The development of moderate to active trade volume generating on Wednesday could mean the feedlot cash trade is essentially done for the week. Scattered clean-up activity is certainly possible today and/or tomorrow. But we will be surprised if late-week prices are much different than those seen so far (i.e., $124 in the South, $192 in the North). Live and feeder futures seem likely to open moderately lower, pressure by follow-through selling and further long liquidation.
Look for hog buyers to resume procurement chores this morning with steady/weak bids. This week'a slaughter is forecast to come in under 2.5 million, only slightly ahead of last year. Harvest levels, on a weekly basis, could add another 100,000 head per the spring pig crop report. Saturday kill is expected to total close to 185,000 head. Lean contracts should open lower thanks to spillover selling and technical uncertainties.
| BULL SIDE | BEAR SIDE | ||
| 1) | For the third-consecutive day this week, boxed beef prices were quoted sharply higher on Wednesday. Again this speaks well of demand surrounding the late-year holidays. | 1) | Cattle futures got hammered with triple-digit losses on Wednesday. If spot December live can't dig in near the bottom of the bullish gap created in late October (i.e., 121.75), the door could open to another 200-300 point to the downside. |
| 2) | Despite the big break in live futures, the cash feedlot trade held up pretty well at midweek (i.e., $1 over spot December in the South on a live basis and fully steady with last week in the North on a dressed basis). This suggests that the country remain quite current with decent leverage in the hands of producers. | 2) | Lean futures continue to struggle in the fact of faltering cash bids and threats of mounting tonnage over the next 30 days or so. The Feb contracts settled below 70 for the first time since October 27. |
| 3) | Trump's visit to China this week has triggered more sales of U.S. pork and beef to that country (see article below). | 3) | For the week ending November 4, U.S. hatcheries set 214 million eggs in incubators, up 1 percent from a year ago. At the same time, chicks placed totaled 176 million chicks; up 3 percent from 2016. |
| 4) | The seasonal trend is for December lean hogs to trade sideways into early November and then turn higher later in the month. | 4) | For the week ending November 4, Iowa barrows and gilts averaged 284.2 pounds, 1.2 pounds heavier than the week before 3.4 bigger than 2016. |
CATTLE: (GLOBENEWSWIRE) — JD.com, China's largest retailer, today [Tuesday] participated in a signing ceremony held at the Great Hall of the People, with the company entering agreements to purchase in excess of $1.2 billion of beef from The Montana Stock Growers Association (MSGA) and pork from Smithfield Foods, Inc. over the next three years. The agreements are part of an overall commitment by JD to purchase $2 billion of U.S. goods across a wide range of categories over three years. U.S. Secretary of Commerce Wilbur Ross, Jr. and Chinese Vice Premier Wang Yang were in attendance to witness the signing ceremony.
Meat products are a fast-growing category for JD. In the first half of 2017, volume from direct sales of meat on JD increased more than 780 percent year-over-year, with imported meat accounting for more than 30 percent of those sales. Online orders for fresh and frozen meat come chiefly from first and second-tier cities, leaving huge potential for growth in online sales from the rest of the country.
"These groundbreaking agreements bring together two of America's most trusted and in-demand meat suppliers with China's leading e-commerce platform, to the benefit of both U.S. producers and Chinese consumers," said Richard Liu, JD.com Chairman and CEO, who participated in the signing ceremony.
"China's shoppers will rest assured knowing that they are able to purchase safe, high-quality meat products imported from the U.S., with the fast delivery and ironclad assurance of authenticity that they have come to expect from JD. We look forward to expanding our long-term cooperation with high-quality U.S. meat producers like Smithfield and MSGA."
JD will import Montana-sourced beef from Cross Four Ranch and MSGA members to China for direct sale to the 258 million Chinese consumers on its e-commerce platform. The procurement agreement is for an initial three years, with a minimum commitment of $200 million in beef to be imported by JD from Cross Four Ranch and MSGA members at fair market value during the term. It is estimated that JD's purchase of Cross Four Ranch and MSGA beef will increase Montana beef export sales by as much as 40% in 2018.
"This is a landmark agreement to increase Montana agricultural exports to the fastest growing overseas market for beef," U.S. Senator Steve Daines of Montana stated. "This is a win for Montana's hardworking ranchers."
Beef is the fastest growing meat sector in China and the country is the world's fastest growing overseas market for beef, following the resumption of American imports earlier this year.
China is the world's largest producer, consumer and importer of pork. According to official estimates, Chinese pork imports more than doubled in 2016, reaching a substantial 1.6 million tons shipped.
JD's extensive cold chain logistics capabilities will ensure the U.S. meat products arrive at customers' doors safely and rapidly. The beef and pork will be cold-chain transported from the United States and stored in JD's own warehouses in China. From there, JD can deliver it to customers in more than 100 cities across the country within 48 hours -- and to many in as little as six hours. With its complete cold chain solution, JD can monitor the temperature and humidity of products from warehouse to delivery. JD's cold chain logistics network currently includes 12 cold chain warehouses in China, enabling the delivery of fresh products to customers in 300 cities.
About JD.com, Inc.:
JD.com is both the largest e-commerce company in China and the country's largest retailer by revenue. The company strives to offer consumers the best online shopping experience. Through its user-friendly website, native mobile apps, and WeChat and Mobile QQ entry points, JD offers consumers a superior shopping experience. The company has the largest fulfillment infrastructure of any e-commerce company in China. As of June 30, 2017, JD.com operated 7 fulfillment centers and 335 warehouses covering 2,691 counties and districts across China, staffed by its own employees. JD.com is a member of the NASDAQ100 and a Fortune Global 500 company.
HOGS: (meatfiy.com) —The World Health Organization is calling for a ban on the use of antibiotics in food animal production. That's concerning to not only the National Pork Producers Council but also for Nebraska Pork Producers Association President Russ Vering. He says he and his ellow producers use antibiotics responsibly for the health of their animals and are closely following the Veterinary Feed Directive.
He says he and the NPPC share the WHO's concern about the rise in antibiotic resistant bacteria but that antibiotic use for the health of animals has no connection to antibiotic resistance in humans. Vering also says the WHO should have talked to producers before calling for an antibiotic ban.
Vering says if the WHO goes ahead with the antibiotic ban in food animal production the loser in the long run will be consumers.
Vering and NPPC officials both say that simply reducing on farm uses of antibiotics likely would have no effect on public health and would jeopardize animal health.
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