Live From Lincoln, it’s Ross Baldwin

[Yeager] There's a new way to stay connected and know what's happening with Market to Market. When you subscribe to Market Insider, one email and a lot of information awaits you, go to markettomarket.org and subscribe to Market Insider.

[Yeager]

Welcome in to the live recording of the MToM podcast here at Nebraska Public Media. Ross Baldwin is our guest. Ross, welcome to Nebraska.

[Ross Baldwin]

Thanks for having me, Paul.

[Yeager] When you're the newest analyst on the show, you have to kind of go wherever we ask, right? Is that how that works? Yup, yup. That's how it seems. You. We have, Ross is one of our newest, analysts. You are from northwest Iowa, for lack of a better geographical description. Tell me about your home.

[Baldwin] Correct. I'm from Anthon, Iowa. It's a small town just 35 miles southeast of Sioux City, Iowa. I grew up there my whole life. Hey. My mom, she came out here with me to Lincoln. And on the way out here, we were talking about it, and she said, yeah, I've. I've lived. The house they brought me home to is the one I lived in, and that's where they still live. I was raised on a cattle feedlot. We still feed cattle today. My dad, I got two brothers that work there. We feed around 4000 head of live cattle there and that's what we've done our whole life.

[Yeager] So Ross is a guy who we bring in to very heavily dive into the livestock market. And. But I'm going to ask him grain questions here in a minute. you cook because. Why not? we are, in our tour. This is another one of our live episodes we've done. We've gone to Jesup, we've gone to Cherokee, done a couple of the Iowa State Fair, and this one in Lincoln. One more to go in LeClaire, Iowa. So we appreciate everybody being here. huge thanks to Nebraska Public Media. Maggie Berndt, Amy, Masten-Knight, Nancy Finken and Stacey Decker, the general manager here, from Nebraska. Let's give them a hand for opening up their doors to us.

And we also brought a few people from Iowa PBS. Our general manager, Andrew Batt, is here. Andrew. Say hello. Yeah. You can't hear him. That's what's enjoyable about this position right now, boss. Andrew, is that used to be a producer on market. He's traveled all around the country, when he worked as a producer at other shows. He's from Council Bluffs, so he feels like when he went by Council Bluffs this morning that he has to stop there at some point. Otherwise, he gets in trouble with his parents. Cameron McCoy is here. He's, one of our bosses now. Dave Miller, you met, Caryline, who was the very person who helped put this event together along with NPM, as well as, Mark and Kenny on here. So let's dive in if we can. so when we do the live, what do you do with the TV show? What was your first, interaction with Market to Market as a young lad, Mr. Baldwin.

[Baldwin] My first interaction with market to Market would have been growing up as a kid. My dad watched market to market. My grandpa always watched market to market. And I would say just as cattle feeders, the analyst that we all talk about and watch would have been wild Hackney, the, the cattle guru that went on there. And Walt did an absolutely fantastic job. So I would say that was my first interactions growing up as a kid, being exposed to market to market.

[Yeager] So when Walt's on, I didn't see that. Do people know who while Hackney is? I think there's many that are nodding. Walt had a certain way of speaking, you know, Ross, we got a lot of cattle here. We got to get through his gravelly voice. was there something that inspired you listening to him like, hey, this cattle things kind of fun?

[Baldwin] I think the thing with Walt that is an inspiration is just his straightforward, no nonsense type of approach that Walt had, which when I think of a lot of cattle feeders in the cattle industry, that that's how you operate is, is, you know, just no nonsense. And Walt, was so cool about Walt was how he was and he was in the trenches. I mean, he was buying feeder cattle. And so he knew that market as well as anyone that could have went on the show.

[Yeager] And as you said, you're in the trenches now, knee deep in, in cattle. Let's talk as a producer for you. How did you get started? When was your first animal?

[Baldwin] So my grandpa, Wesley Baldwin was his name. He started feeding cattle back in the 1950s. And so my family, we've been involved in it ever since then. I have an uncle that had a feedlot also my first cousin, his son runs that operation now and then. My dad started his own feed yard, and the two feedlots are across the road from each other. And then I have another cousin not far away that has a feedlot as well. And so we just grown up our whole lives, you know, feeding cattle and doing that. My first interactions when I would have, you know, got my first livestock would have been cows. My dad and brothers were no longer in the cow calf business. We just primarily focus on finishing fat cattle out. But we for a lot of years had cows and that would have been my first interaction was cow calf business.

[Yeager] So why not full time for you in the business? And how did the numbers and the analysis buying and selling for others come to pass? Come to be? I should say.

