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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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AG Bull
Mike Sands | Fundamentals Trump Politics in Cattle
We unpack why feedlot placements keep falling, how heavier carcass weights mask some supply tightness, and where 2025 prices could land if demand stays steady. We also cut through noise on imports, the Mexico border shift, and dairy buyout rumors with history and context.
• November placements lower and annual totals sharply down
• 2025 fed cattle supplies likely tighter than 2024
• Demand steady as baseline risk, not a driver lower
• Heavier carcass weights boost output per head
• Front‑end supply recalculated for longer days on feed
• Argentina small, Brazil moderate import growth
• Mexico shifts from feeder exports toward feeding at home
• Cow culling falls, herd transition to slow growth
• Dairy buyout history and low odds of a shock today
• Practical read on prices, leverage, and risk
Please click subscribe on YouTube or follow on Spotify or Apple to catch the chart‑driven breakdowns and our upcoming “cattle talk for dummies” series
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Thank you, Tommy G
How are we doing, everyone? Tom Grisaffi, AgBO Media, Agbo Podcast, AgBO Trading, coming to you live from my kitchen. We got another guy who's in his kitchen. I couldn't take working in the basement anymore. Now we took a little break from doing the Mike Sands cattle podcast because cattle were moving limit up, limit down, limit this, and it was just overwhelming. But we're back at it. We brought the one and only, Mr. Mike Sands. He's there. They got him locked up in Nezvik's office. He is in Memphis, Tennessee. I actually got to cut bread with him the other day. He was very well behaved. When others were staying out a little late, Mr. Mike went home early. And uh we did have a good time that was fun to visit with you, Mike.
SPEAKER_00:Tommy, at my age, the recovery times from those nights out are so much longer than they used to be. I gotta limit that, you know. Yeah, but when you do weren't you and I talking about Killian's red?
SPEAKER_01:Absolutely, we were. That's always the fallback. I said, What do you like drink? You said like a red beer, and I said, like Killian's red? And you go, absolutely. All right. Well, when we talk cattle, we're gonna need a beer. Uh, let's get right in the show. These are your show notes. This is Mr. Mike Sands, MBS Research out of Memphis, Tennessee. If you need to get a hold of him, go ahead and call the Nasvik main office and they will get you in touch with Mr. Mike. We will put this out. I think I'm gonna put this out to the general public. Normally, this is for premium subscribers only. And starting at the beginning of the year, these will be for premium subscribers only and clients of MBS. This is the premium content right here, www.agbull.com,$25 a month,$250 a year. But for Christmas, because I love agriculture and I know you love agriculture, uh, we're gonna give this one out for free. So I will release this out on the interweb later today. Mr. Mike Sands, I'll read these monthly feedlot placements continue to shrink, annual feedlot placements historically small, beef cow herd transitioning from contraction to slow growth. I'm looking through my bifocals, by the way. Long day feed lot inventory less burdensome than perceived. Mexican border situation uncertain. Dot, dot, dot. For those of you just listening to the podcast, important volume, slightly much smaller, may never get back to last year's levels. Whoo, that's a big one. Okay. Should I go to slide one?
