Watching the cash cattle market develop Tuesday
will be akin to monitoring the drying of paint (only not so exciting).
Chances are that bids and asking prices will remain poorly defined until
Wednesday or Thursday. Live and feeder futures are geared to open on a
mixed basis thanks to a slow combination of residual selling and
technical buying (i.e., from oversold chart conditions).
Look for hog buyers to resume procurement chores
Tuesday with bids generally near steady to $1 lower. Our guess is that
the weekly kill will be close to 2.55 million head, significant, but
again no record. Lean futures should open moderately lower, pressured by
residual selling and nervousness over late-year fundamentals.
| BULL SIDE | BEAR SIDE | ||
| 1) | New showlists distributed by cattle feeders were mixed (larger in Kansas and Colorado, but smaller in Nebraska and Texas) but generally smaller than last week. Fed supplies remain generally manageable, especially given improving packer margins. | 1) | Apparently willing to keep leading cash lower, live cattle futures remain on the defensive Monday with spot December slipping below the 100-day moving average. Feedlot managers will find it tough to hold the cash line if basis stays this strong. |
| 2) | Beef cutouts on Monday closed solidly higher, particularly the select box. Furthermore, early-week box demand was described as "moderate to good." | 2) | Private analysts are already anticipating that the USDA will confirm that November placement exceeded 2016 by 5% to 7% when the on feed report is released a week from Friday (i.e., Dec, 22). |
| 3) | For the week ending Dec. 5 noncommercial traders increased their net position in lean hog futures by 3,700 contracts to 54,900. | 3) | The pork carcass value broke hard on Monday, losing more than $2.00, especially pressured by a $7.48 drop in the belly primal. |
| 4) |
Total pork exports for October was record large at 494.64 million pounds, representing an all-time high for any October.
|
4) | The seasonal index for February hogs reflects a prolonged down trend in prices moving forward from here. |
OTHER MARKET SENSITIVE NEWS
CATTLE: (Washington Post) -- If you've dined at a
steakhouse recently or grilled rib-eye for dinner, you may have noticed
a curious trend: Steaks are getting thinner.
As U.S. beef cattle have ballooned in size,
experts say, restaurants, grocery stores and meat processors have had to
get creative in how they slice and dice them up. Increasingly, that
means thinner steaks-- as well as more scrap meat and "alternative" cuts
designed to make the most of a bigger animal.
The cattle industry argues that it provides
cheaper and more plentiful beef from fewer cattle. But there's emerging
evidence that Americans dislike the changes to their steaks. And that
could hurt the beef sector in the long-run.
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"If you buy a steak, you have a picture in your
mind of what it should look like," said Josh Maples, an agricultural
economist at Mississippi State who has studied the new cuts. "If you
make that thinner, or you cut it in half — for many people, that ruins
the eating experience." It's no secret that beef cattle are getting
bigger — for decades, federal policymakers, academic researchers and
industry scientists have striven to beef them up. What may be less
obvious to many consumers is how those larger cattle lead to thinner
steak cuts.
According to Department of Agriculture data, the
weight of the average beef cow hovered around 1,000 pounds until the
mid-1970s, when advances in genetics, nutrition and growth-promoting
hormones began to produce larger animals. Since 1975, the weight of the
average cow at slaughter has increased by roughly nine pounds each year —
from 996 pounds in 1975 to a whopping 1,363 pounds in 2016. ("Cow"
technically refers to adult females, only, but is used colloquially for
cattle in general.)
As a result, experts say, U.S. ranchers now
produce more beef at a lower cost than they did 40 years ago, even
though herds have shrunk by 13 million.
But larger cattle also means larger muscles. For
restaurants and grocery stores, that has proved a challenge. "It's a
lot more work for our meat-cutters, I'll tell you that," said Travis
Doster, the spokesman for Texas Roadhouse, a steakhouse chain with more
than 400 locations.
The issue, Doster and others say, lies in the
growing diameter of cows' muscles: things like the longissimus, from
which rib-eyes, top loins, sirloins and chuck eye are cut.
In a forthcoming study in the journal Food
Policy, Maples and two co-authors found that as cattle grew, the surface
area of the average rib-eye grew roughly two square inches-- or two
postage stamps-- between 1991 and 2016. Those larger muscles result in
massive, expensive portions if they're cut to a traditional one- or
1½-inch thickness.
As a result, said Davey Griffin, a professor of
animal science at Texas A&M, restaurants and grocery stores have
changed how they cut and market steaks. The most common adjustment,
especially among mass-market chains, is to simply slice traditional cuts
thinner.
But over the past several years, there's also
been a movement toward "alternate" cuts and cutting methods. At Texas
Roadhouse, for instance, in-house butchers don't just slice a tenderloin
into coins to make filets; they may also cut around the edges of those
coins, and throw the scraps in kebabs or chili, Doster said.
Beef industry organizations, such as the
National Cattlemen's Beef Association, have also promoted novel cuts
that break the old mainstays down into smaller portions. Instead of a
traditional rib-eye, which slices across two cow muscles, butchers are
separating the muscles and selling them as rib-eye cap steaks and
rib-eye filets, Griffin said.
