Getting Data and Insight on the Cattle Market With Dr. Derrell Peel

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[Yeager] The cattle market is complex. We call it the cattle complex, the livestock market, whatever it is. But as Darrell Peel tells us this week, it is still an extremely complex situation and there is a lot to sort out right now. We have talked about it on Market to Market for weeks, months, almost years about this run up in prices. So who's winning in all of this? Who is if the scoreboard is all about who's making the most money? Derrell Peel from Oklahoma State University is going to tell us he is going to help us out, understand what factors are in play, what data is coming down the line very, very soon that will give indication about trade issues that have been happening, especially on North America and around the world. But then we're also going to be talking about drought, because, you know, it always goes back to the weather for me, and I'm sure it does for you. New podcasts of the MToM come out each and every week on Tuesday. This is the last episode of season nine. Next week, season Ten's premiere is a special one. Well, they're all special. Who am I kidding? I like them all. Market to Market research is what we probably should have called this podcast because we do get into many, many topics this week. Again, livestock with Derrell Peel. If you have any feedback for me, hit me up. markettomarket@iowapbs.org. I'm Paul Yeager. This is the MToM podcast. Now here is Doctor Derrell Peel as we open up this discussion like we would if we were in a courtroom. I'll explain why now.

[Yeager] Doctor Peel, if you could please, please give us your qualifications.

[Peel] You've got it. So I've been on the faculty at Oklahoma State University for about 35 plus years. At this point. I have, PhD from the University of Illinois and Agricultural economics. I have two degrees from Montana State University. bachelor's and master's degrees in agricultural economics.

[Yeager] And you've studied the cattle industry at nauseum.

[Peel] My entire life, really, in a very real sense of the word. But certainly, you know, my entire professional career, I've had this exact same position as the extension livestock marketing specialist here at Oklahoma State since I've been here.

[Yeager] Have you ever seen anything like we are dealing with in the last six months in the cattle industry?

— [Peel] Yeah. You know, this is completely unprecedented in a number of different ways. You know, from just the internal fundamentals of the industry, the normal dynamics that we deal with or from the supply side, and then, you know, add to that all of this, political environment that we're working in now, the macroeconomic environment that we're working in now. And then, you know, we've had some unique things here with some animal disease issues and other things. So, yeah, when you put all that together, there's never been anything that I've experienced like this.

[Yeager] We were running up, though, prior to Screw Worm being a headline maker. Right?

[Peel] Oh, absolutely. You know this. In fact, I don't think Screw Worm has relatively little to do with where we're at in terms of prices and the movement of markets right now. It's one more factor. And it's and it's kind of adding to the situation. But, you know, this is not a market driven primarily by the, you know, by the border closure or anything related to that. We're in again, the supply fundamentals in this industry are in a situation we've not seen, maybe ever, but certainly not in decades.

[Yeager] The last time you and I spoke was after a massive report last year that said the smallest herd since this date. Then we went and added it to it this year with inventory lower than before.

[Peel] Exactly. Yeah.

[Yeager] Why is it not? Why are we not getting more inventory?

[Peel] Well we will. You know, it's been a slow process. I've spent a lot of time in the last few months studying previous cattle cycles to try to understand the one we're in now. And, and one of my main messages for producers for many months now has been, you know, I know you remember what happened about a decade ago. We had a cattle low in 2014. We expanded to 2019 and started down again to where we are now. and I said, I know you remember that, but this one, even though some things about it are similar or at least some of the fundamental causes are similar, there's some very important differences. This time it's going to be different and has played out thus far to be different. And I think it's going to continue, to be a little bit different story as we go forward.

[Yeager] You mentioned already some of the factors that make it different, but is there one, if you had to pick just one favorite child that made this happen for this run up? Is there one?