SPEAKER_00:Yeah, let's let's start out there, Tommy. And this is just a kind of a quick recap of uh these placement numbers. USDA, of course, will come with a Ketalon feed report tomorrow afternoon. Uh, and it looks like November placements are going to be down somewhere in the area of seven to eight percent. That's a historically small number. There's only been one other time where it's been smaller than that. But for the most part, it's an extension of what we've seen for the last several months. We go all the way back to May, for example. Placements of every month since then have averaged about 8% below a year ago levels. And at least from an overall perspective, it does not look to me like the November data is going to interrupt that string. Uh, it's gonna fit right in with other months in recent history. And at least the early indications through two and a half or three weeks of December, it looks like these placement patterns just continue to erode. I think that sets the stage for tighter fed cattle supplies as we move into next year. So if you go to the next one, Tommy, that's kind of an annual summary of these feedlot placements. It looks like for this calendar year, total numbers moved into the feed yard this year are going to be almost a million four smaller than last year. And at least the early indications would suggest that we may see another 700,000 head drop next year as well. So this year would be the second smallest on record, and next year's placement numbers could in fact be record small. Now we got a long ways to go to get through next year's data, obviously, but we have been looking at smaller U.S. calf crops in recent years. Uh, and that has tightened up domestic feeder cattle production and supplies, along with, in all likelihood, some increased heifer retention beginning this year, but probably picking up steam a little bit next year and maybe the year after as well. And last but not least, obviously the Mexican border closure has significantly reduced feeder cattle supplies in that Southern Plains cattle feeding area. All of this taken together, I think, paints a picture for tighter fed cattle supplies next year. We talked about this year's total feedlot placements being down a million four. If you just look at July through December feedlot placements, they're down pretty close to 800,000 hit. Wow. You can't look at those numbers and not come away, I don't think, without an expectation that next year's Fed cattle supplies are going to be even tighter than this year. So I'm not convinced yet, Tommy, that we are that we have seen our tightest Fed beef production from a cyclical standpoint.
SPEAKER_01:So we could the only way that prices really go down hard is if demand goes down hard. It's not that the supply is going to go up high.
SPEAKER_00:I think that's exactly right. That the overall supply picture still looks really pretty supportive. Obviously, there are always demand questions, but for calendar 25, overall beef demand is has simply been um pretty darn stellar. And at least at this point, certainly there is some risk going forward that demand could erode. I don't think it's going to grow as much in 26 as it did in 25, but by the same token, I'm a little bit hesitant to argue that that demand is going to be significantly weaker. So let's call demand steady. With a tighter supply, that does not necessarily argue for substantially lower Fed cattle prices.
SPEAKER_01:And as far as box B for the the cuts coming in from Brazil or Argentina, you think the Argentina headline was BS, right? We're going to get four times more. We were barely getting any from them anyway, right, Mike? That's right.
SPEAKER_00:Four times a small number, still pretty small number. Right. So from Argentina's standpoint, I don't think they are a huge threat to the U.S. supply. Brazil potentially could be a little bit different story. Overall imports this year will be up somewhere in the area of 15 to 20 percent compared with last year. Next year's growth, since worldwide cattle numbers are shrinking, I think next year's growth in imports might be closer to say maybe five to eight percent larger. So to your point, we're probably not going to get covered up with imports.
SPEAKER_01:Okay, I'm gonna throw out something crazy out there, and you could tell me I'm crazy. It's not my idea. If I had a client call me today and say that there's a possibility that Trump administration will pay people in the dairy industry money to liquidate animals and turn that into beef. Is that you're laughing?
SPEAKER_00:Yeah, we've been through some dairy buyouts in the past.
SPEAKER_01:We've had those before, Mike.
SPEAKER_00:Oh, yes.
SPEAKER_01:Oh, do tell because I I'm just young and stupid. There was dairy stupid.
SPEAKER_00:There was a dairy buyout in 1984 that was obviously a long time ago, but it was catastrophic. It was announced on Good Friday afternoon that year. The markets were closed, uh, and the total buyout was supposed to be, if I remember correctly, something like a million six or a million seven over a relatively short period of time. Well, when the market opened on Monday, it just absolutely cratered uh as a result of that announcement. So, first of all, I don't think I would agree at this point that there's a very likelihood of a dairy buyout. Uh and certainly not a repeat of what we saw in that debacle, if you will. In all likelihood, it would be more reminiscent, and I'd have to go back and check, Tommy, but I think maybe something on the order of 10 or 15 years ago, 10 years ago. Maybe we could talk about that tomorrow on the Nesviq College because there's a lot of young people who have no clue what you're talking about. There was an industry-funded buyout program uh at that point, and it it was uh financed through the dairy checkoff program, and it was staged in three phases on much smaller volume. So if we're gonna have a buyout, chances are pretty good it's gonna be really small, phased over time, and not a huge market mover.
