Cattle industry outlook for rest of 2023

Paul Yeager   Hey everybody, I'm Paul Yeager This is the MtoM Show podcast a production of Iowa PBS and the Market to Market TV show. This is my microphone that I'm moving on. I just used it in an interview to talk with Ross Baldwin, which you're about to see we're going to talk about the livestock industry, find out about his golf game, his wiffle ball game, and which was a bigger impact on livestock, the Holcomb fire or COVID-19? The obvious answer, of course, is COVID-19. But we're gonna hear why we're gonna look at the livestock here for the next couple of quarters and into 2024. It's very interesting insight here from Ross, who is with ag market.net. Same firm that gives us Matt Bennett on the Market to Market TV show. So just little point of reference there and understanding where he's coming from. Where we're going now is to the full interview with Ross. Do you like playing golf? Ross?

Ross Baldwin   Yeah, I do. I'm not very good at it. But I do like playing golf.

Paul Yeager   So Monday when I tried to get a hold of you to record this. You were out on a golf outing? I didn't think farmers. I didn't think that was something you did in the commodities business.

Ross Baldwin   Yeah. Truth be told it was the first time I've been out golfing all year, the first time I swung a club. They had the Iowa cattlemen beef Masters tournament down in Denison Iowa. And yeah, group of us went down and it was a nice day. The weather was gorgeous. And we had a good time.

Paul Yeager   Who you golfing with them? So I golf

Ross Baldwin   with my brother, Kyle. And then two other friends of ours clients that I work with. Both are row crop farmers, one's a pioneer seed dealer. And so we all went down there and yeah, golf 18 holes.

Paul Yeager   What's everybody asking you right now?

Ross Baldwin   Obviously, the big. The big question in the cattle market is how higher price is going to go and how long are we going to stay at these high prices? Yeah, it's

Paul Yeager   all about the prices with everybody, isn't it? It is it is we'll get back to what they really want to know. And what I want to know. So you were you're in western Iowa, right? Is that what you call it? Or do you call yourself Northwestern Iowa?

Ross Baldwin   Yeah, we're kind of right in the in between and western Iowa, northwest Iowa. I'm going to town a Anthon Iowa. Small town. 500 people. We're about 35 minutes southeast of

Paul Yeager   Sioux City. And is that is that your home area?

Ross Baldwin   Yep. Yep. So I was born and raised here grew up just southeast of Anthon. My family's got a cattle feedlot that yeah, we've spent our whole life in cattle. My my grandpa West started feeding cattle back in the 1950s. And my dad has a cattle feedlot it's we feed around 4500 head at my dad's feedlot his brother and son operate a feedlot right next to his and then my uncle's other son has a feedlot right there. So between the three feedlots There's 7500 to 10,000 head of cattle right there.

Paul Yeager   Did you always did you want I mean did you envision yourself being full time cattle feeder

Ross Baldwin   not really, you know growing up we we've spent our summers and growing up but you know, just working around cattle our whole life and my brothers and I actually our whole Summers was about playing baseball We just liked when we weren't playing in cattle waters or working cattle we'd be in the backyard playing wiffle ball and that's so I didn't I didn't ever envision I'd be you know probably feeding cattle at the rate we are but I guess you know, as they say life comes full circle and when something's in your in your blood, it's you know where you end up I guess.

Paul Yeager   So when the professional wiffleball league didn't develop the way you wanted it to? You had to have another option is what I'm hearing.

Ross Baldwin   Yeah, had to find an alternative.

Paul Yeager   Do you were you more of a fielder better field or better hitter better pitcher? Um, first base.

Ross Baldwin   I mean, when we were playing wiffle ball, me and my two brothers I mean, we were all pitchers just throw it as hard as we could at the other guy. And if the curveball didn't bend, then the other the other one was going to be mad.

Paul Yeager   You had to wear it and move on. Yeah, what did your brothers then mean? Did did you have those discussions? I mean, some people it's always we're all in and and others are like we're all out.

Ross Baldwin   Yeah, so both both of my brothers. I'm the youngest of three, my oldest brother, Kyle, and then my middle one Colt. They both work full time at the feedlot with my mom and dad. And so they're both out there every day. And then when I'm not working here in the office and amp and then I spent a lot of time out there helping them. You also

Paul Yeager   could do math because you figured the third one there might not be enough room for me to eat at that trough. Yeah, exactly. So at what point did you realize that? I mean, was there a college in your future after high school? Yep.

