Friday Morning Livestock Market Summary

GENERAL COMMENTS:

While isolated clean-up trade is certainly possible this morning, the heart of the week's cash cattle trade is essentially completed. Whatever cattle are still left on show lists are priced around $130 in the South and $212 plus in the North. This has been another successful week supported by an impressive one-two punch of tight fed supplies and strong beef demand. Look for live and feeder futures to open higher, possibly even gapping into bullish territory helped by both follow-through buying and the premium status of feedlot cash.

Expect the cash hog trade to resume with bids ranging from steady to $1 lower. Late week carcass value appears to be on the defensive. Furthermore, most accounts seem to be pretty well covered in terms of immediate slaughter needs. Lean futures are likely to open on a mixed basis with light trade volume.

	BULL SIDE		BEAR SIDE
1)	While the important job of taking out tough overhead resistance in April live cattle futures was not completed on Thursday, bulls are now pounding on the door as loud as we've seen in months (i.e., spot April closed as high as 119.20, the most promising settlement seen since January 19.	1)	Beef shipments may be slowing a bit. Actual beef exports last week totaled 13,500 MT, down 3 percent from the previous week and 2 percent from the prior 4-week average.
2)	For the week ending March, cattle carcass weights generally continued to seasonally slide lower. All cattle averaged 819 pounds, 1 pounds lighter than the prior year and 11 pounds smaller than last year; steers averaged 876 pounds, 2 pounds lighter than the previous week and 12 pounds below 2016. Heifers did average 1 pound more than the prior week but still scaled 13 pounds lighter than 2016. Seasonally, look for smaller and smaller carcasses through mid to late May.	2)	Now that nearby feeder cattle futures have at long last gone premium to the cash index, it may actually become more difficult to recruit new spec buyers.
3)	Actual pork exports last week surged to 24,700 MT, up 15 percent from the previous week, up 8 percent from the prior 4-week average, and representing a marketing-year high.	3)	Net pork export sales last week totaled 12,900 MT, down 29 percent from the previous week and 31 percent from the prior 4-week average.
4)	Beef shipments may be slowing a bit. Actual beef exports last week totaled 13,500 MT, down 3 percent from the previous week and 2 percent from the prior 4-week average.	4)	The pork cut-out struggled on Thursday, pressured by softening demand for fresh cuts, ribs, and bellies.

OTHER MARKET SENSITIVE NEWS 

CATTLE: (Omaha World-Herald) -- Would you pay more for a steak if you knew it came from Nebraska?

State ag officials believe consumers will, potentially boosting the value of cattle for ranchers and feedlots here.

They're close to launching a marketing program that will promote "certified beef from Nebraska" — meat from cattle born and raised in the state.

A new logo with that slogan could appear on beef packages at supermarkets as well as on restaurant menus in the U.S. and overseas.

Nebraska Department of Agriculture Director Greg Ibach told an audience Wednesday at the annual Governor's Ag Conference that the new marketing effort comes under a U.S. Department of Agriculture program.

The Process Verified Program allows producers to show consumers that their product meets certain claims, whether it's cage-free eggs, or meat that's traceable to certain farms or that has never been treated with antibiotics.

Ibach's office is opening conversations with meatpacking plants in Nebraska, Kansas and Colorado that process Nebraska beef about using the label. The first customers they would try to sell on the program would be companies that import and distribute Nebraska beef overseas, he said.

Marketing efforts in the last decade have increased Nebraska's share of U.S. beef exports.

HOGS: (Iowa Farmer Today) -- Gregg Hora says while U.S. pork remains the favorite of most foreign customers, there is always another country out there trying to cut into its market share.

Hora, who farms near here in Webster County, serves as president-elect of the Iowa Pork Producers Association. He traveled to South Korea in February as part of an Iowa trade delegation.

"They are our fifth largest customer, and they continue to purchase pork at an aggressive pace," Hora says. "There are many other emerging economies that have a demand for protein and are looking for a safe, quality product like U.S. pork."

But as trade uncertainties swirl in the wake of the U.S. leaving the Trans-Pacific Partnership agreement, Hora and the rest of the pork industry understand competitors are lurking.

In most markets, the primary competition for U.S. pork comes from

the European Union. Hora says within the EU, pork production in Spain

and Germany is growing.

"Spain is in the process of tripling its sow herd," he says. Hora says the U.S. currently has a hold on six of the top 10 economies in the world — China, Mexico, Hong Kong, Canada, South Korea and Australia. The EU is a major player in most of those markets as well, specifically in the Asian countries.

Maintaining strength in China, Hora says, is critical. "250 million people will be coming into China's middle class the next six years, with 100 million of those in the next three years," he says. "That's a big opportunity for us."

Canada, Brazil and Chile are also major competitors, says Nick Giordano, vice president for global government affairs with the National Pork Producers Council.

"Their targets vary, but the EU is at the top because of its sheer size," he says. "Some have trade restrictions due to animal health issues, like Brazil."

Giordano says over the past 10 years, the U.S. has been the lowest-cost producer in the world, but with a strong dollar, trade has been impacted and competition for those markets has stiffened.

New trade agreements could change the landscape, he says. Pulling out of the Trans-Pacific Partnership has allowed competitors like the EU to potentially cut into U.S. exports.

"The EU has been negotiating deals, closing a deal with Vietnam and in the final stages of a deal with Japan," Giordano says. He says the U.S. continues to supply a large amount of chilled pork heading to Japan.

"If competing nations get more favorable access to these markets, it's going to affect our producers," he says.

Renegotiating the North America Free Trade Agreement (NAFTA) could also impact the industry.

"NAFTA has been very good for our pork industry, since we can ship pork tariff-free to Canada and Mexico," Giordano says. "It's not clear what the (Trump) administration is going to do about NAFTA, but I don't think anyone wants to see tariffs renegotiated. That would cause a major disruption to a lot of industries in agriculture."

Canada and Brazil represent the biggest competition in the Western Hemisphere, says Erin Borror, economist with the U.S. Meat Export Federation.

She says the U.S. has lost some market share over the past couple of years to the EU, but because of disease concerns and production costs, there are no real threats.

Borror says trading partners are concerned about changes. "There is a lot of downside risk from the current political uncertainty, and it appears we are going to restart the process with bilateral trade agreements," she says. "The EU and Japan are in the final stages of an agreement, and that will set us back.

"TPP would have allowed us new access to Japan when it comes to bacon and hams, but now the EU is going to get to access that market first."

Hora says the coming years will be challenging for the U.S. pork industry. He says Mexico could become an export player as they expand their industry along the Pacific coast.

But, that USDA label on exported pork still carries a big stick when it comes to overseas markets.

"That meat inspection label is very highly regarded," Hora says. He says despite the recent setbacks involving trade, there is a good deal of opportunity out there for the U.S. pork industry.

"Without TPP, we now have the opportunity to strike up bilateral trade agreements that are going to benefit our partners more so than as part of a multi-nation agreement," Hora says. "We are continuing to grow our industry here, so we will have pork to sell globally."