theU.S.
SPEAKER_01 (12:15):
And the longer this goes on, the more we're giving
Mexico the chance.
So we could look back five orten years from now and say, boy,
Mexico's really good at uhraising animals and then
processing them and thenexporting them.
You'd be like, Yeah, you knowwho forced them to do that?
Us, correct?
SPEAKER_00 (12:30):
I think that's exactly right.
It may be a long time before webring in a million two feeder
cattle from Mexico again for acouple of reasons.
They've probably downsized theirindustry just a little bit, but
in addition to that, we're theyare being forced, if you will,
(12:52):
to figure out how to how to feedcattle, feed them efficiently,
and and produce and export beefto the U.S.
Okay.
SPEAKER_01 (13:02):
What uh what what should be a question that people
should be asking, whether it bea consumer or a trader, what
what's something on your mindthat's so obvious to you that
people aren't asking?
Is it does that make sense?
SPEAKER_00 (13:14):
Well, I I think there are some concerns within
the industry that since beefprices are at record high
levels, that that may very wellhave some impact on consumers'
willingness to purchase beef,whether it happens to be in a
restaurant or or in a retailstore.
(13:35):
And of course, that that is aconcern longer term in the sense
that beef prices are highrelative to pork and chicken,
and as a result, couldnegatively impact overall demand
for beef.
But at least at this point,recognizing full well that price
levels are record high, ourproduction is pretty small as
(13:59):
well.
And it's not apparent yet atthis point that there's been any
big negative impacts on beefdemand.
SPEAKER_01 (14:09):
So we're just the consumer is comfortable.
What would you I Google itsometimes before I talk about
beef, but I'm gonna go withthat.
The average price of ground beefin America is$6 a pound.
You probably know that off yourhead, but it it it's about that
$585,$6.
And the consumer's justcomfortable doing that.
Recently, you said somethingthis morning on the morning
call, and I do listen.
You're gonna be like, you'realways talking, you're not
(14:30):
listening.
Did you say open interest ishigher in hogs and cattle, and
we don't normally stay that wayfor long?
SPEAKER_00 (14:36):
Yeah.
Last, of course, we got a verybullish, if you will, hogs and
pigs report week or so ago.
I think a week ago, Thursday.
The end result is we've gotfewer hogs out there than what
the trade was looking for.
Uh, and as a result, there'sbeen some pretty significant
increases in in overall hogprices, obviously, some pretty
(15:01):
strong buying interest as far asfutures are concerned.
And we end up with something onthe order of 376, 377,000 open
interest in hogs, which isslightly bigger than cattle.
Um typically does not comparethat way.
Uh, and when it does, doesn'tvery often stay that way.
SPEAKER_01 (15:25):
We'll see what that all means.
Okay, everyone, we're meetingwith uh Mr.
Mike Sands, MBS Research.
Probably the busiest he's everbeen, although he always stays
busy.
It's not like he ever tries touh take much time off.
But your uh this show is calledFat Tuesday.
We're doing it on a Wednesday.
Yesterday was the end of themonth.
Today is the first day ofOctober.
(15:46):
It's the first day of thebeginning of the quarter.
I do have one last thing thatshould make you giggle.
This video allegedly ourgovernment shut down, and this
is a picture of what it lookslike.
And I want to hear your opinionon what this does, Mark.
(16:08):
They shut the shut the money offlike a parent calling a college
kid and cutting off the creditcard.
What's going on with the uhgovernment shutting down?
I do know it uh it does affectuh GDP and stuff like that,
Mike.
SPEAKER_00 (16:22):
Yeah, I think from an overall standpoint, uh at
least uh the CongressionalBudget Office in terms of their
assessment of the shutdown backin 2013.
We were shut down for severaldays, if not weeks, that it had
a negative impact on GDP.
It took about a half a point offof domestic growth at that at
(16:45):
that point.
Um I'm not I obviously I don'tknow how long it's going to be
closed.
The longer it's closed, thebigger the impact, obviously.
Um, but at least at thisjuncture, uh it's it's not
positive as far as economicgrowth is concerned.
