Early-week activity in feedlot country should be typically quiet with buyers and sellers focusing exclusively on the distribution of new showlists. Ready numbers are likely to be steady to somewhat larger than last week. Bids and asking prices are not likely to develop this week until traders can gather some sense of board stability. Live and feeder futures seem likely to open moderately higher thanks to short-covering, cash premiums and outside markets.
The cash hog trade is expected to open Monday with basically steady bids. Lean futures are expected to open higher supported by friendly expectations regarding seasonal fundamentals as well as the weekend news regarding improving relations between China and the U.S.
| BULL SIDE | BEAR SIDE | ||
| 1) | The discounts in the June and August contractsremain wider than "typical" for this point in the calendar. Furthermore, the June contract is in the lower 10% area of the historical price distribution. | 1) | Last week's cattle surged to 660,000 head, a stark confirmation of burdensome beef supplies scheduled for the last half of the second quarter. |
| 2) |
According to the DTN model, gross beef processing margins have now surged over $350 per head. Packers have great incentive to fund aggressive chain speed, a reality that should help stabilize feedlot cash going forward.
| 2) | The week before Memorial Day is typically slow and dismal in terms of wholesale meat demand (especially beef). With holiday features fully funded, most buyers will lay low until they can assess late May clearance. |
| 3) | The trade war with China appears to be placed on hold with a pending promise from China to buy more agricultural goods from the U.S. (see article below). | 3) | The pork carcass was quoted sharply lower on Friday, pressured by softer demand for loins, picnics, ribs and hams. |
| 4) | Although hog slaughter increased last week from the prior week, look for available hogs to diminish as we move through the remaining weeks of spring and through the first half of the summer. | 4) | The spread between cash and June lean futures is wider than normal for this time of year and may be too much ground to cover with less than a month to expiration. |
CATTLE: (Agence France Presse) -- China could soon allow imports of beef from France, Germany and the Netherlands, which had been under embargo since 2001, the EU agriculture commissioner said Friday in Beijing.
China had banned imports of European and then US beef due to cases of bovine spongiform encephalopathy (BSE), or "mad cow disease".
The European Union has been working for years to ensure its meat is safe.
France reached a deal to lift the embargo on its beef during a visit to China by President Emmanuel Macron in January, with restrictions to be eased within six months.
China recently opened its market to beef from Ireland, the first EU country to benefit.
"I expect that more member states, particularly France, the Netherlands and Germany will be high on the list in China to open those markets," EU agriculture commissioner Phil Hogan said Friday during a visit to China.
Health checks and verification were being carried out by the Chinese to finalise the lifting of the embargo.
"There is no specific commitment given in relation to a date," Hogan said.
"But I'm very confident, based on the conversations I've had, and on the knowledge of the technical work that is done, that those member states certainly can expect to see some movement in the near future," he said.
Beijing also resumed imports of US beef in June 2017 after a 14-year embargo.
China's appetite for beef has risen over the past decade with an increase in living standards.
Brazil, Uruguay, Australia and New Zealand are currently the main suppliers of beef to China, accounting for almost 90 percent of its imports in 2016.
EU exports of agricultural products to China have doubled over the last five years from 6 to 12 billion euros ($7 to 14 billion).
HOGS: (New York Times) -- The United States has put on hold its plan to impose sweeping tariffs on Chinese products as it presses forward with negotiations to reduce its trade deficit with Beijing, a top priority of President Trump.
Steven Mnuchin, the Treasury secretary, said on Sunday that the two countries had made progress as they concluded two days of intense trade negotiations in Washington late last week. The planned tariffs on $150 billion worth of Chinese goods are off the table while the talks proceed, he said.
"We're putting the trade war on hold," Mr. Mnuchin said on "Fox News Sunday."
After finishing the talks in Washington, the two sides released a joint statement on Saturday that offered little detail about what had been decided. Mr. Mnuchin said on Sunday that they had agreed on a "framework" under which China would increase its purchases of American goods, while putting in place "structural" changes to protect American technology and to make it easier for American companies to compete in China.
While American officials had signaled last week that China had agreed to increase purchases by $200 billion, Mr. Mnuchin declined to confirm that figure. "We have very specific targets; I'm not going to disclose what they are," Mr. Mnuchin said. "They go industry by industry."
He suggested that under a deal, China would make big increases in its purchases of American agricultural products and energy over the next several years.
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