Cash cattle action should be slow in developing
Wednesday. Feedlot managers will probably keep one eye on the board and
the other on news from the FCE. Given the holiday-shortened schedule,
it's more difficult than ever to predict the timing of cash business.
Yet significant trade volume could easily be postponed until Thursday or
Friday. At this point, we assume asking prices will start out around
$134 in the South and $210 to $212 in the North. Live and feeder futures
are set to open moderately higher, supported by follow-through buying
and still-large cash premiums.
The cash hog trade should open with bids steady
to $1 higher. It sounds like analysts are expecting this week's kill to
total close to just under 2 million head. Processing margins remain well
into the double-digits, and for Saturday, could total as much as
220,000 head. Lean futures should open on a mixed basis tied to residual
selling and short-covering.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle futures seemed to quickly shake off the bearish implications of the May 1 Cattle on Feed report by closing with solid gains on Tuesday. More and more traders are concluding that current discounts may be deep enough. | 1) | New showlists distributed in feedlot country on Tuesday were generally larger with only Nebraska offering fewer ready steers and heifers. |
| 2) | After a three-week period of sluggish sales, out-front (i.e., with delivery specs of 22 days or more) boxed beef business picked up last week, topping 1,000 loads for the first time since late April. | 2) | With spot June live cattle at a $9 discount to last week's cash market, basis remains very strong, compared with more typical levels in late Mayand June being par to $1 below cash. Such basis strength is likely to work against feedlot leverage. |
| 3) | Despite the clumsy start to the short trading week, lean hog futures continue to sport both bullish short and long market trends. | 3) | Nearby lean hog futures failed to tap follow-through buying strength and technical potential Tuesday by closing sharply lower. Such action supports ideas that the board is overbought and/or running out of gas. |
| 4) |
Bellies hold the key to summer highs
for the cutout, hogs and futures. The good news is that seasonal odds
favor a sharp belly appreciation as we speed toward BLT season over the
next 30 to 60 days.
|
4) | For the most part, the current structure of lean hog futures points to greater and greater pork production through the balance of 2017 and into 2018. |
OTHER MARKET SENSITIVE NEWS
CATTLE: (foodmarket.com) -- JBS S.A., the
world's largest meatpacker, announced Friday that Joesley Batista
resigned as chairman and member of the board. The Board of Directors
unanimously elected Tarek Farahat as Batista's replacement.
Company owners and brothers Joesley and Wesley
Batista entered into a plea bargain deal that accused Brazil's President
Michel Temer of endorsing the bribing of a witness in the country's
largest meat scandal. The brothers' testimony, released last week,
unleashed a political crisis, alleging that they bribed hundreds of
politicians, reports Reuters. Both brothers resigned from their senior
posts effectively immediately.
Tarek Farahat has worked for Procter &
Gamble for 26 years, serving in a number of leadership positions in
several regions around the globe, including the Middle East, Europe and
Latin America. From 2006-12, he served as president of P&G Brazil.
In 2012, he became president of P&G Latin America and an officer of
the company's executive board. Farahat has been a member of the Board of
Directors of JBS since 2013 and has served as global president of
Marketing and Innovation since 2015.
In the same meeting, José Batista Sobrinho was unanimously elected vice chairman of the Board.
The Board also ratified the creation of a
Governance Committee, which will be led by Farahat and whose main
objective will be to implement global best practices in corporate
governance and compliance at JBS.
"Governance is my utmost priority. We will work
hard to restore trust with the market and protect the more than 235,000
families that are part of JBS. There is a significant amount of work to
be done in order to regain the trust of our stakeholders," states
Farahat.
"We remain focused on offering consumers the
highest quality products and services while maintaining a close
partnership with our suppliers and clients, and supporting our more than
235,000 team members worldwide," adds Farahat.
HOGS: (foodmarket.com) -- A Canadian shipment of
pig feet to China has tested positive for residues of banned growth
drug ractopamine and may curb future trade, Canadian government and
industry officials say.
China views the tainted shipment as a "systemic
failure" of Canada's program that certifies pork sent to China is free
of ractopamine, and the situation "could affect future pork exports,"
according to an email to the industry from the Canadian Food Inspection
Agency (CFIA). The email circulated on Monday and was obtained by
Reuters.
China, the world's biggest pork consumer, is one
of Canada's biggest pork markets, importing 314,000 tonnes worth C$587
million in 2016, according to Statistics Canada. Pig feet are a popular
dish in China.
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