Ross Baldwin   So I went to college down at Northwest Missouri State and Maryville, Missouri. I've got a degree in animal science. And then after graduating college, I wanted to get into grain merchandising, actually, and there was a brand new grain elevator that was built just south of Anthon that I got the location manager role of that. And that was back in May of 2012. So my first year in the grain industry was obviously the the year of the drought that we talked about frequently. And I spent a little over six years managing that truck house elevator handle on corn and soybeans. And then after that, I went over and I worked for Flint Hills Resources at an ethanol plant in Arthur, Iowa and did kind of merchandising and and a lot of commodity risk management forum. And then,

Paul Yeager   in Flint Hills. Flint Hills is one of those that they think of it as an energy company. But it has history and exploration. Right. Do I have that? Right?

Ross Baldwin   Um, yeah. So So Flint Hills resources, I mean, they they do? Yeah, heavy in the energy market. They've sent sold off the, the ethanol plants that they had. Poet is the owner of them plants now.

Paul Yeager   Okay, so then after Flint Hills, what do you do?

Ross Baldwin   Yep. So after Flint Hills, I was really ingrained in the commodity space, heavily focused. I mean, you know, in the grain markets, I've done a lot of risk management and corn spreads, soybean spreads. And at the time, as I was working, working through both jobs, started feeding a lot more cattle at my family's feedlot and just kind of kept progressively getting more and more involved with my brothers and my dad. And then I knew that I, I really, I always wanted to kind of get into the commodity space, more of the commodity risk management. And following close to 10 years in the commercial grain world. I was the I was more ready to jump then than ever. And we ended up Yes, so ended up with ag market.net which the parent company of ag market dotnet is John Stewart and Associates. And one of the head partners of Jon Stewart and Associates, I had gotten to know through the commercial greenspace he did risk management at both the elevator the grain elevator that I was at, and then we worked with him when we were at Flint Hills. And so we ended up Yeah, with ag market and get to work every day with the guy that I started out working in the grain industry with.

Paul Yeager   You also got to know some guy named Matt Bennett.

Ross Baldwin   Correct. I got mad as Matt has been vital in helping get us started our office. There's I've got two other partners in our office. All three of us were in the commercial grain space. So you know, the commodity brokerage world was was new to all three of us and yeah, we couldn't, couldn't ask for a better company to be with Matt and and the other main partners, they've just they've been phenomenal to work with.

Paul Yeager   When you were playing wiffle ball, who was your father using to help market his animals or figure out how to purchase grain? Was he doing that on your own? Was it your mom doing it?

Ross Baldwin   My dad, he's Yeah, did it on his own. He did not ever really work with a commodity risk manager. His dad, they just all did it on their own, you know, back then. I would say the the cattle industry obviously it's went through a lot of change over the years. But you know, they they did you know, more Packer contracts, I would say back then we do very, very little if any Packer contracts today at the feedlot, but you know, that's just kinda Yeah. How the cattle markets evolved.

Paul Yeager   You're talking to your, your personal feedlot you're saying hasn't done a lot doesn't do a lot of Packer feedlot contract.

Ross Baldwin   That is correct. Okay.

Paul Yeager   So your dad kind of did it on his own? How do you tell someone like your dad that, hey, maybe you could have some professional help?

Ross Baldwin   You know, it's never an easy an easy answer or thing to bring up. But I mean, my dad, he understands I mean, the volatility of the cattle market that we've seen, I mean, when you when you go back to I mean, gosh, even the early 2000s this market, the volatility has just only continued to pick up and, and obviously with 2014 to 15. And, and then the volatility would come in off them all time record high prices and, and then 16 through 20. I mean, it was, you know, a massive sell off in 15 and 16. And, and then felt like we were turning the corner in 19. And then we had to come out of your packing plant fire, and that threw a massive wrench into the capital markets, and six months later, it felt like okay, we're finally turning the corner again and we get COVID. So, I mean, it's just kind of, you know, the volatility over, you know, let's just go back to 2014, there's been no shortage of volatility in the cattle markets. And, you know, my dad, he fully understands it now, along with several other producers that, hey, we, we're in a good good spot right now. But we can't let this thing play out the same way that we've seen it over the last, you know, call it decade.

