Look for cattle buyers to open with defensive bids this morning, clearly anticipating lower live inventory costs as we move into the last half of the third quarter. Needless to say, feedlot managers will be very reluctant to accept Southern live bids of $108-110 and Northern dressed bids of $175-177. Our guess is that sellers will begin with asking prices around $113-115 in the South and $180-182 in the North. FCE auction results will be available later this morning and we'll post them on the cash cattle page ASAP. Live and feeder futures should open moderately higher, supported by follow-through buying and short covering.
The cash hog trade is expected to open this morning with bids steady to $1 lower. WTD slaughter is running about 20,000 head ahead of last week, but keep in mind that we got off to a slow start last week. Lean futures is likely to open moderately higher thanks to residual buying interest and the premium of the cash index.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live and feeder futures spiked sharply higher yesterday, possibly signally potential for a late summer bottom. While the jury in that regard remains out, several nearby feeder issues did manage to settle above 40 and 100-day moving averages. | 1) | Although cattle futures shot sharply higher on Tuesday, live charts continue to look very defensive, fenced in by multiple levels of overhead resistance. |
| 2) | Despite the Japanese tariff hike in U.S.frozen beef, currency shifts should minimize any negative impact. As the value of the U.S. dollar has declined, especially in relation to the Japanese yen (moving last week towards the widest spread since early June), along with modest strength in the Australian dollar (up near nine percent on the U.S. dollar this year), coupled with declining U.S. beef prices, Japanese buying power only may be slightly hampered. | 2) | Beef cut-outs were no better than mixed again on Tuesday. Those expecting Labor Day demand to ride in an save the late summer market may be have a long wait. |
| 3) | Given decent pork processing margins, hog buyers are taking in live inventory as fast as possible. Such aggressiveness should work to check the seasonal increase in live and dressed weights, thereby checking total tonnage going forward. | 3) | Though the pork carcass value was only modestly lower on Tuesday, the cutout is forecast lower nearly every consecutive week for the remainder of the calendar year, losing possibly 25 percent from current levels by December. |
| 4) | Even though we are seeing record levels, year-to-date hog slaughter levels are only above prior year by 2.7 percent, relatively modest compared with expectations. | 4) | While the new spot popped higher yesterday, the seasonal tendency is for October lean hogs to trend lower into the Labor Day holiday. Furthermore, the long-term market trend remains negative as is the structure of the market. |
CATTLE: (Fairfax New Zealand Limited) -- New Zealand's beef cattle herd continues to grow with high prices behind a 2.8 per cent lift to 3.6 million head.
The increase tracked by Beef+Lamb New Zealand's annual stock number survey showed continued high returns were making farmers switch towards livestock that were less labour-intensive and more profitable.
The largest contributor was a five per cent increase in weaner cattle numbers, which reflected the high cost of buying older cattle as replacements as well as good grass availability.
Cattle numbers rose the most in the South Island, increasing 6.3 per cent to 1.09 million head in the year to June 30. In the North Island, numbers lifted 1.4 per cent. The size of New Zealand's beef breeding cow herd remained unchanged at 950,000.
The survey also showed the sharp decline in sheep numbers had slowed as they recovered in regions following drought and other challenges.
B+LNZ economic service chief economist Andrew Burtt said breeding ewe numbers fell in most regions and by 1.9 per cent overall. The exception was in Marlborough-Canterbury, where there was a small 0.3 per cent increase following lengthy drought.
"Ewe numbers decreased 2.6 per cent to 8.7 million in the North Island, while South Island numbers dropped 1.1 per cent to 9.1 million. The decrease in the North Island reflects residual effects of last year's facial eczema outbreak. However, nationwide there has been more emphasis on retaining ewe hoggets, which indicates some rebuilding of the flock is occurring."
Hogget numbers were also up as a result, he said.
"Hogget numbers increased 1.7 per cent to 8.7 million, largely due to replacement ewe hoggets being retained on the East Coast to build up flocks, and an increase in Marlborough-Canterbury to take advantage of the improvement in feed supplies after a number of difficult years caused by drought and natural disasters."
Ewes were in good condition at mating, and at the start of winter due to feed availability.
"Pregnancy scanning of ewes reveals good pregnancy rates in the North Island, but the later season as a result of climatic differences means it's difficult to generalise about the South Island."
Despite the small decrease in the number of breeding ewes, the lamb crop is expected to be up 1.1 per cent to 23.5 million, which is 0.3 million more lambs than last season.
"This is the result of several factors, including continued improvements in productivity by farmers leading to better ewe lambing percentages, good feed supplies and a lift in the number of ewe hoggets mated." HOGS: (NPPC) -- With negotiations set to begin tomorrow, the National Pork Producers Council today repeated its request that a "modernized" North American Free Trade Agreement (NAFTA) maintain the zero-tariff rate on pork traded in North America.
President Trump has made updating the 23-year-old trade deal between the United States, Canada and Mexico a priority since before taking office and even considered withdrawing from the agreement. The initial NAFTA renegotiation talks start here tomorrow.
NPPC has been one of the leading agricultural voices in support of the agreement, issuing a white paper and twice testifying before congressional committees on the benefits of the pact.
"Canada and Mexico are top markets for our pork, so, obviously, we don't want any disruptions in our exports to those countries; we need to keep pork trade flowing," said NPPC President Ken Maschhoff, a pork producer from Carlyle, Ill. "We want to reiterate to the Trump administration that NAFTA has been a boon to the U.S. pork industry and to all of American agriculture."
Since NAFTA went into effect Jan. 1, 1994, U.S. trade north and south of the borders has more than tripled, growing more rapidly than U.S. trade with the rest of the world. Canada is the No. 2 market for U.S. agricultural products; Mexico is No. 3. In 2016, America's farmers exported more than $38 billion of products to the two nations, or 28 percent of all U.S. agricultural exports. Those exports generated more than $48 billion in additional economic activity and supported nearly 287,000 U.S. agricultural jobs.
For the U.S. pork industry, Canada is the No. 4 market, and Mexico is No. 2. Last year, the industry shipped almost $799 million of pork to Canada and nearly $1.4 billion to Mexico. Those exports help support more than 16,000 U.S. jobs.
"U.S. pork trade with Canada and Mexico has been very robust, and we need to maintain and even improve that trade," Maschhoff said. "We will continue to work with the administration to make sure that happens in a modernized NAFTA."
No comments:
Post a Comment