Yeah, it's interesting.
SPEAKER_01 (17:03):
All right, we'll do this again next week.
We also were proud to announcewe have premium content
available.
Folks who like videos like this,they could subscribe for$25 a
month,$250 annually, and they'llbe getting videos that uh the
general public can't get.
This will be one of those videosthat's made exclusively for
NASVIC clients and friends ofAgBull Media, AgBull Trading.
(17:25):
And with that, tell all the goodfolks down there in Memphis.
I said hi.
I I feel better now aboutspilling my drink before we were
actually recording.
This is the second time we didthis, and apparently I'm not
alone there.
We have the government closed,we have open interest high, the
cash prices in in cattle arecoming down when we uh see those
afternoon reports, yet thefeeder market's still rocketing
(17:49):
higher.
With that, God only knows whereprices will be when we do this
again next week, correct?
SPEAKER_00 (17:56):
Uh no question about that.
Lower feed costs coming out ofuh yesterday's stocks report
probably doesn't discouragepeople from paying up for feeder
cattle either, along with thetight supplies of feeders.
SPEAKER_01 (18:09):
Yeah, and even though I thought we're ending
the show, I want to talk aboutthat because when I was in
Kansas with you in Dodge City,I've never seen it that green.
Not that I've spent that much inKansas time in Kansas, but I
know that a lot of time theyhave to buy feed because it's
you know it gets dry out there.
And then that folks, what thatwe got are talking about here is
the cattle aren't coming in fromMexico.
(18:29):
There's lots of green grasseverywhere, not everywhere, but
there's a lot of green grass,and we have plenty of corn, and
that's that magic number thatthe government likes to slide
back and forth, that feed andresidual number, right, Mike?
SPEAKER_00 (18:42):
Yeah, absolutely.
Overall feed disappearance lastyear, based on that stocks
report, was overall feed usagewas not as large.
And I think in terms of theiroverall estimates, they gave us
a little bit bigger productionnumber as well.
So uh if you just carry thosenumbers forward, it it means
that the total available supplyof corn this year uh is is going
(19:06):
to be up a couple hundredmillion bushel more than what
the trade had anticipated.
And of course, we had big wheatcrops and and we have a big
grain sorghum crop out there aswell.
So feed is abundant and it'sit's relatively cheap.
Not not good, of course, if ifyou're a seller of those
commodities, but from a buyer'sperspective, um, this is the
(19:28):
cheapest feed has been for quitesome time.
Yeah, it's very challenging.
SPEAKER_01 (19:32):
Folks, if you're watching and you're out there
combining, we wish you a safeharvest.
I know I've received three, fourtexts here just while we're
recording this of people sellingsome grain off the uh combine
and wanting to replace it withthat.
Mr.
Mike Sands coming to you fromMemphis, Tennessee at the uh
Memphis office at Nesvik.
I can't I can't speak.
Mike Sands, Memphis, Tennessee,Nesvik trading.
(19:54):
That's a lot of a lot of stuffthere.
Tommy Grossoffi, I'm inValparaiso Indiana today.
I'm heading down to Nashvilletoday uh to see the good folks
at Nesvik.
This has been your Fat Tuesdayepisode.
We got through it on two takes.
Mr.
Mike Sands, thank you so much.
We'll do it again and uh see younext week, my friend.
SPEAKER_00 (20:12):
Looking forward to it, Tommy.
Well, good good afternoon, everyone.
Tommy Gersafi, Eggbo Media,Eggbo Podcast.
This is your Fat Tuesday showcoming to you on a Wednesday.
We got the one and only Mr.
Mike Sands.
Mike, we had a a little mishap.
I just spelt a drink, and so wehad to restart the show.
And you, from what I understand,that happened on your morning
(00:33):
call.
Anything you want to tell usabout on a coffee mishap this
morning?
SPEAKER_00 (00:37):
No, we had to delay it at least for a couple of
minutes.
One of the guys on the on thecall ended up wearing his
giant-sized cup of coffee thismorning.
