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What does it mean to sell cattle "on the grid"? How do margin calls work in cattle feeding? This episode is for YOU! Ty deCordova and Casey Mabry are answering listener-submitted questions in a rapid-fire FAQ format.
They kick things off discussing current cattle market conditions and their optimistic outlook on futures, then dive into your most-asked questions: How are live, feeder, and fat cattle priced differently? What drives feeder calf prices? How do video auctions compare to local sale barns? They break down breakevens, explain if they think packers pay premiums for certain breeds, discuss how exports impact U.S. cattle prices, and give you the real talk cattlemen and ranchers need.
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Creators and Guests
Host
Ty deCordova
Ty DeCordova is a seasoned professional with more than 25 years of experience in cattle marketing. He spent 20 years at Superior Livestock Auction, including his final years managing the Country Page as well as the block during video auctions. This allowed Ty to develop a deep understanding of the cattle industry's operations and build relationships with cattle buyers on a national level. Ty now oversees all operational aspects of the business, ensuring efficiency and excellence across all areas. Ty comes from a family with a long-standing history in the cattle industry. Growing up in Groesbeck, Texas, he and his brother started their own cattle business during their teenage years, purchasing and selling loads of steers. By the age of 17, Ty was actively involved in buying cattle at sale barns for his father, gaining hands-on experience. This early exposure to the sale-barn environment shaped his lifelong passion and expertise in cattle marketing. Ty continues to run cattle today and is committed to serving the agriculture industry.
Guest
Casey Mabry
Casey comes to Blue Reef following over a decade-long career with Cargill. Casey’s career in the industry started as a cattle buyer in Western Nebraska and Wyoming for six years. Casey then moved to Wichita, KS where he worked in boxed beef pricing with a focus on understanding out front prices and position optimization. Casey then took to cattle procurement as a Strategic Supply Manager where he focused on cattle formula and grid marketing arrangements working with Cargill’s largest suppliers. Casey’s experience in cash and value based marketing of cattle can be a valuable asset to your operation. He has a Bachelor’s Degree from Texas Tech University where he served on the Meats Judging team, and a Masters from Tarleton State University where he coached the Meats Judging team. Casey resides in Brock, TX with his wife Deidrea and daughters Reyse, Avery, and Brooklyn.
Producer
Katy Holdener
Katy Holdener's journey in agricultural communications began on her family's row crop farm in California's Central Valley, where she developed a deep appreciation for the industry. After earning a degree in Agricultural Communications and Economics from Oklahoma State University, Katy has been fortunate to work with respected organizations such as the American Hereford Association, American Angus Association, Superior Livestock Auction and BioZyme, Inc. These experiences have provided her with valuable insights into seedstock and commercial livestock marketing. Katy strives to create effective marketing strategies that support the company and its consignors.
What is We Live It | LiveAg's Livestock Marketing Podcast?
Welcome to the "We Live It" ranch and livestock marketing podcast, where cattle market intelligence meets ranch-ready wisdom. Join hosts Ty deCordova with LiveAg and Casey Mabry with Blue Reef Agri-marketing as they bring you straight-talk market analysis, proven strategies, and insights from industry leaders who understand ranching isn't just a business - it's a way of life.
From livestock market trends to cattle management practices, each episode delivers actionable knowledge to help take your ranching operation to the next level. Whether you're in the saddle or in the truck, tune in for conversations that matter to modern cattlemen. Because we don't just talk about the cattle business...we live it.
We'll go try to buy these cattle off out of the barns or out of the videos or whatever we're doing. You're you're dang sure whooping on your calculator and while they're selling, you're like, that ain't gonna work. Scratching your head all the time. You're like doing that. Let's add that again.
Speaker 1:No. Maybe we can we can cut this cost here, cut this cost there, but
Speaker 2:On you go and hedge one contract to live cattle, which is, you know, 40,000 pounds in live cattle and 50,000 pounds in feeder cattle.
Speaker 1:Nine times out of 10, the northern guys are getting more of the premium. So if you're up there and your your cattle are sitting 10 miles in a feed yard, I mean, it's they're gonna bring more money.
Speaker 3:That's a head on. We live it. The live ag podcast. Quality cattle deserve premium prices. Consign to a live ag video auction and capitalize on today's strong market demand.
Speaker 3:Our upcoming auctions are on your screen and available online at live-ag.com. Contact your local rep to get started. Now here are your hosts, Ty De Cordova and Casey Mabry.
