Light trading surfaced in parts of the North Wednesday with scattered deals covering a wide price range (i.e., $189 to 195 dressed). We could see more of a two-tier market through the end of delivery. The former type may be tightly held until sometime Friday. Live and feeder futures are expected to open on a mixed basis thanks to residual selling on one hand and short-covering on the other.
Look for the cash hog trade to open Thursday with steady/firm bids. Positively, Saturday kill plans at this time sound no larger than 42,000 head, an encouraging sign that ready-market hog numbers are indeed tightening with the season. Lean futures are also geared for uneven price action in the early rounds with nearbys probably outperforming deferreds.
| BULL SIDE | BEAR SIDE | ||
| 1) | Early-month demand for high quality beef remains very strong with the choice box surging another $2.68 higher on Wednesday. Midweek demand was described as "moderate to good." | 1) | There are signs that cattle buyers are booking more and more inventory for mid to late May. If they bank a significant buffer, spot cash demand could really tank later this month. |
| 2) | With the threat of a strike at Cargill's beef plant at Schuyler essentially over, this week's chain speed will list toward full production. | 2) | Nearby live futures continued to slump on Wednesday with spot June obviously anticipating consistently lower bids over the next 30 to 60 days?. |
| 3) | For the week ending April 28, Iowa barrows and gilts averaged 285.5 pounds, .7 pounds less than the previous week and 1 pound more than 2017. | 3) | During the week ending April 28, U.S. hatcheries set 230 million eggs in incubators, up 4% from a year ago. At the same time, broiler growers placed 184 million chicks, up 1% from 2017. |
| 4) | The pork carcass value at midday jumped significantly higher, led by a $3.52 surge in the belly primal. | 4) | Summer lean hog futures remain trapped in the low $70s. Unless contracts can break out of this lackluster range, a seasonal rally may not see the light of day. |
CATTLE: (foodmarket.com) -- Cargill officials say operations are back to normal at their Schuyler plant, with some employees saying they have quit their positions.
Cargill Director of Communications Mike Martin, told NCN in a phone call Wednesday morning, that operations at the plant are moving forward as normal on Wednesday, following Tuesday's strike.
Martin says the pay differential, which caused the dispute, was a $2.00 raise for 3rd shift workers, and a $1.50 raise for 2nd shift workers. The 2nd and 3rd shift have previously received raises, and Martin says the recent raise was being offered as a 6 month trial in an effort to incentivize more people to apply for the open 2nd and 3rd shift positions. Martin says the raise in pay was agreed upon with the United Food and Commercial Workers union that exists at the Cargill plant.
Martin says they are currently trying to fill hundreds of open positions across their Nebraska based plants.
1st shift workers from Cargill went on strike on Tuesday because of the pay raise being offered to the other two shifts, and not the 1st shift. A Cargill employee called NCN Wednesday morning and said roughly 20 people had quite their jobs as a result of the strike, but a specific number of employees who left their jobs or were let go has not be confirmed.
The employees who were on strike stated on Tuesday that they were unhappy with how the union handled the situation. Martin said employees can apply for the 2nd and 3rd shift positions if they meet the job qualifications.
HOGS: (pigworld.co.uk) -- The USDA Foreign Agricultural Service has released its latest update on Livestock and Poultry: World Markets and Trade, forecasting a significant rise in pork supplies.
Record pork volumes are forecast to be produced in the US, EU and Canada with producers seeking international buyers in order to export at least part of the gain.
Global production of pork is expected to rise by 2% in 2018, to 113.5 million tonnes, largely driven by an increase in production in China, alongside the increase in the US and EU. Steady economic growth means that meat demand is increasing in most countries.
EU production is forecast to rise by around 2%, although prices may face some pressure due to weakening domestic demand and a challenging export outlook, due to a reduction in demand from China and a stronger euro.
US production is forecast to increase by 5% in 2018 due to higher prices during 2017. Any increase in supply in 2018 is likely to weigh on hog prices, although this will help boost demand from Mexico, Japan and South Korea. The USDA expects the US to increase exports to other markets such as Mexico, Japan and the Philippines, to offset the decline in shipments to China.
For the first time since 2012, global trade in beef, pork and broiler meat are all expected to rise. The rise in pork is expected to be modest, just 1%.
US exports are forecast to rise by almost 5% during the year, however the recent tariffs imposed on US pork by China may marginally lower total growth. The increase in tariffs will likely price many US cuts out of the Chinese market, with EU, Brazilian and Canadian pork expected to displace US product.
Demand from Mexico, Hong Kong, Philippines and Taiwan is expected to grow, alongside growth in South and Central America. Lower pork prices will help encourage demand, as will growth in household incomes. Pork demand has been rising quickly in South America and has been outpacing production. In Japan, the growth in pork consumption is offsetting lower consumption of fish. Chinese imports of pork are expected to decline over the year, due to higher domestic production.
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