AG Bull
Tommy Grisafi is the main host and content creator for Ag Bull Media.
The Ag Bull Podcast showcases agriculture's top talents in a long-form video format. The Ag Bull Trading Podcast is a deeper discussion of trading with analysts and key players in agriculture nationwide.
AG Bull
Fat Tuesday | Trump says he can lower Beef prices!
We walk through a fast-moving cattle market as futures flip to a premium over cash, spreads widen, and feeders gain leverage to push bids or wait. We also weigh packer margins, rising carcass weights, retail features, and why alternative meats are losing steam.
• Futures premium over cash reshapes feeder incentives
• October–December spread widens and implies stronger mid‑November values
• Government shutdown delays key data and clouds signals
• Carcass weights climb toward records and lift beef tonnage
• Quality grading improves with longer days on feed
• Packer margins turn negative and risk slaughter cuts
• Retail features drive meat case movement and pricing
• Alternative meats struggle against price and clean label trends
• Structural tight supplies favor firm beef prices into 2026
If you enjoy this podcast, well, good news. If you're a client of mine, client of Mike's friend of Nesvik, you'll get it for free. But moving forward in the months to come, you're gonna have to join premium www.agbull.com. We hope to see you on the premium side.
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Thank you, Tommy G
Happy Friday, everyone. Tom Grissopi with Agbol Media, Ag Bull Trading. We got Fat Tuesday show coming to you on a Friday. That's how busy cattle's been. Now we're going to bring in Mike Sands, but I want you to I want you to get to know Mike a little bit better, like I've gotten to know him. Mike's in Memphis. He's with Nesvik. He is MBS, which I, if I had to guess, is his initials. Pretty tricky name there. Research. He knows the cattle industry. As best he told it to me last week, was better that he paid for this education than you pay for this education. So listen up. Class is about to start. We'll bring in Mike to the show. Mike, every time we do one of these, I say to you at the end, I can't imagine where cattle will be when we record next week. Welcome to the show. Stage is yours, sir. What's going on?
SPEAKER_00:Well, the bottom line, each week, it seems to be, at least over the last two or three weeks, you just call the next week's cattle market higher, and uh you're gonna be in the ballpark at least. It may not be right on the money, but gonna be close.
SPEAKER_01:Yeah. The press has been calling me and they're like, hey, Tommy, you want to give a comment on cattle? I'm like, sure. Like, why are cattle? I go, because it's open, because the market opens at 8 30, and that's what we do. We listen to Mike's morning conference call. We know the fundamentals, we know we should buy the dip, we don't, and then it closes five dollars higher. Last week, correct me if I'm wrong, did we put$20 freaking dollars on feeder cattle?
SPEAKER_00:Yes, pretty darn close to that on feeder futures. Feeder futures, right? I think the index was up something less than that. We went from maybe the upper 250s to the low to mid two, I'm sorry, three fifties to three, two, one, yeah, yeah, yeah.
SPEAKER_01:Kind of kind of lose the the You're talking about six individuals price. That's what you're quoting six months ago. Now, I've been listening to your morning conference call. Let me see if I'm getting this straight. The cash market let up cattle the whole way, but did the futures now eclipse the cattle in some of the contracts? Absolutely. I've been listening, you can't fool me, no sir.
SPEAKER_00:Back in the middle part of September, we had the board a$10 discount to uh the Southern Plains cash trade. And over the last week or 10 days, we went, or middle part of September, we went from that$10 discount to uh at times today a five or six dollar premium. So we've seen a huge shift in the basis here over the last few weeks. Okay, what's that mean? And I'm not I'm not saying that like to set you up. What's that mean, Mike? Seriously. Well, I think it provides a really strong incentive for the cattle feeder um to either press for higher bids or to delay his sales. When he's looking at, for example, an October contract that uh expires in two weeks, it's trading at times of five, six, seven dollar premium to last week's cash trade. The incentive to the cattle feeder uh is is to delay sales and wait for the cash to catch up with futures. Um, so looking at futures implied prices, uh, you'd be looking at say an October contract trading at 242, 243 if it expires at par. That's a good seven dollars above last week's Southern Plains cash trade. Not much doubt that the cattle feeder is gonna press for higher bids. Unbelievable.