[Baldwin] So. I went to college. I graduated high school in 2007. I went to Maryville, Missouri, Northwest Missouri State University. I graduated from there with a degree in animal science. And for having an animal science degree, I always wanted to get into the grain industry. And so I actually I spent quite a few years out after college. I was, location manager for a privately owned grain elevator south of Anthon. And so I was in charge of buying and selling corn and soybeans and marketing that, doing the risk management. From there, I went and worked at an ethanol plant and did a lot of risk management there, spread trading, buying and buying corn and selling DDGs with farmers and producers. I and so I've just always enjoyed the markets. the cattle market has always been my passion. But I working with farmers, producers, ranchers, I knew I always wanted to go, you know, get into the, the brokerage side of things. And that's where I got to we, we started our office in March of 2020 during Covid, a great time to get started with the business. Yeah. Yeah, that's kind of how I got into the commodity industry.

[Yeager] And were you with Agmarket.net right away?

[Baldwin] Yes. So we started with agmarket.net which Matt Bennett, who's a regular analyst, he's a co-founder of Agmarket.net. And so I've got two partners in my office, Kevin Clawson and Bran Strack. And so the three of us started our branch of Egg Market dot net. Yeah, like I said in March of 2020. And at that point we had all worked together in corporate America and at that point in March 2020, we were like, what in the heck did we get ourselves into? You know, you starting that and looking back at it was the best decision that we ever made.

[Yeager] So the little secret is that ag market dot net Matt Bennett had been on the show. so Ross Baldwin had actually been on the show prior to your first time on TV because Matt Bennett calls Ross Baldwin for his information about the livestock market. So when Matt calls you a question before you started coming on the show regularly, what's Matt asking you?

[Baldwin] Mainly just what's going on in the cattle market? And big things that I need to know. You know what, what's cash trade doing? What do you think it's going to do? Things like that.

[Yeager] Have you ever heard any line you've given him that he delivered and stole and used as one of his own?

[Baldwin] I don't know that he's directly said anything. I got to be careful here because Matt’s going to be watching this.

[Yeager] So whatever Matt said was right was spot on, right?

[Baldwin] Correct.

[Yeager] All right. So then, a phone call comes to do this MtoM podcast, partially because we'd heard from Matt. Partially because we'd heard about you. and what was that first, let's start with the podcast. When you heard Market to Market called. What’d that mean?

[Baldwin] I got you had tried calling me and I actually was not in the office. And so I had just left, left the office that day. And one of my partners said, Paul Yeager called for you from Market to Market. And I'm like, you know, my stomach dropped and yeah, I got Ahold of you. And we did, podcast. And I was I'll be honest, I was extremely nervous. I have not went back and watched it since I went on the show a few times, but I need to go back and watch it. I would imagine I used several filler words, lots of, you know, so I try to limit those now today.

[Yeager] But okay, that's fair. That's absolutely fair. The using the umms and ahs, you do the podcast, which in reality was kind of a test run for us to see what you had to say. Matt spoke glowingly about you.

[Baldwin] I didn't know that at the time either.

[Yeager] And I don't think I don't exactly say that either, because I don't want to get in your head.

[Baldwin] People told me afterwards, I bet that was a test run or a trial to see if you're good enough to go on the show. Yeah. And I'm like, oh boy.

[Yeager] And then we call and asked, what your first time on the show, I found to be it was great. We paired you with somebody else to talk grains, so you not having to talk about grains. But, when that first episode happened, what was it like back at home?

[Baldwin] I mean, it was really cool. I will say, the first time I went on the show, I was extremely nervous and it went well. I think the thing that made me the most nervous is I was feeling it out. And what I did not know going on the show was that Paul does not give you the questions before you go on. And after I learned this, I have a whole different appreciation for every analyst that goes on there. But when they said you, there is no redos you really have to screw up bad for us to stop it and restart over. Well, at that point I was really nervous before the show started, but it went really good. But back home, back to your question. We had a little bit of a viewing party after that first show. We went to my brother's house. My whole family was there. And yeah, the the kids all thought it was pretty impressive. I've got nieces, nephews and then my three children and yeah, everyone thought it was. It was pretty cool because we're watching on YouTube. It's all my kids watches, YouTube and my nieces and nephews.

[Yeager] And now they just are like, oh, that's gone. Dad's on TV again, Well, is that how it's gone already?

