The midweek cash cattle trade is expected to remain a slow affair. We could see a few more bids tossed on the table, as well as more preliminary asking prices. Significant trade volume will probably be delayed until Thursday or Friday. Of course, it's possible that the changing of the guard in live futures (i.e., February's expiration and April's new spot position) could impact the timing of cash market development. If April begins to rally toward cash, feedlot managers may feel more comfortable in waiting for better packer bids. On the other hand, if April stalls and/or deepens its discount, negative psychology could prompt feedlot managers to throw in the towel relatively early. Live and feeder futures should open on a mixed basis thanks to a slow combination of residual buying and long liquidation.
Hog buyers should resume work Wednesday with bids steady to $1 lower. Thanks to decent profit margins, packers clearly like their work. On the other hand, the country offering of market hogs is generous enough that buyers don't have to push very hard to enjoy the party. This week's slaughter is expected to be right at 2.4 million head, approximately 3% greater than last year. Harvest levels are expected to stay near current levels for the next month or so. Lean futures should also open with uneven price action with deferreds probably gaining more ground on nearbys.
| BULL SIDE | | BEAR SIDE |
| 1) |
The ongoing signs of early-year beef demand remain impressive. Last week's boxed beef summary indicated advanced sales (i.e., with delivery of 22 days or more) totaling as much as 1,249 loads.
| 1) | When February live cattle expires Wednesday at noon, the substantial discount of new spot April could encourage both hedgers (i.e., responding to basis strength) and cash marketers to sell ready cattle sooner rather than later. |
| 2) | Though recent on feed data confirmed aggressive placement activity through January, feedlot in-movement is expected to slow soon. Why? Because cattle grazing on wheat as of Jan. 1 (typically a large pool of replacement feeders for feedlots to pull on in the late first quarter and early second) numbered no more than 1.5 million head, 17% below 2017. | 2) | While cattle futures managed to recover somewhat from Monday's sell-off, many contracts settled 100 points or more below session highs. The stiff and stubborn resistance suggested by spring summer live charts continues to reflect the trade's nervousness about building total meat supplies over the next six months. |
| 3) | Although China's decision to drop anti-dumping and anti-subsidy duties as of Tuesday on U.S. broilers may not have a direct market impact because the China market remains closed to U.S. poultry and egg exports due to an ongoing avian influenza ban imposed in 2015, it seems like a big step in the right direction, potentially tightening per capita meat supplies in the U.S. | 3) | The pork carcass value slipped lower again on Tuesday, especially pressured by a $7.72 drop in the belly primal. |
| 4) | The pork cutout holds nearly an $11 premium over the most recent cash index calculation, suggesting excellent processing margins. | 4) |
Despite lower bids in hog country Tuesday, packers seemed to have little trouble generating a large run (i.e., closed to 18,000 negotiated sales on a national basis). In short, the late-winter offering of ready barrows and gilts seems ample, lending hog buyers plenty of leverage.
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CATTLE:(financialexpress.com) -- With increasing health consciousness among people, the Chinese food eating habits are witnessing a paradigm shift. A recent PTI report suggests that more and more people in China are switching to vegetarian food. In China, a country which is the world's largest market for beef, pork, and poultry, eateries are going all vegan to encash this popular sentiment. The report hints that people relate non-vegetarian food with high blood pressure and obesity. This has made the vegan eateries more competitive than ever.
Han Lili, a Shanghai-based artist told PTI that the number of vegan restaurants has multiplied from 49 in 2012 to more than 100 last year in China's largest city, Shanghai. Another report by research firm Euromonitor pointed out that the demand for pork, beef, and poultry in China has seen a decline in the recent years. Another such report by Chinadialogue.net also highlights the decline in the sales of pork from 42.49 million tonnes in 2014 to 40.85 million tonnes in 2016.
Furthermore, the imports of vegetable and fruits have also registered a spike since the growing trend of vegetarianism. As per UN trade figures, imports of avocados rose alone saw a whopping 13,000-fold increase between 2010 and 2016. The report suggests that the shift is also an impact of many dietary guidelines in China advising to eat healthy, environment-friendly vegetarian food. Notably, around 150 million tonnes of carbon dioxide is released into the atmosphere every year by the Chinese meat industry.
In 2014, a Xinhua news agency report claimed that more than 50 million people shun meat in their meal in China. It is worth mentioning here that as per many world vegetarian outfits, India habitats the largest world vegan population with over 500 million vegetarian people.
HOGS: (North Platte Telegraph) -- Last month the U.S. Department of Agriculture announced that it was allowing Mexico to export pork to the United States for the first time in over a decade. That move has support from the National Pork Producers Council and from local pork producers.
According to a press release from the National Pork Producers Council, Mexico requested approval to export pork to the United States in 2007, but the request was denied over concerns about classical swine fever, a highly contagious, often fatal, viral disease of pigs. Since then, the USDA has facilitated training for Mexican officials and personnel in disease diagnosis and control, and "a subsequent review by the World Organization for Animal Health... determined that Mexico was free of CSF," according to the release.
The release quoted council President Ken Maschhoff: "The U.S. pork industry is a strong supporter of free trade and of using epidemiological science and risk analyses to determine if trade can be safely conducted between countries ... Mexico in 2017 was our No. 2 export market, so maintaining our good relationship with that country by ensuring fair and reciprocal trade is paramount for our producers."
Maschhoff, of Carlyle, Illinois, is part owner of The Maschhoffs, a pork producing corporation that includes facilities throughout the Midwest, including in Arapahoe and Wallace.
Jeff Heinrich, director of Pillen Family Farms, agreed that the decision is a good thing.
"Free trade benefits producers, consumers and the overall economy." Heinrich said. "As ag producers continue to improve, fair trade relationships will only become more critical."
He added, "Consumers benefit from free trade by having access to safe food at reasonable prices."
Pillen Family Farms is a farrow (birth) to finish pork production company based in Columbus. It has facilities throughout Nebraska and the Midwest. The closest to North Platte are a DNA Genetics gene transfer center near Cozad and a hog finishing operation near Imperial.