[Peel] It's tough because I think it's a list of things. But, you know, you can easily say, well, the last two lows were caused by drought or exaggerated by drought. The industry has been cyclical for 150 years, but it's turned out the last two times we've had droughts, right at the low point of inventory that has exaggerated those lows. What's different this time, fundamentally from the last time, is that the drought, a decade ago, was very regionally pronounced. It's primarily here where I'm at in Oklahoma and Texas. And what happened to us was very severe, and it was severe enough to change the national numbers. But not everybody in the country went through that drought. And so they were prepared to respond more quickly coming out of the drought. This time, we've had multiple years of drought that have been pretty much around the country. It's kind of moved around a little bit in emphasis, but everybody's had a turn in the barrel this time. And so the overall impacts to the industry have been much more widespread. It's taken longer for recovery. And I think that's what we've been experiencing the last couple of years. And we're still not out of it. We just can't seem to really get a clean break on this drought at the moment, we're in pretty good shape in the Southern Plains, but there's still a lot of issues in the central and northern Plains and in some major beef cattle areas. So, it's been a long, slow process and will continue to be, I think, a lengthy process as we go forward.

[Yeager] There's always the story of cattle. We're leaving Texas and Oklahoma and going to other places to be fed and finished. Is that something that is still happening?

[Peel] You know, that happened a lot in that last drought induced liquidation. We didn't see much of that this time because, again, kind of everybody was in the same situation. And so we didn't see as much movement around. We had much more, you know, we had a deeper liquidation ultimately. I mean, we're about 1.1 million beef cattle smaller now than we were at the low in 2014. And I think that's that's again, another one of the differences. We've just had to cut deeper because everybody's you know, nearly everybody's been impacted. And so the, you know, the, the, the, the impacts in terms of liquidation were bigger, but the impacts financially were bigger. And I think it's taken a lot longer for producers to recover. So drought is a big part of the story. Back to your earlier question. I would still say drought is probably the biggest factor, but really it's a combination of the lingering and continuing financial recovery from that drought combined with, you know, just the, the, the length of time it takes for everybody to kind of get back on board. And so we've not and, and we've done some things this time that prevent us from being able to respond quickly. Yet markets are trying to tell us and it wants us to grow and recover from this, rebuild the herd. We haven't responded very much yet. I think we will, but it's going to be a slower process this time.

[Yeager] Well, why hasn't a producer responded?

[Peel] Again, it's all of these things we've talked about. I think in many cases we had lingering drought or drought threats that are still out there. So producers either, you know, some in some cases it's just as basic as their grass, their resources are not physically recovered yet. or they need more time to recover, or there's just too much threat of continuing drought that keeps them from being very aggressive in terms of restocking in some cases, in other cases, it's more of a financial situation. Again, producers have had to take advantage of the higher prices we've seen in the last two years, by going ahead and selling everything. I do think it's changing now. I think we're getting to a point now where we've had enough recovery, both physically and financially, that I think and I think producers are coming around to the idea that this is going to be a longer process. And so there's still time yet. And so we're starting to kind of switch our perspective, I think, from a very short run market here and now, kind of an opportunity to a little bit longer term, view of the market and a little bit more of an investment mentality in terms of that future production potential that we need to grow back into.

[Yeager] So does that change the discussion into the number of producers and instead of consolidating producers? We might get more who might say this is an opportunity to get in.

[Peel] Well, you know, there's going to be a number of things that go on in terms of the sort of demographics of the industry. One of the things that comes up at nearly every meeting I do is age of the producers. And, and I actually went back and looked at some of the things I wrote going into the last drought a decade ago, we were talking about the age of the producer. Then it's still an issue, and certainly there will be producers that are using this as an opportunity to exit the industry, but there will also be some new producers and some rearrangement of the structure of the industry a little bit as we go forward. You know, most of those kinds of things are more people questions than they are market questions. In my view, in the vast majority of cases, the resources that are out there are going to stay in production. There may be a transition, you know, there might be a new name on the mailbox, but the cows are going to be out there, the grass is going to be there. And, we will rebuild and restock, and regrow this industry from where we are now.