[Baldwin] Yeah. And the funny thing was, is my wife and our three kids, they did, they went down, one time, the kids all went down and went into the PBS studio. And it was funny that the only thing that the kids saw that day that they thought was so cool is market to market. Has, a YouTube plaque, the play button. Yeah. Because for about 100,000, I think.

[Yeager] It's a hundred thousand subscribers.

[Baldwin] And when my kids saw that YouTube play button, they thought that was the coolest thing ever. No. Nothing else. I could have completely fumbled on the show, but they thought they had made it because of the YouTube play button. I think we had a couple of baskets or, bags of things for them to do a PBS things. So, that was fun. And we always love anybody that comes by. so, yeah, you're nervous, but I think things came out, yeah, I don't. I don't try to write really any question down because I really want to listen to what you have to say.

[Yeager] You know, generally we're going to talk about three things with you and the challenge. Just so you know, and I think I've said this when we have strictly, it was the same with Walt, when you had a market, a grain person with a livestock person. Well, normally it's wheat, corn, soybeans. Then we get to the live. But he'll just sit there. I don't want him to sit there for the whole time. You kind of feel awkward, like they're having this conversation, and I never get to talk. so we mix it in, and. Are you okay that I do that, or do you think we should? Maybe you just want to wait your turn until it's your turn to talk.

[Baldwin] I'm fine. Wait my turn. I know you're eventually going to get to me.

[Yeager] When you start talking, what has been the biggest change? Let's just start since you started with Egg Market 2022. Now, what do you think's been the biggest change in the cattle market?

[Baldwin] The cattle market? I mean, we've went from one extreme to the next. I mean since Covid in 2020 Covid gosh. From a front month futures perspective, I believe futures got down to $0.80 during Covid. You know, it was an absolute disaster. We were backing up, I think the worst of the when we're backing up slaughter during Covid, we were it was like 50,000 head less a day that we were slaughtering. I think we had a couple weeks there where we slaughtered 250,000 less head of cattle than what we normally would have. So, I mean, we went from and I hope I never see that again in my life. I mean, that was the most extreme bearish case scenario. And throw in shutting down restaurants. Now I always think of stadiums, the ballparks and everything that was shut down to where it was. It seemed like we were never going to be able to crawl out of that hole. I mean, we easily backed up over a million head of live cattle because.

[Yeager] Not only did we not have a place to, we didn't have anything to no outlets for the food. We also had these animals that were set scheduled weeks in advance to go to the packer, correct.

[Baldwin] That was stuff that you could not get rid of. And we ran into a cat, our family's feedlot. I mean, we were, it felt like we were very fortunate that we had good relationships with the Packers that we worked with to get our cattle slaughtered in as timely of a manner as possible. You always try to find the silver lining in something like that. But so we went from, we went from the most extreme situation that I've ever seen in really the most extreme situation in a negative way that the cattle industry has ever seen. To fast forward to last week. We were two weeks ago, we were just selling fat cattle for 215. Life picked up. So we're at all time record high prices.

[Yeager] Are we still unwinding 2020? Has that been any part of this problem of high prices? Because it's a problem for those of us who were trying to buy the beef, let alone those of us who were trying to sell the beef?

[Baldwin] Yeah, we’re still seeing some of those impacts play out. And, and you can even, you can even go back I could sit here and talk an hour about how this whole deal played out, but you can even go back to 2014 to 2016. How we went to the previous all time record highs to 2015 and 16, which was a disaster across the cattle industry. You had people getting out saying, you know, I'm actually in the cattle industry. So we started seeing people get out of the cattle industry all the way back then and started getting to better markets then in I believe it was August of 2019. Tyson had a packing plant fire down in Holcomb, Kansas, and we were right back to a terrible market and it took six months for that plant to come back online. And we we started getting the industry straightened out. I believe it was about January of 2020 when it felt like we were getting a straighten out. And then two months later, Covid happened. I mean, it was just it was a culmination of events that have led to where we are today, because even post 2020, you had Covid people saying, okay, we've already went through 2015, 2016, then Holcomb, and now Covid. I'm done. There are easier ways to get through life than to be in the cattle industry. And so you had people leaving for that reason. And then we start getting droughts in 2122. And that started, that really started speeding up this whole process is because of how many cows we started calling.

[Yeager] In drought in areas that are key and very concentrated large operations. There's some west of here, there's some south of here, farther south of here. Why is it that the cattle market is so dependent in the the setup that we have now with livestock? Why is it so weather dependent?

