We priced in a $246 market in the 2025 for 2026. Dollars $2.46. That's $22 a 100 higher than what the market averaged in 2025. We averaged $2.24 in 2025. So my caution to producers out there is remember the futures market's forward looking and the market is supposed to anticipate when we're at our tightest supplies.
Randy Blach:Our tightest supplies are clearly in 2026, not 'twenty five, but the market's job is to have anticipated that and I believe there's a good chance that we've already baked most of that into the pie.
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Announcer:Our upcoming auctions are on your screen and available online at live-ag.com. Contact your local rep to get started. Now here are your hosts, Ty De Cordova and Casey Mabry.
Ty deCordova:Welcome back to the We Live It podcast here. It's got Casey Mabry and myself, Ty De Cordova, along with Catalfax's Randy Block. And did I said the last name right? You did. I butchered your last name something.
Ty deCordova:No, it's pretty good. No, we're here at the Catalfax office in Denver, Colorado, and just thank you for allowing us to come by and visit with you and pick your brain on stuff. We're just glad to be back, to be back in action. Me and Casey have been kinda hanging out over the holidays. We're prerecording this, so people don't think we're worried when we start telling them some of this stuff.
Ty deCordova:Just catch up real quick on the kids. I've seen you did some showing over the holidays. How'd y'all get along? Yeah. There there was a few Jack Bucks.
Casey Mabry:Yeah. There was a Texas national show pretty good for us. It's a show a guy named Tim Ford puts on. He started that during COVID. That's what
Ty deCordova:the pinata was. No. That was a different one. Oh, was? That was a yeah.
Casey Mabry:That was a different But we yeah. It was a great one. That guy gives out quite a bit of scholarship money, so we were able to pull in quite a bit of scholarships for the girls, about $10,000 Cool. On that one. So, yeah, that that show's grown quite a bit.
Casey Mabry:There's been a heck of a lot of attendance there. But, yeah, we wrap that up. We're coming up here next week with a with a couple pigs with Avery for the National Western. So we're excited to see the new facilities that are in there. We've come up here for about the last four or five years, and that's probably one of our favorite places to come.
Ty deCordova:Yeah. We head up here next week with a steer with Tyler, the youngest, and then we got I guess she got four stuff getting ready. Yeah. It's just all about visuals. I mean, they're about to bombard us.
Ty deCordova:These kids are about to wear this.
Casey Mabry:This is the toughest time of year for our family for sure.
Ty deCordova:Yes. Is. Randy, let's get kinda visit a little bit about your yourself and where you come from, where you grew up, kinda the did you grow up in the industry? Did you how did they come about to where you're at today? Just kinda give us a little background.
Ty deCordova:We kinda like to get a little personal here. It's all about relationships and getting to know people, and then we can talk about all the analytics later. Great. Well, first of all, welcome. It's good to
Randy Blach:have you all here, and it's good to have you in the headquarters of the National Cattlemen's Beef Association in Catifax here in Denver, Colorado. My story is a little bit unique. I grew up in Colorado. My family homesteaded here in 1887 in the Northeast Colorado in a little town called Yuma, and we continued to be heavily involved in the cattle producing business, farming, ranching out there. When I graduated from Colorado State University in 1980, I wanted to take a different skill set back to the operation.
Randy Blach:I grew up in a family. There were nine of us kids that came in ten years, and, again, there wasn't any of us that had any marketing background. So I said, you know, I'm gonna go to Catifax and learn these skills around the market. And then my thought was at that time I'd head back to the ranch and and the feeding operation. Well, January record is 45 now when I've been at Cadillac's.
Randy Blach:It's since January 1981 when I started full time here. So I've been blessed to be able to work in an industry I love, be able to serve customers all across the lands here. And, again, I've been one of the few lucky ones in that, I feel like I've really never worked because my work is my passion. So I love serving the industry. I love being able to to help educate people on how these markets work, and, you know, it's pretty dynamic.
Randy Blach:This business has changed a lot in that forty five years.
Ty deCordova:Yeah. What is one of the biggest I guess if there is a big one that sticks out, what is one of the biggest things in those forty five years that change that you've seen?