So we had to we had to delay fora little bit for a cleanup.
That's what we did here.
SPEAKER_01 (00:51):
It was a good thing we weren't live.
I was like, I'll just let it sitthere.
I'm like, no, I got to cleanthis up.
Speaking of cleanup, we got wegot a cattle train that just
won't stop.
Yesterday afternoon, end of themonth, end of September.
Today is October 1st.
We had the cattle market tradeddown at one point yesterday, and
the feeder cattle, this showcalled Fat Tuesday, feeder
(01:11):
cattle rocketed back up, closedon the highs, traded up in after
hours, opened up lower today,and then rocketed back up.
Let's talk with a littlecommentary on just the overall
what's going on in the cattlemarket, and then we'll get to
the slides, Mike.
SPEAKER_00 (01:27):
Well, I think from an overall standpoint, we
continue to work withhistorically small supplies of
fed cattle available.
We've been reducing numbers uhfor five or six years now.
Uh and overall feedlotplacements over the last few
months have come down prettysharply.
Uh, the expectation is thatnumbers stay really tight, and
(01:50):
of course, the Mexican borderremains closed as a result of
the screw worm issue in Mexico,and that has significantly
reduced feeder cattle supplies.
Uh, the end result has been asharp drop in overall on-feed
numbers in Texas.
(02:10):
I think at the beginning ofSeptember, their on-feed numbers
were down pretty close to250,000 head.
It's historically small numbers,while at the same time in the
north, thinking about Nebraskaand Iowa, for example, we have
record numbers on feed.
So a huge divergence within theindustry in terms of fed cattle
(02:34):
availability.
SPEAKER_01 (02:35):
Mike, this kind of what happens to we've had, it
seems like every other yearwe've had major droughts, and we
have drought in Texas and wehave a lot of cattle up north.
And I remember North Dakota, Iwant to say in 21 up north, not
just North Dakota, but the northhad a big drought in 21, and
then all the cattle were downsouth.
But we locked all these cattleup in Mexico, and they're not
(02:55):
coming up anytime soon, it seemslike, correct?
SPEAKER_00 (02:59):
Surely looks like that's going to be the case or
has been the case.
The border closed initially inlate November of last year.
Uh, it opened for a little bituh in the spring months of this
year, uh, and then reclosedagain indefinitely at this point
in mid-July.
So if we go back to that lateNovember timeframe and count
(03:23):
from there to where we are inthe calendar here at the
beginning of October, totalfeeder cattle imports from
Mexico are down well over900,000 head over that
timeframe.
And of course, a lot of thosecattle are going to be fed in
the southern plains.
And that's what this chartreally reflects is that decline
(03:44):
in feedlot placements thatreally started uh in April and
is continued through the summermonths, just aggregating numbers
from April through August, totalfeedlot placements during that
time frame are down about 7%,somewhere in the area of 625,000
(04:04):
head.
And that's built that smallerfeedlot placement number is
built an expectation that Fedcattle supplies, as we move into
the fall and winter months, um,those Fed cattle supplies will
be substantially smaller.
But there is a big butassociated with that.
(04:25):
If we go to the next chart,Tommy, it will show us that
overall Fed cattle marketingshave declined basically in
lockstep with the decline infeedlot placements.
So from that April throughAugust timeframe, overall
marketings are also down about7%.
(04:45):
And that's pretty close to a675,000 head decline in overall
marketings.
So we put cattle on feed duringthat timeframe, reduced numbers
on feed, but we've also reducedmarketings.
And the end result is we'vesimply delayed that front-end
supply of cattle and pushednumbers forward.
(05:09):
So instead of looking at smallerfeedlot inventories and
declining Fed cattle supplies,we've kept that feedlot
inventory at some relativelyhigh levels.
At least we haven't seen thedrop in inventories that one
would anticipate as a result ofthe decline in overall feedlot
(05:33):
placements.
So this front-end supply ofcattle, as as noted in the next
chart, has moved substantiallyhigher going from August to
September, increased almost200,000 head during a time frame
when we'd expect those front-endsupplies to get smaller.
