In the latest edition of the Hog Talk podcast from Ever.Ag Insights, we introduce Dr. Lee Schulz, livestock expert and Ever.Ag’s new chief economist. Learn more about Dr. Schulz’s background, the topics he’ll tackle at Ever.Ag, and what data point he considers the most important in livestock markets.

Tune in now!

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

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00;00;08;22 – 00;00;31;15

Hello and welcome to Hog Talk, brought to you by Ever AG Insights. On this podcast, we talk with subject matter experts on news and topics affecting the swine industry and hog market. I’m your host, Phil Plaut. Before we get started today, just a quick market recap. As of yesterday, Thursday, October 24th, nearby lean hog futures were at 7865 for 108, up about 1% from last week.

00;00;31;15 – 00;01;00;06

The cutout came in at 9815 for one week, up about 2%. So a little bit of an upturn in the markets today. It’s our privilege to have doctor Lee Schulz with us. So the last time on Hog Talk we featured a conversation with Doctor Steven Meyer. Doctor Meyer leaving the fold after a distinguished career, a legend in the livestock economist circles and now is being replaced if there is such a thing by doctor Lee Schulz to make his own bold steps towards a legendary career.

00;01;00;07 – 00;01;03;17

Doctor Schulz, glad to have you on the team. Glad to have you with us on Hog Talk.

00;01;03;22 – 00;01;05;08

Thank you. So glad to be here.

00;01;05;09 – 00;01;10;07

So let’s get start with this. You were working in Ames. What’s your background? How’d you get here?

00;01;10;13 – 00;01;29;28

I think first and foremost really replaces not the right word. Right. I think it’s following Doctor Meyer. Legendary, storied career. And really honored to follow in his footsteps. Right. And try to chart my own path. A little bit of my background. And reflecting on this a little bit. I actually have a background, so I ran in the industry here for a while.

00;01;29;28 – 00;01;48;05

It is a bit of a pivot for me, so I’ll maybe go back a little bit. I grew up in Central Johnson, not that far from where you’re at. Fell really like many farm kids, you know, grew up and show livestock, showed cattle at county fairs, was involved in forage and as I say, and really, that spurred my interest in agriculture.

00;01;48;05 – 00;02;10;24

I decided to go to the University of Wisconsin River falls and study agricultural business that further really grew that passion for for agriculture. And towards the end of my time there, I had the opportunity to do some undergraduate research. Before then, I had really thought that research you needed a white lab coat to do, right? So that really helped provide me kind of of interest of what livestock marketing and research could be.

00;02;10;24 – 00;02;51;24

And I parlayed that into a master’s degree at Michigan State University. And that further really stirred that passion and then had the opportunity to go to Kansas State University for a PhD in agricultural economics study with many of the legends in livestock marketing there. And then when it came time to graduate, had really the fortune of Doctor Lawrence here at Iowa State University, was transitioning into administration and had the opportunity to take over the livestock marketing specialist and professor in the Department of Economics, where I spent 12 wonderful years having a research program, a teaching program, teaching agriculture, marketing to some of the brightest students here in Iowa and beyond.

00;02;51;24 – 00;03;15;04

And then really, what was the best part of that job was the extension component. So that was working with producers and allied industry on livestock markets, in particular beef cattle and hog markets. And really that provided me a network. And so when there was an opportunity to make this transition to ever Egg and join the team, it was such a natural transition to make the move.

00;03;15;04 – 00;03;30;29

I think I really look at this as providing me an opportunity to take on a new challenge and to really grow my role in the industry of providing economic data and analysis and critical perspectives to producers and livestock. Market participants out there.

00;03;31;02 – 00;03;46;10

So from what I understand, the reputation, if you will, of Kansas State, we get a lot of practical economists out of Kansas State. And I’m guessing that you’re able to apply the extension part of your job at Iowa State. It’s really kind of boots on the ground applying things. It’s a practical dimension to the field of economics. Is that a fair statement?