Randy Blach:Well, I would say the biggest thing that I've seen is just the way we merchandise cattle, the way we market cattle. You know, whether we're talking about these video auctions and how many cattle we can merchandise in a day or even the way that when I first went to work at Catifax, we sold cattle, our customers sold cattle six days a week, all day long. You'd sell them Monday through Saturday, cattle were selling, the daily price change or weekly price change in those days was 25¢ a big move, it's 50¢ a 100. And now we basically trade all the cattle within a few hours, you know, in the various regions on a weekly basis to set the base price. Obviously, the bulk of the cattle are sold on some sort of a grid or formula arrangement.
Randy Blach:So the cash trade has certainly changed significantly in that '45 time period.
Ty deCordova:Blair? You say you are just to kinda go back to a little bit. You say you are you are pretty involved out here at the National Western. Kinda they've got a new complex. They got new facilities out there.
Ty deCordova:Kinda walk us through some of that, how how that's
Randy Blach:You know, it's been a it's been a labor for so many volunteers and key people in the the state of Colorado and in the region that had a vision that we needed to rebuild these facilities. And my family started showing livestock in the at the National Western. We'd bring carloads of bulls up in here in the forties and fifties and sixties. We bring in carloads every year, so we've been heavily involved all that time. And when I first came to work in in at Califax, I got involved with the National Western, and I've served on a number of the committees through the years that helped put the stock show on.
Randy Blach:But these facilities, I mean, they had a great plan. They had a great plan, but they're gonna blow you away. It is absolutely the most beautiful facility I've ever seen. I've been to all of them. It is it is staggering.
Randy Blach:The new Legacy Building is really something that the whole industry is gonna grasp because it's gonna be there. It'll be open fifty two weeks a year. It's just a tremendous venue. These livestock show facilities. There's nearly eight football fields undercover, and, you know, the lighting in there is great.
Randy Blach:Those will be facilities that'll be, used year round as well. The new show rings, staggering, phenomenal. You're gonna love it. You're gonna love it. I mean, it is just gonna be an eye opener what you see when you get out there over the course of the next few weeks.
Randy Blach:Yeah. For the
Casey Mabry:last couple of years, we've parked on the other side of it and walked by. There's my kids, for the last two years have walked by that building really, really excited to go in there and see what the show is. Like on the hogs, have to do a raffle or a draw or a lottery, and so we're lucky to be able to come back again this year. The girls are super pumped up to come in there, but it looks beautiful. I've watched a lot of the videos.
Casey Mabry:You guys do a tremendous job, the National Western does, of, you know, educating everybody on what's gonna happen when you get in there and all that. So we've been watching those over on the social media for the last couple weeks.
Ty deCordova:But Can you tell he's got a passion for Oh, man. I mean, he just it's just all over him. Well, I think We found his soul.
Casey Mabry:So hey. Like, Randy, so what what did like, how did that all come about? I mean, I know that those facilities one one question I've got and I wanted to ask. This is one of those roads like Pack And Plant Road.
Randy Blach:So what originally was in that area? So that's what it was. It was packing plants back in the day where the new stock show facilities are. That whole road there was what we called the Exchange Building. So the exchange, that's where all the cattle would come in on the train cars and they had unload and that's where the terminal market.
Randy Blach:Denver had a terminal market there, buyers and sellers would meet and then those cattle would be moved right to the harvest facilities right along Packing Plant Road. There's some great pictures that show all those packing plants and all those yards. You'll see some of those throughout the new facilities. Really is a great history and I think it's pretty awesome that we've been able to keep the National Western Stock Show where it all started. Absolutely.
Randy Blach:You know, because in those days, you you had Sioux City, you had Sioux Falls, you had Kansas City, you had Omaha, you had Denver, and there I know I left some out. You left more pork
Casey Mabry:that which I personally think is more and more important.
Randy Blach:But I'm thinking about those Absolutely. The river markets, most Fed of cattle. Yeah. For the fed cattle trading, and that's that's where it was all staged right along the river going back. A lot of people forget that's where the industry was yet still in we were still selling a lot of cattle on the terminal markets in the seventies and eighties.
Randy Blach:Yeah. We're really not that far out. I mean,
Casey Mabry:like when I was starting with Cargill buying fed cattle, there was a handful of those guys that had worked in Omaha, that pushed cattle in Omaha that were retiring at that time, so those guys would have been in the mid sixties. So that's probably somewhere around forty five, fifty years ago, which, I mean, you really think about this industry and how it's evolved, it's it's insane to think about how slow as it feels. We always talk about how much it hasn't evolved, but then
Randy Blach:you step back and look at it from a bigger view and it's evolved a lot. When you think about that from things that are so important today from animal husbandry and animal care standpoint, not putting that kind of stress on these cattle where we don't have extra movement, efficiencies, those kind of things that industry's done a really good job of adapting some of the new technology to where we think about the cattle and, what's right by those cattle. I think that's been an area we've grown a lot in as as participants in this industry.
