Pasture to Pen – August 1, 2023

00:00:00:21 – 00:00:09:14
VOICEOVER
Future trading involves risk and it’s not suitable for all. Investor contact provided in the strike is meant for educational purposes and is not a solicitation to buy or sell commodities.

00:00:09:17 – 00:00:31:11
MT
Hello and happy August. Welcome once again to pasture to pen a new series from the Ever Insights team. Each week we bring you news and updates on the cattle markets with the intention of helping cattle producers manage their risk. I am your host, Michael Todd Rowen, and coming to you live from my home office in the Texas Panhandle. Before we get rolling, let me timestamp this episode.

00:00:31:14 – 00:00:53:15
MT
Today is Tuesday, August 1st, 2023 305 in the afternoon. Today I am joined once again by my co-host, Intimate, Mr. Trey Freeman. On this episode, Trey and I will be welcoming our teammates on the cattle team and Montana’s very own Mr. Dan Johnson. Trey, Dan, welcome to the show.

00:00:53:20 – 00:00:54:25
TREY
Good to be here again, MT.

00:00:54:26 – 00:00:57:01
DAN
Thanks for having me again MT appreciate being here.

00:00:57:07 – 00:01:28:11
MT
Happy to have you all looking at pasture conditions and weather, we have 39% of the US pasture in good to great conditions and improvement from 25% this time last year. 32% of the US is in fair condition, up from 26% last year. 29% of the US is in poor to very poor condition, down from 49% last year. So improvements across the board regionally west of the Rockies is the best since 2019.

00:01:28:14 – 00:01:50:24
MT
From Arizona all the way up to Washington. The same can be said for the Northern Plains, with the lowest rating of poor to very poor in the past four years. The Central and Southern Plains are hot and dry, with pasture conditions slipping recently due to extreme heat and restraints weatherwise. While it is also hot in the Corn Belt, the Eastern corn belt is seeing moisture.

00:01:51:00 – 00:02:10:15
MT
While the western corn belt could use another shot of rain. As we look at the seven day forecast, it appears that the western corn belt may just get some rain with showers expected from Kansas all the way to North dakota and then over to Montana. Switching to the cash market feeder in calf and then in the silver appears to be good, even though volumes remain light.

00:02:10:15 – 00:02:39:03
MT
As we work our way through summer our feeder store, prices are holding steady with improved pasture conditions. Heifer prices are continuing their trend higher as certain regions of the US contemplate rebuilding their herds. The CME feeder cattle index ended last week at 2.4386 for the seven day average, jumping almost $1 on Friday, July 28. On the right cash cattle side prices are trading sideways but remain 178 to 188.

00:02:39:08 – 00:03:04:09
MT
With trade continuing above futures, especially in the north cut out, prices have been trending lower, taking Packer margins all the way down to -$81 ahead. However, per this morning’s cut out release choice jump 628 to 30806 triggered this jump in the cut out be the spark that caused the pricing action we saw in futures midmorning.

00:03:04:12 – 00:03:25:18
TREY
Yeah, the jump in box beef prices was just what this market needed to get out of its sideways rut. Excellent closes today in the cattle complex live cattle finished a 1.50 to 2.30 higher and feeders to 2 to 2.80 higher along with the sizable jump in the and beef cut out values. The continued bleeding in corn and wheat futures also went their support.

00:03:25:21 – 00:03:54:05
TREY
Great action technically in feeder after sideways trade. Since early July, charts have been coiling up and building pressure off and indicating a breakout for one side or the other feeders prevailed Once again, however, So I’d expect the momentum to carry this higher into the rest of the week. Next level of resistance and September feeders is the contract high of 2.5432 and support at 250 October fast closed just a couple of ticks over former resistance finishing at 1.8182.

00:03:54:05 – 00:04:18:24
TREY
The next level of resistance stands at 1.8372 and support at 1.7950. Looking at outside markets, energies continue their climb higher with crude $15 off the low posted in late June and currently trading around the $81 mark with gasoline and diesel futures following suit. Equities also continue their grind higher. These will be supported commodities across the board.

00:04:18:29 – 00:04:45:10
TREY
Now overall strong action in the cattle complex with support from what may be the bottoming box. Beef prices in cheaper feed costs. Now on the topic of beef prices, I saw an article the other day that the average interest rate on US credit card balances has moved up to 20.7% most day data going back to 1994. That’s the highest rate we have seen and that’s historic interest on top of historic balances.

00:04:45:10 – 00:04:51:20
TREY
So remember, high prices, cure high prices. So be sure to keep this in mind as you navigate your risk management decisions.

00:04:51:26 – 00:05:09:00
MT
Definitely. Thank you very much, Trey. Now to reintroduce our guest, the Montana man himself, Mr. Dan Johnson. Dan, Montana is one of the states that has seen big pasture condition and rainfall improvements. Why don’t you give us an update from out west?