SPEAKER_01:And the reason I say that is I didn't listen to Trump's speech last night, but I guess he didn't say a whole lot that he doesn't say in his normal day-to-day comments, except for the 1776 money to the to the to the people serving, and we thank all those who serve. So pretty much he got every TV channel in America to cover them to not say a whole lot more. But the reason he probably had that, they said, these are they like the contributors on CNBC. I always when my dad talks, he's like they, they. I go, who the hell are these they people? You know, he'll say they. I'm like, who's they? They, the CNBC contributors, said that he he did very the Republicans did very bad during midterm elections, and the number one thing that's upsetting people is affordability. And he talked about$200 billion, which would be one-fifth of a trillion, if my math's correct, coming in from tariffs, but we paid the tax on the tariff because everything we're buying went up. So the Americans paid the tariff, and now we're being told this is a great thing. Now, you don't have to comment, but that's just what they said, which gets me back to the beef. He's got to make it look like to the consumer that he's getting everything down, hence$55 crude oil. If you go fill up your car today, it's probably like$255 gas. That will get people driving again, won't it?
SPEAKER_00:Absolutely, it will. And I know that beef has kind of become the poster boy for high food costs, much like eggs were a year or two ago. But in the overall scheme of things, affordability could be much easier addressed, in my opinion, by eliminating the tariffs in the first place. In addition to that, reducing the tariffs or eliminating those on steel, aluminum, and lumber, which affect obviously a good bit of our manufacturing costs. And in addition to that, addressing high utility bills and insurance costs, whether it's health insurance or your homeowner's insurance, all of those will have a much bigger impact on affordability than griping about cyclically dominated high beef prices.
SPEAKER_01:Mike Sands for president, I got the American flag. Holy moly, you are wound up today. You are cranky and have an opinion. You would be young if you were president. You know you'd be young. Oh no, I'm about the same age as he is. So yeah. Uh, I love it. I love it. Let's get back to the show. The last chart before I asked you that crazy question about the dairy, which I now I'm gonna learn a lot from you on history and Google a couple things. Was these things have happened before? When they happened and the pits opened, it looked like this, things went crazy down, but the overall effect was not maybe what we were looking for, right? Or what you know they were looking for. Absolutely correct. Okay, this is the fourth slide you sent. Large decline in beef cow slaughter culling, herd growth.
SPEAKER_00:Yep. The culling rates, as far as the beef industry are concerned, are down pretty substantially. You can, if you look at that black line running across the top, uh go back to 2022. The culling rate was something in excess of 13 percent of the January 1 inventory. That resulted in a record cow kill that year, and obviously we ended up reducing the size of the cow herd for this year. You see that little black box there is around 8.5%. So beef cow slaughter this year will be down something like 17% from last year, and it's 40% below where we were in 2022. This kind of like why is the black box there? I see the black box now. That's that's the forecast culling rate for the beef cow herd this year. Now you see that blue area running across the chart there. That's kind of the 9 to 10 percent culling rate. That's kind of my benchmark. If we get into that area or lower, a lot of times it's an indicator that the industry is poised to expand. And that's where I believe 2025 will go down. We are making the transition from contraction to slow expansion. Now, people want to use or talk about the kind of dramatic expansion that we saw in 2014 and 15. This year is not any way comparable to the kind of growth rates that we saw back at that point in time. I would argue the January 1 beef cow herd may be up somewhere in the area of 300,000, 350,000 head, somewhere in that area, but it's starting from a really small number. So the end result is this is just a transition, and in all likelihood, we have further growth yet ahead of us, but it's much, much slower than what we saw in 2014 and 15.
SPEAKER_01:Can I ask you another silly question? Today, on our squaw box internal, you guys were joking about the thousand-pound weight. Tell us about that. You're laughing.
