Look for feedlot country to start floating a few preliminary bids and asking prices. Our guess is that showlists will be priced around $122 plus in the South and $192 plus in the North. Significant trade volume may be delayed until Thursday or Friday. Live and feeder futures should open at least moderately higher, girded by residual buying interest and ideas that the beef carcass value will soon be supported by seasonal demand.
The only dependable heat to be found this spring has been the heat consistently generated by this month's cash hog market. Look for more heat in that regard to surface again Wednesday with bids possibly $1 to $2 higher. Lean hog futures should open on a mixed basis thanks to a slow combination of long liquidation and limited spec buying.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle bulls successfully regrouped on Tuesday, pushing nearby live contracts to their highest levels seen since March 22. | 1) |
The wholesale beef trade remained sluggish on Tuesday with cutouts closing no better than mixed. Furthermore, box supplies were described as "moderate to heavy."
|
| 2) | Last week's five-area steer average total $119. 49, only $1.44 above spot April live. Such a relatively weak basis should lend feedlot managers extra leverage and bargaining power. | 2) | The discounts in summer live cattle contracts to spot April feedlot sales continue to widen beyond levels seen in the last five years. The fear of huge levels of commercial beef product remains very real. |
| 3) | Despite more aggressive spending on Tuesday, hog buyers had just so-so luck in moving market numbers. It would seem that higher bids are necessary at midweek. | 3) | China's pork output rose 2.1% to 15.4 million tons in the first quarter compared with the period during the prior year. |
| 4) |
The seasonal index for June lean hog futures has a tendency to be positive from here, with average gains from the April contract expiration.
| 4) | Supported by the fact that WTD hog slaughter is running 31,000 head ahead of last week, some analysts believe that the weekly kill will stretch over 2.4 million head at least one more time before trending lower. |
CATTLE: (Beef Central) -- China's beef imports are expected to increase by eight percent in 2018, as rising demand continues to outpace domestic production growth, according to the United States Department of Agriculture's latest forecast for the market.
China's domestic beef production is expected to grow by one percent in 2018 to 7.4 million metric tonnes, the USDA's April 2018 Chinese livestock outlook reports.
However, Chinese beef consumption is forecast to increase by three percent to 8.4 MMT.
As a result China is expected to increase imports by 8pc to 1.05 MMT in 2018 to bridge the gap between local production and demand.
Contributing to higher domestic beef production in China is a combination of low milk prices and high beef prices.
The USDA says low milk prices have prompted dairy farmers to slaughter their less productive dairy cattle for beef processing at a faster rate than usual.
The high beef prices are allowing farming operations to generate immediate income and to replace less productive dairy cows with more productive cows.
The report forecasts China's calf crop in 2018 will increase by 0.7 percent to 51 million head.
Earlier investments in the development of larger scale farms are now starting to translate into increased production capacity.
At the same time small-sale farmers in China are either continuing to retreat from the market or take a "wait-and-see approach".
Despite the forecast increase, overall production growth in China is being constrained by increasingly strict environmental regulations.
One example is the nationwide Environmental Protection Tax introduced by China's central government on January 1, 2018.
The program levies a tax on farms with more than 50 head of cattle, 500 head of swine, or 5000 head of chicken/duck. The tax rate is designated by each individual province.
Farms which invest in qualifying pollution control and rehabilitation measures are either exempted from the tax, or pay a lower tax rate.
The USDA says this program will further increase production costs for many Chinese farmers, driving many small and medium operations to either consolidate or exit the market.
Also adding to the cost of beef production in China are rising corn prices. The area planted to corn in China has been smaller this year, in keeping with a central government effort to reduce the massive reserves generated in the past, while demand is also rising for corn for the production of ethanol, with both factors putting upwards pressure on corn prices.
HOGS: (brownfieldagnews.com) -- Vice President Mike Pence says a new NAFTA deal could be reached in the next several weeks.
He told reporters at a summit in Peru this weekend he is hopeful that the countries will come to an agreement soon. Canadian Prime Minster Justin Trudeau has also expressed optimism and Mexico's economy minister has said that there is an 80 percent chance the countries could reach an agreement by May.
Topics that still need addressed are increased market access for U.S. dairy in Canada and U.S. demands around automobile production.
Leaders will continue to be in "permanent talks" instead of having another formal renegotiating round.
No comments:
Post a Comment