[Yeager] Okay. Will there be mailboxes in other states that maybe haven't been there as big producers because of ongoing drought conditions? I'm not saying that we're never going to stop producing cattle in Oklahoma and Texas and Kansas, but maybe Montana says we're going to come back a little more. Maybe South Dakota comes. But I mean, do you see regions that might be getting more rain saying, I'm going to beat this drought and get back into the cattle business?

[Peel] There is some of that. I'm not sure how much we'll see around the country. Again, the drought thing has been, you know, up until recently, pretty much everybody was still kind of under a drought threat. And, you know, the overall forecast for the summer still looks a little bit iffy. Now, the Southern Plains again, we've had so much rain in the last 6 to 8 weeks that it's really changed our situation. We could still be dry by the end of the year, but, you know, if you get moisture in the first half of the year, you grow grass, you grow hay, you can get through a drought in the second half of the year in much better shape. Not to say that it won't be an impact, but, and I say all that to say that in some regions there may be some producers that are or are expanding or getting in a little bit. I don't think we ever really left a lot of country empty this last time we just slimmed down the numbers, and in fact, we probably are still slimming down the numbers a little bit. When you look at the feeder cattle, you know, the, the, the, you know, the calf crop's been getting smaller for six years. We peaked the calf crop in 2018. We've been getting smaller. And yet feedlot inventories have stayed high through this whole process. they started down from the peak in 2022. But for the last 15 to 18 months, feedlots have been able to slow things down. and so there's actually less cattle being placed, but it looks like there's as many cattle out there in the country. And when I look at the continued marketing of cattle in the face of these record high prices, I think in some ways we are still kind of emptying out the country. You know, there's always kind of a pipeline of feeder cattle that are out there for various reasons that we don't really think about most of the time. But when we get opportunities like this, the market is pulling these cattle out of the country. And so I think we're still pretty empty out there in the country at this point. And, and again, that sort of emphasizes the idea that the rebuilding process is going to start from a very low level, and it's going to take quite a long time to see a significant amount of recovery in the industry.

[Yeager] Isn't the data also showing the numbers of cattle. Yes. There's fewer of them. They're heavier. And what is the impact if they're heavier?

[Peel] Yeah. So what you know what feedlots have done, of course feedlots do what they are. They're trying to look after their business. Right. They're a volume business, you know, they  need to keep the feed mill humming. That's the core of the feedlot business is the feed part of it. And so they have slowed down cattle over the last, 18 to 24 months and so there's less cattle coming in. But if you keep the ones you have longer, you keep feeding them, you keep the feed mill running of course, they get bigger in the process. So we've seen carcass weights go up. We have not seen the decrease in beef production yet. That really lines up with where cattle numbers are. I think out in the country because of the dynamics of the industry. There's a lot of lags between the beginning and the end of this process in this industry. And so, I, you know, there's still a lot ahead of us here. Now, the one thing that has come down, of course, is, is the nonfat beef side of the industry. Cow culling has accelerated, the last few years or has decreased sharply, I should say, from what it was. So we've seen beef cow slaughter drop dramatically, and dairy cow slaughter has actually been dropping too. So, we've seen a big decrease there, but we haven't seen the decrease yet on the steer and heifer side because again, feedlots have been able to sort of maintain those inventories by slowing them down, making them bigger and so on. I say all that to say that I think going forward, we're going to see, more pressure for feedlots or feedlots are going to have more and more difficulties maintaining inventories at some point in time. I think feedlot inventories will drop once sort of the reality of these, the limited supply of feeder cattle out in the country catches up with us. Feedlots have made, have been able to hold inventories by slowing cattle down. But that's a process. Once you get them slowed down, then you don't get any more benefit from that. You've sort of gone through what you get. And I think we're there. In fact, you know, the Kansas feedlot data that I see regularly would say that days on feed is actually starting to fall again. It accelerated for the last couple of years, or increased, and now it's starting to fall again. So I think we've sort of maxed out that part of what we can do in the industry to deal with tight cattle numbers. And I think we're just going to have to deal with the reality that feeder cattle supplies are very, very tight in this country.