Speaker 2:Welcome back to the We Live It podcast. You've got Ty De Cordova and myself, Casey Mabry. We're just gonna talk through some things here. It's just Ty and I here today. We wanna talk about just kinda current events, what's going on in the market.
Speaker 1:And then some people send in these questions. We kinda go through these questions and answer them to the best of your ability.
Speaker 2:Yeah. If your question's not on here, we struck it off. Exactly. Because it may be too hard for us to answer. Exactly.
Speaker 2:So we'll just kinda start off right here, Ty, talking about the market. I mean, what have you been seeing from a
Speaker 1:feeder cattle standpoint? This thing's been pretty wild. I mean, there's been some ups and downs and you sell one one day and you think he's too cheap, you sell another one the next day and the next day you think he's too high. You know, it's just been pretty volatile here the last couple of weeks, but we're in another little uptrend it feels like. The demand is out there.
Speaker 1:I mean, that's that's one thing that hasn't lacked yet is the demand for some. So I think the number of shortage is really starting to show up. The cow calf numbers are really starting to show now and I think we'll see that even more prevalent here in the near future. So, and, you know, we're starting to see some heifer retention a little bit, but not as much as you'd think. You can see the cell numbers go back to some percentages of how many heifers are selling and how many heifers have the steer heifer ratio.
Speaker 1:That's And kind of where we can tell the heifer retention is not quite there yet. You're starting to see some guys buy some to breed some. You can tell that by the price normally. Yep. You you see one heifer set bring $10 $15 more than the last one, then you kind of can tell that more than like 90% of the time she's gonna go back to get bred.
Speaker 1:Start seeing some of them guys buying some of them better in heifers to breed. So as far as this market and the feeder cattle market, it's it's And these cows have
Speaker 2:been crazy, guys. Oh, the
Speaker 1:cows are wild. I mean, this cow cow deal, when you can run across the good deal, I mean, a good set of young cows, if you can find them, you better get ready to pay for them because that that stock of cow market has has kinda come on up and followed this feeder cattle deal.
Speaker 2:Yeah. There's lots of I mean, that's the thing I've talked about a lot where in the in the physical sale barn side of things on the cow cow deal, there's a lot of empty trailers showing up. Mhmm. Somebody's wanting to take one home, and so it's almost turned into somewhat of a little bit of four h auction, if you will. You know, those things are bringing so much money.
Speaker 1:But Yeah.
Speaker 2:Fed cattle wise, I mean, this thing's been very volatile. You know, we put our peak in here probably about five or six weeks ago where we had a northern market, you know, pushing the mid two forties. We've seen that setback some. I think a lot of what's going on is we got to the early part of the summer, and we had a fed cattle placed against supply. What that so that would be what everybody thought the numbers were gonna be of about 480, 490,000 head every week is what we thought the the numbers of cattle were gonna be there.
Speaker 2:Cheap grain and incentive to carry cattle got the the guys in the North particularly to push those cattle out to September and October is what it appears like. So when we got into the first part of the summer, we saw the packer kill pull kills for the first time. And he pulled the kills from a 480,000 head, steering heifer slaughter each and every week, down to about a four thirty five, four forty, and upwards of around four fifty. And that shot the beef prices way higher because it was kind of a short squeeze, got everybody caught off guard from a meat buying standpoint. And then we took that cutout from about, you know, $3.30, $3.40, and we took it up to $4.04 $0.08, $4.10, something like that.
Speaker 2:I mean, it was crazy on what those beef prices around do. I mean, one item to as an example, been a chuck roll. That chuck roll usually in the summertime struggles because it's a it's a roast item, and that item went from, you know, where it was trading at $4.04 50, and it went up to, you know, over $7.50. And so that that one item is, you know, that just that one item is the largest single item on the carcass, and so that attributed to a lot of the gain there. So we saw people get caught short.
Speaker 2:We got to the middle part of the summer, and I think some of those retail prices or the those wholesale prices start to hit to the retailer, and then they started raising prices up. I mean, the wild part is you're in you're looking at every news article today is talking about how much beef prices are.
Speaker 1:Yeah. But let's let's touch on that a little bit. Yeah. They've a little higher, but have you pressed milk lately? Oh, it's alright.
Speaker 1:Have you pressed eggs? Oh, yeah. For what we're getting for beef is is when you go to pricing and look at all that for what it's bringing
Speaker 2:For a Starbucks pink drink?
