Friday's market could be quite telling. The big question is whether recovering cattle futures can be translated into better cash sales. More specifically, will feedlot managers succeed Friday in selling steers and heifers above the early-week cash test (i.e., $118 live/$188 dressed) now that live futures have rallied nearly 600 points off early session lows? Asking prices will start out around $120 plus in the South and $190 to $192 plus in the North. WTD trade volume suggests both sides need to generate a light to moderate number of sales before calling it a week. Live and feeder contracts seem set to open on a mixed basis thanks to residual buying and pre-cash long liquidation.
The cash hog trade showed modest signs of stability. The national dressed base closed only modestly lower and generated receipts that also seemed relatively small. Yet that could mean processors are well covered going into late week, especially given relatively modest Saturday kill plans around 158,000 head. Furthermore, the wholesale pork market still looks defensive. Our guess is that the cash market will open with bids steady to $1 lower. Lean hog futures should open with uneven price action in slow volume.
| BULL SIDE | BEAR SIDE | ||
| 1) | The rally in cattle futures seems to be proving to be more than a one-trick pony. Wednesday's big reversals were padded Thursday by another round of triple-digit gains. | 1) |
The beef carcass value stumbled badly on Thursday, specifically ambushed by a $3.08 choice box lost. Box supplies were once again described as "moderate to heavy."
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| 2) | For the week ending March 24, cattle carcass weights scaled mostly lighter: all cattle averaged 818 pounds, 1 pound smaller than the prior week and 4 pounds bigger than 2017; steers averaged 878 pounds, 1 pound heavier than the week before and 10 pounds bigger than last year; heifers averaged 815 pounds, 7 pounds lighter than the previous week and 1 pound below 2017. | 2) | Net beef export sales last week totaled 15,800 metric tons (MT), down 33% from the previous week and 9% from the prior four-week average. At the same time, actual exports totaled 15,500 MT, unchanged from the previous week, but down 2% from the prior four-week average. |
| 3) | Given the stability/strength of futures directly impacted by proposed Chinese tariffs (i.e., cattle, lean hogs, beans), the market seems to be moving beyond panicky psychology and less reactive to random headlines. | 3) | The pork cutout lost another buck Thursday with all primals losing some ground. The belly complex looked especially weak with the composite quoted $3.78 lower. |
| 4) | Look for the cutout to find a base this week or next, then begin slowly working higher. The pork cutout is forecast to begin slowly moving higher from here into the end of June. | 4) | While the seasonal tendency calls for April hog futures to trend higher from here into expiration, the prospect of a significant rebound does not seem likely this year. |
CATTLE: (texastribune.org) -- Longtime cattle rancher Jason Peeler gets uneasy when he hears about a looming trade war between the United States and China, and he says he's not the only one.
"We are nervous -- we're really nervous," Peeler said.
His unease swelled Wednesday when China retaliated against President Donald Trump's proposed tariffs by announcing plans for duties of their own on $50 billion worth of U.S. goods like soybeans and whiskey -- and beef. Cattle make up a major chunk of Texas' livestock inventory, with over 20 million cattle roaming on ranches across the state. Around 4.5 million of those cattle are used for beef. ] Texas' beef industry has just started re-establishing a relationship with China; a 14-year ban on U.S. beef exports to the country was lifted just last year. Texas is only exporting a small amount of beef to the country, but the industry is still feeling the pressure, especially given a related tariff threat on pork.
"There is a relationship between pork prices and beef prices," said David Anderson, an economist at Texas A&M University. "Cheaper pork means pork is a little more competitive for U.S. consumers' dollar."
It also means the price of beef goes down, leading to less profit for cattle ranchers, Anderson said.
The back-and-forth between the two economic powerhouses started last month, when the Trump administration moved to tax steel and aluminum from China and other countries. China struck back earlier this week, threatening to put a 25 percent tax hike on imports from pork to pecans.
On Tuesday, the Trump administration announced $50 billion worth of proposed tariffs on Chinese valued U.S. exports such as aircraft parts and flatscreen televisions. China answered by adding beef, among other items, to their list. The potential tax on beef could impact Texan ranchers, but Chinese consumers can get hurt even more, said Pete Bonds, a rancher in Saginaw.
"It will make the beef more expensive to the Chinese consumers -- they're actually hurting the Chinese," said Bonds. "I'm more sad for the Chinese consumer."
HOGS: (myjournalcourier) -- Beardstown pork-processing plant JBS USA is hiring about 200 new employees to staff four new production lines that will be added later this year.
"We are in the early stages of hiring workers for the new lines," JBS human resources manager Cressa Gordley said. "This is a great opportunity for people in this area to apply for a high-paying position, and it will be a great improvement for JBS."
The jobs will involve working on four new ham-boning lines at the plant.
"These new ham-boning lines are something JBS has wanted to add since the plant's acquisition from Cargill in 2015," JBS project engineer Cameron Hays said. "The demand for boned hams is always there, so JBS is adding these lines to meet customers' demands."
JBS now has two ham-boning lines, which will remain. The ham is the thigh of the hog, and the ham-boning process involves workers cutting the ham muscles off of the bone.
Each of the four ham-boning production lines will have 25 employees working an 8-hour shift. There will be two shifts.
"Many workers will be trained for multiple positions on the line, so they will be able to rotate tasks throughout their shift," Hays said.
The new lines will be built in the main JBS building. Hays said construction will begin in July and take about two months to complete. The production lines will consist of four main belts, with workers standing on one side of each belt. As a pork thigh passes by, workers will perform various tasks, including skinning, defatting, boning and trimming.
"Our trim blend operation is currently in the space where the new production lines will go," Hays said. Trim blend refers to the parts of the hog that are trimmed off and collected for use in such things as sausage, hot dogs and ground pork.
In addition to the 200 line workers, JBS also is looking to hire about six forklift drivers specifically to work on the new production lines.
JBS will hold hiring events from 4 to 7 p.m. April 20 and from 9 a.m. to noon April 21 at the Veterans of Foreign Wars post at 610 E. Fourth St. in Beardstown.
"What we are focusing on at these hiring events is to fill jobs for the new production lines," Gordley said. "However, we have other positions available that we (also) will be trying to fill."
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