Paul Yeager   So you're not in a square in the cattle industry, you're more like an octagon where you just keep going, and then there's just a slow corner that you turn, because do you ever feel like you'll go back to something that's lack of a better term normal?

Ross Baldwin   I don't know that we will, you know, it's hard, you know, what is the what is the word normal in the cattle market anymore? I, that's a hard one to say, I think this volatility, it's obviously here to stay. I mean, for the foreseeable future as we navigate through this bullish market that we've got. But I think as eventually when numbers do increase, you know, and we do expand the herd maybe a few years down the road, maybe that would be a more normal market than what we're currently in at these all time high prices. But yeah, for right now, the market like that feels a long ways away.

Paul Yeager   I guess define normal, what, what, what makes something normal in livestock?

Ross Baldwin   You know, the, the word normal to me in livestock, I hate to even say, throw out a number like this, but you know, the word normal, when we come off 2014 When we got up to the previous all time, high prices, 2014 2015. And then we kind of set settled in after that big sell off 16 through, you know, even just a couple years ago, you know, $1.25 to $1.30, for your fat cattle, that was probably, you know, the word normal, you know, you hope to get a rally up to $1.30. And, and get a good spot to hedge some cattle and you know, make us make a small profit, you know, that's probably the word or more normal to me. But hopefully, we're a ways away from that being a normal market. Given what we're dealing with today,

Paul Yeager   do you find a certain level of conditions that are normal, like a certain number of packers or a certain number of large feeding operations, medium feeds, small feeds? Is there any type of balance that influences some of this?

Ross Baldwin   So great question. Normal to me in the cattle industry, as you bring up the the Packers normal to me, I know this is this is open in a huge bag, in the cattle industry, but normal to me is how we operate today with the packing industry. I mean, you have the four major packers, we have smaller regional packers, but that is normal to me, because that's what we have dealt with. Right, wrong or indifferent. That is the way the industry is. And that's how we have, you know, we've had to navigate through the markets over the last decade is, you know, what the Packers that are, that are here, and I don't see that changing? I don't see, you know, there is expansion occurring, there is more packing plants coming online. But I don't see that being, you know, a huge driver in the, you know, in the foreseeable future right now. Obviously, these are not normal times with the rapid, you know, slaughter levels that we've seen across the cattle industry. I mean, that that's been we've been going on over two years now of aggressive cow kill. That's not normal. I mean, the the inventory numbers that we've seen rapidly declining, you know, the last two semiannual cattle on feed reports in January. That's not normal, which is what has led us to these all time high prices that we're seeing. And, again, that's not going to change either. I mean, this next January, which we'll get another semiannual cattle on feed report coming up shortly. But look out the next January, I mean, all cattle and calves on feed, I mean, they're going to be rapidly down again, we continue to slaughter cows at a very aggressive level in this country. And so definitely those aren't normal levels.

Paul Yeager   Okay, so do you buy the or subscribe to the theory of the cure for high prices as high prices in the sense of demand is going to get cut out that is going to maybe somehow keep some of those Animals in the