Speaker 1:Yeah. A Starbucks pink drink. Exactly. I I could shake my daughter sometimes. Every time I turn around, she walks in with a Starbucks cup.
Speaker 1:I'm like, good lord. I mean, but relevant to everything else, beef's still the best and cheapest set of sorts of protein that you So can get all these people out here talking about how high it is and how much more higher it's getting and, you know, I'm not gonna fall into that nonsense. Yes. Cattle are getting higher. There's no doubt.
Speaker 1:And and the feeder cattle and the fat cattle are getting higher. But the beef, as far as beef in in the stores is in my opinion, is the cheapest, best protein you can buy to
Speaker 2:this It's day cheaper on a per pound basis than potato
Speaker 1:All chips. Day long. Don't I mean, all this stuff out there, them guys saying all that, don't don't get me started on all that. That that kinda gets under my craw when they talk about how high beef is. Well, guys, you're going there and buying that for a gallon of milk.
Speaker 1:Now we're just not getting now the beef producer's just now getting to where they are getting what it's worth. So No. I totally agree. I just
Speaker 2:think they put a spotlight on it. And then what that does if the if the media is saying, hey. This is high. I think it concerns people and they start to back off and they move they move to an alternative protein. Right?
Speaker 2:I mean, we've seen that. They won't stick around. They won't they won't go to an alternative protein very long because they're always gonna circle back to beef. I mean, because they're gonna get a much better eating experience, you know, than I mean, I know at our house, my wife, we won't we don't like chicken on the menu very often. You know?
Speaker 2:I guess unless it's a fast food restaurant, my kids like the Lord's chicken. They're at Chick fil A for sure. You know? Yeah. But outside of that, yeah, I think that what we've seen here is we saw the the market set back a little bit from a cutout standpoint.
Speaker 2:So we've taken about 40 or $50 off of that cutout here pretty rapidly. And so, like, right here where we sit today, packer was probably coming in with a little bit heavier inventory of meat. Looks like that's cleaned up. That secondary market stepping in there and buying that meat. We stopped the cutout from going lower here at least for a minute.
Speaker 2:Seasonally, from here forward, we should march this thing higher from a cash market standpoint. But, you know, we didn't really see a seasonal break. We saw the market rally going into that, so it's hard to tell there. So we remain with a lot of uncertainty in this market for sure. We took our summer highs, and we've kinda broke a little bit.
Speaker 2:But if you look in the deferred contracts where we're at right now, feeder cattle are in new all time highs. Fed cattle are in the deferreds, probably on a closing basis into new all time highs. And so whatever little speed bump we had there over the last three or four weeks has recovered quite nicely. Cash market in the North stays still with a little bit of a a lag to it. I think there's some pockets where cattle are big.
Speaker 2:You're hearing stories of 1,800, 1,900 pound cattle that need to move. And, again, I think that goes back to guys had bought these cattle in the you know, to hit July, and they carried them September, October because the cost of gain relative to the market price was so cheap. And it was easier to hold on to those cattle than sell them and go buy another set of cattle. Right? So they just kept rolling them back.
Speaker 2:So I think once we get through that time period or the, you know, getting through this, I think it's gonna be easier to get cattle moved. Like last week, the market's trading in the North, and I think there's about a week delay on this podcast. But cattle are trading in the North at, you know, 02:28 to 02:30. Southern markets 02:20 $2.32 to $2.33. So now we're seeing a Southern premium.
Speaker 2:And, I think that has a lot to do with when you look at the USDA data on the cattle on feed report, it's showing placements are much lower in the South. Again, a big portion of that is the Mexican border being closed and those, you know, eight or 900,000 cattle up until this point that should have come over here and been on feed. They're not here. And then the other part is we've had cheap grains and a big premium in the North, so there's lots of incentive to move cattle. You know, whether they're out of the East or the West, they can go south or they can go north.
Speaker 2:Those cattle have been hitting the northern feed yards. And so we got a really big difference between capacity or not capacity, occupancy rates in the South where feed yards are kinda showing up to where they've got a lot of empty pens versus the North where they're starting to, you know, show quite a few, or or most of the pins are full up there. So Yeah. Again, I feel good about the market. Again, I I've said this each and every time.
Speaker 2:This market's very confusing. The market's exceeded most people's expectations for sure mine each and every week, and I know there's somebody out there that says this thing's gonna go way higher, and they've been right for sure. But, again, I think as far as the supply and demand fundamentals, specifically around The US cattle industry, things still feel really good. Yeah. Numbers are tight.