Casey Mabry:Yeah. Yeah. I I mean, as we discussed that, I mean, you think about we measure shrink on cattle and drift on cattle from feed yard to packing plant, and, you know, those cattle are on a truck. In in our world now, call it, you know, not much more than three or four hours, then and they're unloaded, harvested pretty quickly, and kind of ran through the supply chain. It had taken days to get cattle to the market since.
Casey Mabry:Yeah. Now one thing, was watching the pig show there a couple of years ago, and I'm standing in there and watching it. I'm like, man, I feel like I'm in the sales cooler at a packing plant or something, you know, with some of the columns and things like that. So and then I left there, you know, without understanding the history of that area and see the packing plant road and and all of that stuff. And I started, like, really thinking about because I was now not able to see it with my eyes.
Casey Mabry:But then when you step back and think through all that, that's exactly what that place was. So it's neat. I'm gonna spend some time this year going through the history side of
Randy Blach:it with the girls. So if you get a chance to go down to the Wagner Arena, which is right right below the Sue Ann Schutz new building that will house the livestock. The Wagner Arena is on the north end. And on the upstairs around the perimeter up there, they have a lot of the history of those pictures that I think you'd all find interesting to go take it in and see what it looked like a 100 years ago. Another thing I think we might
Ty deCordova:have found if we've been fortunate enough to make sale, I think we might have found some potential buyers.
Casey Mabry:Oh, you gotta be from Colorado to make any money up
Ty deCordova:here. No.
Randy Blach:That's not true. We do I've been involved on the gym. I've been for years,
Casey Mabry:and I tell you that No. It's a good it's a it's a great
Randy Blach:a good job of supporting these
Ty deCordova:Jimmies and selling over
Randy Blach:the country. John is still doing it and best
Ty deCordova:there is. I mean, it's that's an understatement. He is. He is a
Casey Mabry:great, great man. Avery made the sale here a couple years ago, and and that's probably one of the more exciting auctions that we've been in. And, you know, and and having the ability to go on the green carpet with those hogs and all that stuff, there was it's pretty neat. So that's a great experience. Hopefully, we get to do that again this year.
Casey Mabry:If we do, I'm gonna hit you up. Oh,
Ty deCordova:you bet. Same. You know, I have to we
Randy Blach:can get the if you guys can win, we'll see you at the Brown Palace. We always take the grand champion and reserve grand champion steer to the lobby of the Brown Palace the day of the sale. So
Ty deCordova:There you go.
Randy Blach:That's that is quite a treat if you're watching out there and you haven't taken that in to see those two big steers come walking in the lobby of the of the most majestic hotel in in the city of Denver, that hotel is where Denver was built. That's how when business was done. And so it is that's a pretty good tradition that we've kept all this year.
Casey Mabry:And you guys I mean, they televise that all over all over Denver. Right? I mean, on the news station, watching the auction, and things like that. But
Ty deCordova:Well, you wanna get into some numbers and kinda what the what the future looks like in the cattle industry? Or
Casey Mabry:Yeah. I think I think Randy's got all the answers
Ty deCordova:for this. That's what I that's kinda why why I came because he bet I was told he had a crystal ball, so I was sitting here. I was hoping to
Casey Mabry:let you know. Yeah. So Randy, sitting today where we're at here in January 2026, I know we've gone through where the market's been you know, we talk about market cycles and things like that, and there's a heck of a lot of volatility that we would have seen last year where the market would have probably gone $20 or $30 higher than a lot of people would have expected, and then we saw the market dive going into this fall and then rally back here pretty aggressively, so not asking you for a market prediction at all. Just where are we at? I mean, we've recently seen Tyson close a plant, take one plant down to one shift.
Casey Mabry:Let's talk about, you know, the the the really, let's kinda just hone in on available available cattle supply in the cycle, talk about some slaughter capacity, things like that, see where your head's
Randy Blach:at. Well, I think the best place to start with that case is just to take everybody back and let's talk about the cattle cycle. In 2020, when we were at the low end cattle numbers and we'd all gone through COVID and the markets flushed into, I believe it was the first week in July, the market went to 95¢ in 2020. And it was very clear to us that we would go we would see the market push higher into '25 and '26, 2025 and '26. So where I would start here with this conversation is the cattle market is pretty cyclical.
