What do you think of the concept?

Well, you know, this really speaks to an ongoing issue that's been developing for some time.

You know, our price reporting system is based on negotiated cash trade, but there's lots of industry incentives to trade cattle in some sort of a formula or arrangement or whatever, often based on that.

cash trade.

As that has grown over time, these alternative marketing arrangements, they're called, that means there's less and less of that cash trade.

And USDA's rules for reporting under the mandatory price reporting system means that they don't violate confidentialities.

And it's just gotten thinner and thinner from that standpoint.

I guess the problem truly is, is that everybody likes the idea of negotiated cash trade, but they don't necessarily want to put their cattle to the test in that regard.

And do we also get heifer numbers within this report?

Yeah, the October report is a quarterly report.

So we get a breakdown of steers and heifers on feed.

So we've been watching that for the last two to three years.

And in fact, the heifer number this time as a percent of the total cattle on feed was actually 38%, which is up slightly from the July quarter.

And it just stays stubbornly high.

It just has not dropped very much.

Daryl, taking a different look at the cattle market now, what are we seeing for trade or what are some trade expectations?

And do we also get heifer numbers within this report?

Yeah, the October report is a quarterly report.

So we get a breakdown of steers and heifers on feed.

So we've been watching that for the last two to three years.

And in fact, the heifer number this time as a percent of the total cattle on feed was actually 38%, which is up slightly from the July quarter.

And it just stays stubbornly high.

It just has not dropped very much.

Daryl, taking a different look at the cattle market now, what are we seeing for trade or what are some trade expectations?

So we continue to shrink these placement numbers.

That's exactly right.

This is the third month in a row of very sharply down placement numbers.

Placements are smaller than marketings, which means that that on-feed inventory compared to a year ago is coming down.

It's even now with a year ago.

It's going to go below again in the coming months.

I think that's pretty inevitable at this point.

so.

It seems like a lot of folks are pretty frustrated.

Well, I think so.

You know, it's just it's really hard for anybody to have an idea of what's going to happen.

It's jumping up and down.

And so, you know, that that definitely is taking a toll.

You know, we had a fairly lengthy list of reasons why this was a slow process to sort of get a start on stabilizing this herd and looking at some herd rebuilding.

But the uncertainty itself is a significant factor on that list now.

Any early ideas on what you think they may come up with?

So are producers starting to gear up for heifer retention? Are they rebuilding? You

know, if you look at, you know, heifer slaughter is down twice as much as deer slaughter is down so far this year.

That sort of suggests that.

And, of course, we've had two inventory reports, January and July, that showed a very modest increase in the replacement heifer inventory.

All of that taken together, I think maybe we are starting to see a little bit of heifer retention.

Now, you know, one of the things that happens sometimes is, Particularly in the early stages of a herd rebuild is that we will wind up breeding some heifers that we didn't designate as replacement heifers.

I call that impulse heifer breeding.

What are you hearing from the border? How are operations at the ports that have reopened?

So with this being said, how do you feel the corn price is gonna be?

[laughs] You know, I don't pretend to be a corn market analyst, but obviously I follow it from a, from a cattle perspective.

Um, we've had, um, you know, 23, 24, 25 were all big corn crops, and that's why we saw, you know, uh, take it to the point of, of, uh, feedlot cost of gain, which is where we see the bulk of it in the cattle industry.

Feedlot cost of gain worked from a high in early 2023.

We've been down here at the low level now for the last 18 months or so.

And then, and we had a big crop coming in, in 2026, but now there've been some issues.

USDA's pulled back their yield estimates, and other analysts have pulled back their yield estimates.

No, it's okay.

After?

The middle meats, the tenderloin, and so on.

This one falls right behind that.

But we never recognized it for years because we always just kinda cut across it with everything else, and it wound up in a roast.

If you fabricate it a little bit differently, separate it out, and get that piece of meat by itself, hey, we've got an excellent new steak here.

The other thing about cattle that makes them unique to any other market is they're ruminants, so they have the ability to utilize a wide range of feedstuffs.

We can use lots of grain and a little bit of forage.

That, again, is the economist Derrell Peel.

But as we really look into fall, and if we had you on this podcast again in two months, Daryl, what What would we be reflecting on then? What are we really going to be seeing as we step into a really vital time for many producers across the industry? Or just kind of caveat off of that, what other things are you watching as we continue to move forward into Q4?

Yeah, you know, it's again, the underlying fundamentals are very strong.

You know, we just got a cattle on feed report for September that showed, you know, another big month of declining placements, which reflects, I think, the reality of tight feeder cattle supplies out in the country.

And so, you know, those things are going to continue to help support the market.

I think it'll be more obvious as we go forward just how tight feeder cattle supplies are.

And because of that, and because of this sort of big summer correction that we've been in, you know, I actually think that from a calf price standpoint, you know, counter-seasonally, normally we expect to see seasonally lower prices for calves in the fall of the year.

I think we might actually see those calf prices at least stabilize and probably increase a little bit counter-seasonally as we get into the fall, just because we've already taken a pretty big beating.

And so from your perspective, from a little bit more of a worldwide standpoint on how the world economy is really...