Speaker 2:Demand is good. And there's nothing that I that I can see that really puts a whole lot of pressure on this thing outside of, some black swan event.
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Speaker 1:Yeah. Well, that's not that's out of our control. Yeah. Absolutely. Let's kinda get into some of these questions.
Speaker 1:What does it mean to sell cattle on the grid?
Speaker 2:Okay. So selling cattle on the grid, this this question is really around fed cattle. Yep. Cattle have been on the feed yard fed for a certain period of time. So there's basically two, let's just say two ways to sell cattle in a feed yard.
Speaker 2:Well, whether you're gonna sell them on a live weight basis or dressed. So that'd be just only based on live weight would be on live pounds. Dressed weight would be on a carcass basis. And so then yield goes into play and account for that. On the grid, what that means is all the packers offer a value based grid, and that is to incentivize producers to make better animals and feed them longer and, you know, get them right.
Speaker 2:And so there's a parameter, and so, like, the first thing would be addressing percentage is what it's defined as by the academics. And then in in the industry terms, we call that yield. And so that would be the percentage of the live weight that we hang on the rail as a carcass. And so most of your grids, to get to a dressed weight basis, they take the live cattle market average, and then they take a standard yield. So let's say that's sixty three six or some sixty three five.
Speaker 2:So you take the live market divided by the percentage point six three five, and that would get us a dressed carcass weight basis. That would be the first calculation in that grid. And then the reason why it's use the word grid is you think about it as like a matrix or a grid. So for every, you know, quality grade, so prime, choice, CAB, select, each one of those are gonna have a assigned value. Primes are gonna be premiums.
Speaker 2:And so let's say the average prime premium today is probably $20 a hundredweight. The CAB premiums are probably running between 4 and 6. Let's call it $5 a hundredweight. Those are both premiums. Choice would be par, and then selects would be a discount, basically where the choice select spread is on the USDA.
Speaker 2:And then you're gonna have that would be all the quality attributes of it. The yield grade component of it would be a cutability metric. And so how much fat versus red meat you're gonna have there. So those are in USDA yield grades. They're really assigned by vision grades at the at the camera, at the packer level.
Speaker 2:And so those are those are a numerical number between one and five. So USDA yield grade ones and twos are gonna give you a premium. Threes are gonna be par. Fours and fives are gonna give you a discount. So each carcass goes in there and has to stand on its own.
Speaker 2:They're assigned premiums or discounts, so obviously cattle that have more primes and more CABs and yield higher and have better yield grades are gonna bring premiums. And then obviously the discounts are gonna hit that. You know, hard bombs, dark cutters, things like that.
Speaker 1:Really? Here's another one that I guess we kinda both can touch on. How are live feeder how are live cattle, feeder cattle, and fat cattle priced differently?
Speaker 2:So why don't you start off
Speaker 1:and talk about feeder cattle? Like, what drives value differences between feeder cattle? Several different things, several different aspects of them. The first of all, your weight or where they're located, the freight difference from the feed yard, where they're gonna go, genetics, type and kind, and predictability on what they'll do. So that's kind of where you start your figuring out kind of what you want to give for them.
Speaker 1:These commercial guys or private feeder guys will kind of look at that. Freight's a big one. And then kind like BreedType and then shrink. I mean, look at the shrink and then now they each got to bring us so much, this slide is a big issue nowadays. I mean, that's one of the biggest things we talk about with a lot of these buyers nowadays is that these slides need to be bigger and there needs to be some sort of a wait stop.
Speaker 1:So we're getting into that and kind of telling our producers more about the educating them more about the slides and then how these slides need to be bigger and these wait stops need to be tighter. But there's a lot of different variables on pricing a feeder cab. I mean, lot. Oh, yeah.
Speaker 2:That's a way more complex question
Speaker 1:than a
Speaker 2:fat cattle.
Speaker 1:Than a fat cattle deal. I mean, so, you know, you get you get into and I would say a biggest deal is the location. I mean, where where where you're gonna start at. I mean, you got a Nebraska for your cattle gerlin that's gonna bring a premium. You got a South Texas gerlin that's got a little bit more ear to it.
Speaker 1:I mean, they're gonna bring what they're supposed to down there, but there's gonna be discounted from a Nebraska black home raised yearling. I mean, it's just different aspects of the country and what different people are feeding them and where they're going with them. And they it ties right back to how they price their lockout. I mean, how they price their cattle out of the feed yacht. So if you got these northern yards up there, they're getting they're seeing the premium.
