Friday Morning Livestock Market Update

GENERAL COMMENTS:

Assuming final trade volume generated in the North was close to moderate, the cash cattle trading is probably done for the week. Limited clean-up action is possible, but we don't look for much. Unsold inventory remaining on showlists are likely priced around $122 in the South and $192 plus in the North. Look for live and feeder futures to open mixed with the latter probably set to outperform the former.

Hog buyers to resume work this morning with basically steady bids. Although still profitable, packer margins have narrowed in the late rounds thanks to losses in the product trade. Lean hog issues are also set to begin with uneven price action thanks to light bull spreading and late week profit taking. Correcting what was said earlier, spot July is scheduled to expire next Monday, the 17th.

	BULL SIDE		BEAR SIDE
1)	Not only were Northern cattle buyers willing to spend more on Thursday for spot delivery (i.e., $120 live/$190 dressed), some were willing to give the same for steers and heifers to be delivered in two weeks.	1)	For the week ending July, cattle carcass weights continued to climb: all cattle averaged 804 pounds, 1 pound above the prior week and 9 pounds smaller than 2016; steers averaged 859 pounds, 4 pounds bigger than the week before and 9 pounds lighter than last year; heifers averaged 766 pounds, 1 pound bigger than the previous week and 12 pounds lighter than the year before.
2)	Given soon-to-be-spot August lean hog's $10 discount to the cash index, the board may experience little trouble next week in attracting new buyers, especially if midsummer fundamentals remain relatively positive.	2)	Beef cut-outs remained in free-fall on Thursday, closing another $1.47 (select) to $2.84 (choice) with box supplies described as "heavy."
3)	Given soon-to-be-spot August lean hog's $10 discount to the cash index, the board may experience little trouble next week in attracting new buyers, especially if midsummer fundamentals remain relatively positive.	3)	Net pork export sales plunged to 9,700 MT last week, down 27 percent from the previous week, 49 percent from the prior 4-week average, and represented a marketing year low.
4)	The hog market has worked slightly higher putting the short-term trend positive, and the long-term market trend remains positive as well.	4)	The pork carcass value also came unglued yesterday, losing as much as $2.15 with all primals quoted sharply lower except the loin.

OTHER MARKET SENSITIVE NEWS

CATTLE: (Technomic) — Fewer consumers are eating burgers now than in previous years and restaurants are feeling the effects, according to Technomic Inc.'s recently released 2017 Burger Consumer Trend Report. While 56% of consumers say that they eat burgers at least once a week, this is down from roughly two-thirds of consumers in 2013, and consumers say they are now preparing a higher percentage of their burgers at home. These shifts in consumption align with the increased availability of other foodservice options, especially at fast casuals and retailers, and the 15% increase in burger prices at leading chains since 2013 (compared to about 11% for all entrees).

"Burgers are becoming a more premium option as pricier toppings like brisket, fried eggs and avocado trend up on menus," explains Anne Mills, manager of consumer insights at Technomic. "While these ingredients are satisfying demands for new and unique burgers, increasing prices may make burgers a less practical option and push consumers to more affordable alternatives, especially as retail prices for burgers drop."

Key takeaways from the report include:

•Thirty-five percent of consumers say it's very important that restaurants offer burgers with new and unique flavors.

•Twenty-six percent of consumers say breakfast burgers are highly appealing, up from 22% in 2015.

•Forty-eight percent of consumers say it's very important that burgers are made with never-frozen beef.

HOGS: (USMEF) — As China's domestic pork production has rebounded this year and its hog prices have cooled, demand for imports has moderated from the exceptionally strong levels seen in mid-2016. China's pork/pork variety meat imports were actually somewhat stronger than expected in May at 219,249 metric tons, but this was still down 24% year-over-year. With Hong Kong included, the region's total May imports were 280,172 mt, down 15% from a year ago but the largest since September.

Through the first five months of 2017, China/Hong Kong pork/pork variety meat imports totaled 1.345 million mt, up 7% from a year ago. Monthly imports for the remainder of this year are projected to be below year-ago levels, so 2017 volume will likely total about 3.23 million mt — down 4% from last year's record.

When excluding variety meat and looking strictly at pork muscle cuts, the softening demand for imports is more dramatic. China's May muscle cut imports totaled 119,683 mt, down 27% from a year ago. The combined China/Hong Kong total was 154,522 mt, the largest since September but still down 20% year-over-year. China's imports from the European Union (67,891 mt, down 42%) were sharply lower in May while imports from the United States slowed moderately (18,180 mt, down 7%), and volumes were notably higher from Canada (25,278 mt, up 54%) and Chile (4,522 mt, up 21%). For January through May, China/Hong Kong's muscle cut imports were still up 4% to 724,505 mt. If imports maintain this same average monthly pace through the rest of the year, imported muscle cut volume will be about 1.37 million mt — the second-largest on record, but down 15% from 2016.