SPEAKER_01:Unbelievable. All right, everyone, you listen to Mr. Mike Sands. This is the Fat Tuesday podcast. I am Tommy Grossaffi of AGBO Media. If you enjoy this podcast, well, good news. If you're a client of mine, client of Mike's friend of Nesvik, you'll get it for free. But moving forward in the months to come, you're gonna have to join premium www.agbull.com. Of course, people at MBS, Nesvik, and Agbol will be getting it. But if you're on the outside looking in, you're probably gonna have to swipe that credit card and pay 25 bucks. We hope to see you on the premium side. Back to the show. Mike, you're too good to not charge, my friend. You're too good not to charge. And and and you did say it last week. You said, you know, you can go to college to learn, or you can learn it the hard way. But the the mistakes, you know, when when a father tells a son, don't do that, I've done that, it doesn't work. I mean, they're not kidding, right?
SPEAKER_00:Yeah, absolutely not. Uh, it it there are always tuition bills that have to be paid in virtually everything that we do. Uh, and the cattle market is no different, it does charge tuition.
SPEAKER_01:Yeah. Now, there's some things, folks, going on right now upon filming this. I just want to talk about. We're probably gonna release this later this afternoon or Friday morning, but uh gold was up$110 new all-time highs, silver up two dollars new all-time highs, extreme volatility in the stock market this afternoon, extreme volatility in Bitcoin. Interesting to see gold and silver hit all-time highs and Bitcoin sell off. What those two have to do together, I don't know. But you you got some wild things happening here in commodities. We had a big pop in uh soybeans and corn. That was nice to see all these people really bearish corn and beans. Oh, it's harvest, be bearish corn and beans. Listen, there's some bigger picture things going on. Let's get into the slides and the stage is yours. I'm gonna pop myself out, but uh, Mr. Mike Sands, slide number one. Go ahead, sir.
SPEAKER_00:Tommy, this is just what we were talking about a few minutes ago in terms of the cattle market going back into the middle part of September. The board was trading anywhere from a seven to a ten dollar discount to what the Southern Plains cash trade was at that point. And at that juncture, we were looking at a at a Fed cattle market that was something in excess of 240, 241, 242, somewhere in that area. Uh, and the board was a huge discount to that. Uh, and over the course of the last three weeks, we've seen the board rally along with in response to the the very strong basis levels that we saw in the middle part of the month. Maybe the cattle feeder was a little bit more inclined to move cattle given the strong basis and and the uh hedge situation that he was in at that point. We get into the early part of October, specifically this week, and we have the board at 242, 34, somewhere in that area, trading anywhere from a five to a seven dollar premium to last week's cash. Not much question in that kind of an environment for a hedged situation where the cattle feeder is gonna press for either higher bids or he's going to tell the packer, um, come talk to me next week and bid a higher price. And that's exactly what we've seen. I haven't seen the cash trade yet this week, but I fully expect it's gonna be substantially higher than what we saw a week ago, and a good bit of it is related to this really weak basis that we're looking at here, two weeks ahead of expiration.
SPEAKER_01:Interesting, interesting. All right, this next chart's got me scratching my head. What's going on here? Wide ID spread.
SPEAKER_00:Yeah, it's a really wide spread. All this line does is track that October, December spread. And typically, we might think of October as it was back two months ago, three months ago, trades about a$2 discount to December, typically because we see a higher cash trade going from October into December. Recently, that spread has been anywhere from$4 to$5. So besides the extremely weak basis that we have, we have this very wide spread between October and December. And it's another encouragement for the cattle feeder to either delay sales or press for higher bids. As an example, if we're looking at the December contract at$245 or better, and figure that basis in November is going to be around$2 cash under the board, then the market's really offering a cattle feeder out in mid-November, something on the order of$243,$244. And last week's cash trade in the southern plains was$235. Is there any doubt what he's going to do in that kind of an environment? Uh, the Packer won't get them bought at steady money for sure.
SPEAKER_01:Interesting. Uh, I'll throw you a curveball on the headline here before we go to the next slide. October 24th, Cattle on Feed Report vulnerable to government shutdown. What do you tell people?
SPEAKER_00:Yeah, well, um I think the odds are pretty good that that report is not going to be released, or it certainly won't be released on time. That presumes, of course, that the government shutdown does continue. But it's it's setting up a situation where we're seeing less and less of the usual government economic data that we typically see and use to make some of our forecasts and marketing decisions. And one of those is the slowdown in feedlot placements that we've seen in recent months. Along with that, overall marketings have declined very sharply as well. And one of the side effects of that slowdown in marketings and the cutbacks in slaughter rates is that carcass weights, owing to more days on feed, are heading toward a seasonal peak that's going to be record high. You can see that top line, the top red line in that chart. Those are contract and formula weights coming out of the comprehensive report. They are at historic highs, and it surely looks like we are going to see some additional increases in carcass weights yet before they finally top out. My point is that these heavy carcass weights running anywhere from 2 to 3% above a year ago are adding to beef tonnage, and overall supplies are not quite as tight as the small kills would suggest. So I'll uh give you an analogy.
