The cash cattle trade is not expected to climb far out of the shell Tuesday with both buyers and sellers monitoring the board and/or the beef trade more than each other. Look for bids and asking prices to remain poorly defined. Yet there seems to an early assumption that the country trade will continue to sport a firm undertone. Our guess is that asking prices will eventually be posted around $130 plus in the South and $212 plus in the North. Active trade volume may be delayed until Thursday and Friday. Live and feeder futures should open higher thanks to spillover buying and signs of decent seasonal beef demand.
Well, we accomplished two things that would-be bulls have long insisted were necessary before better price action could develop in the cash hog trades: 1) the passing of the Easter holiday; and 2) the expiration of the April lean contracts. Should everyone now fasten their seatbelt? Maybe, but we haven'tfelt a jolt forward, yet more than a few are waiting for some kind of shift. Lean futures seem likely to open moderately lower, checked by slow packer sales and lackluster wholesale demand.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live and feeder futures didn't lose a step of bullish momentum over the week. Most contracts once again set new highs on Monday with spot April live still closing $1.50 or so under last week's five-area steer average. | 1) | June live cattle becomes spot month in less than two weeks at a $12 to $13 discount to cash, the much stronger-than-normal basis could easily inspire more willing feedlot sellers. |
| 2) |
Beef cutouts closed sharply higher Monday with early-week demand described as "moderate to fairly good."
| 2) | At the same time, depending on its recent tally, actively-traded June live cattle typically trade lower from early spring into the spot month. |
| 3) | The pork carcass value seems to be trying to stabilize, closing moderately higher with the help of better demand for loins, ribs and bellies. | 3) | Both the long- and short- term market trends in lean hog futures remain negative as most contracts have been unable to build any additional premium to the front end of the market. |
| 4) | Technically, summer lean hog futures should be staged to dig in above 72, very close to where they landed on Monday. | 4) | Packer demand for hogs will increase when their margins improve enough to turn the cash light green, and clearly they are not there yet. |
CATTLE: (foodmarket.com) -- Brazil's Federal Police said Sunday they charged 63 people for taking part in a corruption scheme that sold expired or adulterated meat, China's Xinhua news agency reported.
The scandal led at least 25 countries to temporarily suspend imports of Brazilian meat.
Among the charges are falsifying medical records and certificates, tampering with food products, conspiracy and corruption.
In March, the police launched a wide-ranging investigation, dubbed "Operation Weak Flesh," against illegal practices at meatpacking plants.
The operation dismantled groups that allegedly bribed inspectors to overlook altered expiry dates, water-injected meat as well as other unsanitary practices.
A total of 21 meatpacking plants were involved in the scheme, including multinationals BRF and JBS, two of the world's largest meat producers and exporters.
Brazil is the world's largest exporter of beef and poultry, and the fourth largest exporter of pork.
The scandal is estimated to cost Brazil's export market some USD 1.5 billion in lost annual revenue.
HOGS: (NPPC) -- The U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS) this week said it wants to move forward with a "Modernization of Pork Slaughter" rule. The regulation, which NPPC strongly supports, would increase efficiency and effectiveness of the federal inspection process and allow for the rapid adoption of new food safety technologies in pork slaughter. It also has the potential to increase U.S. hog slaughter capacity.
The HACCP Inspection Models Project, or HIMP, would allow FSIS to better focus its inspection resources and partner with the pork industry to better ensure safe products are entering the food supply. It shifts certain food safety responsibilities from federal inspectors to packing plant workers and could lead to faster pork production lines. Currently, five U.S. pork packing plants are participating in HIMP pilot projects; enactment of a modernization rule would make the system available to all packers.
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