Speaker 1:They're not seeing them today. I guess those southern guys are cutting more of a premium today, but nine times out of 10, the northern guys are getting more of the premium. So if you're up there and your your cattle are sitting 10 miles from the feed yard, I mean, it's they're gonna bring more money. Absolutely.
Speaker 2:So fat cattle are priced, I mean, in that world. We talked about the grid a little bit. So, you know, whether you're selling them on the grid but fat cattle for the most part are all gonna bring the same price in the same region. Steers and heifers bring the same amount of money because we're not worried about gain at that point. Obviously, heifers bring a discount to steers in the feed yard because they don't I mean, as a as a as a stocker animal because they don't gain as much and obviously they're less efficient.
Speaker 2:So cost of gain goes into play on that. But cattle bring the most for the most part, fat cattle in different regions bring, you know, collectively the same price, and you start to kinda have some regional differences based on the, you know, how far they are from the plant and things like that.
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Speaker 2:Let's see. Here's a real complex question that somebody asked that I hate touching on, but we'll touch on it. How are margin calls in cattle feeding? I would tell you that. Do
Speaker 1:you wanna go into that subject today? I mean Yeah. So We can also skip that.
Speaker 2:Yeah. No. We'll talk about that for a minute. A margin call is in a brokerage account, if you're a hedger, a margin call is so whenever you put a contract on, you go and hedge one contract to live cattle, which is, you know, 40,000 pounds in live cattle and 50,000 pounds in feeder cattle, you're gonna have an initial margin. Today in live cattle, it's $3,000 a contract.
Speaker 2:So you have to put up $3,000 to have the minimum maintenance requirement on that or the initial margin on that contract. And then if the market goes up, which is gonna go against that short futures position, you have to margin that. So you're gonna send money into, you know, offset the the loss in your account to do that. So margin calls, a lot of people look at those as a bad thing because you're having to call your banker and wire money into that into that brokerage account. But, again, you gotta look at it from a business standpoint.
Speaker 2:And so people probably look at that. You know, the one of the biggest selling factors to these crop insurance agents that sell LRP is there's no margin calls. But, again, there's there's lots of things that that are gonna come into play on that. So, again, like I said, a margin call is you sell a futures contract. You have a minute you you have the the initial margin on that that you have to put up.
Speaker 2:Like I said, $3,000 per contract. If the market goes against that that position, which mean we'd be going higher, you'd be sending in money, and that would be a margin call.
Speaker 1:Lots of that going on lots of that going on here lately. So let's touch on this one. I get this question a lot, and I have a lot of guys that that wanna understand it that that sell quite a few feeder cattle. I still don't understand the basis price. What what's the difference between a basis and a cash price?
Speaker 2:So basis the definition of basis is cash minus futures. And so if you're somebody, whether you're talking about fed cattle or feeder cattle, there are people that trade, you know, a forward contract or a spot price, and that would be utilizing the the market to understand what that would be. So that would be just talking about a price on a per hundredweight basis for that. Basis traders are guys that are looking out and they're hedgers, theoretic or hedgers most of the time, and they're looking for a price that they can then attach to either where we're adding it to or subtracting it from the futures market to determine their price. And so some guys want basis.
Speaker 2:They want to be able to write a basis contract. And so that basis would be like in fed cattle terms, the basis for May is usually the highest basis month of the year. Futures market's usually under pressure because it's trying to anticipate the spring break, summer break in the market. So futures go lower, cash market stays flat, big positive basis. And so you'll see packer bids out there at four and five and six over for the May to that they can go out there and basis contract their cattle.
Speaker 2:You also see spot basis trades where somebody's you know, the market's two thirty three futures right now. You might see somebody in the South come out and go, hey. I'm hedged. The market's going up. The futures market's going up.
Speaker 2:They might trade those cattle on a basis, you know, one or two over the board or one or two back of the board. Where it matters is effectively how you calculate back to what your total revenue's gonna be. So probably works the same way in feeder cattle, I'm assuming.
Speaker 1:Yeah. It's the same way. I mean, it's just you you establish you establish a month where where you wanna where you wanna call the call the price and you're either plus or you're minus where the futures are that day. So it's it's pretty much the same. So what have we got now?