And you made a mention of the border reopening, and how are things looking? Where are we at with that?

Yeah, so we did get the Douglas, Arizona port opened in late August.

We've had about three weeks of data now, and they're slowly building numbers.

They had one week there where they had equipment breakdown, so they only got like 100 head across.

But this last week, the last week of data, we were getting 800 to 900 head a day.

I think they wound up with 3,600 head for the week getting across.

And that's kind of preliminary for this very last week.

And any big important numbers you saw from there?

And you made a mention of the border reopening, and how are things looking? Where are we at with that?

Yeah, so we did get the Douglas, Arizona port opened in late August.

We've had about three weeks of data now, and they're slowly building numbers.

They had one week there where they had equipment breakdown, so they only got like 100 head across.

But this last week, the last week of data, we were getting 800 to 900 head a day.

I think they wound up with 3,600 head for the week getting across.

And that's kind of preliminary for this very last week.

And any big important numbers you saw from there?

So you predict prices are going to stay strong through the end of the year for sure?

Well, subject to volatility, I guess.

Obviously, we've had a tremendous, what should have been a relatively short summer correction turned into all fall pummeling of cattle markets, but it was really because of these outside factors.

Given a chance, these markets are going to bounce back.

I think we'll see calf prices bounce back counter-seasonally.

They're normally low in the fall, and they probably will actually come back a little bit.

at least uh and here in the southern plains it's been so hot and dry but if we get the cooler weather that's currently predicted in some rain that'll add some wheat pasture demand for stocker type cattle uh to the mix so i think these prices will stay you know, stay strong and probably strengthen kind of through the fourth quarter.

When we look at the reopening of the border, how long will it take before we start to see evidence of how that impacts the cattle and feed and the placement numbers?

Professor, given the activity of Washington and the importing of just about anything to America at present, how much can American government policy actually make a meaningful difference at the production and or retail level for beef in America? What will policy do to the actual consumption and production of beef?

You know, that's the ironic thing.

As a market analyst, and we've talked about this now for many months, the government is very directed to try to do something.

They're driven by the overall increase we've seen in food prices in the U.S.

Beef has kind of become the poster child, if you will, for our high food prices in the U.S., and I don't really think that's warranted.

The B price situation is a result of the industry's natural dynamics.

We didn't plan to be here and we were going to have high prices, but it's really received a lot of political attention.

What is one thing about the US cattle and beef market industry that you think policymakers or even producers and packers are getting wrong right now?

When a hotel pays a distributor for a case of strip loins or fillets, how did that price get built from the cow-calf producer through the feedlot, the packer, the distributor? And where are those biggest price steps along the way? And can we as an industry have any impact on that?

That was a lot.

That is a lot.

And obviously, you could teach a semester course on just that.

But I'll try to make it as simple as possible.

I mean, again, it is an enormously complex industry with these multiple layers.

And the way I explain it to people is that at the fundamental level, all supply in this industry comes from the cow calf production.

know and what does that mean for someone designing a banquet menu and or how can catering chefs what would you tell them about time selection and diversity diversifying their products i mean should we be serving flank steaks instead of fillets or should we be serving you know over the next couple of years how does a meeting planner and a hotelier kind of make those decisions based on what we're currently in

And what have we seen in the recent news?

Yeah, so this past week, you know, we got additional news on top of what we've already seen the last few months with beef packing infrastructure adjustments.

Tyson made an announcement this last week that they were going to cease slaughter and fab operations at their Joslyn, Illinois plant, and that they would also be closing a further processing plant in Utah.

And then they also announced that their Pasco Washington plant is for sale.

My understanding is that it's going to continue operating for now, but they've made the announcement that they would be interested in anybody that would like to buy that potentially.

And the other thing they said was that, you know, Amarillo has been on one shift for several months now, the Amarillo Tyson plant.

And they've announced that as they expect eventually to see cattle supplies rebuild a little bit, perhaps they're thinking ahead to the Mexican border reopening, that they will resume a second shift there.

And how has the border reopening, which is happening next week, added some more volatility to our market?

And what have we seen in the recent news?

Yeah, so this past week, you know, we got additional news on top of what we've already seen the last few months with beef packing infrastructure adjustments.

Tyson made an announcement this last week that they were going to cease slaughter and fab operations at their Joslyn, Illinois plant, and that they would also be closing a further processing plant in Utah.

And then they also announced that their Pasco Washington plant is for sale.

My understanding is that it's going to continue operating for now, but they've made the announcement that they would be interested in anybody that would like to buy that potentially.

And the other thing they said was that, you know, Amarillo has been on one shift for several months now, the Amarillo Tyson plant.

And they've announced that as they expect eventually to see cattle supplies rebuild a little bit, perhaps they're thinking ahead to the Mexican border reopening, that they will resume a second shift there.

And how has the border reopening, which is happening next week, added some more volatility to our market?

The July Cattle on Feed report came in just about as expected.

The July Cattle on Feed report had, uh, placements in June, uh, down 2.7%.

Marketings were down 2.9%, and the July one on feed total was up 2.2% year over year.

He says those numbers didn't contain any surprises.