Randy Blach:We're ten to eleven year cycle. Normally, the up part of the cycle is four to five years in length, five is about what it averages, and the down part of the cycle is five to six years in length, so 2025 or 2026 would have been the ideal timing for the cycle high. So that'd be where I would start. If you were to look at where we've gone, again, if you look at the last five or six cattle cycles going back into the nineteen seventies, normally, when the the way I like to look at a cycle is when did the beef cow number be was it at the low? And the beef cow number was at its low on January 2025.
Randy Blach:That was the low in the beef cow number. The the beef cow herd will be a 100, maybe 200,000 head bigger this year than it was last year. So it's turning higher because we've dropped cow kill so much. It's not that we're keeping a lot more heifers than that yet, but the cow kill dropped substantially below where we needed it to to stabilize the herd. We are starting to see some heifer retention on top of it.
Randy Blach:That showed up in the last two quarters of twenty five. It looks like we're getting a little more traction on it here in early twenty twenty six. So, again, as we've as we've stated, this is not the last cycle. It's not gonna be as aggressive as it was in 02/1415. It'll be much, much slower.
Randy Blach:Interest rates are a big part of that. That's a big difference where we have just the the cost of money in these operations. And, again, you've got all the normal things that you'd have, an aging producer, etcetera. The bottom line is we will respond to the economic signal, and we are responding to it, just not quite as quickly as we did in the last.
Ty deCordova:So you're saying that the build back will be sore because the interest rates and what it cost
Randy Blach:to build back. That's right. That's what you're That's right. So, you know, if you're going out here and you're buying a 4 doll $4,000 bread heifer, most people are still paying eight or eight and a half percent interest. Mhmm.
Randy Blach:So, I mean, that's a pretty big number on an annual basis if you're borrowing all that money. And we're in a situation now that there was enough money made in 2025 at the cow calf level that, you know, some of this becomes a tax decision. We're gonna keep a few more of these heifers because, again, it just makes sense from a long term business standpoint. And we saw that at the feed yard level with the profitability side. We saw a lot of prepaid feed this year.
Randy Blach:So, again, all of those things, the market the market dictates some of those decisions as as people are looking at the overall consequences of cash flow and and tax consequences during the course of a year.
Ty deCordova:Where does the, where does the Mexican border fit into all this cycle? Well, that's a
Randy Blach:great question. I think if you look at 2025 and you look at the two biggest market drivers and uncertainties, the things that I think Casey used the term that, hey. The market went 20 to $25 above a lot of expectations. I think that's a very real statement that you made. I think that's very fair Because the Mexican border, we would typically bring in about 1,200,000 head of feeder cattle and calves out of Mexico on an annual basis.
Randy Blach:We were down that much this last year. I mean, they would have brought in this last year would have been a year that we would have brought in 1.4 to 1,500,000 because of where we were in the cycle and the price signal we were sending. So we we only bring in a quarter of a million, which we left left a 100 and or 1,200,000 that we did in Crocs. That by itself, if you work that production all the way through the system, is a significant number as far as production is concerned, how many fed cattle, the beef production, and ultimately how much impact it has on on the fed cattle market. The other major driver is when we put the tariffs to 76 and a half percent on Brazil.
Randy Blach:That really slowed significantly the amount of beef we imported from Brazil. And if you think about the futures markets, the futures markets when those things happened in July 2025, the live cattle futures markets were trading between 02/2005 and 02/10. That was the average of the first six live cattle contracts out there, what we call the live cattle strip. By the time the market made its peak on October 16, we'd gone on top of $2.40 for the strip. So the strip basically priced in the absolute tightest supplies in the cycle.
Randy Blach:That's what we believe we've already priced in. We priced in a $2.46 market in the 2025 for $2,028.46. That's $22 a 100 higher than what the market averaged in 2025. We averaged $2.24 in 2025. So my caution to producers out there is remember the futures market's forward looking, and the the market is supposed to anticipate when we're at our tightest supplies.
Randy Blach:Our tightest supplies are clearly in 2026, not '25, but the market's job is to have anticipated that. And I believe there's a good chance that we've already baked most of that into the pie. Ben? It's
Ty deCordova:a lot to thank you.
