While we thought there was a chance of early-week business in feedlot country if attractive basis opportunities became available (e.g., sharply lower futures and near-steady packer bids), the surfacing of cash bids on Tuesday as much as $1 higher than last week came as quite a bullish surprise. Light-to-moderate trade volume developed in several states with the largest number of sales evident in the South. Look for weekly business to build further Wednesday and Thursday with prices steady/firm with the range established on Tuesday. The balance of showlists should be priced around $129 plus on a live basis and $206 to $207 in the North. Cattle futures seem likely to open higher Wednesday, boosted by residual short-covering and cash premiums.
Hog buyers have used lower bids with decent success so far this week (improving processing margins along the way), and they're not likely to change strategies at midweek. Accordingly, expect the cash trade to once again open Wednesday with steady to $1 bids. Some project the Saturday kill to total around 125,000 head. Lean futures should open on a mixed basis tied to a combination of further short-covering and fundamental worries.
| BULL SIDE | BEAR SIDE | ||
| 1) | Light-to-moderate cash trading developed as early as Tuesday with live prices generally steady to $1 higher (i.e., $126 to $128). Such impressive spending once again developed in the face of large board discounts, underscoring packer hunger, good margins and manageable fed supplies. | 1) |
Even if cattle futures can stabilize with the help of higher feedlot sales, chart formation remains very limiting. There is significant overhead resistance in the $124 to $124.50 region. The 40-day and 100-day moving averages are hovering about 200 points above spot April live.
|
| 2) |
After probing the lows of last week around midsession, nearby live contracts recovered by more than 100 points. Nearby futures may finally be getting ready to converge with cash premiums.
| 2) |
While beef cutouts have been forced significantly higher in recent weeks, box volume has clearly been on the slow side. Spot sales have been especially slow, remaining well below a year ago. Some fear that fill-in buying may be limited moving forward if retailers appear mostly disinterested in beef items at higher cutouts.
|
| 3) |
The seasonal trend for April lean futures is to chop around in the near-term before moving higher into expiration. Normal seasonal premiums are built into the spring and summer contracts as traders are anticipating a seasonal advance in cash values.
| 3) |
Tuesday's negotiated cash hog market saw both significantly lower sales and sizable trade volume. Such a combination typically reflects poor country leverage and bearish market psychology.
|
| 4) |
As hams have one more week of probable price support, hogs have one more possible week of moderate support before downward pressure from packers is likely to resume.
| 4) |
Though lean hog futures closed moderately lower, the technical picture remains very bearish. Spot April is trapped in a range between $66.50 and $69.50 with new buying interest going nowhere fast.
|
CATTLE: (The Cattle Site) -- Growing demand for Australian cattle has prompted Vietnam's processing sector to invest millions in abattoir training facilities to improve animal welfare.
ABC Online reports that in 2016, disturbing footage was allegedly released by animal welfare group Animals Australia showing cattle being bludgeoned to death in Vietnamese abattoirs.
Since then Australia has been working with Vietnam, which is the second-largest importer of live Australian cattle, to improve its animal welfare standards to ensure the country complies with the Exporter Supply Chain Assurance System (ESCAS) so it can continue importing Australian cattle.
Now, two commercial companies in Vietnam have invested millions of dollars to develop training facilities, where staff undergo a three-month intensive program to learn western ways of processing cattle.
Meat and Livestock Australia (MLA) livestock services manager Michael Patching, who is based in Vietnam, described the facilities as high-quality abattoirs.
"Every Australian I bring to these facilities is surprised at the amount of money spent on them and how modern they look," Dr. Patching said.
"They could fit very well into any Australian domestic supply abattoir that you would see in the modern world."
The push for improved cattle handling and processing standards has come from within Vietnam, according to Dr. Patching.
"Vietnam, like many places in the world, need models to help model their development," he said.
"We are just nurturing that growth.
"To date it [the training] has focused on ESCAS compliance. This is more about positioning Australian beef and cattle at the forefront of the development of the sector here in Vietnam.
"We have done a lot of work in abattoirs, which we and they know is a problem area... [but now] there is potential to shape the industry so that it does grow in line with Australia's priorities and can become a sustainable industry.
"[So] the training will focus very heavily on making sure cattle are looked after before slaughter and at the point of slaughter."
Plan to transition into sustainable model
As part of the beef sector's development in Vietnam there is also a strong push for improved food safety.
MLA and the Australian Government have supported the industry through this development.
MLA has focused its efforts on educating the industry about opportunities to expand its markets for beef.
The Government has initially funded the training, which will be undertaken by a registered training organisation in Australia.
"The intention is that it transitions into a sustainable model, so we will hand it over to the Vietnamese and train the trainers," Dr Patching said.
The two facilities in the south of Vietnam are set to open at the end of March.
HOGS: (Observer Media Group 2018) -- Prime Minister Justin Trudeau is brushing off the idea that Canada might be coerced into making concessions at the NAFTA negotiating table under the pressure of tariff threats from the United States.
The U.S. government has been dropping hints that the decision to excuse Canada and Mexico from tariffs on steel and aluminum might only be temporary, and somehow dependent on the result of trade negotiations.
The American administration has expressed a desire to get a NAFTA deal in a hurry and some prominent members have been suggesting that the threat of steel and aluminum tariffs might prod the negotiations along.
But Trudeau told a U.S. TV audience he sees them as separate issues: "We don't link together the tariffs and the negotiations with NAFTA," he told CNBC in an interview Monday from a Quebec aluminum plant, where he toured the facility and promised to continue standing up for the industry.
Trudeau also rejected the idea that the tariff exemption was some kind of benevolent American favour that required repayment. In Trudeau's view, the U.S. wasn't just helping Canada-- it helped itself by refraining from slapping tariffs on its No. 1 supplier of both steel and aluminum.
"The exemptions aren't a magical favour that was being done (for Canada)," Trudeau said.
"(We're) highlighting that the imposition of tariffs on Canada would end up hurting the U.S. almost as much as it would hurt Canada."
Trudeau's view has prominent support: A newly released poll of leading economists organized by the University of Chicago has found rare unanimity on the topic, with zero per cent of economists surveyed saying they believe tariffs will help Americans.
The prime minister made the point by mentioning in his U.S. interview that he was a few kilometres from the Bagotville air force base, built during the Second World War to protect critical aluminum supplies required by the military.
He said he made similar points last week to U.S. President Donald Trump, in a phone call before the tariff decision.
"I told the president that imposing tariffs on steel and aluminum does not help with regard to NAFTA.. It has a negative impact on the NAFTA talks," he told a news conference Monday.
The prime minister is on a cross-country tour of aluminum and steel factories to demonstrate his government's support for workers in light of potential threats to those industries from the U.S. administration.
Other stops will include Hamilton, Sault Ste. Marie, Ont., and Regina.
The Trump administration has set tariffs of 25 per cent on steel and 10 per cent on aluminum, applicable to every country except Canada and Mexico. While the penalties take effect later this month, Trump has encouraged countries to try negotiating exemptions for themselves. Canada is the United States' largest foreign provider of steel and aluminum, with about 85 per cent of Canadian exports being directed to that country.
Quebec Premier Philippe Couillard spoke to reporters alongside Trudeau and said he wouldn't accept any undue pressure on the province's dairy farmers as a potential compromise on the NAFTA deal. Quebec has a supply management system regarding dairy, poultry and eggs, which imposes steep tariffs on those products entering the country.
"On our end we are going to vigorously defend supply management," Couillard said, adding Quebec's farmers have already given up market share for other recently negotiated trade deals.
No comments:
Post a Comment