00;03;46;12 – 00;04;05;09

Very much so. And I think that really is the bread and butter of Kansas State University’s graduate education. It’s really providing the tools to students to go out there in the field and be able to contribute at whatever level that that is. I’ll joke here a bit. I mean, there’s several, you know, important decisions I’ve made in my life.

00;04;05;09 – 00;04;23;01

My wife would argue on the Wisconsin River falls was number one because I met her there. But going to Kansas State University and really the trajectory that that put me on was tremendous. And I think there wasn’t a better place for me to go. That set me up. And so I am so thankful for that opportunity to be at Kansas State and be an alumnus there.

00;04;23;01 – 00;04;27;19

And still be connected to the faculty and staff at Kansas State. So what do you love about.

00;04;27;19 – 00;04;32;10

Livestock markets, Leigh? What about the livestock markets gets you excited, juiced up for your day?

00;04;32;11 – 00;04;48;29

There’s never a dull day and that’s really, you know, all of us that are in the markets. We can say that, right? I mean, because these markets are so dynamic. You know what also I love about it is there’s so many different perspectives. You’ll talk to different analysts or be at different conferences or see a market outlook presentation.

00;04;48;29 – 00;05;13;20

And something’s always new, right? It’s never the same. And so I think that really does provide a challenge for us that are in these livestock markets of continuing to keep up with the latest information and how we distill and analyze and provide that information. But also, I think there’s a role for everyone, right? Depending on your training, your experience, and really, there’s a way for you to carve out your role in these livestock markets.

00;05;13;20 – 00;05;27;01

And then it’s certainly about the people. There’s a real passion in the industry. And you look across the industry, all the participants are very genuine, and I think that makes our job that much easier. And being involved in these livestock markets.

00;05;27;04 – 00;05;48;25

I’m clearly a biased observer. But in the 2 to 3 years that I’ve gotten to know our livestock group in Ames, I just think it’s a remarkable, remarkable collection of team members and an incredibly collaborative spirit towards helping clients. It’s just a special group. And what excites you about your new role in that group? You’ve been, you know, on the morning hog call and do a lot of customer work, customer calls.

00;05;48;25 – 00;05;50;15

What about this new role excites you?

00;05;50;19 – 00;06;11;12

Well, I would say it’s further confirmation of the horsepower and the team that’s in place. And so my experience with the team really dates back to when I got to Iowa State. The team of Joe Kearns and Dave Delaney and others reached out to me and got me to be part of the network, right? That they were involved with, because they are leaders in the industry.

00;06;11;12 – 00;06;27;02

And so that really helped set me up for the position that I’m in now. I kind of was out in front of my skis at that point, right? I probably didn’t belong or deserved to be in a lot of those conversations or a lot of those rooms, but they really provided that opportunity for me. So that’s not lost on me.

00;06;27;02 – 00;06;43;10

And I think now as I think about, you know, I’m a bit in on being part of that team. If I look back to kind of where I started to where I’m at today, I have a place at the table now, certainly continue need to earn that right and continue to kind of show my value. But but that’s really what excites me and the challenge.

00;06;43;10 – 00;07;05;19

Right? So I think when you look at those team members, they’re always challenging you. Right? And I think that’s certainly making you better as a market analyst and an economist. And I think, you know, at the end of the day, I truly believe I can do some good, right? And that’s the public facing part of my role. I think there’s really some good I can do for, you know, the broader livestock markets and broader industry.

00;07;05;19 – 00;07;10;24

And I really hope to continue what I’ve done over the last several years and continue that in this new role.

00;07;10;25 – 00;07;28;20

So just thinking broadly, I like to say that in a very what would be a very unfortunate circumstance, that I had only one graph to look out every day. My graph would be crude oil, because I think it tells you so much about so many different things. So from a hog and cattle market perspective, if you could only look at one thing every day or every week, what would it be?

00;07;28;20 – 00;07;31;01

What’s your favorite indicators on these markets?

00;07;31;06 – 00;07;52;23

So I’m going to cheat here a little bit because I think you left me a little bit of broadness. You know for me it would be looking at USDA livestock mandatory reporting data. I think that really provides us the best real time assessment of these livestock markets. When you look at both from a price and a supply standpoint, that doesn’t mean the data isn’t perfect.