Speaker 2:We got one on here that says, what are breakevens and how do they calculate them? This is a pretty simple one. Right? So what is a breakeven? Breakeven is what is the cost of the cattle plus the cost of the gain to get to a end price, whether you're talking about cattle you're gonna kick out on wheat pasture.
Speaker 2:So what would be the price of the animal plus the freight plus all the all the things to get it there, interest cost, all that stuff, totaled up into a total dollars per head divided by what their projected outweight's gonna be. So that's projected breakeven. Happens as we weigh in the feed yard. You know? So we buy a set of cattle off of wheat.
Speaker 2:We send them to the feed yard. What's the yardage gonna cost us? What's the feed gonna cost us? What's that projected cost of gain gonna be? How many pounds do we think we're gonna get, you know, from that standpoint?
Speaker 2:And I'll tell you today, the feeder cattle are so high that they don't get to a breakeven probably. So it's probably important to make sure your calculators
Speaker 1:Calculators broke. Yeah. Yeah. The calculators broke on those deals. Yeah.
Speaker 1:We when we go to trying to buy these soccer cattle, we do figure a breakeven ever. I mean, when we go trying to buy these cattle off out of the barns or out of videos or whatever we're doing, you're you're danked, you're whooping on your calculator and while they're selling, you're like, that ain't gonna work.
Speaker 2:Scratching your
Speaker 1:head the whole time you're like, let's add that again. No. Maybe we could we could cut this cost here or cut this cost there. But I try to keep it
Speaker 2:a little do lately is just add weight to the outweight. That's Yeah.
Speaker 1:We'll make them weigh fifteen seventy five. That'll work. That's right. Or eighteen seventy five. Or eighteen seventy five.
Speaker 1:Yeah. Yeah. How do video slash online auctions compare to local sale barns? The biggest there's a couple different there's a couple different now there's a place for everything. Don't get me wrong.
Speaker 1:But on, like, load lots and and big strings of cattle, the the video market is is the only way to go in my opinion. And the reason behind that is the stress of the cattle, one for all, is you can ship them right off your place on a buyer's truck. So you don't have that shrink in that way up when you go to the sale barn. And it's a lot better handle on the cattle. There's less stress and for the next guy, it's it's if you're especially if you're selling calves off cows, less stress you can put on them animals is the better off you're going to be off at the next at the next stop.
Speaker 1:Straightening those cattle out, getting them on feed, the less stress is better. And and and market, I mean, putting those putting those cattle on video, you're not you're not regionalizing regionalizing yourself and keeping your market, your your buyer base right here closed, you're you're able to get a nation nationwide buyer base. And that's that's two of the biggest reasons I say video auctions are the best way on load lots of cattle for sure.
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Speaker 2:That makes total sense to me. One of the ones that we've got on here is why do packers sometimes pay more for certain breeds or crosses? So I'll touch on that one. I I don't think they pay more for certain breeds. I think it comes down to they're looking for animals.
Speaker 2:I was a packer buyer in the country, and you're looking for predictability. And the other thing is is there's certain breed associations, the Angus Association that's got certified Angus beef, that's been kind of the leader on that, and there's been lots of copycat programs after that. Mhmm. So it's really driven to where it's which cattle fit the most programs. And so if they fit the most programs, they have the most ability to get more premiums out of that.
Speaker 2:So ultimately, they chase those. And so but you'll still have some situations where there's reputation Charlez cross cattle or there's certain reputation Red Angus cattle that don't necessarily fit into that program at that packer, but those cattle might bring a premium because of predictability. You know? I remember very vividly, there was a set of cattle that I try to buy each and every year, and all the packers did Then they were Charley Red Angus crosses that were in Western Nebraska, and they would bring more than anything because we knew how good they would yield. We knew how good they would grade.
Speaker 2:And just because they weren't black hided, we knew that they weren't gonna fit into those programs. We're gonna get a lot of red meat out of those. And so, I mean, you probably can get in there and I I'm probably gonna say this and it's not gonna be a super popular opinion. But if you get real humpy Brahmin cattle, there's some packers that don't want those. And so you'll probably see the ones that don't want those not bid on them.
Speaker 2:And so those might bring a discount because they've got less bidders on those. But, again, they they fit from a breeding and run that standpoint in in certain production systems. And so I don't think I mean, I'd say from a tendency standpoint, you start to see black hided cattle probably bring have more attention on them. And so from a packer standpoint and the reason why is a lot of those packer programs are kinda stemming off of the CAB brand, which a lot of those cattle can go into that, and then there's a waterfall from that. So if they're CAB, they can go into their packer owned programs, or they can they can be downgraded into multiple things.