If you look at the seasonalpattern in terms of that
(05:57):
available supply of cattle, ittypically peaks out in April and
May and then declines all theway into the summer and fall
months.
This year we're looking at acounter-seasonal increase going
from August into September,October, and November.
As of October 1, it looks likethis cattle on feed over 150
(06:19):
days.
This front end supply is uppretty close to 500,000 head,
maybe a little bit more thanthat compared with a year ago.
It's record large for the date,and it's up over 21%.
So big numbers on feed, andthey're they're pretty heavy as
(06:44):
well.
Carcass weights are at recordlevels.
Uh as the next chart willsuggest and confirm, we're
looking at kind of a weightedaverage of fed cattle weights
here in late September, earlyOctober that are up around 925
(07:05):
pounds.
A seasonal increase would pushthose weights at the peak this
fall, somewhere in that area of940 pounds.
Obviously, those arehistorically heavy weights.
So we've got big numbers onfeed, we've got heavy cattle on
feed.
(07:25):
I think there's some risk thatit may continue to erode the
leverage that the cattle feederhas, has been able to enjoy in
recent months and reduce some ofhis flexibility in terms of
marketing those cattle.
The other part of the issue interms of the value of those fed
(07:50):
cattle, if one looks at uh ournext chart, which is the decline
in overall uh beef prices, uh wedid see a really sharp run-up in
the overall blended cutout.
That's the weighted average ofchoice and select cutout values
from around 360 at the beginningof August to something over$400
(08:17):
at the end of August and veryearly September.
At the beginning of September,from that record high level,
we've seen the blended cutoutdrop now by almost$40.
So, as far as the Packersconcerned, uh the value of that
animal out there is obviouslyworth less to him than it was 30
(08:41):
days ago.
So we got big numbers, we gotheavy weights, and we got a
declining uh beef market, all ofwhich likely translates into
some continued weakness here inthe near term as far as Fed
cattle prices are concerned.
One other thing from ageographic standpoint, and our
(09:04):
last chart here this afternoonis the price spread between
cattle on feed in or Fed cattleprices in Nebraska versus
Kansas.
At the beginning of July, wewere looking at price levels in
Nebraska, a$10 premium to whatthey were in the Southern
(09:28):
Plains.
By the time we moved to the endof September, price levels in
Nebraska had moved to about a$4discount to the Southern Plains.
Now that's we've been herebefore, but that's a relatively
wide discount, and it reflectsFed cattle availability.
(09:51):
We have record numbers on freeon feed in Nebraska and Iowa,
and historically small numberson feed in Texas, and that's the
key factor behind that that wideprice spread.
SPEAKER_01 (10:06):
Incredible.
I'm gonna ask you a couple sillyquestions, and maybe they're not
silly to people listening to thepodcast.
I'm gonna get rid of thesecharts and just put you up real
quick, folks.
We're we we're meeting with Mr.
Mike Sands, MBS Research.
Mike, I this is such a sillyquestion.
I hear you guys talk about it alittle bit on the morning call.
What's happening to all thesecattle in Mexico?
(10:28):
So they used to come over theborder and then we would take it
from there.
They're not coming over theborder.
Do they have the the processingability to uh take that fat
animal and uh package it up andturn it into ground beef, etc.,
and steaks?
SPEAKER_00 (10:43):
Is that a silly question?
No, it's not a silly question.
SPEAKER_01 (10:46):
And well, then I'm gonna keep going until I ask
Paloozy.
SPEAKER_00 (10:52):
Well, from an overall standpoint, over the
last couple of years, we'vebrought in um somewhere around a
million two feeder cattle eachof the last two years.
And as alluded to earlier,numbers this year are down well
over 900,000 since the borderinitially closed in in late
November of last year.
So obviously, those cattle arestill in Mexico.
(11:14):
Now, total supplies down there,since they've been under drought
conditions over the last two orthree years as well, total
supplies might not have been asbig to begin with as they were
the last couple of years.