Ross Baldwin   eye absolutely buy into the same, there is no cure for high prices like high prices there. You know, conversely, there's no cure for low prices like low prices. I know we're talking about livestock here. But let's talk about, you know, the grain market. Just real quick. I mean, we've seen, we've seen the corn market, it's just, you know, we've sold off over 90 cents here in the last five days. But prior to that, we rallied $1.40 On December corn from the May low to the high here recently. And that was on the weather concerns the drought that we've had dryness across the country. The problem, though, that the corn market had going forward in the in the wake of all of that was the recent high prices we've had the last couple of years. I mean, it's no secret to anyone in the grain markets. corn demand for lack of a better word is terrible right now. I mean, our exports are, are terrible. And there's a lot of other things, obviously, you know, cattle numbers down. But, you know, high prices have cured that. I mean, that is why we're in the state that we are as a relates to the cattle market. Eventually, there's there's no question, high prices, we'll hear what we have going. Demand is when you when you look at, hey, what's something that could take down the cattle market right now? I mean, in my opinion, the fundamentals, the tightness that we're in that we're seeing, I don't see that changing. And I know there's several others out in the cattle market. I mean, we've, we've got to this point, because of it's unfortunate, but years of destruction across the industry, I mean, coming out of 15 to 16, how much money was lost, you know, after the first time, we had all time high prices, and I mentioned this earlier, but the whole compacting plant fire, I mean, that was devastating. And then COVID. And, and then the last coming out of COVID, we were thrown the drought across the country, and your feed costs just screamed, I mean, coming out of you know, August of 2020, when when corn finally bottomed. And so we've unfortunately got to this point, because the amount of destruction, and once you start the cycle and the cattle were gay, you just don't change the fundamentals on a dime. You know, we're not even, we're not even in my opinion, we're not even talking about, you know, big big heifer retention this year. I think you're looking out into to next year before we're really starting to see maybe the retention, you know, of heifers. So from the from the sheer fundamentals numbers only continue to get tighter, I mean, for both the market ready fat cattle, and in even on the you know, the cow side of things.

Paul Yeager   Who wins in that scenario, then? Who's the who's the biggest, biggest beneficiary of less retention?

Ross Baldwin   Your question is between the fat cattle feeder and the rancher.

Paul Yeager   And for the sake the packer to

Ross Baldwin   you. So I'll hit real quick with the packer being the last one you're brought up. I mean, Packer margins have have, you know, got back in the positive here. Obviously, box beef is, you know, screamed higher, it's since really been coming back down aggressively over the last 10 days. But I mean, the Packers have done a phenomenal job managing this tight inventory and their throughput in they're extremely good at what they do. And so they have done a very good job of keeping their margins positive. They have had a blip here recently where they weren't negative. But moving forward, I don't think it gets easier for the packer. If you start talking q3 and q4 of this year, later this year, q1 of next year, I think the Packers really got their work cut out for him, because these numbers are rapidly going to start getting a lot tighter than what we thought. I've been in the camp telling people I really think you get past the first 10 days, two weeks of June and July, we're gonna see these market ready factors are gonna be a lot tighter than what people realize. in it. Go back to your question. I mean, the fat cattle feeder. We've had a, we obviously had a really good run here. I mean, the the last couple years have been good. And this last turn right now. I mean, anything that we've been selling for the last six months is it's been extremely good, which is, you know, needed across the cattle markets. The rancher he's having he's having a really good, really good go right now to so who wins. I mean, ultimately, I do think that comes down to I mean, we can we can all win, I guess because we are all in a position right now where we are profitable. But managing risk is going to be key. I do think I mean, who's the who's the winner at the end? I mean, there will come a time where right management is going to be key for the fat cattle feeder, the rancher. The packer, he's going to be just fine.

Paul Yeager   Well, and it seems like the packer always has been fine. Correct. That is for there's very little sympathy for the packer, even though some of them are publicly traded companies that probably some farmers on some stock in either because of whatever scenario and in America, we should love it when our companies that we have stock in perform well. Yeah. I mean, I don't mean to yell. But I mean, that's what I hear. And I know you hear? Yep. All right. So let's go to the question of whose best setup for the scenario, the picture that you're painting, the small time producer who's less than 100 head, the medium sized one are those ridiculously large ones.

Ross Baldwin   Um, so I would say that up here in the North, the northern feeding region, we have had a major advantage to the southern feed yards over the last couple of years. The north, we, they we've outgrown, you know, the southern feed yards. I mean, we've been tighter on numbers. And, you know, one result of that is over the last couple of years, a lot of Farmer Feeders up here in the North that got caught up two years ago, or a year and a half ago, feeding $8 Corn said, I'm not doing this again. I mean, we weren't getting enough money for our fat cattle back then. And so it was not lucrative to be feeding high dollar corn like that, let's just say seven $50. Corn. So we have been tighter on numbers, no question. Caches lead the way up here in the North. You know, we are there are some big feed yards up here in the North. But as a whole, we are a lot smaller in size relative to the southern yards. I do think we've been better equipped up here because our feed feed costs and a lot more manageable versus what the South had to deal with. With what the price of corn has been, you know, the South is catching up with the north now on cash. Cash is very undefined at this point this week. But you know, the South's traded some 178 to 180. So far this week between Kansas and Texas, it's been very quiet, northern trade, very undefined people have been passing bids. But I do think we are going to see the south continue to increase on cash prices. And you can look at the previous you know, several previous cattle on feed reports. I mean, on feed numbers and placements down especially Kansas, Texas, they have been well below 100. And so, you know, they've the Texas look at the drought issues that they've had down there. And the high cost, you know, high feed cost and, and Kansas is obviously dealt with high corn cost over the last couple of years. So we are gonna start to see those numbers, you know, really tighten up I think in the south versus what we've been used to.