Speaker 2:And so they've got lots of versatility to them from that standpoint.
Speaker 1:Now they did Angus Associates did a really good job when they pushed I mean, I just they did a heck of a job for their producers for the towel.
Speaker 2:Oh, I mean, what they did is they went in there and creamed out the upper two thirds of choice, they said, hey. This is better than the lower one third of choice, which they're right. They're gonna get a they're kinda stuck in between a prime and a low choice and said we're gonna pull those cattle out. It started in, like, 1978. But, again, I mean, the consumer had a good eating experience when they went and ate that versus something else.
Speaker 2:And so a lot of people, you'll hear them say, we can't eat the hot or it doesn't matter. Well, what does matter is they clearly defined what the the quality attributes of that cattle were gonna be Mhmm. And that meat. Consumer ate it. Consumer liked it.
Speaker 2:Consumer says, yes. Okay. Bring me more CAB. It's probably like what we're getting on with the Wagyu or Akashi or some of those other, you know, breeds that has kinda started to go into it because CAB did a great job. A lot of these Angus programs out there like, if you ate a select Angus, does it make it better than a regular select?
Speaker 2:The answer is no. Or at least I would say no. But, man, you're starting to see some of these other breed associations or breed segments, Wagyu, that are trying to, you know, really but a lot of those programs are driven off of what the marbling score is gonna be. Yeah. You know?
Speaker 2:And so then when you that predictability of what you're gonna eat.
Speaker 1:You're starting to see Red Angus and Charley guys and and then the the the crosses there that that are starting to really pick up and and take the slack up there and and do a very good job marketing their own too. So I don't wanna discount them guys done, but that that Angus started it a while back and they've done a really good job of it. But you're starting to see the Hereford Association do the same thing with everybody. So
Speaker 2:Yeah. And again, it goes back to just segmenting out what the quality of that's gonna be. I mean, certain breeds, I guess you can probably get into the dairy crosses. I mean, and and from a feeder cattle standpoint, I know my customers have really chased after mostly like the the Holstein cross Mhmm. Because they've known from a predictability standpoint, those animals do different.
Speaker 2:But it may not even be that that that they're better than a jersey or whatever. It's they bought them out of that they're out of that segment. They had success, and they're gonna go back to that pot again. You know? So then there's just more of them.
Speaker 2:And I think that's probably where you run into that from that degree. But everybody in the world, we could probably sit in a circle around a campfire and debate breed characters and which one's worth more money, and I guarantee you there's people that get real passionate about that. So I don't even wanna get in front of that bus. You know? Yeah.
Speaker 1:I mean, let's finish up here with one more. How do exports impact US cattle prices?
Speaker 2:Yeah. So this is a really good topic in my mind. So and that's global trade. I would tell you, and we can go back and look at whenever BSE hit, you know, in two thousand one or I'm probably off on that date there when we lost our export markets. And so market was running higher.
Speaker 2:Everything was great. We had a BSE. We lost our export markets. The cattle market dropped considerably. Why it's important for US for us to export a lot of meat is, generally speaking, us in The US, we like ground beef and we like steaks for the most part.
Speaker 2:And the and the steaks, you know, that's what we eat here in The US. When you go to a lot of export markets, and those are gonna be mostly like your Asian countries and things like that, we'll talk on that. If you're talking about the top side of the carcass, the rib, the strip, the tender, that's what we consume here in The US. That's what The US consumer watch. When we don't have export markets, the bottom side of the carcass, you start talking about navels, short plates, short ribs, flank steaks, those items end up going into the grinder.
Speaker 2:The grinder is the catchall. It has no it has no discretion on what that muscle was. We eat it as a hamburger. That's the cheapest item that we have on any kind of carcass. And so when when you export those mussels, you go to navels and short plates.
Speaker 2:That's in Korea and Japan, that's what they prefer. So we send those over there as a whole mussel, and those those guys really want that. We don't necessarily eat that here in The US. There's some pockets where you're getting into some areas where we've got more diverse population and cultures to where they're consuming The US, but not like your however many billions of people are living in China. Right?
Speaker 2:So when we're able to export that meat to China, when we're able to export that meat to other countries, we're taking it out of our grinder. If we're taking it out of our grinder, we're adding value to it. And then if we're adding value to it, then that sets back to a higher cutout value and price that's gonna go back into the the rancher ultimately. So I wanna make sure that we don't think we don't forget about imports too. What else?