SPEAKER_01:The uh Southwest Airline plane still only has 250 seats, but the passengers like Tommy G got a little bigger, right?
SPEAKER_00:Well, I I can't speci speak specifically to that situation, Tommy, but I think the analogy is good. Very good.
SPEAKER_01:Hey, uh, speaking of good, the good news for farmers, Rollins came out today and said Rollins states aids to farmers as soon as government opens. Uh Mike had stated that uh the government is still closed, which if you're just finding that out from the show, uh you took a heck of a nap. All right, but with that, there there was also a headline. I don't think we saw it come across the Nesvik wires, but Thun, Senator Thune from South Dakota, who's extremely high up the uh ladder, said we need to get emergency funding out to the farmers while the government shut down. It was suggested he walked in Trump's office and said, uh, listen up, boss, you know, we got a problem. So the government shut down, it's creating chaos. I I gotta tell you, Mike, the road crop farmers not gonna be too mad about it. They're gonna be like, this was great. The government shut down, beans rallied, this happened, that happened. There, they're not overly uh upset about it, to be honest with you. But uh they're probably gonna be more pissed off when we open up and find out exports or something were bad. But there could be some surprises, and I will say I'm not an analyst, but this gives every analyst on the street three to six months to say, well, my research was right, but the the data from the government was wrong. So no matter what anyone comes out with or says, they always have an out for a while, don't they?
SPEAKER_00:Absolutely, they do. We can as a as an analyst, you can kind of make up any story you want when you don't have data to pin it to.
SPEAKER_01:Uh uh and not be wrong or falsifying stuff. Hey, real quick folks, if you're out there, Mike brought six awesome charts today. And if you go to the Ag Bull website, www.agbull.com, I'll send you these six charts. If you want to call me, 1855-737 Farm, you can email me, TG at AG Bull.com, and I'll get you Mike's charts. Because I know people are listening on Spotify and all that other stuff, and they're like, what the heck was he saying? Hey, dumb question, Tom Grassoffi, longtime listener, first time caller. What's the second red line under the top red line, Mike?
SPEAKER_00:That's the actual FI data that the government releases, typically on a Thursday afternoon, and it's for the the week, two previous weeks. So the last actual FI data we got was back in the middle part of September. Well, we're a month later, and the odds are pretty good. The carcass weights are substantially higher today than they were a month ago. Follows a seasonal pattern, and in addition to that, overall kill numbers have been paired back. Last week's Fed cattle slaughter was only 440,000. That's like 88,000 a day, and our kill capacity is probably somewhere in the area of 105 to 107. So packers are operating at a really slow or low capacity rate, and it's leaving a lot more cattle on feed, carried over from week to week, and and that front-end supply is getting a little bit bigger. Okay. That's interesting. Slide number four. Yeah, that that relates to our previous slide. We were talking about carcass weights getting heavier days on feed. Our cattle are being fed longer. It's not at all unusual for uh feeding times now to be 190 to 210 days. Uh, and as a result of those longer days on feed and heavier carcass weights, we're seeing cattle grade much better than historically would be the case. I think prime grading right now is around 11.5%. That's record high. Choice and better, which would include choice and prime grade, is running around 84%. That's a good two percentage points better than what we were a year ago. So both the cattle feeder and the packer is happy with that result. But the concern that I have, as we alluded to earlier, is that these carcass weights may be getting up to the point where we start to see some bigger discounts coming from the packer. Hasn't happened yet, but it sure is a big red flag sitting out there.
SPEAKER_01:Mike, while you're talking, I Googled what the average price of ground beef is today, and it said$662. That's a little higher than the previous few weeks, so it's catching up a little bit to the storefront. Now, you and I spoke on last week's episode where a store could put it at$599, make it a lost liter. So you come in the store and buy a bunch of other stuff, right? What's that called when they do that? Just discounting? Yes. Uh featuring.
