The cash cattle trade should begin to take on some definition at midweek. The FCE internet business could push in one direction or the other (look for results posted on the cash cattle page later Wednesday morning). Yet its limited volume hasn't been too significant in recent weeks. Our guess is that asking prices will start out around $108 plus in the South and $175 plus in the North. It's possible that significant trade volume will be delayed until Thursday or Friday. Live and feed futures should open moderately lower, pressured by follow-through selling and pre-holiday long liquidation.
Between Tuesday's large run of negotiated hog sales and sharp break in the carcass value, it's a good bet that hog buyers will stay focused in terms of lower cash bids Wednesday morning. Pork processors clearly like their work. Just look at Tuesday's monster kill of 450,000 head (a new daily record if it holds up under revision). Yet why should they raise bids if they don't need to. Preliminary ideas point to a Saturday kill around 108,000 head. Lean futures seem staged to open moderately lower, checked by spillover selling and sour fundamentals.
| BULL SIDE | BEAR SIDE | ||
| 1) | Lower beef cutouts continue to drive accelerated out-front business. Last week's box business with delivery specs of 22 days or more totaled a robust 1,160 loads, the third busiest week since mid-April. | 1) | If there was any doubt that Monday's rally in cattle futures was nothing but a dead cat bounce, such skepticism was quickly smashed Tuesday when the board crashed with triple-digit losses. Beyond question, the trend remains lower. |
| 2) | Spot beef sales on Tuesday enjoyed decent pre-holiday buying interest with box demand described as "moderately to fairly good." | 2) | If the basis actually continues to strengthen thanks to defensive futures, cattle feeders may be hard pressed this week to plant their feet and hold for steady prices. |
| 3) | Crashing cash hog prices through the second half of August is often caused by oversold finishing floor, which can result in a decent post-Labor Day rally. | 3) | The pork carcass closed sharply lower on Tuesday, once again pounded by imploding belly demand (i.e., the belly primal lost another $9.27). |
| 4) | Lean hog futures look extremely oversold and due for a bounce. Given such extreme discounts, this bear market could be close to simply running out of sellers. | 4) | In closing lower and lower, day after day, lean hog futures are beginning to look bottomless. While no market goes down forever, the severe market tone is understandable discouraging would be spec buyers. |
CATTLE: (Times of India) -- JBS SA, the world's largest meatpacker, said on Monday that a majority of the company's nine-member board of directors believe Chief Executive Officer Wesley Batista should stay, in response to a plan by a plan by state development bank BNDES to remove him
In a securities filing, JBS said a plan by BNDES investment arm BNDES Participacoes SA is not in the best interest of the company's shareholders because the removal of Batista would be premature and would hamper the meatpacker's financial and operational stability
The filing did not detail the names or number of JBS's nine board members endorsing Batista's stay as CEO Batista and BNDESPar are ramping up their efforts to sway JBS investors ahead of a Sept. 1 shareholder meeting on the fate of Batista, who has led the food processor since he took over from his younger brother Joesley in January 2011
Reuters reported on Aug. 25 that some shareholders have recently grown skeptical of Batista's argument that he is uniquely able to complete two upcoming asset sales and list a U.S. food subsidiary next year. Last week, proxy advisory firm Institutional Shareholder Services Inc recommended shareholders sue Batista and against board's plans to increase pay
Shares jumped for a fifth day, adding 3.7 pct to 9.20 reais - the best five-day streak of gains since March 2016. That spree of rises have helped propel a 19 pct rise in the stock over the past month
HOGS: (foodmarket.com) -- New Hope Liuhe Co Ltd has expanded its hog herd this year, it said on Tuesday, the latest meat producer in the world's top pork consumer to boost output even as a domestic glut grows and prices languish at two-year lows.
The news came as the listed unit of China's top animal feed producer New Hope Group said first-half profit fell 20.9 percent to 1.1 billion yuan ($166.8 million) as fears about bird flu hurt business.
New Hope Liuhe said it will have more hog production going online in the next two years in provinces including Sichuan, Shandong and Jiangsu, after increasing its herd by more than 2.6 million hogs in the first half, according to the filing.
The company managed to keep its profit in the first half of the year from hog products around last year's level by expanding herds to offset falling pork prices, according to the filing.
H7N9 bird flu affected poultry farming and weighed on profit from poultry products, and was the main reason for the drop in the company's interim net profit, the filing said.
To alleviate impact from bird flu, New Hope Liuhe has pushed into processed meat and fresh meat in the first half, it said.
Earlier this month, China's top hog farmer Guangdong Wens Foodstuff Group Co Ltd also reported the expansion of its hog herds and processed meat sector as it reported a 75-percent of fall interim profits.
Wens increased its hog herd by 2.74 million in the first half. It produced 17 million hogs in 2016.
Pork belly prices in China have languished at two-year lows of around 27 yuan per kg since June as suppliers rushed to cash in on last year's record prices for the meat, a staple form of protein at the heart of Chinese cuisine.
Concerns also linger about slowing demand for meat as China's growing middle class eat more beef and fish.
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