But the bottom line is they areeither on grass still in or in a
(11:35):
backgrounding program in Mexico,or they have put been put into a
feed yard in Mexico per se.
So the end result is maybe tosome extent, the we are
developing a fed beef productioncompetitor, if you will, in
(11:57):
Mexico over time because of theborder closure.
They're going to, in alllikelihood, develop their
feeding expertise on prettyconsistent with with how we feed
and produce fed cattle in theU.S.
SPEAKER_01 (12:15):
And the longer this goes on, the more we're giving
Mexico the chance.
So we could look back five orten years from now and say, boy,
Mexico's really good at uhraising animals and then
processing them and thenexporting them.
You'd be like, Yeah, you knowwho forced them to do that?
Us, correct?
SPEAKER_00 (12:30):
I think that's exactly right.
It may be a long time before webring in a million two feeder
cattle from Mexico again for acouple of reasons.
They've probably downsized theirindustry just a little bit, but
in addition to that, we're theyare being forced, if you will,
(12:52):
to figure out how to how to feedcattle, feed them efficiently,
and and produce and export beefto the U.S.
Okay.
SPEAKER_01 (13:02):
What uh what what should be a question that people
should be asking, whether it bea consumer or a trader, what
what's something on your mindthat's so obvious to you that
people aren't asking?
Is it does that make sense?
SPEAKER_00 (13:14):
Well, I I think there are some concerns within
the industry that since beefprices are at record high
levels, that that may very wellhave some impact on consumers'
willingness to purchase beef,whether it happens to be in a
restaurant or or in a retailstore.
(13:35):
And of course, that that is aconcern longer term in the sense
that beef prices are highrelative to pork and chicken,
and as a result, couldnegatively impact overall demand
for beef.
But at least at this point,recognizing full well that price
levels are record high, ourproduction is pretty small as
(13:59):
well.
And it's not apparent yet atthis point that there's been any
big negative impacts on beefdemand.
SPEAKER_01 (14:09):
So we're just the consumer is comfortable.
What would you I Google itsometimes before I talk about
beef, but I'm gonna go withthat.
The average price of ground beefin America is$6 a pound.
You probably know that off yourhead, but it it it's about that
$585,$6.
And the consumer's justcomfortable doing that.
Recently, you said somethingthis morning on the morning
call, and I do listen.
You're gonna be like, you'realways talking, you're not
(14:30):
listening.
Did you say open interest ishigher in hogs and cattle, and
we don't normally stay that wayfor long?
SPEAKER_00 (14:36):
Yeah.
Last, of course, we got a verybullish, if you will, hogs and
pigs report week or so ago.
I think a week ago, Thursday.
The end result is we've gotfewer hogs out there than what
the trade was looking for.
Uh, and as a result, there'sbeen some pretty significant
increases in in overall hogprices, obviously, some pretty
(15:01):
strong buying interest as far asfutures are concerned.
And we end up with something onthe order of 376, 377,000 open
interest in hogs, which isslightly bigger than cattle.
Um typically does not comparethat way.
Uh, and when it does, doesn'tvery often stay that way.
SPEAKER_01 (15:25):
We'll see what that all means.
Okay, everyone, we're meetingwith uh Mr.
Mike Sands, MBS Research.
Probably the busiest he's everbeen, although he always stays
busy.
It's not like he ever tries touh take much time off.
But your uh this show is calledFat Tuesday.
We're doing it on a Wednesday.
Yesterday was the end of themonth.
Today is the first day ofOctober.
(15:46):
It's the first day of thebeginning of the quarter.
I do have one last thing thatshould make you giggle.
This video allegedly ourgovernment shut down, and this
is a picture of what it lookslike.
And I want to hear your opinionon what this does, Mark.
(16:08):
They shut the shut the money offlike a parent calling a college
kid and cutting off the creditcard.
What's going on with the uhgovernment shutting down?
I do know it uh it does affectuh GDP and stuff like that,
Mike.
SPEAKER_00 (16:22):
Yeah, I think from an overall standpoint, uh at
least uh the CongressionalBudget Office in terms of their
assessment of the shutdown backin 2013.