[Baldwin] You need a lot of feed to keep livestock, you know, on feed. And you need, you need good growing, good rains and ample feed supplies to keep heifers back, to retain heifers, to have that incentive. And so that's just where we've really been juggling this. I mean, you throw in record high feeder cattle prices that we've seen now going on 2 or 3 years. It's hard to retain heifers then for that reason. But then you also throw in the weather issues we've had over the last few years, and there's just not enough feed to go around. So when you start having drought, drought issues occurring, the cows go to town. And that's what we've seen. Now, the the cow herd is the cow. The US cow herd is down 12% in five years. And that is staggering. everyone in here knows that the inventory report that we've seen the US beef herd, it's the smallest we've had since the early 1950s. It's the smallest on record.

[Yeager] Do you ever anticipate that's going to get bigger?

[Baldwin] I do absolutely. We will see these numbers increase off of these low numbers that we're in. But I don't I don't know that we go back to the high numbers that we had in 2019. 2019 was our most recent peak that we had. And I don't think we're going back to those numbers just a lot of a lot of dynamics have changed over the last few years. But I do think we we don't stay at these low numbers that we're at right now.

[Yeager] What's the reason why would we want to expand? Because if prices are what they are when you start producing more. Last time I checked, that's supposed to flood the market and lower prices. So from a producer standpoint, why do I want to get bigger?

[Baldwin] The the reason we will eventually expand prices will drive that expansion. So when you there will be some reason that we drop feeder cattle off of these record high prices. Live cattle will not stay at 215. I don't think $2 plus live cattle is the norm. I don't think just say $3 eight weight feeders. I don't think that's the norm. And so when those prices do go back down, cut producers will retain more heifers. The other reason that I think you'll you will expand the herd back is the cow calf guy is wildly profitable. There is. Everyone knows that right now. When you're selling feeder cattle at these prices, you are wildly profitable. What do you want to do when you have these kind of profit levels? What’s a farmer want to do when you have $8 corn? I want more of it. And it's the same thing. We seek more production and row crop farming to capitalize on these windfall profits. And that is we will lead that will lead us to expand this herd across the cattle industry.

[Yeager] We only show a four month snapshot of the markets on any given week. But if we pull that thing back out eight months, 12 months, it has been on that stair step which sets up this question of the election did not change or set the course of this market. However, the election result now has changed it a little bit, and closing down borders in the amount of cattle that are going back and forth between Canada, the US and Mexico in the United States. What's that done to this situation?

[Baldwin] The tariffs and tariffs is it's tricky for any one of the commodity markets right now to navigate. You and I could get off the set right now. And Trump could have put something out on social media that completely changed what I knew about tariffs or thought I knew about tariffs before we came on here. The tariffs, though, for the beef industry is extremely tricky right now to try navigating because where you look at tariffs, say on Mexico and China for the corn and soybean industry. Now China is not a major player right now in US corn. Mexico obviously as you spend that right away as negative I mean you we need more exports, not less. The cattle industry, on the other hand, it doesn't automatically go to a negative situation. The tariffs on our major trading partners, because of how tight our numbers are, you can actually spin it to where it's friendly that the tariffs is friendly. Now it's crazy because I'm going to say friendly for the beef industry. And when I talk about beef I'm talking about retail beef. Not cattle retail beef that the Packers produce and the retailers sell for beef. You can spin it as these tariffs. So if we put tariffs on beef imports coming into our country well we have a shortfall right now of beef. Our beef that USB ports are forecast to be up 6% this year. Last year I think they were 2,324% higher year over year because we don't have enough right now. What we don't have enough of is the the lean beef. And that's driven off of cows because our cow heard is so well when cows go get slaughtered, that's a lean beef that they produce. A lot of that goes to your, your, you know, fast food burgers, your processed beef. That's what that goes through. We don't have enough of that right now. Well, if we start putting tariffs on that we still had the demand there. So we will bring that in the negative part of that. It probably gets put on the U.S. consumer. Those tariffs would. The other part we now feeder cattle imports have really fallen off a cliff because of the New World screw worm problem in Mexico. They are slowly picking up. But we import a lot of feeder cattle from Mexico. We import a lot of feeder cattle from Canada. So that's where if you start putting tariffs on that, those cat feeder cattle will still come in. Where that gets tricky. It's the Canadian rancher and Mexican cattle feeder that probably bears the burden of those tariffs. They'll just discount them. The US buyers will discount those cattle coming in here. So it's extremely tricky on the cattle side and the beef side. But you can say that it's not negative. It's actually probably friendly here.

[Yeager] I thought it was only the government reports that had funny numbers. You're saying that the producer you know there's going to be that is how this will maybe play out economically.