[Yeager] And okay, so looking at that data, is that Kansas number, is that an indicator to you? It sounds like it is. Are things changing?

[Peel] I mean it just happens to be the data that I see regularly. But I think it is probably consistent with what's generally happening around the country. So you know, again, they've slowed down the turnover rate in the feedlot by extending the days on feed. But I think we've sort of maxed that out. We're pulling back from that a little bit. Carcass weights are still up this year compared to last year, but they're not up near as much. They made a big jump last year compared to the previous year. We won't be that much higher again this year. They're going to stay pretty high again once we get cattle slowed down, we continue to feed them longer, but, we aren't continuing to slow them down. We've sort of matched that part out. So I think the carcass weights will sort of stabilize here, at least for the time being. Eventually they may come back down a little bit, although probably not a lot, but so you know, again, all of that has sort of kept beef production, fed beef production specifically higher than maybe it would have seemed like. But it's going to catch up with us and we'll see. And we've seen in the last 7 or 8 weeks, significant drop in both steer and heifer slaughter. and so fed beef production has started to come down. Some of that may be a little bit seasonal, but I think we'll generally see that happen as we go through the year.

[Yeager] Let's look at a couple of economic things in this. And the one picture of what you just said makes me think, what if, is it everybody loves a good speculation? What if corn would have been above $5 for a longer time during this run up? Would that have changed anything? I mean, since we're still below $5, has that changed any of the economics for being able to feed longer if need be?

[Peel] Well, I think so to some extent. I mean, obviously as you know, it happened that the corn price was coming down, feedlot cost, the game was getting more attractive, which certainly, supported the idea of feeding the cattle. You have them longer, not turning them over as fast, because, you know, and that's actually been a key to the fact that feedlots have gotten through this up to this point in relative good shape. You know, in general, margins in the industry are pretty tight above the cow calf level. That's kind of what happens in this market. And yet feedlots haven't really seen that big squeeze yet. I think cost again has allowed them, not only to continue to feed animals but also to enjoy the higher the, the lower cost again. Now as we go forward again, there's, you know, the one thing that is a negative for feedlots is obviously the cost of these feeder cattle. And, you know, again, eventually, as we sort of slow down the rate of increase of cattle prices in, in the country, I think the feeder cattle part of this will in, you know, will be, a little bit more of a challenge for feedlots relative to the fed cattle market now fed cattle markets just been phenomenally strong so far this year. And so again, that has sort of bail them out up to this point. yeah. And that's not to say that it's all going to completely fall apart, but I think feedlots are going to have more challenges as we go forward with numbers of feeder cattle and being able to maintain inventories, as well as the cost of those feeder cattle. The one positive they have is that the cost to gain is pretty attractive. Right now.

[Yeager] Let's go off the farm to the grocery store. What's the consumer's role in all of this been?

[Peel] You know, in this situation, obviously, everything is tight from the bottom up. Right? So, as you work your way up, the implication is, of course, that sooner or later, beef production will fall more than it has. We have not dropped very much in the last couple of years, even though we peaked the overall beef production in 2022. But we haven't really dropped much, certainly not in the last year. We were actually pretty flat last year. I say all that to say that we've got record high consumer prices, retail prices, wholesale beef prices. and that was, that was actually in place on sort of steady supplies of beef. As we go forward, we're going to have less beef. Beef supplies are going to tighten up. And so that's going to continue to support higher prices. You know, probably the biggest question I've had for many months in my meetings is, is there a limit to demand when, you know, when do we top our demand and we just haven't seen it yet? Beef demand has been remarkably strong. It's a real testament to the industry, continuing to produce very high quality and very consistent quality beef in recent years. And so, the consumer demand has been remarkable as we go forward with a tighter supply, we're going to continue to see higher prices. I think, you know, I don't think there's any real relief for consumers for the foreseeable future, in this thing, because we've actually got to make things tighter, as we start the rebuilding process, when we save heifers and pull them out of the feeder supply side of the industry, then we're going to make, we're going to make the, the, you know, the beef part of this, the retail part of this even tighter, for quite a few months. Eventually, of course, we lead to higher production. That's a couple of years at least down the road.