Paul Yeager   Well, let's talk about the South last year did a lot of stories about Oklahoma and Texas drought and yards, shipping some animals to other places. It has rained in the panhandle of Texas and Oklahoma. And in some cattle feeding areas. What does the southern outlook look to you?

Ross Baldwin   Yes, Texas, as you mentioned, I mean, they dealt with just a severe drought, you know, and all across the country, you know, issues. But let's just talk about Texas real quick, because I think Texas is a major driver of what we're seeing in the market. So yes, they have gotten good rains recently. I mean, their drought has been easing, all but dealing with excessive heat right now. But when you look at the drought that Texas has dealt with, when you look at the weekly cow slaughter, okay, down there, recently, they picked out and it's part of a region down there, but Texas is the main one in that region, I believe it, they call it region four, but they were in that region killing 16,000 cows a week. And that was as recently as I think a month ago, I haven't looked to see exactly what that number is right now. But the peak of that number was just under 25,000 cows a week that they were killing in Texas was 16,000, or that region was 16,000 cows a week to put that into perspective back in 2014. The peak of what they killed in that region was 6000 cows per week. It is staggering. You know, the the amount of females that we've killed across the industry. And currently today, we are still killing a lot of cows and heifers across the country, which which tells you we're not at that that retention phase yet to where we gotta worry about, you know, which that's even three years out, you know, from the time that you start retaining heifers, but the I do think that's just a really interesting number to throw out there as Texas has dealt with that drought. You know, hopefully they can all catch a break down there. And you know, what, you know, moisture obviously is a lot better than what they've dealt with. And I mean, they could definitely use that, you know, cheaper cost of gain down in, you know, Kansas and Texas versus what they've dealt with the last couple years.

Paul Yeager   Why does someone in Anthon need to care about what goes on in Texas in Oklahoma?

Ross Baldwin   I mean, Texas, Oklahoma, Kansas, I mean, you know, as it relates to feeding fat cattle, Texas is the number one state, you know, number of fat cattle on feed. You know, as it relates just overall numbers, Texas is the biggest, you know, back cattle. I mean, you got Nebraska and Kansas, you know, be in number two and three, but the southern yards with the big corporate feedlots they they are where the numbers are at. And so it is it is key to watch. And if we can see them start to out trade, the North, the Texas and Kansas feed yards, which I think is going to happen. It shows you how much more current the industry is versus what we've even been mean. We're already extremely current. But

Paul Yeager   is that tell me define current? Because I know what it means. But how do you define current there?

Ross Baldwin   I define current as you know, what weights are that we're shipping cattle out what cash continues to do, obviously, the choice let grading. But current to me, is, in the simplest terms, what the weights are that we're shipping out and what the appetite is from the packing industry. And I can tell you at our feedlot just right here and Anthon over the last year and a half, it is nothing for us to have four different bins from four different major packers. And to me that defines that sums up the word current and the cattle industry when you have Packer competition, your current, that's what we have today.

Paul Yeager   That's balance to it does sound

Ross Baldwin   exactly fun.

Paul Yeager   Okay, I asked you a couple of political questions. I was gonna steer away from him right now. But I'm gonna get political for just one minute. We had hearings about six months ago, 12 months ago about these four big packers, and maybe they're too big and there needs to be some a little more oversight. When the government gets involved. Does that upset the market? Or is does the market shrug it off what the government's doing, at least when you hear you hear about and you see hearings?

