Given the unusual round of early-week cash trading, feedlot business seems to be virtually put to bed. We could see a few clean-up deals here and there, but don't look for much. Any unsold cattle are probably priced around $122 in the South and $193 in the North. Live and feeder futures are staged to open moderately lower, pressured by follow-through selling and long liquidation.
Expect cash hogs to stay hot Thursday, sparked by bids $1 to $2 higher than last week. If beef processing margins have improved since the first of the year, pork processing margins have tightened for the same period. Saturday kill plans are modestly growing, now estimated at 158,000 head. Lean futures should open on a mixed basis thanks to spillover selling on one hand and ongoing reports of cash strength.
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Cattle futures have become quite oversold from a technical standpoint and due for some kind of corrective bounce.
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Although cattle futures tried to rally on Wednesday, short-covering fizzled and live and feeder issues slumped lower on the close.
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Between lower cattle costs and firm carcass value this week, packer margins have improved, enough to justify greater chain speed and eventually end support to the country trade.
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The April live cattle contract is at a modest premium to spot February and about a dollar discount to cash, providing little in the way of expectations for higher prices and does not bolster producer efforts in resisting lower bids from the packers.
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Lean hog futures closed some lower at midweek, but the damage was within the bounds of moderate profit-taking. All months remain within striking distance of new contract highs.
| 3) | For the week ending Jan. 5, barrows and gilts averaged 285.5 pounds, .5 lbs. heavier than the previous week and still 2.5 lbs. heavier than early 2017. |
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The early-year cash hog trade remained on fire at midweek with the national lean base surging by nearly $2. The combination of sustained packer spending and aggressive chain speed speaks well of demand.
| 4) |
For the week ending Jan. 6, U.S. hatcheries set 226 million eggs in incubators; up 3% from a year ago. At †he same time, chicks placed totaled 184 million chicks, up 2% from early 2017.
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CATTLE:(HT Media Limited) -- The accord, which would allow French producers back into the huge Chinese market within six months, came as French President Emmanuel Macron made a three-day visit to China.
French beef producers have hailed a deal reached by President Emmanuel Macron and his Chinese counterpart Xi Jinping to end China's 2001 embargo on French beef.
The accord, which would allow French producers back into the huge Chinese market within six months, came as Macron made a three-day visit to the country, his first destination in Asia as France's leader.
The ban was imposed over a decade ago as Beijing started closing off its markets to all European and later US beef imports in the wake of the "mad cow" disease scare.
Paris has been working for years to promote the safety of its meat and open new markets for its ranchers, who were hit hard by the "mad cow" scare of the 1990s.
"Our beef currently has no access (to China) for sanitary reasons. But with French beef consumption falling five percent a year, we have to find new markets," said economy minister Bruno Le Maire, who is travelling with Macron.
"It will allow for higher prices that will better compensate cattle ranchers," he said.
Beef is rapidly becoming more common on Chinese tables as the middle class expands, with imported meat particularly prized.
"Excellent news for France's beef producers, who consider the potential of the Chinese market a strategic opportunity," the Interbev producers' association said in a statement Wednesday.
Its president, Dominique Langlois, is part of the delegation of about 50 business leaders who joined Macron for his trip.
Interbev said China is the second-largest importer of beef, at nearly 1.1 million tons a year.
The average inhabitant eats four kilogrammes (8.8 pounds) each year, according to the Organization for Economic Cooperation and Development.
Ninety percent of China's imports currently come from Brazil, Uruguay, Australia and New Zealand.
Several countries have dropped their import bans against French beef in recent years, including the United States, which again opened its market last year after imposing a ban in 1998.
French producers could nonetheless find China a tough market to crack.
"There is market share for France to take in China," said Jean-Marc Chaumet, an economist who specialises in China at the French Livestock Institute in Paris.
"But it won't be an Eldorado. It will be hard and take time, because France will be entering a very competitive market already open to the US, Uruguay, Canada and Australia," he said.
"And they'll need to invest, because the Chinese don't know about French beef," Chaumet added.
Beyond beef, French officials said talks were continuing about China's ban on French poultry, imposed in 2015 after an outbreak of bird flu.
HOGS: (Farm Journal) -- Since his days on the campaign trail, President Donald Trump has voiced little support for keeping the U.S. involved in the North American Free Trade Agreement (NAFTA). If anything, Trump's lukewarm support for NAFTA has cooled even more, despite five rounds of negotiations between the U.S., Canada and Mexico.
That's bad news for U.S. farmers, according to Jackson Takach, a Farmer Mac economist. "Without NAFTA, we're looking at the 1980s," Takach says. "NAFTA is a big part of our trade package. NAFTA delivers a lot of ag export markets, and without it, I think we're going to see a pretty significant decline in sales and revenues for our farmers."
USDA Secretary Sonny Perdue says he doesn't believe President Trump will walk away from NAFTA, but notes that just in case the agency is making "contingency plans" if the trade agreement is scrapped.
The sixth round of discussions will take place Jan. 23 to 28 in Montreal. The three countries have agreed to host joint negotiations through March.
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