Our guess if that cattle traders will experience a typically quiet Tuesday with both sides trying to weigh higher cut-outs against lower futures. Having said that, these are days when trade volume is hard to track (e.g., how did Nebraska trade as many as 52,000 head last week?). Between different delivery terms and basis consideration, it's been difficult to get a daily count. Specific bids and asking prices for spot biz may be tough to identify this early in the week. Wednesday or Thursday may be a better bet. The closer we get to Memorial Day, the more of a challenge it will be for producers to ignore stubborn-born discounts. Live and feeder futures are likely to open moderately lower, pressured by spillover selliing and mounting beef supplies.
Hog buyers are likely to resume procurement this morning with bids ranging from steady to $1 higher. Hog slaughter should continue to contract, albeit at a fairly slow pace. A significant decline in chain speed could be delayed until the last third of the second quarter. Lean futures should start out moderately higher, supported by residual buying interest and improving pork product demand.
| BULL SIDE | BEAR SIDE | ||
| 1) | For the 12th-consecutive business day, beef cut-outs closed significantly higher on Monday with the choice box closing at its highest level since June 26,2017. | 1) | Last week's big jump in cattle slaughter seemed to be a bearish harbinger of burdensome beef tonnage ripe to unfold through the balance of the second quarter. |
| 2) | For the first quarter of 2018, beef exports were 9 percent ahead of last year's pace in volume (318,073 MT) and jumped 19 percent in value ($1.92 billion). See article below. | 2) | Yesterday's crash in live cattle futures only worked to reinforce multiple levels of overhead resistance on summer charts. Furthermore, spot June's inability to move toward cash can't be good for feedlot psychology and bullish resolve. |
| 3) | The pork carcass value surged more than $2 on Monday, significantly supported by all primals except the butt. | 3) | Although lean hog futures closed mostly higher on Monday, summer contracts clearly remain cautious thanks to ongoing concerns regarding overseas pork demand. While first-quarter trade totals were some better than last year (see article below), growth was no ball of fire. |
| 4) | With further downward revision made on Monday, last week's hog kill totaled 2,327,000 head, 36,000 below the prior week. This slide in slaughter should continue at least another 6-8 weeks. | 4) | During the week ending May 1, noncommercial traders increased their net short position in lean hog futures by 6,400 contracts (now net-short 10,600). |
CATTLE: (USMEF) -- Strong March results capped an excellent first quarter for U.S. red meat exports, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF), as beef exports set a new monthly value record in March and pork export value reached the second-highest level on record. The United States is exporting a strong share of its beef and pork production at higher prices — a clear sign of solid international demand.
March beef export value was $693.1 million, up 18 percent year-over-year and topping the previous high set in October 2014. Export volume was 111,994 metric tons (mt), up 6 percent from a year ago. For the first quarter of 2018, exports were 9 percent ahead of last year's pace in volume (318,073 mt) and jumped 19 percent in value ($1.92 billion).
Exports accounted for 13.6 percent of total beef production in March, up nearly a full percentage point from a year ago. For muscle cuts only, the percentage exported was 11.1 percent -- up from 9.9 percent last year. For January through March, exports accounted for 13.2 percent of total production and 10.7 percent for muscle cuts, up from 12.4 percent and 9.8 percent, respectively.
Beef export value averaged $332.89 per head of fed slaughter in March, up 23 percent from a year ago. For the first quarter, per-head value averaged $315.67, up 18 percent.
March beef exports to leading market Japan were steady with last year's pace at 28,158 mt, while value increased 6 percent to $177.5 million. For the first quarter, exports to Japan were down 3 percent in volume (72,440 mt) but still increased 8 percent in value ($459.5 million). This included a 6 percent increase in chilled beef to 35,290 mt, valued at $275 million (up 18 percent).