00:05:09:02 – 00:05:30:25
DAN
Yeah, absolutely. Thanks again for having me. So, you know, things have changed a lot. We were in drought, too. Really bad. There was about a three year stretch of that, depending where you were at. Conditions really changed. Cow herds got a lot smaller. We saw that throughout those cow inventory reports. So a lot smaller number of herds out here or at least smaller number of head per herd.

00:05:30:27 – 00:05:50:19
DAN
So we went through a big winter this last winter, especially in my part of the world. Tons of hay was fed. Going back to what Trey was saying about interest rates. A lot of people talk about having a lot of money on their operating loans. But now we’re kind of getting to the point where we’re seeing these video sales and these northern cattle doing really well.

00:05:50:25 – 00:06:10:15
DAN
Great to see that. But also, the producers want to remind us all that, you know, it’s been expensive. It’s taken a lot to get here, getting through drought and winter, all of those things. But, you know, back to your point of the conditions have changed a lot. I don’t know if I can quite say we’re rebuilding the herd out here.

00:06:10:17 – 00:06:21:27
DAN
But, you know, I think that’s heavily on people’s mind. They’re trying to way out, how can I buy cows? What are they worth or breed heifers worth? Should I be selling bred heifers instead? That kind of thing.

00:06:22:03 – 00:06:44:15
MT
Thank you very much, Dan. That was an excellent update. Before we close, let me introduce a new segment that we are going to call a coffee shop chat. So let’s go around the horn. Let’s talk about the biggest talker, the biggest questions in each of our locations, in each of our areas about what producers are talking about Dan if you don’t mind.

00:06:44:19 – 00:06:45:21
MT
Please lead us off.

00:06:45:24 – 00:07:09:14
DAN
So, hay, markets are a huge thing to talk about right now. When we look at the Montana Hay Report from USDA last year at this time, Hay was reported to them at $260 a ton, large square bales. Now we’re at 225, a ton, down about 13%. Also, in my opinion, I think that it might go down more or not quite to the second cutting of most of Montana.

00:07:09:17 – 00:07:27:26
DAN
So that really is what determines the price. We find out what our supplies are and how it really hasn’t been traded yet. It really takes some time for people to start planning for winter, planning for things like horse feed. We don’t think about that enough probably, or talk about it enough. So definitely people are really wondering where that’s at.

00:07:28:03 – 00:07:46:14
DAN
The fertilizer price dropped a little bit. And then just a personal opinion as you talk to people or as I talk to people and see what kind of hay is being made, it looks like really good bale counts to be the devil’s advocate a little bit. I heard some talk about weevils hurting some hay in Idaho, and then there was also a lot of winter kill

00:07:46:15 – 00:08:15:00
DAN
with the bad winter we had. I’d also add that, you know, the price of a mother cow is really it’s almost debated right now. Same thing as with the hay market. There hasn’t been a lot of trade yet. We’ll probably see more of that in the fall. Sale barns don’t have a ton of bread. Cows specials at the time, but as we go forward, we’ll start to see those bread efforts get marketed, see what they’re worth, see how this interest rate and corn price, hay price, all of it factors in and where where things are going to be at.

00:08:15:07 – 00:08:20:07
MT
Definitely very good. Thank you. Dan, Trey, how about western Oklahoma?

00:08:20:10 – 00:08:44:14
TREY
So yeah, around here it’d be the purchase price on these upcoming rounds of cattle. What are these next turns? What are they going to cost? Where are the margins going to be? Are we going to be betting on the come? There was a lot of opportunity last year, earlier this year with the deferred board so high. And now, you know, these these margins are really being crunched with with some of these calf prices that may only be going higher.

00:08:44:16 – 00:09:07:07
MT
Sure thing. As far as the Texas panhandle, south of Amarillo, specifically, how long are these deferred life cattle contracts? How how long are they going to stay this high and how high could they possibly go? Cash is very good. I agree. It is very good. So it’s it’s just nice nice for the street yards around here to see.

00:09:07:09 – 00:09:32:02
MT
We’ve got a decent amount of grass. We got some very good rains in May and June. Guys were planting dry Milo that probably wouldn’t have risked it this time of year ago or two years ago. So feed it seems like it’s going to be available. Guys are waiting just to see how available it’s going to be before they pull the trigger on these input prices.

00:09:32:04 – 00:09:52:26
MT
So little sellers are saying just kind of wait and see what what the fall brings. That is a wrap for this episode of Pastor to Pen. Thank you to all of our viewers for watching this episode. If you haven’t done it yet at the Like button at the subscribe button and click the bell to be notified of future episodes.

00:09:52:28 – 00:10:26:06
MT
Thank you again to my co-host and teammate Trey. Thank you to Dan for joining us on this episode. As always, a big thank you to Paige, Korri and Hattie. Big thank you to the entire Insights team for making this show a reality. Until next time, stay safe. Pray for rain at Ever.AG We partner with every corner of the agriculture industry, from livestock to dairy crops and agribusiness to deliver intelligent supply chain and risk management solutions.

00:10:26:09 – 00:10:34:15
MT
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