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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.
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Fat Tuesday | Cattle on a Gold Diet: When Feeders Act Like Bullion
Supply tightens even as front‑end cattle grow heavier and packers pace kills, creating a bullish medium‑term picture with choppy, risk‑heavy near‑term price action. We lay out why feeder highs may persist, how data gaps from the shutdown complicate decisions, and where heifer retention is starting to bite.
• counter‑seasonal decline in fed slaughter and record‑low August–September marketings
• heavier carcass weights and front‑end burdens into OND
• blended cutout rally then retracement with limited upside into holidays
• feeder highs, border closures, smaller calf crops, cheaper feed costs
• why 2014–15 comparisons fall short this cycle
• heifer retention signals and early cow herd bottoming
• government shutdown data gaps and trade flow shifts
• Brazil tariffs vs Australia/New Zealand supply
• risk management, hedging discipline, and margin awareness
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Thank you, Tommy G
Wow we doing everyone, time Grossafi Aggbow Media Ag Bull Trading. Another week has come by and we're here to talk cattle with the one and only Mr. Mike Sands with MBS Research. What an exciting time to talk cattle for everything we're saying in this video. By the time we get it boxed out and put out to you, who knows where cattle will be trading. But upon filming this video, uh some of the back months and feeders are making new contract highs, and the uh front months are just a touch away. So let's bring in the stars show, Mr. Mike Sands. Mike, good to have you on. We're getting more comfortable doing this every week. And the only thing I'm not comfortable doing is trying to answer when's a top. And that's probably what uh you hear what's going to top these things out, correct?
SPEAKER_00:Well, and no question about that. That's obviously a major question going forward. But when we look at overall beef supplies and the size of the cattle inventory, the prospect that we are going to see some heifer retention, uh, the Mexican border remaining closed, chances are pretty good that we are in fact going to see smaller beef supplies, smaller fed cattle supplies going forward from here. So our real tightness in numbers, despite all of the discussion during the course of this year about a small inventory, small calf crops, uh, it sure looks to me, Tommy, like they get tighter going into next year and maybe the year after as well.
SPEAKER_01:With that, we got Thanksgiving and Christmas coming up. Pretty soon people are gonna have to start buying their needs for that, right? The big box stores and everything else. They uh I know when I go to I'm kind of a Costco guy, and every once in a while you you know that I don't feel like beef's out of control. I mean, it's expensive, but for some reason, sometimes there's still good deals at the retailer once in a while, isn't there?
SPEAKER_00:I surely believe that's the case. They do feature a good a good bit of the product that they move. The old rule of thumb years ago was something on the order of 40 to 50 percent of the beef moving out of traditional retail stores, moved on some kind of a feature price. It's probably it's probably a little bit less than that now, but it's still a pretty prominent part of their overall feature program. Now, I think for the most part, Costco is a little bit like Walmart in the sense of they really try to put together everyday low prices rather than doing a lot of featuring like traditional retailers do.
SPEAKER_01:Yeah. All right, we're gonna have an action pack show. I'll give you a couple of touches what we're gonna talk about. We got a government shutdown that's still going on. We might talk a little bit about uh with the government shutdown. We got website shutdowns. Uh, we might talk a tiny bit about Trump payments. Uh, everyone's uh wanting to know what's going on with farm raid. But uh most importantly, we're gonna talk very in detail. I'm not gonna talk. I'm gonna click the buttons. Mr. Mike Sands is gonna talk here about cattle, in particular feeder cattle. This show is called Fat Tuesday. Real quick uh about the show. I want to thank you for watching. I want you to tell friends about it. But I gotta tell you, in the next few months, you won't be able to find the show. This show's going behind the paywall. So only people receiving this show in the next few months will be friends and family of MBS Research, Mr. Mike Sands, and then friends and family and subscribers of AgBill Trading, clients of AgBill Trading and Agvil Media. So if you're interested in premium content like this, you'll have to subscribe.$25 a month,$250 a year. With that, let's get in the show, Mr. Mike Sands. I'll go full screen on you. Well, let's bring in the second start of the uh show, the uh charts. Let's see here. Chart number one. Want to talk about this a little bit?
