Cattle buying interest could slowly start to
improve Thursday with initial bids around $130 in the South and $208 to
$209 in the North. Encouraged by the board's firming tone, feedlot
managers are sticking with higher asking prices of $134 in the South and
$212 plus in the North. Significant trade volume may be delayed until
Friday. Live and feeder issues should open moderately higher, supported
by follow-through buying interest and cash premiums.
Hog buyers pushed hard for market numbers at
midweek, and we expect to see similar energy Thursday. Expect open bids
to range from steady to $1 higher as packers work to supply a large
Saturday kill close to 220,000 head. Lean futures seem staged to open
moderately higher, boosted by residual buying interest, bull spreading
and ongoing cash optimism.
| BULL SIDE | BEAR SIDE | ||
| 1) | Several thousand cattle on the FCE sold at near steady money at midweek, an encouraging sign of decent packer demand for ready steers and heifers throughout feedlot country in general. | 1) | Between last week's reduced beef production and the theoretical demand tied to the Memorial Day week, lackluster boxed beef performance so far this week is not a ringing endorsement of late spring/early summer product demand. |
| 2) | Triple-digit gains push live and feeder futures significantly higher Wednesday with most issues settling above moving average highs. | 2) | While spreads between nearby June cattle and deferred contracts have narrowed, the back months remain at discounts, suggesting trade expectations of continued downside risk in the cattle and beef markets. |
| 3) | Summer lean hog futures set another round of new contract highs on Wednesday. Clearly, board bulls are eager to lead the cash market higher into the early summer. | 3) | Spot month June lean hog futures now stands at a 540-point premium to Tuesday's CME two-day settlement index value. With just weeks until expiration, June may have it tough to build a bigger premium. |
| 4) |
The pork carcass value rolled solidly higher at midweek, supported by better demand for rib, butt and ham cuts.
|
4) | Though many traders are willing to bet that pork export demand will remain as strong as that seen in the first quarter, weekly sales have been slowing in recent weeks. |
OTHER MARKET SENSITIVE NEWS
CATTLE: (AP) -- Brazilian meatpacking giant JBS
has agreed to pay a fine of more than $3 billion for its role in a
corruption scheme involving pension funds.
The Federal Prosecutor's Office says the agreement was reached Tuesday night and that the fine will be paid over 25 years.
JBS executive Joesley Batista is at the center
of the political crisis engulfing President Michel Temer. In a secret
recording Batista made in March, Temer appears to be condoning the
payment of hush money to the imprisoned former Speaker of the House
Eduardo Cunha.
The recording and the revelation of kickbacks to
more than 1,800 politicians are part of the plea bargain signed by the
Joesley Batista and his brother Wesley, also a top executive at JBS.
HOGS: (Asia Times) -- A Canadian shipment of pig
feet to China, produced by Olymel LP, 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.
The pig feet were shipped by privately-held
Olymel, and were produced at the its Vallee-Jonction, Quebec, slaughter
and processing plant, company spokesman Richard Vigneault said.
Olymel, one of Canada's two biggest pork
processors, is investigating how it may have shipped the pork with
ractopamine to China, Vigneault said.
CFIA has temporarily stopped signing
certificates that allow the plant to export to China, and asked the
company to send back any other shipments that may be in transit to that
country, spokeswoman Lisa Murphy said.
Chinese inspection authority AQSIQ notified CFIA
on Friday that the 27,000kg shipment of frozen pork hocks, also known
as pig feet, contained ractopamine, she said.
China, the world's biggest pork consumer, is one
of Canada's biggest pork markets, importing 314,000 metric tons worth
C$587 million (US$) in 2016, according to Statistics Canada. Pig feet
are a popular dish in China.
The last time China detected ractopamine in a
Canadian pork shipment, in 2015, it removed several Canadian processing
plants from its list of eligible exporters to China, said Gary Stordy,
spokesman for the Canadian Pork Council, an industry group.
"We're taking this as a serious situation,"
Stordy said. "We want to understand what happened in the programme and
how we can take corrective action."
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