Casey Mabry:Yeah. I mean, a lot of the stuff that we gotta really just digest and think through is to your point, we don't have the Mexican cattle in here anymore or we're those are diminishing quickly. We're obviously not importing any of them and have it for quite some time. Talk about 1,200,000 head of cattle, which roughly comes out to about, what, 22,000, 24,000 fed cattle slaughter per week. Yep.
Casey Mabry:So if we would've had the Mexican cattle into the supply chain, last year we would have averaged what placed against supply average fed steer and heifer slaughter per month. Roly, to your point, we would have harvested another 20,000 cattle or 24,000 cattle a week all the
Randy Blach:way through because those cattle were coming, the pipeline was full, and then we emptied the pipeline out. So
Casey Mabry:if we had a place to get supply, we should have had somewhere around a four seventy five to four eighty. Yep. Stair and heifer slaughter, not total slaughter, stair and heifer slaughter that was slated to slaughter. We pull that number out. That was roughly a five day workweek, forty hour workweek at the packing sector.
Casey Mabry:Last year would have been probably a $500,004.95 to 500,000, so that's what the packer wants to kill. That's what he budgets everything for. That's what he's trying to kill is a forty hour work week, and what we would call just call it add capacity. We pull those cattle out of the supply chain, take that down somewhere around 5%. So now the packer's chasing cattle trying to run forty hours, and then ultimately gets into a really, really poor margin scenario.
Casey Mabry:We get into a really poor margin scenario. We don't have those cattle there. We take roughly how much capacity out
Randy Blach:of the market starting this week. 25,000 cattle a week is is how many hooks we took out this week. We've gone from 500,000 to 475,000. So and you get narrowed the gap, but you still have more hooks than you
Casey Mabry:have cattle. Absolutely. The the deficit is probably a little bit less than what it was before, so it doesn't necessarily seem like the packer has to try as hard. Right? And then given that, what do we do as far as whenever we start to we're gonna probably look for more capacity at some point in the future, begging for more capacity at some point in the future, whether that's if the if the Mexican cattle come back into the supply chain or we start to see the fruits of the retention.
Casey Mabry:Absolutely. I I think you hit
Randy Blach:the nail on the head. We're we're being in a situation that we still have more hooks and cattle through the first half this year. We're only going to harvest 450 to 455,000 head of fed cattle over the next four months. I mean, that's a small slaughter and we've got capacity to harvest 475. So the packers are gonna continue to be in the red.
Randy Blach:We're likely gonna see more thirty two hour a week kills. 30 twos and 30 sixes, we're probably gonna see more of that all the way through here. But, again, it's that stage of the cycle we have to remember. You know, we always have a drawdown. We had the same thing in 2015 where we had more hooks than cattle, and, of course, we closed a lot of plants as we went through that 02/1415 time period.
Randy Blach:We've lost some capacity now. We may still lose more capacity. So that'll be something we have to just keep an eye on. But, again, by '20 if the Mexican border does reopen at some point in 2026, we're gonna see numbers increase probably more rapidly from a fed cattle harvest standpoint in 2027 than what most people are forecasting today. That makes total sense.
Randy Blach:And so yeah.
Casey Mabry:And that's that's something that's different than any other cattle cycle that we've probably had. So it almost creates a little
Randy Blach:bit of a super cycle, I guess you'd say. It probably extends it to some point. It is interesting. You know, I've had this question a lot as I've traveled around the country this last year, and we've we've seen a lot of different outside factors that have impacted markets. You go back to 1986, we had the dairy termination program.
Randy Blach:In 1996, we had that was the first time corn got on top of $5 a bushel. And the cost to put on a pound to gain when it moved above the price of fed cattle. So we overnight created a carryover on the front end of the market and the market just when we were losing money every day, we we kept those cattle in our inventory. So you see those kind of factors. One that I think a lot of people forget is 05/10/2003.
Randy Blach:What happened on 05/10/2003? Canadian border closed. Why the Canadian border closed? First case of BSE. It was really very interesting when you look at the comparison.
Randy Blach:We did the same thing then. We basically didn't harvest a man head of cattle that would have normally come out of Canada from May 2003 into early two thousand four. We created the same type of a market run up in the in the 2003. In fact, this year, our market topped on October sixteenth of of twenty twenty six and or 2025, and it topped it on 10/15/2003.
Ty deCordova:Really?