SPEAKER_00:Sure do, Tommy. It's been an ongoing theme of mine, at least in recent weeks, that we've seen pretty much a counter-seasonal decline in Fed cattle slaughter. Basically, going back to the beginning of the year, if you look at that solid red line arrow, uh, you can see that our biggest numbers this year in terms of weekly average Fed slaughter occurred back in January. And typically, as we go from January into the late spring and summer months, uh you can see that solid black arrow at the top. We see a seasonal increase in Fed cattle availability going from January into the spring and summer months. This year, however, we are looking at and have looked at a counter-seasonal decline in fed cattle slaughter, with our peak numbers in January declining all the way into July, August, and September. That's a counter-seasonal decline. There was an incentive there for the cattle feeder to delay marketings, to put uh days on feed, to push cattle forward. Uh, and from a packer standpoint, they basically enabled that set of decisions. And the end result is we've built a front-end supply of Fed cattle here, of market-ready cattle, uh, that is uh counter-seasonally larger here in the OND quarter compared with the summer. That's a huge red flag, I think, in terms of thinking about Fed cattle prices moving substantially higher here into the fall. I've I certainly have a forecast in place for bigger Fed cattle supplies going into the next six to eight weeks. That's highly questionable. I think the risk is that the Packer keeps a pretty firm thumb on what those kill numbers look like, and that for all practical purposes enables that front-end supply to stay fairly large. We're going to string these numbers out for a bit. This second chart really confirms that. If we look at Fed cattle slaughter in August and September, they were record low for those individual months. Not just low, but the smallest on record on a weekly average basis, going back to 1985. And it sure looks like we have done more of the same type of thing here in the very early part of October. So August marketings were down 10%, September marketings were down about 9% on a weekly average basis, and it sure looks like October is going to be down somewhere in the area of 7%. All of that suggests that we still have a relatively large front-end supply of fed cattle here to work our way through. And of course, that that slowdown in marketings does culminate into heavier weight cattle. So if we look at the next chart, Tommy, you can see that uh carcass weights here for late September, uh, middle part of September are record heavy. Now, with the government shutdown, we don't get actual FI slaughter data. And along with that, no actual carcass weight data. But a reasonable proxy is the weights on formula and contract cattle. They represent somewhere in the area of 80 to 85 percent of the cattle that we slaughter on a weekly basis, and you can see that top line is moving progressively higher toward a fall peak. You can pretty well bet that FI weights are moving higher as well. My point is we got a big number of front-end cattle, uh, front-end market ready cattle at record heavy carcass weights. And that, in in my estimation, poses a bit of a red flag as far as the cattle feeder is concerned moving forward. Very good. This chart, Tommy, is uh just a confirmation. Maybe to some extent of um our discussion last week, we saw a huge run-up in beef prices. And this is the blended cutout. You can see that very sharp rally that we had during the course of the month in August. And now we're in the early part of October, and for all practical purposes, we have retraced all of that August rally with a very sizable decline in price levels here in the early part of October. Uh, it's not unusual if you look at uh the last two or three years to see a little bit of a dead cat bounce, if you will, in beef prices in late October, early November, and then maybe a little bit of a retracement in terms of that limited price increase here over the next few weeks. So that's kind of what I've got in mind. It does look like we've seen a little bit of firmness in the beef market here over the last few days. Obviously, from a buyer standpoint, uh looking at a blended cutout somewhere in the area of 360 to 365 certainly looks more attractive than that plus four dollar area that we were in at the end of August and very early September. But I think their enthusiasm and interest in pushing beef prices higher is going to be pretty limited.
SPEAKER_01:And uh upon filming this, Mike, uh, we have feeder cattle, November feeder cattle just hit 369. I believe that's a new contract high in feeders. Does that uh sound like a new high?
SPEAKER_00:Yeah, it surely does. We did get a report to the early part of this week with regard to another screw worm case, confirmation of a screw worm case in Mexico. I think the perception had been that maybe the border might reopen later this year. It sure looks like with this new confirmed case, about 170 miles south of the U.S. border, uh even though it looked like and or sounds like it was an animal that was trucked north from southern Mexico, it sure, I think, from a trade standpoint, reaffirms the notion that this border is going to stay closed. So uh this chart is is simply a comparison of the feeder index relative to the Fed cattle market. And you can see the last couple of weeks, uh the feeder index has been around 150 to 155 percent of the Fed cattle market, uh, and that basically matches up with the kind of peak feeder prices that we saw back in 2014 and 15. That would suggest that maybe feeder prices are in the process of peaking out. However, I think this time around is is substantially different than where we were several years ago. First of all, feeder cattle imports from Mexico, if we go back to the initial border closure in late November of last year, feeder cattle imports are down somewhere in the area of a million two hundred and forty thousand over that time frame. So we've got fewer feeder imports. We've had smaller calf crops in both 2024 and 2025. And in addition to that, I think we're probably in the process of holding back a few more heifers at this point in the cattle cycle, which also further tightens that feeder cattle supply. So my point is that feeder supplies are going to remain tight going forward. And if you combine that with excess feeding capacity along with considerably cheaper feed costs relative to the last couple of years, I'm certainly not at this point going to argue that the feeder market is in the process of peaking out.
