Friday Morning Livestock Market Summary

GENERAL COMMENTS:

Light-to-moderate trade volume is expected to develop in most areas of cattle feeder country as short-bought packers collect just enough live inventory to cover short-term slaughter needs. Limited business surfaced on Thursday with some live sales in Texas at $128 ($2 lower than last week) and $205 to $209 in parts of the North ($1 to $5 lower). Some deals were represented as low as $125 to $126 in the South and $202 to $205 in the North, but such discounts included extra delivery days (e.g., mid- to late April). Most showlists are still priced around $132 in the South and $213 to $215 in the North. Live and feeder contracts should also begin with uneven price action tied to residual selling interest and late-week short-covering.

The March 1 Hogs & Pigs report turned out to be generally well anticipated. For the most part, the new data supports widely-held assumptions of herd expansion. Nevertheless, the longer-term question remains: Are deferred lean contracts discounted enough, too much, or not enough? Assumptions of pork demand will obviously be key in sorting through this thorny puzzle. Look for the cash hog trade to open Friday with bids steady to $1 lower. Packers are understandably defensive given ample offerings and struggling beef demand. Lean futures seem geared to open with mixed prices in light volume.

	BULL SIDE		BEAR SIDE
1)	While the sharpest edge for spot cash cattle may be beginning to dull a bit, packers still seem willing to bid strong basis levels for steers and heifers to be delivered over the next two to four weeks (i.e., $5 to $6 over spot April). Such willingness implies a great deal of confidence in the friendly combination of supply and demand over at least the next 30 days.	1)	The wholesale beef trade remained in full retreat on Thursday with the choice and select boxes quoted $1.71 and $2.21 lower, respectively.
2)	For the week ending March 18, cattle carcass weights plunged lower: all cattle averaged 817 pounds, 4 lbs. below the prior week and 19 lbs. lighter than 2016; steers averaged 872 lbs., 9 lbs. smaller than the previous year and 23 lbs. short of last year; heifers averaged 812 lbs., 7 lbs. lighter than the prior week and 22 lbs. smaller than 2016.	2)	The steam seems to be coming off foreign demand for U.S. beef as well. Net beef export sales last week totaled no more than 10,800 MT, down 26% from the previous week and 31% from the prior four-week average.
3)	Hog & Pig data released Thursday clearly could have been worse. Both the size of the March 1 breeding herd and spring/summer farrowing intentions fell somewhat short of average trade expectations.	3)	The March 1 hog inventory certainly confirmed that producers have embraced a fairly aggressive pace of herd expansion. Indeed, the industry managed to set four new records in the December to February period: 1) most total hogs on March 1; 2) most hogs kept for market March 1; 3) largest December to February pig crop; and 4) most December to February pigs per litter.
4)	Though pork export sales have cooled a bit from the impressive surge from mid-month, it remains quite strong. Net sales last week totaled 21,100 metric tons, down 30% from the previous week, but still up 8% from the prior four-week average. Furthermore, the softening dollar should help foreign demand going forward.	4)	The pork carcass values lost another buck on Thursday with all major primals quoted lower, especially the fresh cuts.

OTHER MARKET SENSITIVE NEWS 

CATTLE: (US NEWS) -- Coming soon to McDonald's: Fresh beef.

The fast food giant said Thursday that it will swap frozen beef patties for fresh ones in its Quarter Pounder burgers by sometime next year at most of its U.S. locations. Employees will cook up the never-frozen beef on a grill when ordered.

That has been the biggest selling point at rival Wendy's. Yet there are larger forces at work that have prompted other menu changes at McDonald's, known for decades more for the billions of people that it has served, rather than its culinary choices.

The world's largest hamburger chain for some time has been attempting to improve its image as more people shun processed foods.

It has tinkered with its recipes, removed artificial preservatives from chicken McNuggets and it removed high fructose corn syrup from its buns.

The company is trying to stem a streak of adverse trends that led to an executive shakeup two years ago. The company brought in Steve Easterbrook as CEO to turn steer the company in a more promising direction. It's an ongoing endeavor.

Earlier this month, McDonald's acknowledged that it lost 500 million customer transactions in the U.S. since 2012, mainly to other fast food rivals.

McDonald's Corp., based in Oak Brook, Illinois, tested the fresh beef Quarter Pounders at more than 400 restaurants in Dallas and Tulsa, Oklahoma, for about a year before rolling out the changes nationally. By the middle of 2018, the fresh beef will come to most of its 14,000 U.S. locations, except those in Alaska, Hawaii and some airport locations.

HOGS: (foodmarket.com) -- Heading into April, the food sector is impacted by various seasonal factors that will ultimately translate to a shift in retail action.

Demand for grilling items, especially interest in premium cuts from the beef category, helps to lift the meat case and drive up the price of the basket, much to the delight of grocers. Cuts like strip steaks, rib steaks, porterhouse and T-bones, which see rather soft demand in the colder months, hit their peak usage period in the warmer months, and wholesale prices often begin to tick up sometime in April.

Historically, the start of April marks the beginning of the gradual wholesale climb in pork prices to their mid-summer peak. Demand for many pork items reaches its highest during the summer months when grilling usage is up and pork production seasonally slows. As the weather warms up and grilling returns, wholesale prices advance. In retail, pork remains a competitive protein with sub $3 per pound feature levels on numerous items.

Bacon, however, has been advancing higher since late February this year, and is currently featured at multi-year highs for the current week. Wholesale belly prices began to soar at the start of the year due to strong demand and lower inventories of product in cold storage, hitting uncharacteristically high levels for the season, but peaked about mid-February and are now trading at more normal seasonal levels. The impact from the Q1 climb, however, is still having a delayed effect on current retail offerings. This week, brand label bacon is on feature at $5.26 per lb. on average, up 10% from a year ago.

Hams for the Easter holiday are also making their way into store circulars to kick off the month of April. Bone-in ham varieties are featured between 90 cents and $1.56 per lb. this week. Easter is just over two weeks away, and sale themes are largely geared toward this Spring occasion.

Retailers have the opportunity to promote eggs aggressively for Easter this year, as wholesale prices are at some of the lowest levels seen in regard to the holiday over the last decade. Planners have responded with ads well below the dollar mark for large dozens, some even set to run below 50 cents. Ads will begin to break next week and run through the week of the holiday.