Moderate trade volume developed in Kansas and Texas on Thursday with most steers and heifers marked at $110, $5 lower than last week. At the same time, scattered dressed sales in the North were reported at $173 to $175, $8 to $10 lower than last week. While we could see isolated pockets of clean-up trade Friday, chances are the lion's share of cash business is probably done for the week. Live and feeder futures should open at least moderately lower, checked by residual selling interest and further late-week long liquidation.
Hog buyers should complete their weekly procurement chores by one final round of lower bids. Negotiated receipts did seem to slow somewhat on Thursday, but we don't think any packers are worried about inadequate slaughter numbers heading into the weekend. Saturday's kill is expected to total close to 125,000 head. Lean contracts seem set to open lower thanks to spillover selling interest and ideas of bearish fundamentals through the second half of the third quarter.
| BULL SIDE | BEAR SIDE | ||
| 1) | At the same time, actual beef exports totaled 15,600 metric tons (a marketing-year high), up 7% from the previous week and 4% from the prior four-week average. | 1) | Beef cutouts continued to bleed hard on Thursday with the choice and select box off $1.88 and $.84, respectively. Supplies were once again described as "heavy." |
| 2) | Live and feeder futures are quickly becoming oversold and should be due for some type of corrective rally. In fact, if October live can close Friday above the early week price, some might argue that the potential for the formation of a lateral bottom is in the making next week. | 2) | For the week ending August 5, cattle carcass weight soared, underscoring the challenge of late summer tonnage: all cattle averaged, 816 pounds 2 lbs more than the prior week and 8 lbs less than 2016; steers averaged, 880 lbs, 5 lbs heavier than the week before and 6 lbs lighter than last year; heifers averaged, 801 lbs, 7 lbs more than the previous week and only 2 lbs less than the year before. |
| 3) | Although third quarter hog slaughter is clearly accelerating, late-summer chain speed has definitely been running below the implications of the June 1 Hogs & Pigs weight breakdown of market ready barrows and gilts. Specifically, quarterly numbers suggested that late-summer slaughter would be as much as 4.5% above 2016. Recent kills have "only" been closer to 2.5% higher. | 3) | Lean futures broke hard with triple-digit losses on Thursday with October and December once again falling below 100-day moving averages. Such action once again highlights conventional trading wisdom long in place in this market corner: "rallies are for selling." |
| 4) | The pork carcass value closed moderately higher thanks to better demand for rib, ham and loin cuts. | 4) | For the week ending Aug. 12, Iowa barrows and gilts averaged 276.6 lbs, 1.1 lbs heavier than 2 lbs bigger than 2016. |
CATTLE: (Calgary Sun) -- Steaks sold at your local grocery store could be labelled "sustainable beef" as early as next year as the Canadian beef industry comes to grips with consumer demands to know where their food comes from and how it was grown.
The industry has also come under pressure by campaigns pressing consumers to eat less beef due to environmental and animal welfare concerns. But Alberta producers believe a new sustainable beef program can help them fend off these criticisms.
While "sustainability" is a buzzword that lacks meaning, a beef industry association backed by environmental groups, meat packers, producers and retailers has been defining the rules the industry must meet to source sustainable beef.
The Canadian Roundtable for Sustainable Beef expects to finalize the rules by the end of the year, making way for an audit program to track beef cattle from the farm to slaughterhouse.
Steaks, prime rib and other beef products that are produced in a way that satisfies the rules will have sustainable beef labels on grocery store packaging and restaurant menus as early as 2018.
A pilot project, revealed Tuesday at an annual Canadian beef industry conference in Calgary, is seeking producers to participate in an early round of the program to produce T-bones and other products that meet the emerging criteria. "Even with fast-food, consumers want to know where their food comes from, and how it was raised, and how the animals were treated," said Emily Murray, a general manager at beef processor Cargill Ltd., which is involved in the pilot. Draft rules for the program consider environmental concerns, such as emissions and wastewater quality from beef production, along with efforts to reduce animal pain and distress, including humane slaughter methods, among other factors. Murray, who handles McDonald's Canada's beef business for Cargill, said the program doesn't state how the industry must meet the rules, including whether producers should use antibiotics or growth hormones, but it lays out some ground rules for animal and environmental protections.
Ranchers whose cattle make it through the verification process will receive financial credits, paid for by companies that will apply the sustainable beef label on their products. McDonald's Canada and Swiss Chalet, a division of Cara Operations, have signed on for the pilot.
Bob Lowe, chairman of Alberta Beef Producers, said support from environmental groups like the World Wildlife Fund is necessary in order to secure public support in the face of criticisms from healthy eating gurus and animal welfare advocates.
"We've got to put ourselves in a position where people understand the value of cattle on the land and understand the health benefits (of beef)," Lowe said. Greg Bowie, who runs a cattle ranch in the Ponoka area north of Red Deer, expects ranchers will be interested in training that will be offered through the sustainable beef program, and will educate producers on rules and methods. But he believes there will be "considerably less" interest among producers to subject their farms to regular audits in order to become a verified source of sustainable beef, pointing to big time commitments.
For his part, Bowie participated in McDonald's Canada's sustainable beef pilot and plans to take part in the industry-wide program. He believes it's in his interests to prove his farm follows generally accepted rules on animal welfare and environmental protection.
"It will raise the average value of our product because the demand will be higher across the entire beef chain," he said.
HOGS: (thepigsite.com) -- Both Japan and South Korea have reported year-on-year increases in fresh/frozen pork imports during the first half of 2017, according to Bethan Wilkins, AHDB Pork analyst.
With Chinese import demand slowing in the second quarter, these destinations have become increasingly important outlets for the global pork market.
During the first six months of 2017, Japan imported 459,000 tonnes of pork, 7 per cent more than in the same period last year. Shipments from Canada in particular were 19 per cent higher year-on-year.
Meanwhile, the other key suppliers, the EU and US, saw more modest increases of 3 per cent and 4 per cent respectively.
The expansion in EU shipments was largely driven by increasing imports from Spain in the second quarter. Conversely, US shipments actually fell 1 per cent on the year in Q2. For South Korea, fresh/frozen pork imports increased 12 per cent on 2016 during the first half of the year, reaching 257,000 tonnes.
Disease outbreaks in both the beef and poultry sectors have reportedly boosted demand for pig meat this year.
EU shipments, which were up 25 per cent year-on-year and now provide over half of import requirements, drove the overall expansion.
Within this, volumes from Germany and the Netherlands were up 46 per cent and 58 per cent respectively.
The sharp increase in German shipments in particular is likely related to the temporary suspension of exports to China from a number of key plants earlier this year.
The UK also supplies pig meat to South Korea, albeit in small volumes (1,600 tonnes), but shipments were nonetheless 50 per cent higher than a year earlier.
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