[Baldwin] Yeah I yeah.

[Yeager] Do you get the sense that Canada has the same appetite and the Mexican farmer has the same appetite as the American farmer to withstand and, and handle the current situation? How long will they're okay I can tolerate this, but not much longer.

[Baldwin] The tariffs? Yeah that I think that that will is back to more their government elected officials in the negotiations. They're going to have because let's be honest we're all out here playing the game. We're going to continue to raise cattle and farm and whatever the policy is, we're going to navigate through that. So I don't know that it's them that can, you know, make that decision. But the problem I mean, now this is my opinion as the tariffs relate, is I don't see that Canada and Mexico has the leverage here, the upper hand and the all of these tariffs in this trade war. The biggest issue though for their producers say Canada, for example, a lot of Canadian fat cattle come to the U.S. to get slaughtered. So that is it. I mean, it's a major impact for them. And, you know, as a percent of the U.S GDP, it's just Mexico and Canada. I mean, it's so small as a percentage of our GDP. So it gets tricky. And I mean, you know, the unfortunate part for their producers is they're going to they're probably going to face them, you know, negative consequences, way more severe than anything that we would.

[Yeager] Of all the factors, who is at the greatest disadvantage as we sit here today with prices? Is it the consumer buying hamburger at the grocery store? Is it the guy holding the farm holding the big fat cows in Canada? Is it the one in Texas that needs to ship across to feed for cheap over in Mexico? Is it the one expanding out here to the west of us, in Nebraska or in Oklahoma?

[Baldwin] The the one that's at the biggest risk? Yeah, I think it's a culmination of of everybody is I mean, I would say the consumer I don't see the consumer being at the most risk for them. I mean, okay, so $6 a pound ground beef, it's expensive. There's no question about it. What inflation has done though has made everything expensive. If you want to go out to eat, you can't go through McDonald's without spending $4,050 to get 3 or 4 meals. So when you go back to $6 a pound hamburger. Yes. I mean, from a long term, what we're all used to, it's expensive. But I think inflation has showed that $6 a pound hamburger is really not that expensive because everything's expensive that we touch. But when when I think about who's at the most risk and this is probably me being a producer, I go back to, we as livestock producers are probably the ones that the most risk if the consumer does eventually start to shy away from the the high priced beef, which so far the the, the U.S. consumer has has remained so resilient. This is actually what we don't talk about enough is how this has been a demand driven rally in the cattle market. U.S. beef demand has been off the charts, but that could change at any point. So let's just say they do step back away because of high prices. I feel like us as cattle producers, whether you're a cow calf guy, you background feeder cattle, or you finish out fat cattle, we're the ones that the most risk because these are astronomical prices that we are at. And if 2014 to 20 1516 taught us anything, it's how fast these markets can change. Or you go back to $8 corn, how fast we go from $8 corn back to $4 corn, historically speaking, or 18 hour soybeans. You know, these markets, how fast they revert back to what we all think is the mean is so fast that us as producers, we're the ones at the most risk I feel like.

[Yeager] Hold on, I'm looking for my cliches, though. There's nothing on these. What's the one about the markets? Something about stare. Step up. Do you have the sense that the elevator shaft down would happen?

[Baldwin] Elevator down.

[Yeager] Could happen?

[Baldwin] Eventually. It. Well, there's no question. the tricky part with the cattle market, obviously, and with any market is when none of us know when that is. And the thing that scares me the most is Nomad. I have this, this, this thought in my head that no matter the commodity market, they always start selling off their. I say, I think, but then always but they always start the sell off when we as producers don't think they should. And I think that goes back to always it's the most bullish at the top, bearish at the bottom. It's about like $2.15 that cattle. Is everyone bullish cattle right now I think yes we are.

[Yeager] I think and and to go back to Matt Bennett, Naomi Blohm, Ted Seifried this week we were talking between the plus and the show and after plus we were get to livestock and you know they Matt said something Naomi said something and I, I almost wanted to say it on air. I just said it after. That's been the common theme of well, at some point this doesn't seem to pencil out to buy feeders right now, but people are and they continue to do so. They have been, I have heard that almost every week for months and months has Covid and everything else and just the inflation. Maybe it's more inflation than Covid given insulate to the cattle market to be at this elevated level.

