Both cattle buyers and sellers are running out
of time to find a market. Wide spreads between bids and asking prices
have persisted all week (e.g., $120 vs $128 in the South), essentially
preventng the development of significant trade volume. These spreads
will have to somehow narrow between late morning and early afternoon.
Packers are short bought on one hand; feedlot managers are nervous about
large board premiums. Live and feeder futures seem set to open
moderately higher bssed on residual buying interest and possible cash
potential.
The cash hog trade is expected to open steady to
$1 lower. This week's country market has been well supported by both
tightening supplies and improving pork demand. If the Saturday kill
comes in close to 42,000 head, weekly slaughter should again drop,
possibly as low as 2.3 million ahead. Lean futures are staged to open
moderately higher, thanks to spillover buying and supportive
funddamentals.
| BULL SIDE | BEAR SIDE | ||
| 1) | For the week ending April 28, cattle carcass weights continued to aggressively deflate: all cattle averaged 798 pounds, 4 pounds lighter than the prior week and even with 2017; steers averaged 850 pounds, 6 pounds smaller than the week before and 3 pounds heavier than 2017; heifers averaged 788 pounds, 7 pounds lighter than the previous week and 3 pounds bigger than last year. | 1) | Net beef export sales last week totaled only 11,300 MT, down 30 percent from the previous week and 41 percent from the prior 4-week average. |
| 2) | At the same time, actual beef exports totaled 16,600 MT, up 6 percent from the previous week and 8 percent from the prior 4-week average. | 2) | Even though this week's Saturday is forecast near 40,000 head, 18,000 head under the week prior, the weekly cattle kill should still total a substantial 642,000 head. |
| 3) | The pork carcass value continued to firm on Thursday, moving moderate higher thanks to better demand for bellies, ribs, and loins. | 3) | Net pork export sales last week fell to 16,500 MT, down 5 percent from the previous week and 21 percent from the prior 4-week average. At †he same time, actual exports declined to 22,000 MT, down 16 percent from the previous week and 3 percent from the prior 4-week average. |
| 4) | Soon to be lead month June lean hogs finished Thursday's session 75 points higher at $77.33, 700 points higher than contract lows posted in early April, and nearly $14 above the cash index. All of a sudden, June does not look bashful about leading late spring/early summer cash higher. | 4) | According to the World Board, total U.S. red meat and poultry production for 2019 is forecast above 2018. 2019 beef production (i.e., 27.715 billion pounds. up 1.8 percent) is forecast above 2018 on higher slaughter and heavier carcass weights. 2019 pork production (i.e., 27.61 billion pounds, up 3.1 percent) is forecast to increase as expected growth in farrowings and pigs per litter will support larger pig crops. |
OTHER MARKET SENSITIVE NEWS
CATTLE: (Business Insider) — McDonald's is now
selling Quarter Pounders made with fresh beef nationwide — something
that has long been a key advantage for fast-food rival Wendy's. Wendy's
is fighting back by slamming McDonald's in advertising.
"We'll keep screaming that from the rooftops and
continue to hold others in check on what is really happening," CEO Todd
Penegor said Wednesday, encouraging investors to "look on Twitter" for
evidence of Wendy's feisty responses to McDonald's fresh beef.
Wendy's is doubling down on a key advantage as McDonald's tries to edge into its rival's territory.
On Monday, McDonald's announced that it had
completed its roll-out of fresh-beef Quarter Pounders across the US.
With the completion of the national roll-out, the chain is planning to
launch national advertising around the revamped, higher-quality burger.
At face value, this is extremely bad news for
Wendy's. The fast-food chain has aggressively advertised its use of
fresh, never-frozen beef in all its burgers, launching a national
campaign highlighting its fresh beef and slamming McDonald's for its
frozen patties in February.
However, Wendy's is trying to spin McDonald's attempt to take away its fresh-beef advantage as an opportunity.
On Wednesday, executives said in a call with
investors that Wendy's has not yet seen any impact, positive or
negative, from McDonald's fresh-beef roll-out.