Randy Blach:So it's really interesting. You know, you see these kind of things, but those are the only two times in my career that I've seen that kind of thing that has happened where you actually close the border. One was the Canadian, now the Mexican, and the impact was pretty similar. Yeah. No.
Randy Blach:It's pretty amazing. I I had a
Casey Mabry:guy when I first started in this business tell me that if you wanna know the future of the business, look in the history. You know? And it's interesting. I mean, I think about whenever I was, you know, 15 years old, and I'm you graduated college the year I was born. So when I was 15 years old or 14, 15 years old, I took a show steer that was a cool show steer to the sale barn in 1995, 1996, about that time, and guys were joking around about they would pull up to the sale barn to sell one and then somebody put another calf on their trailer because they'd get gone.
Casey Mabry:So we had the complete opposite scenario because then you had the cost of gain, cost of production exceeding market price, and then now we've got such an incentive to carry cattle, and so it's the opposite. It's opposite. And so I keep trying to remind most of the people I work with is not trying to be chicken little, but, hey, grain's cheap, cattle are high, the incentive to carry, everybody's gonna carry. We're gonna take cattle and, you know, add as many days possibly as a packer will let us to do it until it's done until it's over. And so we hope that it extends and lasts forever, but we gotta remind ourselves that that what the not not what's impacting us today, but what what is in the future.
Casey Mabry:And that's what I think, Randy, you guys do a great job of putting a lot of information out there that's data driven. That's that's, you know, really a good resource and a great resource at Catalfax.
Randy Blach:To appreciate that. We strive hard to do that on a daily basis as a to be factual to the best that we know the facts and to share that with our customers or where they can make good decisions. So these markets can get pretty emotional, and I think the less emotion we can carry into these markets, the more it backs, the better off it will be. Yeah.
Casey Mabry:I think the emotion comes with volatility, and it's always changing. You said the market moved a nickel or a quarter or something twenty years ago. I had a guy call me whenever I pulled I was getting off the airplane and he said, man, how's the market up $2 yesterday and down $2 today? And I said, well, because $2 is a quarter. That's what it used to be.
Casey Mabry:That's what we move now. Cash market will move $5 in a week on fed cattle. We've rallied the feeder cattle, what, $50.60 bucks in the
Ty deCordova:last six, eight weeks. We're gonna think about that when me and you are by ourselves, and me and you have a long conversation.
Casey Mabry:But there's just a tremendous amount of volatility now, and I think that creates emotion around that. So one thing I do want to talk about, Todd, before we leave is, and I think that a lot of analysts maybe don't necessarily look at this, and we don't really talk about it from an on feed report, but the dairy industry has become a substantial participant in the fed cattle, I mean both the fed cattle but in the beef market. The dairy industry, so I think about when I left Cargill and I was, that would have been in like 2017, but in 2013, 1415, we had a lot of Holstein steers on feed in the Plains States. About sometime in there, we basically said, most of the packers said, don't want any more Holstein cattle anymore. We pushed those things back out.
Casey Mabry:We disincentivized people to place those cattle into feed yards, and now those animals that have come from those reproductive tracts now stand in feed yards, but they're black hided. And what used to be a Holstein steer now is a Black Cross steer and heifer. Yep. And so how does that kinda play in? What are you seeing there?
Casey Mabry:Let's talk about a little bit of the numbers and how that plays into it from a from a just
Randy Blach:a total standpoint. Well, it's been a game changer. You know? You think about our industry where these supplies of fed cattle would be. We didn't have as many of these dairy influenced animals in our systems today.
Randy Blach:And, you go back to 02/1415, we were using a lot of Holsteins in our systems then, but I believe we got between 1415% of our fed slaughter in 2015 was Holsteins. And you look at where we are today in our analysis, we believe that 18% of our fed supply in 2025 was dairy influence cap. K? Beef dairy crosses primarily. There's still some Holsteins in that mix, but beef dairy crosses would be the bulk of it.
Randy Blach:We think in in 2026, that number will be 19% of our fed slaughter will be as a result of the dairy influence supply. So it's it's a real deal. It's here to stay. The cattle have gotten so much better, so much better. I mean, you watch these cattle.
Randy Blach:If I don't care if you're a veteran cattle feeder and you drive through the feed yards today, these really good ones, it's hard to pick them out. They are really good, and they got a ton of meat in them, and the cattle grade like a house fire.
Ty deCordova:So You gotta try to sort it.
Casey Mabry:They're good. Well, you don't need to sort them, do you?