SPEAKER_01:And I've traded a few markets on big peaks, Mike, like Minneapolis wheat, for example. Talk about dramatic or corn when it goes above seven or eight. Just because it's in the process of peaking out doesn't mean it won't blow you up for uh a whole nother couple days or weeks or whatever. Margin calls do need to be made, correct? Yeah, absolutely correct. No question. You better run that banner. Future options have risk down there. We're talking uh with Mr. Mike Sands with MBS Research. This show's called Fat Tuesday, but I think we're filming it on a Wednesday because that's just how the schedule went. But uh, this is uh Mike's information here. Uh if I could find it, he was somewhere over here. I lost him. But interesting because uh I want to ask you a question and we'll get to our last slide. With the uh government shutdown and the uh website shutdown, how how much are you dependent on uh that information that they provide?
SPEAKER_00:Well, USDA basically is a source of of a great deal of the information that we work with from an analytical standpoint, and as a result, a shortfall in that information does leave some holes. Um I mentioned earlier that the overall FI slaughter data and carcass weight data is is no longer available as long as uh the government is shut down our weekly trade data, both in terms of export sales and shipments, is also a casualty. And the monthly trade data that was due to be released yesterday or today will not be released. And of course, uh we have a catalog and feed report coming up, scheduled to come up uh toward the end of the month, I think the 24th. That could be a casualty of the government close down as well. And next week, um from a more macro standpoint, the CPI data and associated with that is our retail beef price data, um, could also be casualties of this government shutdown. So uh the data that we depend on from an analytic standpoint is starting to show bigger and bigger holes, which uh for all practical purposes get worse as long as as the shutdown continues. Yep.
SPEAKER_01:Soybean farmers, Mike, we're hoping for uh big talk of a big payment for soybean farmers. That doesn't look like it's gonna happen anytime I know they had talked about giving it, but the government shut down. They just can't write a check when the checkbook's in the safe, right?
SPEAKER_00:Uh that's what it sounds like, that they don't have the personnel in place and and the capability of of getting that done here in the short run. And of course, one other part of that, there has been some ongoing discussion with Brazil uh about maybe relaxing some of those trade disruptions, at least on beef imports from Brazil at this point. Uh the tariff rate is over 75 percent. So imports from Brazil uh have come to a virtual standstill, uh, and that uh does pose some limitations on domestic manufacturing type beef supplies. But at least here in the short run, uh we're more than uh well supplied in terms of large increases in production coming in from Australia and New Zealand and even Mexico and Canada for that matter.
SPEAKER_01:I'm just gonna put it out there. Well, let's talk about it after the slide, but I think this is gonna come back to haunt us in years forward, and I think you'll have a spin on that. All right, heifers and weekly feed summary declines.
SPEAKER_00:Yeah, we talked a little bit about uh heifer retention, and I think we're in the process of beginning to see a little bit of growth uh in that regard. We've been reducing the size of the cowherd since 2019. I think we're slowly in the process of beginning to hold back a few more heifers now and and rebuild that cowherd, but it's off to a slow start. Uh, if we look back at the number of heifers on feed back in July, they were down 5%, while the number of steers on feed was up two, uh, indicating that that maybe there was some early indication of heifer retention. In addition to that, there were a number of key cow states at the beginning of 2025 that were reporting slightly larger, a slightly larger cow herd and holding back a few more heifers. And last but not least, a data series that I track fairly closely is a number of heifers on in the weekly feeder cattle summary. And if you look at that black line with the triangles in it going across that chart, those numbers of heifers in that feeder cattle mix are well below where we've been the last two or three years. So when you take all of that together, I think we are slowly putting in place a bottom in overall beef cow numbers that may culminate in at least a small increase in the beef cow herd come January 1 of next year. Now, I presume, Tommy, that we're gonna have the we're gonna have the government back working by the time we get to January 1, right?