SPEAKER_00:Feature. That's what you call that. Feature, feature, feature. Something on the order of, say, 30 to 40 percent of the beef movement. Traditionally, it may have changed over time, but historically, it was kind of the rule of thumb that maybe somewhere in the area of 30 or 40, or at times as much as 50% of the beef movement out of the meat case moves on some kind of a feature program. Whether it happens to be a discount, or typically it's a discount, or two for one, buy one, get one free, that kind of thing. Sounds good. Slide number five, sir. Yeah, this is this just tracks the year-over-year change in choice and better beef production. It's the quality beef that that we all typically talk about. And in recent weeks, it's been running about five percent below last year. At the same time, we've been looking at fed cattle slaughter that's been running anywhere from seven to eight percent below last year. My point is the difference between the slaughter rate and this production number is the heavier carcass weights. So the weights add to tonnage and it trims the year-over-year decline in fed beef production. But going forward, given what we've talked about in the past with regard to cattle inventory numbers, on-feed numbers, placement numbers, these overall production numbers are going to stay moderately below last year. Interesting, interesting, interesting. Slide number six. Yeah. We talk about front-end supplies or fed cattle supplies with with a good bit of regularity, of course. Uh, we think for the most part that supplies are a big part of the determination of what actual slaughter is. But right now, perhaps the more dominant influence is packer margins. That red line that you see running across there above and below the zero line is just a calculation of weekly packer margins. It's a packer margin index. Doesn't represent an individual packer by any stretch, but you can see there have been weeks of big calculated losses, and there have been weeks of some pretty substantial profits. Right now, that index would suggest losses somewhere in the area of 75 to maybe as much as$100 a head in that kind of an environment. We've just talked a little bit about the packer paying up money for cattle this week. His choice then is to try and figure out a way to support the beef market to get some of that higher purchase cost back. And at least at this point, uh if we see cash prices move substantially higher this week, I think a sidebar or an offshoot of that is probably going to be some renewed cutbacks in Fed cattle slaughter over the next two to three weeks.
SPEAKER_01:Interesting. Interesting. All right, I'll pop myself back in the show. You're visiting with Mike Sands from MBS Research. I do have a uh a chart of the day. It's called uh Beyond BS. Beyond Beef today went below one dollar. That was a headline. They're on their last leg, is they would say this stock. I'm gonna Google its range. Talk to me about when you first saw Beyond Beef come on and you know its life. I'll tell you the highest the stock's ever been, and obviously today's the lowest it's ever been. Beyond Beef trades one dollar. Stage is yours, sir.
SPEAKER_00:I think it when when it was first introduced not too long after they went through their IPO, it traded somewhere in the area of 258 to 279. And there was a lot of discussion, I think, at that point. There were a number of other alternative meats that were introduced at the same time. I think there's always been a lot of concern in the beef industry in particular, but pork and chicken as well, that these alternative meats would replace a significant portion of our traditional red meat industry. But price levels on these alternative meats have been historically, in the case of beef, much higher, for example, than traditional ground beef. And as a result, I think for the most part, has never gained the penetration that the the investors originally had in mind. It's just been a situation where consumers, for the most part, were not willing to pay a huge price premium for an alternative meat. And as a result, the success has been certainly somewhat questionable.
SPEAKER_01:Yeah, well said. I I would also sum it up that three to four, caught five percent of the population is vegan, caught 10% of the population, but the whole company was based as if we were all going to switch and start eating that as if it was a healthy alternative. And you'd mentioned to my brother Joe and I before we started the show. Has anyone ever read the ingredients of what's in that? I want to say 16 to 18 ingredients on the average pack. You know, you look at that label, you know why the label's so big? That's where they put all the ingredients. I mean, absolutely. You flip that thing over and no soy, no gluten. They got all the stuff that the little TikTok mommies like so much, but they don't explain to them what's in there. I mean, that looks like a chemical bomb, if you ask me.
SPEAKER_00:Well, I think that's been part of the reaction that that some consumers have had to alternative meat products. The the ingredient list is as long as your arm. And uh in an environment where consumers in general seem to be looking for more uh clean label products, if you will, beef stands pretty high on that list when you when you look at the ingredients in beef. So that may be one of the factors that uh has contributed to the uh less than optimal performance of these alternative meats as well.
SPEAKER_01:Yeah, absolutely. All right, folks, Tommy Gersafi, Agbell Media AgBull Trading, Mike Sands, MBS Research. If you missed anything on the show, email us, call us, text us, hit us up on the website, Agble, get a hold of the folks at Nesvig if you need Mike. And uh with that, we'll meet again next week. Mike, tell me what you're optimistic about. I'll let you close the show. Tell me what you're optimistic about here in the cattle industry, sir.
SPEAKER_00:Well, uh, aside from the day-to-day and week-to-week overall price level moves, uh, as you think about longer term in terms of beef production potential, uh, it still looks to me like we're looking at some pretty tight supplies for an extended period of time. So as we wrap up this year or head into the latter stages of this year into 2026 and maybe 27 as well, for the most part, we're not going to see big year-over-year or maybe even any year-over-year increases in production. And that's got to be pretty supportive as far as beef price levels are concerned.
SPEAKER_01:Well said, my friend, Mike Sands. You've been listening to Fat Tuesday Podcast. We'll catch you all next week. See ya bye. Good to see you, Tommy.
SPEAKER_00:Looking forward to getting together again next week.