March was the final month in which the higher safeguard tariff rate (50 percent versus the normal 38.5 percent) was applied to Japan's imports of frozen U.S. beef. The higher rate took effect in August and expired on April 1 with the beginning of the new Japanese fiscal year.
"While beef exports to Japan held up well during those eight months, the higher tariff rate certainly weighed on exports of frozen cuts such as short plate," explained USMEF President and CEO Dan Halstrom. "U.S. short plate is an essential ingredient for Japan's gyudon restaurants, which are part of a highly competitive fast-casual dining sector. We are pleased to have the higher safeguard tariff rate behind us, though U.S. beef still faces a widening tariff rate gap in Japan compared to Australian beef, and U.S. beef remains subject to Japan's quarterly safeguard mechanisms for chilled and frozen imports. USMEF continues to monitor this situation, and we are hopeful that the frozen beef safeguard will not be triggered this year."
Through an economic partnership agreement (EPA), Australian beef entering Japan is subject to tariff rates of 26.9 percent for frozen cuts and 29.3 percent for chilled, while the rate for beef from most other suppliers is 38.5 percent (Mexico's EPA rate is 30.8 percent). Imports from EPA suppliers also are not subject to Japan's quarterly safeguards. Australia's tariff rates decline annually until they reach a floor of 19.5 percent for frozen and 23.5 percent for chilled, but will be phased down to 9 percent once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is implemented. Japan's beef imports from Canada, New Zealand, Mexico and Chile will receive the same benefits under CPTPP.
Conversely, U.S. beef enjoys a tariff rate advantage in South Korea under the Korea-U.S. Free Trade Agreement. This has helped push U.S. beef's presence in Korea to new heights as U.S. beef drives Korea's overall consumption growth and especially its soaring appetite for steaks. Through the first quarter, export volume to Korea was 22 percent ahead of last year's pace at 51,909 mt, while value increased 37 percent to $366.3 million. Chilled beef exports to Korea accelerated at an even faster rate, increasing 34 percent from a year ago in volume (11,408 mt) and 44 percent in value ($107.9 million).
Other first-quarter highlights for U.S. beef exports include:
• Exports to Mexico were steady with last year in volume at 57,039 mt and climbed 10 percent in value to $250.3 million. Mexico is the leading volume destination for U.S. beef variety meat, including tripe, hearts, kidneys and livers. While first-quarter variety meat exports to Mexico declined 4 percent in volume (25,921 mt), they still achieved a 17 percent increase in value to $60.5 million.
• In Taiwan, exports increased 34 percent year-over-year in volume (13,067 mt) and 48 percent in value ($126.7 million). This included a 61 percent increase in chilled beef exports to 5,860 mt, valued at $74.4 million (up 72 percent). The United States holds 74 percent of Taiwan's chilled beef market, the highest of any Asian destination.
• Exports to China/Hong Kong climbed 34 percent in volume (35,060 mt) and 61 percent in value ($269.1 million). Weekly data show that shipments to China cooled in April following China's proposed tariff increase on a number of U.S. products, including beef. Although these tariffs have not been implemented, the threat of a possible increase has added uncertainty to the Chinese market, which reopened to U.S. beef in June 2017.
• Fueled by rapid growth in Indonesia, beef exports to the ASEAN region reached 11,157 mt (up 55 percent year-over-year) valued at $61 million (up 46 percent). Exports also increased to the Philippines and Vietnam.
• Strong performances in Chile and Colombia pushed beef exports to South America 42 percent higher in volume (7,006 mt) and 46 percent higher in value ($34.3 million). Exports to Peru trended lower in volume but still increased in value.
• First-quarter demand was very strong in Guatemala, as beef exports increased 56 percent in volume (1,424 mt) and 45 percent in value ($8.4 million). Exports to the Central American region were up 15 percent in volume (3,145 mt) and 17 percent in value ($17.8 million).