Griffin, who runs a popular quarterly workshop
about the basics of butchery, has found that chefs are generally
receptive to the new cuts.
"But you still have a lot of consumers who say
'that's not a rib-eye, that's not a sirloin,'" Griffin said. "So it
doesn't work for everyone."
For the food and cattle industries, that remains
the big, unanswered question: whether consumers will adapt to the new
and different steaks that larger cattle entail. Maples's recent study
has bad news on that front: In a survey of more than 1,000 U.S.
beefeaters, he found near-unanimous dislike for "the thinnest cuts of
steak." The jury is still out on the new cuts like rib-eye cap steaks
and filets.
Griffin, the Texas A&M professor, predicts
consumers will simply have to adjust. Cattle have been trending in this
direction for years, he said, and all signs suggest that traditional
steaks will continue to get larger.
But Matt Niswander, a Black Angus rancher in
Tennessee, questions whether consumers are the ones who will ultimately
need to adapt.
"My customers want a one-inch or 1½-inch
rib-eye. That's all they know," he said. "So you as the rancher have to
adjust to that."
HOGS: (National Pork Board)--America's 60,000
pig farmers continue to do what's right on the farm for people, pigs and
the planet when it comes to demonstrating their commitment to
antibiotic stewardship. That's why last week's findings in the U.S. Food
and Drug Administration's 2016 Summary Report on Antimicrobials Sold or
Distributed for Use in Food-Producing Animals came as no surprise, but
as a validation of the hard work U.S. pig farmers have put in to reduce
the overall need for antibiotics while still protecting the health and
welfare of the pigs under their care.
"This report, which still is based on sales and
not actual usage, supports what we already know at the farm level—we're
using fewer antibiotics overall Tuesday because we're committed to
reducing the need for them while protecting the health and welfare of
our animals," said National Pork Board President Terry O'Neel, a pig
farmer from Friend, Nebraska. "When we must use antibiotics, we work
closely with our veterinarians to ensure that we use them according to
the FDA-approved label."
Veterinarian Dave Pyburn, vice president of
science and technology at the National Pork Board, says the new report
must be viewed for what it is -- an estimate of antibiotic use and not a
literal measure of use at the farm level. He also points out the
inherent size and longevity differences between cattle, pigs and poultry
when looking at antibiotic use. Different species will obviously face
additional health challenges due to longevity. For example, a broiler
chicken ypically goes to market in about six weeks, whereas for pigs
it's about six months and for beef cattle it's 18 months.
"Unfortunately, the FDA report is not truly
reflective of overall antibiotic usage by species because the
pharmaceutical companies don't record sales by species," Pyburn said.
"Secondly, the report does not include species-specific data regarding
ionophores in its results, making its estimate about which species use
more antibiotics than another less than precise. For example, pig
farmers use almost no ionophores, but poultry and beef producers use a
fair amount of that class of antibiotics."
Despite its species-specific shortcomings, the
FDA report clearly shows that the overall usage of antibiotics in
livestock is the lowest since 2009. According to the USDA's National
Agricultural Statistics reports, America's pig farmers produced over
five million more market hogs in 2016 than in 2009 and market weights
increased by 16 pounds in that period. Those figures suggest that
Tuesday's pig farmers are using far less total antibiotics per pound of
pork produced.
"As a scientist, I'm very excited about the work
America's pig farmers have funded to help us get a more precise handle
on antibiotic usage," said public health veterinarian Heather Fowler,
director of producer and public health with the National Pork Board.
"We've been collaborating with some of the best researchers in the world
on developing on-farm metrics, so that we can make additional progress
in antibiotic stewardship in a way that has a tangible and positive
outcome for the health of people, pigs and the planet."
According to Fowler, the National Pork Board's
work with researchers on creating novel on-farm antibiotic use metrics
will advance more quickly in 2018 since much of the groundwork has been
completed. Likewise, similar work has been done by the U.S. poultry and
beef industries.
Fowler believes ongoing collaboration with
academia, governmental agencies and non-governmental organizations is
the best way to move forward in solving the complex issue of antibiotic
resistance. She points to the Pork Checkoff's ongoing work and
collaboration with partners such as the Centers for Disease Control and
Prevention on the global One Health initiative. Also, long-time industry
programs such as PQA Plus have put even more focus on antibiotic
stewardship Tuesday, which complements the Checkoff's investment of more
than $6 million for antibiotic-related studies since 2000.
From a farmer perspective, O'Neel said 2017 has
been another milestone in antibiotic stewardship. "While some of our
detractors may think it's only legislation or new rules that move us to
act, we know differently," he said. "The data that we are seeing in this
FDA report shows that livestock producers were reducing the need and
usage of antibiotics prior to the enactment of the FDA guidances going
into effect on January 1. It also reflects our ongoing dedication and
competency as pig farmers to practice good antibiotic stewardship."
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