[Yeager] And a lot can happen in two years economically. And if a consumer gets to a point of less job, less money in their pocket, and it's a rising beef price that you're talking about, there. Does that lead to the possibility that, I'm not going to say collapse, but fall quickly if nobody's, not as many people are buying as they are now at the beef counter?

[Peel] Yeah. I think you've hit on what I perceive to be the biggest threat to the entire industry at this point. you know, as we've said, the supply fundamentals are just extremely bullish right now. Extremely tight is going to get tighter because of the normal dynamics of rebuilding the industry. and consumer demand has been stellar up until now. It is somewhat surprising honestly. I've looked for problems for a couple of years. We just haven't seen it. But obviously if we get into a bigger macro economic weakness in this country, where we are, where we do have rising unemployment, we we're going to have more inflation going forward, more challenges for consumers that come from that macro economic environment. That's probably the single biggest thing that could be a threat not only to consumers, obviously, but to the entire industry in terms of a limit that we might, that we might hit here going forward.

[Yeager] Recently Market to Market analyst Naomi Blohm was on and she talked about being at a tailgate in Wisconsin with other football parents. One of her sons, both of her sons play football. But she said, we were at this tailgate. And normally you expected to see hamburgers, bratwurst, you know, whatever it is, she says, pork was the leading product people were making. She took that as an indicator of consumer changing because of price. I know that's one tiny, tiny data point in a massive picture. But when you start hearing stories like that, what goes through your mind?

[Peel] Well, I, you know, I, I that's out there, I mean, clearly if you look at the retail counter, we notice it in my family as well. Pork looks pretty attractive at this point. It's, there's lots of alternatives, protein alternatives, to beef. And so, again, the fact that beef has stayed so good is a testament to how strong the demand is. But, particularly if we go forward and we start seeing tighter supplies, then there will be more switching to other means. I mean, if we reduce beef production, some people are going to eat less beef just because it's not there. But it'll probably take higher prices or even higher prices to ration. That's the, that demand, given how it looks at this point. So, you know, I think the demand is still good, but we may see some switching just because, you know, there just simply is not as much beef. I don't see, you know, I don't see any, any big, change in preferences on the part of consumers, but their ability to continue eating beef could be challenged as we go forward.

[Yeager] Another economic part of this discussion, exports and imports. What? How do you make sense of what's happening right now with trade talks, trade? strong chest thumping imports coming from other countries when we think we can do it here domestically. You hear all of that? Make sense of it for me.

[Peel] Well, I'm not sure we can make sense of it yet. There's just so much turbulence in the water right now. It's really hard to see things. And in fact, you know, with the tariffs coming on in early April, we're just not quite, we don't have the April trade data. We're going to get that in the next day or two. And so you know, we may get our first picture of what's going on. Beef is a real challenge to try to figure out because we do both import and export. And so, sorting out all of those impacts, is going to be a challenge, and it won't be an immediate thing. It's not like we're going to know from the April trade data, the impacts of all of this trade stuff is going to continue to evolve, for many, many months. Honestly, these supply chains are very complex. They play out over months to a year, in many cases or longer. And so and of course, we've just continued to have a lot of uncertainty and a lot of sort of moment to moment headline changes that, continues to challenge the market. So, we're going to see impacts going forward. I mean, on the face of it, you know, we know we're going to have some export hits because of this. We were already seeing exports challenge just because of the price levels we were at in the US. but, there will be additional hits. We'll have to wait and see, kind of on a market to market basis in terms of our export destinations on what that means. Yeah. And it's not just, you know, you can't just talk about it totally in the aggregate. because beef is not one thing. Beef is thousands of different products. And particularly when you get into the trade environment, you have to look at specific markets and think about the set of products that tends to go in those markets. And then, boy, you got to think back through then what that means domestically when we, you know, when we don't ship that stuff out, you know, we will eat stuff in the US that we don't like as much. and that can have price impacts on the, on the, you know, on the domestic market as well. On the import side, of course, I mentioned earlier that the one thing we have seen already is a big decrease in cow slaughter in the last couple of years. So those lean trimmings prices or those lean trimming supplies that drive much of our ground beef market have dropped dramatically. They've dropped about 22% in the last two years. In terms of the overall production of nonfat beef, if you will. And so, you know, and we did see a sharp jump in imports even last year, in response to that, to try to mitigate some of those tighter supplies, we've still got, you know, basically wholesale ground beef and on to retail, at record levels. In fact, there's been relatively more increase in the ground beef part of the market than in the muscle cuts yet, because, again, we haven't seen fed beef production fall as much yet compared to the ground beef market. So imports are coming in now. We've got tariffs that are going to change that a little bit. The only thing I've really seen I mean we do see obviously the price impacts on those imported, imported trimmings, products that we bring in for ground beef.  Those did jump pretty sharply in April. when, you know, when the tariffs went on. So it's just a very, very complex market and a very complex set of impacts that are going to take months to sort out here as we go forward.