SPEAKER_01:Yeah, we had a little breaking news while you and I were recording, or I don't know if it's breaking news, but the the betting services, you know you could bet on anything right now, like sure when am I gonna sneeze again? But the betting services just up that this will go down is the second largest government uh shutdown here in history. That's coming from the betting services. And people are placing their bets, like who's gonna be president, who's gonna be vice president, who's gonna be this. They're they're making these bets. And these prediction sites are becoming a lot more uh mainstream, like exchanges are buying them. These betting sites are like getting interwoven into our futures markets and our CFTC regulation here. So it sounds like gambling, and you know what? It is gambling, and you can do it. Speaking of gambling, uh the CME announced last week that they're going to, and they were at a huge disadvantage, they're gonna start opening 24 hours a day, seven days a week, because they have these crypto products launched. Well, you can't trade Bitcoin tell people to put Bitcoin futures on and say, hey, it's Friday at four, we'll see you at Sunday at five. Like that doesn't work in a market that never stops, right? And so now the exchanges are uh slowly moving to that. To note, just on a side note, goats gold, the goats, gold is the goat, it's the greatest of all time. New all-time highs today in gold about$4,025, gold up another$65. It's nothing for you to walk in the morning, look at your quote screen, and uh see gold at$4,000. I imagine most of your life you think gold was a three, four hundred dollar item, correct?
SPEAKER_00:It was thirty-eight dollars an ounce when I was in grad school, uh, and they relaxed the uh uh trading on gold back in the 70s. And and that was it was at a fixed price up till that point. Uh so it's changed pretty dramatically over the course of my career. Unbelievable. Any other uh closing thoughts or ideas before we get out of here? Well, we talked a little bit about uh the Brazilian situation. Apparently, there is some ongoing discussions there, but with between the the two administrations, but I haven't heard anything at this point in terms of relaxing on those tariff rates on on Brazilian beef imports at this juncture, Tommy.
SPEAKER_01:All right, yeah, we'll uh keep an eye on that. Stay close to our our uh quote screen, and if news comes out, probably the market will move instantly. I I feel like the more cattle goes up, the more risk there is, and I don't say the harder risk is to control. Maybe if you're just open long cattle, if you own them, you almost I got I got a feeling people are starting to feel like there's not risk because it's just working. Does that make sense? I know it scares the hell out of you, but does that make sense? Hey, I've been for a year, why should I now?
SPEAKER_00:I I I believe that's the case when we're at the top of the market, uh, and and bullish attitudes certainly prevail. Uh I think there's less of an interest, if you will, uh, particularly with regard to feeder cattle, about doing any hedging. Uh, and to some extent, to be a little bit trite, feeder cattle are almost as valuable as gold at this point.
SPEAKER_01:Yeah, interesting. Interesting comparing feeder cattle to go. Hey, speaking of feeder cattle to gold, I saw a friend of mine on X put up a chart that these two markets have gone lockstep the last two years. If you overlay a feeder cattle on gold, they they've had similar dips, they've had similar rallies, and they keep spiking to highs. I'm not saying there's any correlation between gold and feeder cattle. And one market's so big and ginormous, and one market's so small. But you know, people are always looking for correlations. And and you just mentioned that. I'm like, I just saw a chart of that two days ago. So all right, everyone, you listen, Mr. Mike Sands, MBS Research, Tommy Grossofi, AgBOL Media, AgBull Trading. Mike always does a great job. We're doing the show uh hopefully once a week. And uh with that, for folks out there listening on the podcast, on any podcast, if you'd like to see the six slides that Mike presented, email me, TG at AG Bull. I will send those six slides to you. Of course, if you'd like to call us, 1855-737 Farm. We'd love to have you over on the uh premium side here to uh continue viewing videos like this. But Mike is by far a legend. Is that is that what you get called? A legend in the industry?
SPEAKER_00:I I don't know, Tommy, that I would say famous, maybe infamous would be a more appropriate term. I've just been around a long time, is all.
SPEAKER_01:I hit the wrong button. I started to laugh. I well, you know, with uh like you said, you could pay for a lot of college with all that experience, right?
SPEAKER_00:Yeah. Uh uh the markets do charge tuition, and I've I feel like I've paid my dues.
SPEAKER_01:We all are. Mr. Mike Sands coming to you from Memphis, Tennessee. He's in the uh Nesvik trading office. Tommy Grossafi, I'm at the uh Nesvik offices here in Nashville. Mike, we'll see you next week, my friend.
SPEAKER_00:Great to visit with you, Tommy. Looking forward to getting together again next week.
