With trade volume totals generally better than moderate, we expect cattle buyers to engage in the country sometime Friday, enough to gather another light to moderate round of ready steers and heifers. Opening bids should be around $118 in the South and $188 in the North. Asking prices should be around $120 in the South and $190 plus in the North. Live and feeder futures seem staged to open mixed with residual buying on one hand and pre-cash profit-taking on the other.
Look for cash hog buyers to wrap up procurement chores for the week by opening with bids steady to $1 lower. Assuming that Friday's slaughter is around 440,000 head with Saturday's effort close to 74,000, the weekly total should come close to 2.24 million head. Lean futures are geared to begin narrowly mixed thanks to bull spending and/or profit-taking by bear spreaders.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle futures extended Wednesday's rally Thursday with spot August live nosing back above its 40-day moving average. | 1) | For the week ending July 22, cattle carcass weights jumped higher: all cattle averaged 810 pounds, 4 lbs heavier than the prior week but 11 lbs lighter than 2016; steers averaged 868 lbs, 3 lbs bigger than the week before and 12 lbs smaller than last year; heifers averaged 795 lbs, 3 lbs larger than the previous week and 8 lbs lighter than a year earlier. |
| 2) | As the basis continues to weaken with nearby live contracts moving closer to cash, feedlot resolve and leverage should improve. | 2) | Given large beef production potential and still relatively large, live cattle open interest, the board remains vulnerable to bearish minded specs and commercials. Should the noncommercials increase the pace of liquidating their net-long positions, additional volatility and downward pressure could quickly resume. |
| 3) | Net pork export sales last week totaled 17,800 metric tons, although total was down 7% from the previous week, it was as much as up 32% from the prior four-week average. | 3) | The short-term and long-term lean hog futures trends remain bearish as well as the structure of the market, with the fall contracts trading at a sizeable discount to the cash market. |
| 4) | Besides strong seasonal demand for bellies, carcass value has also been well supported by great ham business. For week ending July 28, FOB ham sales to export markets outside of North America were 1.463 million pounds, 252% higher than a year ago. Such a trend has persisted for much of the summer. | 4) | As non-belly primals head lower, further easing on the cutout is forecast to be light for next week followed by a more accelerated decline. |
CATTLE: (Technomic) -- Following a drop from 2013 to 2015, burger consumption in Canada is now on the rise as nearly half of Canadians (46%) eat burgers at least weekly, according to Technomic's 2017 Canadian Burger Consumer Trend Report. Though consumption hasn't yet reached 2013 levels, the upward trend underscores the strength of the emerging fast-casual burger market and suggests that menu changes are resonating.
"Burger consumption has benefited from an increased emphasis on quality and sourcing, particularly as it relates to domestic beef, as well as operators' ability to adapt the classic burger to modern demands through menu development," explains Anne Mills, manager of consumer insights at Technomic. "Going forward, routinely innovating with new flavours, particularly sauces and premium toppings, will be key as expectations continue to rise for unique burgers."
Key takeaways from the report include:
•Thirty-six percent of consumers have a preferred restaurant that they almost always go to for their burger occasions, up from 30% in 2015
•Forty percent of 18- to 34-year-olds says it's very important that restaurants offer burgers with new and unique flavours, compared to 22% of older consumers
•Fifty-six percent of consumers say it's very important that they can customize burger toppings
Compiling findings from more than 1,000 consumers, as well as Technomic's proprietary industry and menu data, the comprehensive 2017 Canadian Burger Consumer Trend Report serves as a guide for foodservice operators and suppliers to understand consumer usage and attitudes toward burgers and to identify key areas of opportunity.
HOGS: (wallacefarmer.com) -- Getting pork to consumers requires producers, but also processors and retailers. USDA divides the retail pork price into three shares: producer, packer and retailer. In 2016, hog producers received a record-small percentage of the money spent on pork at the retail level — only 21 cents of every dollar spent by pork consumers. If producers got less, someone got more! The retail share was at a record high in 2015, and the packer share was at a record high in 2016.
There has been a long-term decrease in the producers' share of retail dollars spent on pork. In 1990, hog producers received 41 cents of each retail pork dollar. That dropped to the record low in 2016. If hog producers received a smaller share over time, why did others in the chain get more?
The retailer was primarily the one gaining market share. This is largely explained by the growth of retail marketing services that have been expanding over past decades. Retailers were trimming more fat, deboning more and doing more processing.
In addition, grocery stores were getting bigger, with better lighting, wider aisles, better parking, shorter checkout lines and nicer displays. All these were desired by consumers, but they all cost additional money. So, the retail share increased to cover these costs over time.
There have also been wide year-to-year swings in the producers' share, which has important implications for 2017 and 2018 hog prices. In 2014, hog prices were at record highs due to large baby pig losses from the porcine epidemic diarrhea virus. Hog prices and wholesale pork prices shot up. Retail pork prices reached record highs.
Then in 2015 and 2016, hog prices and wholesale prices came down sharply, but retailers were slower to move retail prices down, resulting in record retail margins. The advantage for hog producers and hog prices this year is that retail prices are continuing to drop, and lower retail prices are resulting in consumers buying more pork.
The packer share was at record-high levels in 2016. High packer margins last year were related to a large supply of hogs pressing packing capacity. Typically, packer margins are high when there is a shortage of packer capacity. Packer margins started dropping in the late spring and summer of 2017, and are expected to continue dropping in the fall, as new packing capacity means there will likely be more aggressive bids for hogs.
The bottom line for 2017 and 2018 is that lower retail prices will help spur pork consumption, and new packer capacity is expected to reduce packer margins. This means the producers' share of the retail dollar spent on pork will increase. These are also reasons why 2017 hog prices will be higher than 2016, even with increased pork supplies.
No comments:
Post a Comment