Ross Baldwin   Government involvement always scares me? I will say that, or overreach, you know, but as it relates to the packing industry, I know there's always been a call for we need the government to get involved. You know, there's even been calls to break up the big four. I'm not, I'm not in that camp. It's a that is a extremely tough industry to aware these major four packing companies. It's a tough one to fill. So, I mean, these plants I have, I've had the luxury of touring Tyson's Dakota city plant here a couple of times over the last couple of years. And it is it's it's a mind blowing tour to go on to see from start to finish how they're killing 5000 head of cattle every day. So I know there's you know, calls for the government to get involved in and break that up. I struggle with that one, to be honest with you, Paul, just mean when you go through those plants and watch how they they the amount of workers that they have and and how efficient that processes to slaughter 5000 head of cattle every day. It's It's a humbling humbling experience to see just just how well the machine that is in it really gave me you know, a whole different perspective when you thought about the whole compacting point of fire and COVID and how quick it is to derail you know, the production side of things of what they're trying to do every day.

Paul Yeager   But you've said Holcomb a couple of times that I wrote it down as I wanted to go back to that which was a bigger influence on the livestock specifically cattle market the Holcomb fire or COVID.

Ross Baldwin   COVID. No question. So Holcomb Holcomb happened. You know, that's a Benny county plant 6000 head 6000 Head of day slaughter facility down there. When that happened. I mean, you start backing up, obviously 6000 head of cattle a day. It was devastating short term to the industry. The crazy part was is once we did get down the road, the other packing plants started picking up the slack enough to where we were slaughtering just as many cattle without Holcomb as when it was on line, you know, down the road once they started getting cattle jockeying around and in shifts running more efficient. You know, that was about a six month problem of backing catalog. And then we get to started feeling like when we started out 2020 January 2020 Hey, okay, maybe we're finally working through Holcomb was back online, but you were finally working through this and then COVID hits in March. And that was, I hope, I hope I nor anyone else in the cattle industry and obviously the world, but what we had to deal with, but let's just say for the sake of the cattle industry, I hope we never have to see anything like that again. Because once that happened, you know, I don't remember off the top of my head, what the lowest slaughter number was what it feels like 70 to 75,000 heads a day, you know, we were backing up 50,000 head of cattle a day, you know, there were there was I think one week there was over 250,000 head of cattle that we backed up. I mean, by the time it was all said and done, you were talking a million head of cattle over a million head of cattle that we backed up. And, I mean, it was that was, that was a tough market, you know, because even as cattle feeders we were, you know, you had zero leverage, absolutely no leverage, and the prices had plummeted were plummeting. And we were essentially all just trying to beg to get kills face, you know, to get cattle slaughtered. And it all worked out, unfortunately, you know, it was it was financially horrible for a lot of producers. And, and it's it's led, I mean, coming out of Holcomb and, you know, the grain markets rally during that same timeframe. It was like, we just got one blow after another, but it's ultimately what's led to, you know, that kind of destruction has led to the market that we're in as, as numbers. I mean, you know, they they peaked out there, you know, back then, and, and we just continue to see him drop rapidly.

Paul Yeager   Give me the difference. Now, 2023, and some of the factors that you mentioned, moving in the next two years for livestock producer, versus what we had going into 2016, how are we going to be different and not have that collapse? Of 16? Are we set up any different that because I mean, you've checked off a couple of boxes that give me pause to kind of poke a little hole in what you're saying in the in the rosy outlook here.