00;07;52;23 – 00;08;15;04

Right? And I think, you know, there’s always room for improvement. And continued discussions of how, you know, Packers report data and USDA publishes that data. But I think as we look back to, you know, that data being over two decades old now and really USDA providing that it is the envy of the world, when we think about marketing data that’s readily available to us as analysts.

00;08;15;04 – 00;08;30;24

And so I would argue, really, that’s kind of my go to when you think about of a place, you know, maybe when you see football coaches on the sidelines, right, they script the first 15 plays that they have. When I look at where I’m looking at the markets every day, certainly that our data is on the top of that list.

00;08;30;25 – 00;08;37;19

As I look at my place, there’s other things that I look at, right. But that’s where my go to from a data analyst standpoint is I.

00;08;37;19 – 00;08;51;29

Heard you say something this morning. I wrote it down. I was so impressed with what you said because it’s true. And I think all ag circles, you said this morning that producers respond to profits and not prices. As we think about the current scene. Let’s start with hogs versus called hog talk. Right, doctor Schultz, let’s start with hogs.

00;08;51;29 – 00;09;05;07

Producers respond to profits, not prices. Where do you see the industry right now? Where the markets are and producer, profitability and producer outlook for the next, let’s say, for the fourth quarter and into 2025? Yeah.

00;09;05;07 – 00;09;25;18

And that’s a great way, I think, to dive into this a little bit. So if we look at hog prices currently, so if we look at 2024 prices, they’re slightly higher than 2023 prices and prices right now are about the seventh highest nominally. So I’m going to use that descriptor here because we’re not going to adjust for inflation.

00;09;25;18 – 00;09;47;26

But if you look at prices seventh highest nominal, you’d say that’s a pretty good economic environment for producers, right? But then when you pair that with the cost situation where 2023 was the highest cost producers ever faced, was the worst economic times that producers also faced with the Iowa State University model from fair to finish production, suggesting they lost about $32 per head.

00;09;47;26 – 00;10;14;15

And that’s even larger than the large losses. You have to go all the way back to 1998. And so there, if you’re purely looking at prices, that really distorts the economic situation for producers. Now 2024, I mentioned prices were a little bit stronger, but we’re still at elevated costs. And so we’re still facing a situation that is pretty close to break even here in 2024 and likely to be somewhat of a replay in 2025.

00;10;14;15 – 00;10;31;23

And so, you know, the phrase producers respond to profits, not prices. You know, it’s important to keep in the context that it’s not only what they’re selling, but those inputs a lot of times are driving the decisions that they’re making on their operations. And so from a risk management standpoint, I think a lot of times we talk about the output side of things, right.

00;10;31;23 – 00;10;55;27

And the hog side of things here. And certainly that’s critical to manage that side of the business. But also we have this input side of the business that is, I would argue, increasingly important and more difficult to manage because you have the commodity side, right? When you think about hogs, it’s corn and soybean meal, but you have all these other costs, these inflationary costs that have continued to rise, that are more difficult to manage.

00;10;55;27 – 00;11;08;15

Right. And so there we have to think about things, about long term relationships potentially, that may help level out some of the price inflation. Also, you can think about stocking up on inputs to help mitigate some of those large heights that we’ve seen.

00;11;08;16 – 00;11;21;01

Well, Doctor Schultz, there you have it. Your passion comes through for the topic. I think you’re going to fit right in over here. I know we’re all delighted to have you board, and thank you for joining us on hog hock. I doubt this will be your last appearance. So thanks again for joining us.

00;11;21;03 – 00;11;31;19

Thanks for having me. And I can’t be more excited and thankful for this opportunity. So look forward to continued interaction on this horn talk, as well as other avenues that I can play.

00;11;31;20 – 00;11;40;04

All right, if you’ve enjoyed listening to Hot Talk, be sure to tell a friend or to and subscribe to us wherever you listen to your podcasts. Thank you to the Insights Crew for their work on today’s show.

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