Earlier this spring, midday darkness tied to a total eclipse of the sun might have spooked bullish psychology in cattle country. But given how gloomy cash and futures have been in recent weeks, the early-week market may not give Monday's solar totality much notice. Of course, even if the sun was scheduled to put in a normal day's work, feedlot country would be typically slow with the distribution of new showlists about the only thing on the agenda. We believe the fed offering will be about steady with last week. Cattle feeders would probably like to price steers and heifers steady to $2 higher than last week to start the week (e.g., $110 to $112 on a live basis), but much will depend upon the stability of futures and beef cutouts. Live and feeder futures are expected to open lower Monday, pressured by residual selling interest, technical concerns and uncertain product demand.
Souring fundamentals late last week left a bad taste in the mouth of packers, so they will probably try to kick cash sales off this week by bidding significantly lower. Look for opening bids to be $1 to $2 lower, and then we'll see where we go from there. Despite sure signs of strong domestic and foreign demand, wholesale prices are understandably having a tough time holding up in the face of huge waves of commercial production. Clearly, we need the new plants and expanded chain speed to start up as soon as possible. Lean futures should open solidly lower, checked by long liquidation and challenging fundamentals.
| BULL SIDE | BEAR SIDE | ||
| 1) | Gross beef packer margins popped back over $300 per head last week for the first time since early July. If the late-summer box trade can stabilize, cattle buyers should have plenty of incentive to support the cash market and fund decent chain speed. | 1) | Beef cutouts ended a rough week on Friday with cutouts still fighting a rearguard action. The choice and select box lost $1.34 and $1.78, respectively, with supplies still described as "heavy." At $194.29, the choice cutouts sank to its lowest level seen since Feb. 22. |
| 2) | Live and feeder futures are listing toward being oversold. Furthermore, some may see a short-covering correction as prudent ahead of the uncertain on feed report due out this Friday. | 2) | Active liquidation of longs in live cattle futures is accelerating. For the week ending Aug. 15, the net-long position held by noncommercials dropped by 11,800 to 93,600 contracts. |
| 3) | For the week ending Aug. 15, noncommercial traders were net buyers of lean hog futures, increasing their net position to 59,800 contracts (i.e., up 3,800 from the prior week). | 3) | The pork carcass value imploded on Friday with the belly and rib primals crashing by $10.98 and $8.90, respectively. |
| 4) | While last week's big hog kill was indeed 1.6% larger than 2016, it was considerably smaller than the threatening implications of the June 1 Hogs & Pigs report (i.e., according to its weight breakdown, slaughter should now exceed last year by 3% to 4%). | 4) | Last week's hog slaughter jumped to a new August record, totaling 2,332,000 head, 60,000 more than the prior week and 37,000 greater than 2016. |
CATTLE:(thecattlesite.com) -- US Trade Representative Robert Lighthizer on Thursday conveyed Washington's concern about Tokyo's recent imposition of emergency tariffs on frozen beef from the United States and other countries.
Mr Lighthizer raised the issue of the so-called safeguard tariffs — under which Japan boosted the rate to 50 per cent from 38.5 per cent for the period from 1 August to 31 March — in a meeting with Japanese Foreign Minister Taro Kono in Washington, the Office of the USTR said.
The Japan Times reports that US exports of beef and beef products to Japan totaled $1.5 billion last year, making it the United States' top market, according to the US Agriculture Department.
Mr Lighthizer and Mr Kono agreed to accelerate bilateral discussions as a way of strengthening free and "fair" trade, the office said in a statement. Under the "America First" policy, US President Donald Trump's administration has pledged to reduce trade deficits with countries such as China, Japan, Mexico and Germany.
"Secretary Ross and I welcome the acceleration of discussions on trade with Japan that fulfills the administration's objectives of advancing free and fair trade with one of our largest trading partners," Mr Lighthizer was quoted as saying in the statement, in reference to Commerce Secretary Wilbur Ross.
"We look forward to constructive and vigorous engagement with Japan across many issues to improve trade outcomes for American workers," he said. In a separate meeting, Mr Kono and US Secretary of State Rex Tillerson agreed that despite the US withdrawal from the Trans-Pacific Partnership free trade deal in January, it is vital that the two countries lead the economic order in the Asia-Pacific, according to the Japanese Foreign Ministry.
Mr Kono and Mr Tillerson concurred that Tokyo and Washington should step up cooperation in maintaining a free and open order that propels the stability and prosperity of the region, it said.
They also agreed to promote preparations for a trip by President Trump to Japan in the fall, a Japanese official said.
"To demonstrate an unshakable alliance between Japan and the United States, we attach great importance to a first visit to Japan by President Trump," Mr Kono was quoted by the official as saying.
Mr Kono held separate talks with Mr Lighthizer and Mr Tillerson after attending a so-called two-plus-two security meeting involving the foreign and defense ministers of the two countries.
HOGS: (AP) -- The United States says it has agreed to terms on a deal to export pork to Argentina for the first time in 25 years.
Argentina blocked imports of U.S. pork in 1992, saying it had concerns about animal health. There was no immediate comment from Argentina's government about the U.S. announcement.
The White house said in a statement Thursday that all fresh, chilled and frozen pork and pork products from U.S. animals will be able to be exported to the South American country.
The U.S. is the world's top pork exporter.
The agreement comes after this week's meeting between Vice President Mike Pence and Argentine President Mauricio Macri in Buenos Aires.
President Donald Trump first discussed the issue with Macri during their meeting at the White House on April 27.
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