SPEAKER_00:Yeah. Well, if you go back a few years, and maybe it's more than a few now, but overall marketing weights on fed cattle were 1100, 1200, 1250 pounds live weight. And that meant the carcass weights were something, you know, between 8 and 900 pounds, maybe a little bit over 900 pounds, but that was pretty typical. Now we're talking about live weights that might range anywhere from 1500 to 1700 pounds, and carcass weights somewhere in the area of 900 to 1000 pounds and getting bigger. So we're talking about carcass weights now that are as high as our live weights were a few years ago. So our production per animal is substantially bigger than it was a number of years ago.
SPEAKER_01:So if these boys and girls had to buy a seat on Southwest Airlines, they might need four seats instead of two or three. Absolutely. Same thing the airline industry's going through is holy cow, are our passengers getting bigger. We should charge them a gas surcharge, right?
SPEAKER_00:Yeah, absolutely. Uh and it's another indication that the application of technology and feeding technology in the cattle feeding business here in the U.S. gets us more production per animal than than we've ever seen historically. So the industry has gotten considerably more efficient. We're getting more beef produced per cow, beef produced per fed animal, and and we're doing it essentially with less resources.
SPEAKER_01:Yeah, that's interesting. Now, at the let's go slide five.
SPEAKER_00:And yeah, this is this is the one that kind of gets at that whole question. What I just asked? Yes, sir.
SPEAKER_01:Good smart. Oh, all right, great.
SPEAKER_00:Great lead-in, Tommy. That was by accident, everyone. That was by accident. I think the the structure of cattle feeding has changed dramatically over the last two or three years. Part of it is genetics with regard to the cowherd, part of it is economics, part of it is feeding technology and management, but all of those things taken together has facilitated much heavier, much longer feeding periods in the feed yard and much heavier carcass weights. And for the most part, they have been pretty well accepted as far as the packing and retail industries are concerned. So even though weights are historically heavy, we really haven't seen or or felt a whole lot of pushback from the the feeding industry. Now, why does why is this important in terms of overall cattle feeding? One of the things that we've talked about a lot over the last two or three months is this front-end cattle supply. We've put few cattle on feed, we haven't marketed very many, and as a result, this front-end supply of cattle. And that's the blue line that you see running across the top of the chart. It's a calculated number of cattle on feed over 150 days. And you can see over the last four months: September, October, November, and December, those are historically high numbers. Generated a lot of discussion with that red box that you see there. That number, calculated number, first of December is 600,000 head bigger than last year. Well, that sounds like a real problem if you've got a lot of long-day cattle hunt feed and record heavy carcass weights to go along with it, doesn't leave the cattle feeder with much leverage. That's been a contributor, I think, to some of the weakness that we saw back in November and the early part of December in terms of cash prices. But I'm also going to argue that that 600,000 calculation. Is way more pessimistic than what I think the real situation is in the feed yard. If you see that blue line running across there, those on feed numbers over 150 days increased counter-seasonally in September, October, and November. Let's say, given the change in the feeding structure that we just talked about, let's say that we had seen kind of a seasonal change. We know over time that feeding on feeding regimes have increased. We've gone from 150 days to 180 days, and in some cases, maybe 190 or 200 days. Let's say we saw a seasonal change in that on-feed inventory over 150 days. That's the brown line that you see running across there. Doesn't look nearly as ominous as the blue line. And as of December 1, that on feed, long day on feed inventory is only about 150,000 head bigger than last year. December slaughter has been much more aggressive than what we had seen in October and November. And the end result is we've probably put a huge dent in that 150,000 head estimate. My point is that this long day cattle inventory is less ominous than what many of the calculations and perceptions would suggest.
SPEAKER_01:Okay. See if we have one more slide.