[Baldwin] I don't know that it Covid or any of that that's given the insulation. I think the insulation that the cattle market has had recently and moving forward is just the tight numbers. And it's kind of crazy to say that because if you compare back to 2014, when we were made the previous all time record highs, we have consistently had a million more head of cattle on feed over the, you know, over the last year versus what, 2014 did. The thing that gets so hard to match up, though, is demand. Demand when you look not the grain markets are easy because they're not. No. Let's be honest, trying to analyze any commodity market any more is not easy. I don't care what it is, but it is a little bit easier to gauge demand and say the corn and being markets versus the beef market. The beef market is so tricky. And pork would be the same way in poultry. It's so hard to gauge all that because of just how demand ebbs and flows in the US consumer. You can track retail, you can track the cut out, you can track beef exports. But just to try gauge, even though the outflows and how much the consumer continues to buy, you can get there. But it's just not as easy. But I think the tight numbers is what has continued to insulate the market and the leverage the cattle feeder has.

[Yeager] I had a conversation with Darryl Peel. I know you read a lot of his stuff down at Oklahoma State, and he has talked about this number situation, and I think it's kind of staggering to him to think about. I mean, that's a guy who's seen a lot of things. You go through. So numbers, let's, let's wrap up with the consumer before we do one more thing. The consumer I can think of at my grocery store shop, there's still plenty. There's still a good crowd around there. Nothing has. I don't see pork taking off or seafood or poultry. It still is beef. Do you still find that beef is still the winner? No matter the price?

[Baldwin] I can't say no matter the price, because you can always get to a price where high prices cure high prices. But for right now, if you I mean, we have record high retail prices, but when you when you I go back to the $6 pound hamburger, when you look at what other things cost, it's still it's not terrible. It's expensive. I am not trying to sit here and say the $6 pound hamburger is is cheap, but just compared to everything else that we have seen in flight over the last 2 to 3 years, I don't think it's that bad.

[Yeager] Let's talk about the young guy or gal that's graduating from university wants to come back home or just graduated from high school, wants to come home. And usually the first path in was to buy some type of livestock. Maybe a way to get started. If you're a banker right now, are you writing any of those? Are you hearing bankers writing less of those notes to some of those people who are starting because of the price of a feeder right now?

[Baldwin] I think that all probably depends on just everyone's personal situation. I don't know of any. I don't know of any examples off the top of my head where a banker's writing, you know, less notes just due to the high prices per se. But, I mean, there are less cows and calves, you know, that are out there. I mean, there's just the US cluttered is is so much less. There's no question that, you know, there's fewer and fewer people coming back and starting, you know, getting into the livestock business.

[Yeager] You get into the hog market instead?

[Baldwin] Me personally. Now.

[Yeager] Do you think some people will see that as an alternative?

[Baldwin] I don't think so from an independent standpoint. And independent hog producer, I mean, the hog industry is just, you know, there's so few independent people in it. you know, there's a lot of road crop guys that have hog barns, no question. They use the the manure on their ground that they have. But even a lot of that, I mean, they're contracted hog barns that some of the major players fill up.

[Yeager] So speaking of contracts, also in the poultry industry and they're dealing with bird flu, we see the stories about eggs. We see, there's certain isolation, certain regions that are hit harder than more. What do you know about the poultry industry just from even a topical standpoint of your your livestock hat? And what is it that we need to know about that?

[Baldwin] It's actually from for the cattle industry. It's been relatively quiet here lately, which knock on wood, you know, because early on, when the avian influenza was being detected in the dairy herds, it was it was really bad for the futures market. And, you know, I, I do go back to that period when we were having such aggressive sell offs in the cattle market because of the avian influenza found in dairy cattle. I wonder if a year ago we wouldn't have been at some of these higher prices sooner if it wasn't for how that story derailed the cattle industry. At that time, it had no fundamental change to the cattle industry. And part of me wonders if when we've had some of these recent pullbacks in the cattle market, and it's been so violent to the upside, if that isn't part of the avian influenza situation, how it it held us back from maybe, maybe more of a gradual climb a year ago versus this explosive rally that we've seen. But around the avian influenza though, and the poultry and streaming continues to, to be a huge story and it doesn't look like it's going away anytime soon. Now, egg prices obviously have really fallen off, but a lot of that's been driven off. We ramped up egg imports.

[Yeager] So to an extent it wasn't a ton. But I mean it was some. And there's probably going to be some hearings about ‘why were your prices this high.’ And you know, you're not surprised at that.

[Baldwin] And now I just yeah, I, I'm sure there will be some of those discussions happening.

[Yeager] Do you get the sense that the consumer has been weary of buying poultry just because, I mean, we there's never any talk about the health of the meat that we buy. But do you think the non-educated, shopper has been spooked?