Ty deCordova:Oh, it's Well
Casey Mabry:I know. So if you think through that, so, like, you know, 2014, a dairyman would have looked viewed that animal as a byproduct. Those cattle were worth, you know, through the the the peak of it, you know, they got to where they were $4,500 a head, but then they went back down to where they were worth about $100 a head. And then now that Dairy Cross animal as a day old is worth some range between 1,300 and $1,500 a hip as a baby calf, as a day old calf. One of the large incentives is because the grain prices are so cheap and we can, you know, basically get the animal and it's not it doesn't cost very much to get it to the end.
Casey Mabry:We've made such leaps and bounds. When I left Cargill, we had basically we didn't know of a whole lot of cattle that were on feed that were Angus sired or limpsired or whatever bull that it was. And so I remember telling one large genetics company, put a 100,000 on feed and we'll figure out what they look like. And now we've got considerably more than that. The bet the largest bull buyers and the Angus breed, I think, are are some of the some of the guys that are putting those as dairy influence.
Casey Mabry:So that calf that's coming out of a Holstein cow or, you know, a juror or some dairy cow today has got a better genet. He's getting bred to the absolute best bull. Yep. We're seeing lots of leaps and bounds on that, and so consequently we've seen the grade and the prime and all that stuff jump up higher as well. So to your point, that's changed a lot, and that's a driver.
Casey Mabry:I think as an industry we gotta look at those collectively. I think some people try to go beef versus dairy and they want to fight a little bit. I spoke at a group one time and I said this is the largest collection of rubber boots and cowboy boots at one setting that we've ever had, but that's the truth, right? We gotta think about it that
Ty deCordova:from that standpoint. That one guy didn't think he was on his side. Really ran it back.
Casey Mabry:So let's touch on that a little bit. So we got 9,500,000 dairy cows, right? What percentage of those dairy cows do you think are producing an animal that goes into the beef supply chain today? Well, I
Randy Blach:would tell you that our when you look at it today, it's well over 4,000,000 of those cattle come through our system on an annual basis because what we've been able to do, we've been able to use our rifle instead of a shotgun on being able to develop the replacement heifers that the dairy industry needs and and then be able to focus the rest of the animals that come into to your point, if you got a 13 to $1,500 a day old calf, to be able to breed those cows in a fashion that we've got those beef dairy crosses that can move into our other production system. I've had a lot of dairy producers that have said, we're now in the beef industry and milk is secondary. And, again, it is that economic system may change some if corn gets higher, whatever the case may be, but today that's really, I think, the mindset.
Casey Mabry:Oh, I think it's I think it's a mindset. Oh, it did. I think it's the biggest shift in the industry since probably if you think back to moving the packing plants out of the cities into I mean, this is a big monumental shift probably that we've seen in in a long time. But and and those animals used to be a a male into the Midwestern feedlots. There was I never really bought any Holstein heifers.
Casey Mabry:And so now they're breeding just generic seam or not generic seaman, but beef semen and getting a both a bull calf and a heifer calf and then sending those to feedlots. So how's it shifted the data whenever you guys look at the on feed numbers?
Randy Blach:Well, you have to really take that into account as as when you look at it historically, you'd look at the percent heifers placed on feed. That was one of the that was one of the metrics that you use that understand where we're really going through expansion phase in the in the cycle or not. Now that we have so many more beef dairy crosses that are in the system, they're heifers. Again, the number of beef dairy cattle in the feed yards, that number can get as high as 47 or 48% heifers depending on how many they need going back into the replacement streams in the dairy side. So we have to adjust that historical number about two to two and a half percent to put it on a on a comparative basis when we look back over the last several cattle cycles.
Randy Blach:So the data has changed. Again, the turnover rate is so much slower on these animals and the heifer numbers, all of those things are different. So I think one of the big changes from a data standpoint is an on feed number. A lot of people historically looked at that and tried to derive their marketings out of that. How fed cattle market, well, that didn't work very good.
Randy Blach:That didn't work very good because of how slow the turnover rate is on those beef dairy crosses. Yeah. And then and then the other part
Casey Mabry:of it is the incentive to overfeed cattle. We've slowed the whole supply chain down. And so the average days on feed, we used to look at that as a metric. Anything over a hundred fifty days would if we got that number too big, it was bearish because we'd worry about a front end supply. But those cattle on average, I mean, they're all gonna be over a hundred and fifty days, obviously.