Ross Baldwin   So I I will say right now, and I'm bullish now, I am bullish for the remainder of 23, it's hard for me not to think that 24 isn't more bullish than than what we currently are. Now, that doesn't necessarily mean that we're going to get fat cattle prices. And I hope we do. I don't know, that'll mean that we have to have that cattle cash prices go, you know, well over $2 Live, I think we will eventually trade $2 live on fat cattle. You know, one thing to where 24 can can be wildly profitable without cash, you know, screaming to two plus dollar live prices is if our costs again can come down which is we are seeing that come down with what's going on in the grain markets. You know, in I mean corn, corn rallied the dollar 40 of the time and did that and the same time feeder cattle August feeder cattle as bullish as they are. They sold off corrected after going to you know, they actually had a double top on the weekly chart of the previous high back in 2015. I don't think that holds long term. But feeder cattle white corn rally, you know $1.40 They sold off over $18 now and the bowler story for feeder cattle and that same time did not change i i have been extremely bullish feeder cattle and I honestly think feeder cattle is one of the most bullish markets out there as as those numbers are extremely tight and they continue to get tighter. But as corn has sold back off here recently which cost again comes is coming down feeder cattle now but over $13 back on in the last five days. I think it's been but what can out into 20 fold. You know the the USDA and there there may was two reports there June was reports they have you know beef slides the grain markets get all you know the hype is around the grain markets for the Wednesday but the USDA does have slides and beef and the May was the report is always when they give their outlook for the the upcoming year for 24 that we got to see on this last May Wednesday. And they they made a massive reduction for beef production out into 24. And I believe it was 2.22 point 3 billion pounds that they are forecasting beef production to be below this year. And this year is already down. They've had to make a lot of revisions actually from their initial one for 23. due to drought, the amount of kill cows that were killing. So we've had more production than what they originally were forecasting. But that last year the the May was in 23 the decrease that they made I believe it was initially like 1.81 point 9 billion pounds lower versus 22. That was the largest decrease to be production over one year and 44 years. They've sent said to revise that because of cow kill. We're not going to have that near that. Well, I believe they've actually raised it like maybe one 1 billion pounds 1.2 Something like that we were still 800 million pounds below the previous year. But this may was the that we just had, they forecast beef production, the 2.3 billion pound decrease that was the largest decrease in 45 years that they're forecasting for next year. So as it relates to market ready cattle, the availability, it's just simply not going to be out there for 24. You can't turn this thing on a dime, feeder cattle. You know, we just had our cattle on feed report last Friday. You know, the placements there was there was people that thought all that placement summer came in as Barry she was 105% placements versus the guesses they weren't thinking was going to be that much. What the role that is the dry conditions that we've seen across the country coupled with where feeder cattle prices are the ranchers, the ranchers are so wildly profitable at these kinds of prices. They're selling, they're selling these feeders. Very quick. And I can tell you, even from personally at our feedlot, we've been buying feeder cattle back as fast as we possibly could. Because we know the writing's on the wall of what's coming post July, the availability is just not going to be out there. So that number Yeah, it was a bigger placements than what people thought but it there was a lot more that went into it than just seeing 105% placement number

Paul Yeager   took advantage where you could earn

Ross Baldwin   that 105% placement number that was actually the first placement summer that we've seen above 100 Since last September.

Paul Yeager   Oh, it's been that long. Yep. Wow.

Ross Baldwin   I know you asked so so so how does this end? What's different verses 16. And the way that ended? I, I have been in the camp and I continue to tell people, This will in the exact same way that 2015 and 2016 did, we will go from you know all time high profitability levels all time high cash prices, risk management will be as key as ever. I still think we've got a good go of it. I do think back to our our comment earlier about high prices, high prices will eventually they will eventually slow demand. Personally, I I'm not too concerned about demand right now. I think when you look at some of the US economic data, unemployment remains extremely low. Just spending across the country. I mean, people continue to spend money. I mean, we see it here, I've traveled across, you know, you know, some bigger cities in the Midwest, and you just see people are out and about and they want I think that was the one of the biggest things COVID did was and people want to be out and about and they still remember that. So I don't have too many concerns about demand, you know, let's say over the next few months, but eventually these high prices, they're going to weigh on demand, which ultimately will weigh on cattle prices being at all time record highs and it makes managing your risk is crucial as ever. The stakes have never been higher. It's what I keep telling people, especially with what we're paying for feeder cattle.

Paul Yeager   You can't call Spencer a big town that's not a big town when you've seen you've been to all these big towns. Ross, last question. Are you better driver chipper or putter?

Ross Baldwin   Um, we did use a couple of my drives at the tournament. On Monday. I died. I'm not much of a golfer, the one individual that golf with us he did shoot knockin to Eagles actually and he almost so I didn't have to do a whole lot of chipping. I'm gonna be honest with you.

Paul Yeager   Fair enough. You can get to make your dough where you can be a good clutter. Ross Baldwin, I appreciate the time. Thank you so much.

Ross Baldwin   Thank you, Paul. It's been a pleasure.

Paul Yeager   Alright, my thanks to Ross Baldwin. If you have any feedback for me MarkettoMarket@IowaPBS.ORG is the email address to us. I look forward to hearing from you and see you next Tuesday for another installment of this podcast.