GENERAL COMMENTS:
Apparently Wednesday has become the magic hour to sell cattle sharply higher. For the third consecutive week, feedlot managers scored big time in terms of bullish marketing yesterday. It started out when the FCE sold internet cattle as m much as $4-5 higher than last week. With that spark, packer buyer interest seem to grow through the day. By the time the sun set, live sales were $3 higher in the South (mostly $128) and dressed deals were $8-9 higher in the North (mostly $210). At this point, we think trade volume was no better than moderate, but it will be important to check out Mandatory summaries later this morning. Unsold cattle remain ing on show lists are priced around $130 in the South and $212 plus in the North. Live and feeder futures seem likely to open significantly higher, supported by follow-through buying and tall cash premiums.
Look for the cash hog trade this morning to open with near steady bids. While lean futures have been drifting some lower after Monday's rally. Most contracts. continue to hold above 40-day moving average. But it's probably important for spot April to dig in above 70. Saturday's kill is expected to total close to 145,000 head. Lean futures should open on a mixed basis tied to follow-through sellingg on one Hand and short covering on the other.
| BULL SIDE | BEAR SIDE | ||
| 1) | The cash cattle market exploded further on Wednesday with live sales in Western Nebraska and Colorado marked as high as $131, $5-6 higher than last week and the strongest since mid April 2016. The bullish brew of tight fed supplies and strong beef demand continues to be extremely rich. | 1) | Once again, live cattle futures largely ignored bullish cash news and respected tough overhead chart around 119 basis April. The board's discount at the CME just gets deeper and deeper, but nobody seems to care. |
| 2) | Thanks to aggressive marketing, feedlots are becoming increasingly current. Indeed, we have been that several lots in Nebraska now have all of their March cattle already been sold. | 2) | For the week ending March 11, U.S. hatcheries set 224 million eggs in incubators, up 2 percent from a year ago. At the same time, chicks placed totaled 181 million chicks, up 2 percent from 2016. |
| 3) | The seasonal index for April lean hog futures is basically flat to a bit lower prior to a typical rebound in values heading into contract expiration in April. | 3) | The pork carcass value closed moderately lower at midweek, pressured by softer demand for all primal except the rib and belly. |
| 4) | Through the pork carcass stumbled a bit on Wednesday, the cutout should have an upward seasonal bias over several more weeks, even possibly getting above $87 before the end of April. | 4) | Lean hog futures seem to be running out of gas once again, closing lower despite the fact that cattle paper surged higher on Wednesday. |
OTHER MARKET SENSITIVE NEWS
CATTLE: (Nebraska Pork Producers) -- Nebraska pork producers traveled to Atlanta, Georgia to serve as delegates to the Pork Act Delegate (NPB) and National Pork Producers Council (NPPC) Delegate assembly on March 1-3. Pork Act Delegates are appointed by the
U.S. Secretary of Agriculture and NPPC delegates are elected at the state level from producers that participate in the Strategic Investment Program.
Serving as Pork Act Delegates were Tim Chancellor of Broken Bow, Michael Luckey of Columbus, and Duane Miller of Davenport, Nebraska. They were among the 168 appointed delegates who traveled from 49 states across the country to represent pork producers and importers who sell pork products in the United States. The duties of the delegate body include nominating members to serve on the National Pork Board, establishing how much of the Pork Checkoff is returned to state pork organizations, and providing direction on pork promotion, research and consumer and producer education priorities funded by the Pork Checkoff.
To fund programs, America's pork producers contribute 40 cents of every $100 of sales to the Checkoff. Importers use a sales formula to contribute a similar amount. The role of the Pork Checkoff is to promote and enhance consumer demand for pork on a global basis, as well as invest in research designed to improve production practices and safeguard the pork supply, the environment and animal well-being. Building consumer confidence and educating America's pig farmers about livestock production practices through training and certification programs are also key priorities.
The National Pork Producers Council Board set its number of delegates at 125. Those producers attending from Nebraska were Russ Vering of Howells, John Csukker of Columbus, Mike Wisnieski of Omaha, Aaron Reichmuth of Humphrey and Dave Harrington from St. Paul, Nebraska. The number of delegates that can attend is based on the Strategic Investment Program (SIP) total income attributable from each state. Pork producers voluntarily contribute
10 cents of every $100 of sales to the program to fund legislative and regulatory issues. Al Juhnke, Executive Director for the Nebraska Pork Producers Association also made the trip to Atlanta. HOGS: (National Hog Farmer) -- Bans imposed by some countries on poultry products bear watching by all U.S. livestock producers, according to Kansas State University agricultural economist Glynn Tonsor.
In response to news of the presence of highly pathogenic H7 avian influenza on a Tennessee commercial poultry farm, South Korea on March 6 banned imports of all uncooked U.S. poultry and egg products.
Taiwan imposed a ban on imports of poultry-related products from Tennessee and also imposed a ban on poultry meat from Wisconsin on news that a flock there was confirmed with low pathogenic H5 avian flu. Japan and Hong Kong have also imposed restrictions.
The Tennessee state veterinarian's office confirmed March 9 that a separate flock of chickens at a commercial poultry operation tested positive for low pathogenic avian influenza.
Depending on how long or widespread such bans on U.S. or specific states' poultry imports last, however, poultry supplies could back up and potentially weigh on prices for chicken, as well as pork and beef, Tonsor says.
"When one industry loses access to a foreign market, a portion of that volume may be redirected to other foreign customers yet usually results in larger domestic consumption," he says.
The net effect can lead to a chain reaction: Without the ability to export chicken meat to international markets, U.S. suppliers may be forced to lower prices in order to move product off of grocery-store shelves. And when chicken is cheap, many shoppers will opt to save money instead of buying pork or beef which, in turn, affects the price of livestock in those markets.
Tonsor notes that it's helpful when some international buyers of U.S. meat products — in this case poultry — adopt regionalization restrictions rather than nationwide restrictions.
"When an importing country elects to restrict products from a region rather than the U.S. entirely, the corresponding trade disruptions and, hence, market-price effects are diluted as the national industry retains some of their originally expected trade access," he says.
Tonsor adds that this regionalization aspect is particularly important in the case of the poultry industry as production in some bird flyways may be affected while operations in other flyways may experience no animal-health events.
The U.S. exports about 18% of its annual poultry production, according to the USDA Economic Research Service. Mexico, Canada, Hong Kong, Taiwan and Japan were the top five importers of U.S. poultry and eggs in 2016.
Neither the low pathogenic nor high pathogenic forms of the disease poses a risk to the food supply, according to the Tennessee statement.
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