[Yeager] Complex. See, that's why it's fun to have longer discussions, because I don't have to just get you to give me eight seconds of something. But I did get you to say, Derrell, Market to Market. I might have to use that in a promo. Now you know where the show name, how that came about. 

[Peel] That's right. It's lots of markets. It's lots of different products. It is. And, you know, I have I have maintained not that you can prove this definitively, but I've maintained for many, many years that the U.S. cattle and beef industry, as it operates is probably the most complex set of markets on the planet. When you look at all of the dimensions of, you know, the multitude of products we produce, the long time lags in production, the dispersed nature of cattle production, the perished ability of these products, once they get into the meat side, it's it's just an enormously complex industry that I think is very, very difficult for anybody to understand. And that's why, you know, sweeping kinds of changes in terms of policy type things really are very difficult to anticipate what those impacts are, because there's just a lot of things connected that we maybe don't think about. 

[Yeager] And it takes time to work through the system. It takes time to understand. It takes time to do trade deals. We can't just. Gregg Doud told me a couple of weeks ago from his role in the Trade Representative's office. He's like, it takes countless conversations to negotiate things and you have to have some patience. And it's hard in an environment where we all want something done yesterday to get something done.

[Peel] That's right.

[Yeager] Let alone all the politics involved.

[Peel] That's right. I mean, you know, obviously once you get into the political realm, then that's a whole other set of complex issues and so on. And so it does take time, and, and it's again, there's a lot of details and, and it really is true that, you know, the details are going to matter a lot in terms of the overall impact. 

[Yeager] I want to go back to something you said then about that, tell me, the relationship between the U.S. and Mexico, the U.S. and Canada, we still ship a bunch of cattle, go back and forth over the borders, finished unfinished, fed, slaughter. I mean, there's all of that stuff. Has any of that been impacted yet? That shows up in data?

[Peel] Well, it's just beginning to show up in the data. I mean, obviously, we close the border so you can immediately see the, you know, the decrease in cattle imports from Mexico in terms of the screw worm related concerns that we have. and again, you know, in total, Mexican feeder cattle imports are equivalent to about 3.2 to 3.5% of our calf crop. So they're not a major part of our supply, but it's a noticeable part if we keep the border closed now for much of the rest of the year. And I wouldn't be surprised if that doesn't happen, then we're going to wind up getting something like a million head less cattle from Mexico that we normally do. That's enough, particularly in a situation where we've already talked about how tight feeder supplies in the US that will certainly contribute at the margin to the kinds of, you know, price supports that we're seeing in terms of, the, you know, the supply driven market in the US. So, but again, it's evolved over time to get to be a much more complex situation on the North American continent, because we do have we have some bilateral trade of cattle. We tend to import a lot more cattle, but we do export a few cattle to Mexico and Canada, especially Canada. And there have been times when we've exported significant numbers of feeder cattle to Canada. And then we have bilateral trade, beef products. And again, it's not just beef in the aggregate that matters here. It's specific products. It's a function of transportation issues, particularly with Canada. You know we trade roughly similar products in some cases, with Canada. But the economic driver of much of that trade is simply the fact that both countries are wired east to west, and it's closer to ship products north and south in both countries than it is to ship it east and west. Right. So, a lot of that's just basic transportation economics, when it's similar products. and so what you've got all these things of, of specific product mixes in the market trying to sort out who wants stuff the most, in terms of particular products, what the preferences are, what the value is ultimately, as well as these logistic things. And then, you know, in the case of cattle versus beef, there's a time lag there, but they are connected. So if you, you know, it's kind of like a balloon. If you push on one part of it, you can push it in, but it's going to pop out somewhere else. And so all of these things tend to be connected over time.

