The cash cattle market could get started sometime Tuesday, but much depends on the stability (or lack) of the board and basis opportunities. While it's a tough call, our guess is that feedlot managers will start out pricing showlists around $5 plus over the board. You could make the case that buyers and sellers would like to take care of business by Thursday. Live and feeder futures seem set to open moderately lower, pressured by follow-through selling and cash uncertainty.
The cash hog trade is likely to remain on the defensive Tuesday with packers once again leading into cash. Lean futures will probably open on a mixed basis as specs and commercial begin to position ahead of the March 1 Hogs & Pigs report set to be unveiled Thursday afternoon.
| BULL SIDE | BEAR SIDE | ||
| 1) | Not only did the national beef cutout continue to plow significantly higher again last week, out-front demand (i.e., with delivery of 22 days or more) took an impressive jump to 1,142 loads, the most in a month and possibly a sign that meat buyers are starting to anticipate the grilling season ahead. | 1) |
New showlists distributed in feedlot country were generally larger with more ready cattle especially noted in Kansas and Texas.
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| 2) |
Given the smaller Jan. 1 feeder cattle supply (i.e., off 2% to 3% from the prior year), aggressive placement cannot be sustained for more than a month or so longer.
| 2) |
Cattle futures simply cannot find the brakes, closing sharply lower again on Monday. Spot April live is now at its lowest level since the first week of last September. Furthermore, the extraordinarily strong basis makes it nearly impossible to resist lower packer bids in the country.
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| 3) |
It would appear that trade war talk is cooling a bit. Maybe the U.S. and China can "make nice," at least enough to get past the March 31 line in the sand that China marked last week for retaliatory tariffs on pork (and other items).
| 3) | Lean hog futures tried to rally Monday on suggestions that the Chinese threat had been overplayed, but bearish cash and technical realities quickly resurfaced and drove prices far below session highs. |
| 4) | The pork cutout should try hard to stabilize above $70. Further easing is possible but the forecast is for some support at the primal level forming a base over the next to two or three weeks. | 4) | Though this week's slaughter will fall below 4 million head, that fact is tied to the late-week holiday situation. Hog supplies remain ample and are still expected to average more than 3.5% above last year well into April. |
CATTLE: (Fox News) -- Wendy's is out to prove its rhymes are as fresh as its "never frozen" beef in a new mixtape that dropped on Friday
The fast food chain revealed their album, titled "We Beefin'," in a Twitter post at 11 am Friday.
"The mixtape drops now. Not pulling punches. We Beefin'," the tweet reads beneath a screenshot of the playlist filled with rap battle-ready verses.
About an hour and a half after the drop, the mega-chain tagged McDonald's in a post, instructing Mickey D's "don't sleep on this mixtape." Wendy's also sent along a link to the album on Spotify.
The five-track compilation -- also available on Google Play and Apple Music -- held nothing back with tracks like "Rest in Grease" and "Clownin," which directly reference McDonald's.
Lyrics for "Rest in Grease" call out the chain's broken ice cream machine, rapping "You No. 1? That's a joke / Why you ice cream machine always broke? / Why you drive-thru always slow? / Why you innovation just can't grow? / It's queen Wendy, need I say more?"
While "Clownin" takes direct jabs at Ronald McDonald:
"You hide from funk / That's prolly why you go paint your face / My meals are great, people lining up like everyday / Leave you in shame, make you run back to Cirque du Soleil / That's cold game / But what you expect from tryna play / Won't say no names but you a clown / Get it, OK?"
However, McDonald's wasn't the only one Wendy's roped in to their fast food feud.
In "Holding It Down," the redhead takes aim at Burger King with rhymes, "And BK, don't think that you got away / You copied my old menu and put it out on replay."
HOGS: (The Canadian Press) -- U.S. President Donald Trump's plan to impose tariffs on up to US$60 billion of Chinese imports could help Canadian retailers by further easing cross-border shopping, even though a full-fledged trade war between the world's two economic superpowers would damage Canada's economy, experts say.
The Retail Council of Canada said Friday that U.S. tariffs that would raise the prices of Chinese consumer goods, such as electronics, sold in the United States could prompt more Canadians to shop at home.
The United States buys half a trillion dollars' worth of goods from China every year, from toys to shoes to cellphones, and prices of those products could surge due to a tariff plan announced Thursday. Specifics about which sectors will be targeted remain sparse and a detailed list of products is expected to be developed in two weeks.
U.S. officials say they will try to minimize the impact for American shoppers by mostly targeting products that business buys like computers, IT products, industrial machinery and aircraft parts.
But even if tariffs attempt to avoid consumer sectors, businesses could still pass on any higher costs to consumers.
"Obviously if U.S. prices increase you're going to see an impact," said council vice president Karl Littler.
Littler added that lower U.S. demand for Chinese-made goods could help Canadian retailers to drive better bargains from Chinese factories looking to replace lost sales.
And transnational retailers such as Costco, Best Buy and Walmart may ship directly from Canada instead of transporting goods from the U.S. to avoid tariffs, he said.
Canadian Association of Importers and Exporters president Joy Nott also thinks higher prices for goods could encourage more Americans to shop in Canada. "Not in waves or anything but I think it will level the cross-border type activity," she said in an interview.
Canadian products that are similar to Chinese goods could also be substituted by American buyers, helping to boost Canada's export sector.
Further retaliation by China could open the door for more Canadian exports to replace higher-priced American goods, particularly in agriculture.
"That could be of assistance to Canada's own pork exporters," said CIBC chief economist Avery Shenfeld.
"We could end up replacing the U.S. as a supplier to China if China imposes restrictions on U.S. products."
However, there's still the looming and much bigger problem of an escalation of the battle into a full blown trade war that causes a slowdown in global economic growth, he added.
Because Canada is a nation that depends on exports of commodities, a weaker Chinese economy would also hurt the Canadian economy by reducing sales and prices of raw materials, added Conference Board of Canada chief economist Craig Alexander.
"The tariffs as they're currently announced is a negative but you're really worried about is how this can escalate."
If that happens, there is a risk that the world's trading system collapses, added Yves Tiberghien, distinguished fellow at the Asia Pacific Foundation of Canada.
"If the trading regime really collapses then we suffer massively," he said from Washington.
Tiberghien said the Chinese will make the fight long and painful. The result will be a U.S. government that is distracted by China -- which could ultimately be good news for NAFTA, he said.
The U.S. has recently softened up on Canada, by exempting it and Mexico from steel and aluminum duties and making concessions in NAFTA concerning automobiles.
"So the ground is completely different from last week."
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