You know, we continue to see, um, this cattle on feed, uh, inventory over a year ago, but we, you know, you have to understand that that's coming from the fact that we're just slowing down marketings more than we're slowing down placements.

And so that allows that in- i- inventory to go up.

There's not more cattle in feedlots, but they're staying in there longer, and that's why that number goes up.

You know, we're just slowing down the turnover rate in the feedlots.

But from a market perspective, there's no wall of cattle waiting to come across.

We're starting with Sonora.

Douglas, the Douglas, Arizona port.

That's, you know, historically about 15% of the cattle that cross each year come through that port.

But even if they did, it's insignificant, says Peel.

If you remember that 1.15 million head that we've gotten on average, average is out to be about 3.2% of our calf crop.

So it's a significant number, but it's not a huge major factor.

I'm Michelle Rook reporting for Ag

Derrell, in terms of the markets, we are in what you would call a rather significant slide right now.

Yeah.

You know, the last, uh, couple of weeks, uh, have been a pretty serious, uh, pullback in the markets, uh, in terms of especially the future kind of leading the way, but cash markets as well.

And, uh, you know, this is, uh...

I'm gonna characterize this as, as a correction.

You know, I think it's partly seasonal.

It's midsummer.

What about in terms of imports and export numbers? Something that we should keep an eye on?

What is wrong with the fed cattle, the live cattle futures market right now, Daryl? Just a heck of a lot of

pressure on it.

You know, I think there's several things going on in this market with these continuing wide basis that we see.

You know, part of it is just that we've been in a very strong bull market for so long in the US cattle industry.

And obviously, we've been at record prices.

And so, you know, markets get nervous when you're near the top, you know, just on the face of it, you'd say, well, the odds have to be higher for it going down than going up.

And yet, that's not necessarily consistent with the fundamentals that we see today.

What's impressive, really impressive to me, is that the cash market is doing what it's doing and Fort Morgan is still shut down, right?

There's also been a lot of talk this week about New World screw worm.

You know, um, this thing finally got here last, uh, you know, last week, about a week ago.

Um, June 3rd, I think, was the day that we first diagnosed it here in the US.

And so, uh, you know, we've been waiting months for it.

So there's kinda two different reactions.

One is it's here, we've gotta deal with it.

Uh, on the ground it's a, it's a huge management issue for the producers involved, for the industry in that area, as well as for the state, local, and, uh, federal officials that will be working on, on the, uh, containment and, and, uh, eradication of this thing.

Darrell, what are imports and exports looking like right now?

And as we've been talking about our neighbors to the south, wanting to look at our neighbors to the north and thinking about trade with them, is it still flowing?

Yeah, absolutely.

In fact, we sometimes don't talk about, uh, the, the cattle situation, the cattle trade with, uh, with Canada.

And so, uh, we do both import and export, uh, in Canada.

Cattle, uh, imports from Canada, uh, in 2025, we imported about 750,000 head, roughly three-quarters of a million.

About, uh, 75% of those were slaughter cattle, uh, either fed steers and heifers out of their feedlots, as well as slaughter cows and bulls that come into processing facilities, uh, in the US.

We also imported about 18 or 19% of the imports last year were feeder cattle from Canada that were going into US feedlots.

And moving away from our neighbors and going across the ocean, China, any news important when we're thinking about trade with them?

So can you talk a little bit about our relationship with Mexico there as well?

Yeah, the situation with Mexico is a little bit different story, although it's getting to the same point that we get to with Canada.

Mexico historically is a country that had lots of resources to produce cattle at a primary level, so cow-calf production, if you will, but historically not a lot of cattle feeding or processing.

And in fact, there wasn't a market for that kind of beef.

It was a market historically for grass-finished beef and so on.

And so for many, many years, going back, I mean, in some cases, all the way back to the U.S. Civil War, we've imported cattle from Mexico.

They had a comparative advantage, if you will.

So just like the next few years and then future as well, what advice are you giving to those producers?

And does that have any impact on our cattle market?

You know, springtime and especially in the southern plains, you know, it is the time of year when we get a lot of severe weather.

Part of that is to get some rain.

So, you know, you kind of have to accept the threat of severe weather to get the moisture we need and we really do need it.

But at the same time, you know, severe weather can cause problems.

Typically, tornadoes are isolated enough that they don't have overall market impacts.

They're just not that big.

So for places that are seeing drought, do you think that could trigger more selling of livestock, selling of cattle?

And so as you're talking with producers and being in Oklahoma, what concerns do you have?

I tell you, the drought situation continues to expand in a very scary way for this time of the year across the country.

And so, you know, a large percentage of the U.S. is in some stage of drought right now.

And I did some looking the other day.

If you look at the top 10 beef cow states, which collectively have about 57% of the beef cows in the country, 63% of those cows in those 10 states are under some level of drought.

So that works out mathematically to be about 36% of the beef cows in the country under drought in those top 10 states.

If you expand that to the top 15 states, add the next five states in there, you bring that total up to 44% of all the beef cows in the country are in some stage of drought in those 15 states.

What concerns are cattle producers having about beef on dairy calves?