[Baldwin] I don't have any reason to get that feeling. I think I mean, protein in general is tighter in the United States. I mean, when you combine all three proteins beef, pork and poultry, I mean, it's all tighter and the hog market for the hog and pigs report that we got to see recently. I mean, it's showing fewer hogs also in this country. So I don't get that sentiment. So but when you just look at the tightness that we're seeing and where demand has gotten to from a protein standpoint, I think we'll stay very well supported moving forward.

[Yeager] The day that we're recording this, a couple of highly anticipated reports, one on acres, one on stocks, both seemed fairly neutral. What does more corn acres mean for the livestock industry?

[Baldwin] So the corn number came in. I believe it was just shy of a, million acres, more than what the average straight yeses were. Well, the last I had looked, I believe corn closed about 3 to $0.04 higher, which was a very good performance for corn to to shake off that. I mean, the core corn acres were 95.33 million. And I mean that at the end of the day that that's still a big corn number. Now, we've seen the corn market get hammered over the last, say, 1 to 2 months. And a lot of that is we had the manage money crowd pushing on an all time record long position. As of last Friday's commitment, traders report they were only long, I believe 73,000 futures contracts. I mean, they have ran for the door and a large driver of that has been, I believe, this acres story. And I think quietly there's probably even though the average right guess was say, 94.5 million acres was the guess, I think quietly, there's probably a lot more people that were worried about more than what we seen today. So this was a good sign to see now 95.5 million acres, it's still a lot of corn. So for a livestock perspective, we've got a long ways to go to go to grow this. I mean, we still got to get it planted, which we will do that. I mean, the farmer always gets the crop planted.

[Yeager] It might be June 15th, but they'll get it done.

[Baldwin] We'll get it planted. And with the size of the equipment today I mean it don't take long once people get in the field. But we need a we need plenty of moisture, there's no question. And where some of these acres increased, I mean they're we're going to need moisture. So from a livestock perspective, if there is a lot of corn though, if, if, if we raise a big crop, a trend line yield, which has been difficult over the last couple of years to get up to that big trend line that the USDA says, but if we get up there and have cheap corn, cheap feed, that we will continue. I mean, at the rate that we are on livestock now, the other crazy part is, though, is let's say that is negative, corn prices. I mean, with where corn has sold off to and you got $2 and ten cent plus fat cattle or 215 life cattle. A lot of these feeder cattle still make sense. So it it, it's crazy to say now there's still some there's still plenty of feeder cattle that break way too high versus where their months are when they'll go. But it's hard to get negative feeder cattle. I mean, you know, two negative feeder cow we can always sell off, don't get me wrong, but.

[Yeager] Still optimistic after all of this talk.

[Baldwin] The one plug that I do want to get in when you bring up optimistic and I made that feeder cattle comment. My biggest fear not my biggest fear I got several of on the cattle market. But one of my biggest fears is when you look at the feeder cattle market, the managed money crowd as of last Friday was record long new all time record long 32,000 feeder cattle contracts. That is massive. How many long contracts their position is. And if you went back to the previous all time record long, which they had done back in, I think 2011 or 2012, it was only like 21, 22,000 contracts. I mean, they're 10,000 more contracts long already today. So when you get bullish and I, you know, say that the market will be supported, the reason that we are already at these prices and stand so strong is because the funds are record long feeder cattle. Whenever there comes a point when they want to exit that door, it is a very, very small door in the feeder cattle market. There's not a ton of liquidity, and that's why that market always sees those big moves.

[Yeager] Is that because the doctors and dentists have bought some of those contracts very well. Could be do you get I mean that is that's actually kind of a serious question because that is always the whether it's the, you know, the front of the New York Times or front of the NBC news, whatever it was, that was the indication of the top of the market was there. But when when you see some of that money, that's not normally they're in good or bad.

[Baldwin] it's good and it's good because look at the prices we're at now. It's only I don't mean only good, but I mean the the biggest reason it's good though, is if we as producers are using it to our advantage, we all get mad when the funds are selling it and taking us to horrible prices and the volatility. Right now, we don't talk enough about how it's a good thing that the record long. That's why we're at these prices. We are but yes that you brought up a good point. I mean when the position that they have right now this this massive long position, it shows you that there are players in the cattle market that are not normally on the cattle market. And so you go back to if something were to change or, or we get a negative headline that, you know, drives this thing lower. It could be panic like we haven't seen in the in the feeder cattle market. I bring this up fall of 23 feeder cattle. They had that big rally August, September I think in the funds were long 18,000 contracts, the feeders and they didn't go to a record long. But that was the fall winter of 23. We had that big sell off and they went from being long about 18,000 contracts at their peak to, I believe they went short like 5000 contracts, something before it bottomed out. But between that September and the low in December, feeder cattle sold off 50 to 60 bucks. And that was from an 18,000 long position to short 5000. Today there long over 30,000 contracts. So the while the market is bullish today the fundamentals are really good. We're in good shape. But the in my eyes the writing's on the wall of how the story eventually ends. Now I just wish you would tell me when that time was right.