"It's still early," Wendy's CEO Todd Penegor said. "The competitor just turned on their national support."
Instead of shying away from the discussion,
Wendy's has launched its own advertising around McDonald's decision,
emphasizing that the rival chain is currently only using fresh beef in
its Quarter Pounder burgers.
"We'll keep screaming that from the rooftops and
continue to hold others in check on what is really happening," Penegor
said, encouraging investors to "look on Twitter" to see Wendy's
responses.
This week, Wendy's has taken to social media to
slam McDonald's for serving some burgers that do not use fresh beef. On
Tuesday, the fast-food chain tweeted a meme spoiling the end of
"Avengers: Infinity War" to slam McDonald's for using frozen beef in the
Big Mac.
"We wanted to make sure that people aren't
confused about what is communicated and what is reality," Kurt Kane,
Wendy's chief concept and marketing officer, told Business Insider in
March, when Wendy's began its most recent anti-McDonald's social media
campaign.
He added: "You shouldn't have to use a decoder ring to figure out what quality you're going to get" when you order a burger.
HOGS: (meatfyi.cpm) == Russia is in the process
of building several new large pig production projects. This is happening
despite the fact that self-sufficiency has almost been reached and in
some cases there is an oversupply situation.
The combined worth of the pig farms currently
under construction in Russia is around 200 billion roubles ($ 3.3
billion) and the production capacity is roughly 1 million tonnes of pork
in liveweight. This estimate was shared by Yuri Kovalev, chairman of
the Russian Union of Pork Producers (RUPP), to the local newspaper
Kommersant. All these projects are estimated to start commercial
operation by 2022.
According to Mr Kovalev, a certain degree of
surplus pork can already be seen on pork markets in virtually all
regions of Russia. In 2017, the pork self-sufficiency rate of Russia was
estimated to be at 95%. In addition, there are still some import
supplies that meet a small share of the domestic demand.
Feed transport arriving at a pig farm in Russia.
There are many more to follow in the years to come, despite a state of
self-sufficiency
Feed transport arriving at a pig farm in Russia.
There are many more to follow in the years to come, despite a state of
self-sufficiency.
In 2017 Russia produced 4.57 million tonnes of
pork in liveweight, which was an increase of 5% compared to the previous
year, Russia's Agricultural Ministry estimated. If all announced pig
farming projects indeed will be launched, the self-sufficiency rate of
Russia with regards to pork could reach 115% by 2022 and the production
surplus as the result would be close to 700,000 tonnes.
An example of the expansion is a recently
announced plan by agricultural holding Kopitaniya. It revealed plans to
invest 3 billion roubles ($ 50 million) into a new pig farm for 150,000
pigs.
This would drive up the company's capacities in
Siberia by 40% from the current level to 69,000 tonnes of pork per year.
The new farm should start commercial operation early 2019.
Eugene Leshenko, the agricultural minister of
Novosobirsk region, where the farm will be based, stated on an earlier
occasion that in 2017 pig farms in his region had yielded 70,000 tonnes
of pork. There were no growth in production volumes, compared to 2016,
but there was no need as well, he said.
The self-sufficiency in pork of Novosobirsk
region was above 100%, so the pig farms started facing difficulties with
selling their products to customers, Leshenko said.
Russian pig farmers hope that the oversupply
crisis in the industry can be avoided by a rise in demand to Russian
pork both in domestic and foreign markets. In the first quarter of 2017,
Russia's pig industry exported 22,400 tonnes of pork, up 50% compared
to the same period in 2016.
It is a big question whether the growth in pork
exports could be sustainable, as Russia failed to negotiate the opening
of new markets for pork products in 2017. As a result, nearly 85% of the
pork exports in last year were sent to traditional trade partners like
Ukraine and Belarus.
The domestic demand could recover in the years
to come, as it was under pressure between 2014 and 2016. The economic
crisis in the country had undermined the purchasing power of Russian
citizens. As a result, they opted to consume less pork and beef and more
chicken.
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