[Yeager] The internal monologue in my head has been debating how to ask this question, but we're going to do it this way. Has anybody, if the scoreboard is all ultimately money and profiting, who has come out money ahead in everything we've just talked about, and is in a better spot financially than they were two years ago through all of these economics of the higher price for cattle? 

[Peel] I think it's pretty clear right now that the market is oriented towards the cow calf sector. Okay. So the cow calf guys are in the driver's seat. We find ourselves smaller. We didn't necessarily plan to be here. It was Mother Nature and the drought that pushed us to be, you know, a million head smaller than we were even, a decade ago at the previous low. And the market is really focusing market incentives at the cow calf level, telling us, you know, we are smaller than we need to be from a market standpoint. And, and so the incentives are there. And, and as I said earlier, what that means for the rest of the industry, this very complex industry we've talked about is that is that the price pressure is coming from the bottom up. And so, the cow calf guys are clearly in the driver's seat with calf prices and with returns to the cow calf level. Everybody above them is dealing with the fact that they're buying and selling either cattle or cattle and beef or beef products or whatever, but they're all driven by a margin kind of a relationship where the bottom tends to be increasing farther and faster than the top is. And so, you know, everybody's struggling if you're a even a stocker producer, that that simply puts weight on calves as feeder cattle feedlots by feeder cattle sell feed cattle packers by fed cattle sell box beef even retailers ultimately are going to feel part of this, particularly once we get into the tighter beef supply. So the margins are being challenged for everybody above, I think packers of actually carried much of the burden up until now, which struggle the most feedlots have. I've actually not struggled as much yet as I might have thought they would, but I think they will see more challenges as we go forward.

[Yeager] And usually when it's the packer that's in the driver's seat, that's when we get Congress involved, that's when there's hearings, that's when there's and here. I'm not saying people are feeling sorry for the packer, but they can see the Packer isn't winning. And some consider that a victory, too. Derrell.

[Peel] Well, I suppose so. You know, certainly it's a big change from what we had. Certainly during the Covid period and all of the disruptions we had then, as the supplies were beginning to tighten through this process. And so, yeah, I don't think probably anybody at the producer level really feels sorry for Packers, but I do hope they recognize part of what we tried to explain before is that the dynamics of this industry tend to average out over time. Yeah. And, you know, clearly packers did make a lot of money at some points in time through that. They're giving it all back and then some in some cases now. And they're going to continue to struggle for at least another couple of years. And they know it at this point. So it's a long term game for them as well. Even though they turnover cattle very quickly.

[Yeager] I always appreciate our time, Doctor Peel. It's always good to chat and I always learn a ton from you. So thank you again for putting me in your one on one class today.

[Peel] You're very welcome. Anytime.

[Yeager] New episodes come out each and every Tuesday. Audio, video form or whatever form you like. You can also read it too if you want. Thanks for watching, listening or reading. We'll see you next Tuesday. Like, subscribe, review, share, tell a friend. I think those are all those crazy podcast words I'm supposed to say. I just really appreciate you listening. Thank you.

Contact: paul.yeager@iowapbs.org