Speaker 2:So imports, we import a lot of meat from Australia, Uruguay, not Brazil right now, but Brazil was, like, really importing a lot of meat into The US, or they were exporting meat into The US. And there's some guys out there that would probably say we do not need to import meat from other countries. The interesting thing is if we're not exporting those fat the bottom part of the carcass that I talked about, navel, short ribs, short plates, those items are about 50% fat. So if we keep those here in The US, they're worth about a buck and a half to $2 a pound. If we put them in a combo bin or we put them in a box and we send them over to Asia, they're worth quite a bit more.
Speaker 2:We produce an overabundance of grain in The US. We're great farmers. Right? So ultimately, we feed those that grain to the cattle and we make them fat. Making them fat produces a byproduct and that the animals here in The US are fatter.
Speaker 2:We need to import that lean material to be able to blend that fat and add value to it. That's mostly what comes on imports. Now you'll see some muscle cuts. Australia sends some muscles over here, but they really don't go to retail. So it's not like we're competing on rib eyes and strip loins and tenderloins and things like that.
Speaker 2:But we do import quite a bit of meat from Mexico. We import quite a bit of meat from Brazil, what been till there all the tariffs happened. And so the dynamics that we got today and just kinda go back on the market stuff, we've imposed tariffs on a lot of countries. They've started to really kinda disrupt our trade flow, whether it's imports or exports. I know China's changed a lot here recently.
Speaker 2:Obviously, you've seen them not buy any US soybeans. And so we wanna make sure that we continue to export our meat. If we start to, like, get restrictive on imports and tariffs and things like that, then it can really disrupt the global trade because that meat's gotta go somewhere. Like, the Brazilian meat's going somewhere. It's gone to China today.
Speaker 2:You know? So I think we gotta make sure that we've kinda balanced that out. I think a good balanced approach is something that's very, very important in all the segments. Yeah. Well, Kasey,
Speaker 1:once again, we appreciate it. It's always a good discussion with you, and thank you for partnering with us and doing this podcast. I mean, you and Blue Reef team, y'all been y'all been with us from the get go, and we appreciate that. And I think that that most people are enjoying what we're doing here and and diving into lots of different industry topics.
Speaker 2:Yeah. There's a couple haters out there that like to talk about body types and things like that. But otherwise
Speaker 1:They that he they just don't have enough they just don't have enough to do. I mean, they they're they're them, well, keyboard warriors. You know? Is that is that what's he call them? That they're just sitting there twiddling their thumbs.
Speaker 1:They ain't got nothing else to do, so they need to find something better to do in my opinion.
Speaker 2:Oh, yeah.
Speaker 1:I don't like them talking about my belly, but I got one. Or my beard or my head. Y'all make enough fun of me when I shave my beard of that. I didn't need no other help.
Speaker 2:It didn't take you very long to
Speaker 1:grow that. It sure didn't. And it ain't ain't going away now. Kids of mine were like, you gotta grow that back, dad. Your seventeenth chins keep showing up.
Speaker 1:So, but now we appreciate everything and I wanna thank you and your Blue Roof team for being supportive of us since we've gotten going. Likewise. We enjoyed this thing. We wouldn't wanna do it for a long time and just now finally had the opportunity. God finally blessed us with the opportunity to finally be able to do it and I enjoy it.
Speaker 1:Enjoy sitting down and visiting. This this episode will come out here pretty swift, but we just had another one that just kind of tease the episode that's coming out after this one. We just sat down with a great friend of ours and a great industry leader with Richard Stover and was able to talk through him and y'all don't want to miss that one. For sure. That said, believe it comes out next week.
Speaker 1:So just to be sure you tune in next week and get that one.
Speaker 2:Yeah. You'll find Todd and I just sat there for about fifteen minutes.
Speaker 1:Yeah. He's starstruck. I was just kinda starstruck because he's he's that kinda guy. He's a great mentor of mine and it's pretty neat. So thank you everybody in social media land for joining us today and watching us.
Speaker 1:Don't forget hit subscribe and like. If you have any questions, Katie at live dash ag dot com. If you want to forward or email those to her. If you want to reach out for a marketing package or to maybe to be on the show or to do some kind of marketing with us, it's katielive ag dot com. Thanks everybody and God bless.