Randy Blach:Let me let me age you a little bit there, chief. In the nineteen eighties and nineteen nineties, our average days on feed on a seven and a half to eight weight steer was about a hundred and thirty days. That's how much we were feeding them. And you think about what that is today, it's between a 180 and a hundred and ninety days. Oh, yeah.
Randy Blach:It's just changed so much, you know, to take an eight weight steer, we're feeding them that many days. But, again, a lot of that, though we think about one of the other big changes in our business. In the nineteen eighties and nineties, we were producing as a flip of a coin whether it was even gonna be choice. We weren't even quality grading a lot of the carcasses in that time period cause there was no incentive. No incentive to make them better.
Randy Blach:I mean, everybody was everybody was whatever they were, we weren't focused on what grade or quality as an industry. That's why we're enjoying profitability we are today, and I don't I think everybody needs to understand that. If we hadn't got focused on quality, I think we'd still be that buoy out there in the ocean going back and forth and and really wouldn't be enjoying the fruits of what we're seeing today with the level of profitability. 85% of the cattle are choice and prime. Grid premiums have been strong.
Randy Blach:They've pulled people to focus on these kind of cattle, and we've done it. We got rewarded by doing it. It's moved the needle. Beef demand's at a forty year high. A forty year high.
Ty deCordova:We don't talk enough about is how high the beef demand is.
Randy Blach:I mean, that's he put this
Casey Mabry:you put that chart in your presentation every year that I see it, and it's it is and I can think about the time period where we lived through that. And if you think through, if the industry was fiftyfifty Choice Select and then you went to a steakhouse or you went anywhere, wherever you got it, you got a steak, that means that a Select beef is probably a 50% satisfaction rate. That's right. And then now they go get a steak, 87% of it's choice or prime, and they're gonna enjoy their experience a heck of a lot more.
Randy Blach:Unbelievable. Unbelievable. The big deal. I mean, you think about that and what that means. I mean, we got calf prices at these kind of levels.
Randy Blach:Our analysis would say a thousand dollars of the value gain in in the value of a calf is attributed to the demand growth that we've seen since $2,998 ahead. And the simple way for you to think about this is this way. The CPI or the inflation rate has gone up at two and a half percent since that time. That's the annual inflation rate. Retail beef prices have gone up 4.6% in that same time period.
Randy Blach:2.1% real demand growth on an annual basis, and that's what it's worth. That's why we're enjoying the the the profitability we are across this industry. I think it's important we all recognize that. Absolutely. And everybody leaves supplying
Ty deCordova:the Mandalorian up there in the politics.
Randy Blach:We need to let the markets work. Exactly. Let these markets work. They're pretty doggone efficient. Sometimes we don't like what they tell us, but they're pretty darn efficient.
Randy Blach:Absolutely. No. I totally agree a 100%. So, no, it's it's it's interesting to look at that data, and you guys
Casey Mabry:are doing a phenomenal job of putting that out there so we can see it and then remind us all and beat us over the head and go remind us, you know, hey. Again, like I said, the history in this business will tell you kinda where the future lies and, you know, what we need to do as far as just to kinda looking around and making sure that we're keeping
Ty deCordova:our heads square. You know? So Well, guys, man, I appreciate appreciate you sitting here busy with us, Randy. Fun. And thank you enough.
Ty deCordova:Anything else we wanna cover or anything you wanna talk about before we get off here that that we didn't that we didn't cover? Keep up the
Randy Blach:good work out there. Keep up the good work. Industry benefits, technology growth, all these things have been good for for all of us. We just gotta keep gotta pedal pretty fast these days to keep up. Oh, absolutely.
Randy Blach:Yeah. You can't you can't sit still for sure.
Ty deCordova:Well, Eddie, we thank you. My pleasure. Thank you everybody out there in social media land for joining us here on the We Live It podcast. On behalf of myself and Casey, we just thank everybody for tuning in. If you have any ideas for industry updates or anything like that, we love feedback.
Ty deCordova:Any questions, be sure to submit them to Casey. He is very good at answering the questions. He really likes to talk about his size and stuff, so you should just send those in. But thank you all very much for making this what it is. If it wasn't for you guys out there, we wouldn't be here and we wouldn't be able to do this informational stuff with great people like Randy and his help with the cattle facts.
Ty deCordova:Thanks for joining us. Hit subscribe and like and remember, God bless.