SPEAKER_00:This is this is the last one. We're probably going to talk about this whole thing more going forward. It's the number of feeder cattle imported from Mexico on an annual basis. You can see in recent years that number has ranged anywhere from say a million to a million four. In the last two years, 23 and 24, we brought in a million two or a little bit better each year. This year, for a short period of time, back in the spring, we brought in about 225,000. So that's it for this year. The perception seems to be that when, and that's highly uncertain, the border reopens, that there's this massive supply of feeder cattle that's going to be heading north. And my point is that that border has now effectively been closed for 13 months. So if you're a Mexican cattleman, you have made other arrangements to accommodate that inventory. We believe, first of all, that the Mexican cattle herd at the beginning of the year was somewhat smaller than a year ago because of the drought in the northern states of Mexico, Chihuahua and Sonora, that have been affected, much like Arizona and Texas. So the cow herd, first of all, and the and the resulting calf crop were smaller than a year ago. In addition to that, after 13 months, I would guess that the Mexican cattle feeding industry has ramped up, and cattlemen in Mexico have made other arrangements rather than shipping feeder cattle to the north. So the end result, maybe that potential supply might be half of what it was historically. Half a million, that's just a guess on my part. But my point is it's dramatically smaller than what we've done historically. And it looks to me, based on the amount of corn and grain sorghum that is being shipped to Mexico, they are ramping up their feeding industry to the point where we may not get back to a million two anytime soon in terms of feeder cattle imports. In fact, it's possible that we never get back to that point and we end up feeding considerably more cattle in Mexico and see beef shipped to the U.S. rather than feeder cattle.
SPEAKER_01:And hence why you said every day this goes on, we're teaching the Mexicans how to be in our business, just like we taught the Brazilians how to grow soybeans, correct? Absolutely. And just unless someone's been sleeping under a rock, the Brazilians are absolutely kicking our ass when it comes to growing soybeans. We sent them our seed, our tractors, our technology, our knowledge. They tore down the rainforests and they are not backing off.
SPEAKER_00:That's exactly right. And I think to some extent we are making some of the same steps with regard to the beef industry that that we did 20 or 30 years ago in the soybean industry. Yeah.
SPEAKER_01:Real quick, everyone, if you're watching this, I want to thank you for subscribing to the AgBo podcast. Please click on the if you're listening this on YouTube, or or if you're listening to this on Spotify or Apple, you probably want to go watch it on YouTube because it was very, very chart-specific. Mike does a great job. For those of you who don't know, Mike, or if this is your first episode, I know because of our partnership with Jim Wiesmeyer, who Mike worked with for many years. Mike, just go tell people one more time about yourself because we got some new subscribers.
SPEAKER_00:Grew up on a dairy farm in Wisconsin years and years ago, migrated to the cattle industry across the Midwest, spent about 30 years or fairly close to it, with Sparks companies. And over the last seven or eight years, have been a part of the Nesvik trading group. So that's kind of my background. Spent a career as a livestock and meat market analyst, mostly associated with the cattle and beef industry in recent years.
SPEAKER_01:Very good. Well, you are an absolute expert, and it took you how many years to get good at your job? 78, 79?
SPEAKER_00:Well, I'm still working on it, Tommy.
SPEAKER_01:It's uh this is 2022 progress year. You're gonna get good at this. I'm um we we believe in you. All right, I'm learning a lot, folks. We're gonna do a video. I was out dinner with Mike last week, and I said, We're gonna do a cattle video for dummies, and all the these guys speak their own language, and Mike's like, I don't know. And I go, All right, how many different names are there just for a type of cattle? He's like, Well, when they're this weight, they're called this, and when they're this, they're that, and then this and that. And 99% of the people have no clue what you guys are talking about, but you've done it for so long, you just think we all understand. So we're gonna do a little series cattle talk for dummies, and it'll be fun. And I think we'll I know I'll learn a lot. Sounds good, Tommy. Looking forward to it. You are in charge tomorrow's NESVIC Christmas party. You are the only adult in that room, so you are in charge. I want to hear some reports, okay?
SPEAKER_00:I I am not in charge for of anything associated with that. I am a participant, but not in charge.
SPEAKER_01:Very well. You that's right off the Bill Clinton uh playbook. I did not inhale. Mike Sands, MBS Research. Thank you, my friend. I love doing these videos with you.
SPEAKER_00:Good to visit with you, Tommy, and Merry Christmas. Same to you.