We were shut down for severaldays, if not weeks, that it had
a negative impact on GDP.
It took about a half a point offof domestic growth at that at
(16:45):
that point.
Um I'm not I obviously I don'tknow how long it's going to be
closed.
The longer it's closed, thebigger the impact, obviously.
Um, but at least at thisjuncture, uh it's it's not
positive as far as economicgrowth is concerned.
Yeah, it's interesting.
SPEAKER_01 (17:03):
All right, we'll do this again next week.
We also were proud to announcewe have premium content
available.
Folks who like videos like this,they could subscribe for$25 a
month,$250 annually, and they'llbe getting videos that uh the
general public can't get.
This will be one of those videosthat's made exclusively for
NASVIC clients and friends ofAgBull Media, AgBull Trading.
(17:25):
And with that, tell all the goodfolks down there in Memphis.
I said hi.
I I feel better now aboutspilling my drink before we were
actually recording.
This is the second time we didthis, and apparently I'm not
alone there.
We have the government closed,we have open interest high, the
cash prices in in cattle arecoming down when we uh see those
afternoon reports, yet thefeeder market's still rocketing
(17:49):
higher.
With that, God only knows whereprices will be when we do this
again next week, correct?
SPEAKER_00 (17:56):
Uh no question about that.
Lower feed costs coming out ofuh yesterday's stocks report
probably doesn't discouragepeople from paying up for feeder
cattle either, along with thetight supplies of feeders.
SPEAKER_01 (18:09):
Yeah, and even though I thought we're ending
the show, I want to talk aboutthat because when I was in
Kansas with you in Dodge City,I've never seen it that green.
Not that I've spent that much inKansas time in Kansas, but I
know that a lot of time theyhave to buy feed because it's
you know it gets dry out there.
And then that folks, what thatwe got are talking about here is
the cattle aren't coming in fromMexico.
(18:29):
There's lots of green grasseverywhere, not everywhere, but
there's a lot of green grass,and we have plenty of corn, and
that's that magic number thatthe government likes to slide
back and forth, that feed andresidual number, right, Mike?
SPEAKER_00 (18:42):
Yeah, absolutely.
Overall feed disappearance lastyear, based on that stocks
report, was overall feed usagewas not as large.
And I think in terms of theiroverall estimates, they gave us
a little bit bigger productionnumber as well.
So uh if you just carry thosenumbers forward, it it means
that the total available supplyof corn this year uh is is going
(19:06):
to be up a couple hundredmillion bushel more than what
the trade had anticipated.
And of course, we had big wheatcrops and and we have a big
grain sorghum crop out there aswell.
So feed is abundant and it'sit's relatively cheap.
Not not good, of course, if ifyou're a seller of those
commodities, but from a buyer'sperspective, um, this is the
(19:28):
cheapest feed has been for quitesome time.
Yeah, it's very challenging.
SPEAKER_01 (19:32):
Folks, if you're watching and you're out there
combining, we wish you a safeharvest.
I know I've received three, fourtexts here just while we're
recording this of people sellingsome grain off the uh combine
and wanting to replace it withthat.
Mr.
Mike Sands coming to you fromMemphis, Tennessee at the uh
Memphis office at Nesvik.
I can't I can't speak.
Mike Sands, Memphis, Tennessee,Nesvik trading.
(19:54):
That's a lot of a lot of stuffthere.
Tommy Grossoffi, I'm inValparaiso Indiana today.
I'm heading down to Nashvilletoday uh to see the good folks
at Nesvik.
This has been your Fat Tuesdayepisode.
We got through it on two takes.
Mr.
Mike Sands, thank you so much.
We'll do it again and uh see younext week, my friend.
SPEAKER_00 (20:12):
Looking forward to it, Tommy.
Popular Podcasts
Spooky Podcasts from iHeartRadio
Whether you’re a scaredy-cat or a brave bat, this collection of episodes from iHeartPodcasts will put you in the Halloween spirit. Binge stories, frights, and more that may keep you up at night!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.