[Yeager] Because that's actually in my notes too. this is going to end soon. okay. For our audience that's here, when they're watching, whether it's you or someone else, give me something in the next three months. That's an indicator that things are changing.

[Baldwin] For the cattle markets?

[Yeager] Anything, anything. Cattle, feeders, you know, even hogs. And maybe even in the poultry market.

[Baldwin] I think the one indicator that would, I think for the cattle industry, the one indicator that you, you could really watch to see that things are changing is, is the throughput at the packing plants. And right now it has stayed stable. But there's no question the packers are going on over 12 months, well over 12 months of negative margins. And it always boils back to is how long will they continue to do that before you start to see more prolonged slowdowns at these plants? And that has not happened today. I don't know if and when it will happen, but it's just a question. We as cattle feeders need to be asking ourselves, if something like that were to happen where a plant or plants would really pare back throughput, that would be a big negative. And another thing to watch is really the cash markets. I mean, right now the any we have not had sustained weakness in the cash markets, whether it's cash, live cattle or cash feeders. These feeders will not break right now. And if we were to see feeder cattle start to maybe soften up or weaken up at barns or the feeder index, really to have more of a meaningful correction, that would be a sign that this things change them. Another thing we haven't really talked about is the lack of imports from Mexico that we've had. You know, when the New World screw worm came out in November and they shut the border down, there was no imports from Mexico in December and January. We will April, right? Yeah, it's going to be April.

[Yeager] It's going to be the same.

[Baldwin] So April 4th, we will get the next update of what the February imports from Mexico looked like. And they started to pick back up. Now it's been slow, but they are ramping back up. So that could be another thing for the cattle markets that could change this thing.

[Yeager] Right. And I said the second because that's the next round of tariffs. The fourth is what you're talking about. So there are there are all sorts.

[Baldwin] Of things to go with this week.

[Yeager] And anything that you just said means it will expire by this time tomorrow. Right. That's kind of the way it goes in the business.

[Baldwin] Another thing we could talk forever…

[Yeager] Well, I mean, this is our first hour. We're going to go for another four. So come back, we'll get some food. You could do it too.

[Baldwin] Couldn't you, could I?

[Yeager] Could I leave me with one last thing?

[Baldwin] One last thing is the economy. There's no question the stock market has just been getting hammered over the last two months. And the Dow, the S&P and the Nasdaq. And there's growing concerns around a US recession. And there's growing concerns with the tariffs and the impacts that that could have. Now, there's always been a big correlation between the equity markets and the cattle markets. They have completely disconnected themselves. And you could make the case that the cattle markets followed the gold market here recently, as both of which went straight up. But then in the back of my mind, I just wonder if the equity markets were to continue to set into a prolonged setback. And it's been a big sell off. But if we were to, God forbid, go into a recession at some point in this country, and there again, none of us will predict when that happens. But I just question, how long can the cattle market separate itself and really all commodities, when, you know, when whenever the equity market has a big correction, commodities in general follow it. So I think that's back to your question. That's another indicator to probably keep your eye on is is the equity markets as well.

[Yeager] But again, like the other things that you're talking about though. But that stock market is it numbers we've never seen before by far. Not just like a little I. And so I still don't know how to read that if that's truly because even if it sounds or rhymes the same, it doesn't necessarily seem to perform the same, correct? Which is, it has to be, keep one of those things that keeps you up at night.

[Baldwin] Yeah, absolutely. The things that are the hardest or that you can't answer that. Yeah. Yeah. Keeps you up.

[Yeager] But you're good at answering a lot of my crazy questions I appreciate it.

[Baldwin] Thank you all.

[Yeager] Right. Ross Baldwin everybody. Thank you so very much. And my thanks to Nebraska Public Media. And thank you for coming to our event today. This has been a production of Iowa PBS in conjunction with Nebraska Public Media here in Lincoln, Nebraska. New episodes of the MToM come out each and every Tuesday for Ross Baldwin. Thank you everybody.

[Baldwin] Thanks, Ross. Thank you. Thanks, Paul.