• Beef muscle cuts continue to make inroads in Africa, where first-quarter exports were up 27 percent in volume (4,340 mt) and 88 percent in value ($6.7 million). While last year's exports to Africa were almost entirely beef variety meat, muscle cuts now account for nearly 30 percent of export volume and 60 percent of export value.
HOGS: (USMEF) -- On the pork side, March export volume was steady with last year at 227,363 mt, while value increased 4 percent to $610.4 million -- trailing only the November 2017 record of $615.8 million. For the January-March quarter, volume increased 1 percent year-over-year to 636,297 mt, while value was up 8 percent to $1.7 billion.
Exports accounted for 27.5 percent of total pork production in March, down from 28 percent a year ago, while the percentage of muscle cuts exported increased slightly to 23.5 percent. First-quarter exports followed a similar pattern, accounting for 26.6 percent of total production (down from 27 percent a year ago) and 23 percent for muscle cuts only (up from 22.6 percent).
March pork export value averaged $56.91 per head slaughtered, up 4 percent from a year ago, while the January-March average increased 5 percent to $54.81.
Asian and Latin American markets drive big jump in beef export value
March pork exports to leading volume destination Mexico were below last year's level in volume (66,136 mt, down 4 percent) and value ($120.3 million, down 5 percent). For the first quarter, exports were down just 1 percent from last year's record pace in volume (203,656 mt) and were steady in value at $371.3 million.
Exports to Japan, the leading value market for U.S. pork, followed similar trends as March exports slowed 10 percent in volume (33,969 mt) and 11 percent in value ($138.6 million). But for January through March, exports to Japan were steady in volume at 101,435 mt and increased 2 percent in value to $419.7 million. This included a 5 percent decline in chilled pork to 53,688 mt. Chilled pork value was down slightly at $258.6 million.
"While exports to these two mainstay markets moderated in March, they still posted a strong first-quarter performance," Halstrom said. "Mexico continues to be a critically important destination for U.S. hams, while Japanese demand is very strong for U.S. loins. In both cases, USMEF works closely with processors, retailers and other key buyers to develop new products and new menu ideas that will further expand consumers' interest in these items."
Other first-quarter highlights for U.S. pork include:
• South Korea's demand for U.S. pork is booming, as exports climbed 36 percent from a year ago in volume (69,518 mt) and 47 percent in value ($202 million). USMEF is helping to position U.S. pork in all sectors, but Korea's rising pork consumption is especially evident in sales of home meal replacement items and convenience foods.
• With China's rising domestic hog production and falling prices cooling demand for imported pork, export volume to China/Hong Kong slowed 15 percent from a year ago to 111,681 mt. However, first-quarter export value still increased 1 percent to $260.7 million. China's additional 25 percent tariff on imports of U.S. pork, imposed in retaliation for U.S. tariffs on steel and aluminum, took effect April 2 and therefore any trade impact is not reflected in the first-quarter results.
• Strong growth in Colombia pushed exports to South America 22 percent higher than a year ago in volume (29,126 mt) and 24 percent higher in value ($70.8 million). Exports to Chile dipped slightly in volume but were still higher in value year-over year. Argentina officially opened to U.S. pork in April, but shipments have not yet begun as exporters work through regulatory requirements.
• Volumes increased to traditionally reliable markets Honduras and Guatemala, as exports to Central America were up 16 percent from a year ago in volume (18,605 mt) and 22 percent in value ($45 million). The region got an even stronger boost from smaller markets, as exports jumped sharply to Panama, El Salvador and Nicaragua.
• Coming off a record year, demand for U.S. pork in the Dominican Republic continues to gain momentum, with exports increasing 23 percent in volume (9,578 mt) and 25 percent in value ($21.5 million). This pushed first-quarter exports to the Caribbean up 13 percent (13,439 mt) and 16 percent ($32.5 million), respectively.
• Steady growth in the Philippines and sharply higher results in Vietnam and Singapore moved pork exports to the ASEAN region 21 percent higher in volume (10,634 mt) and 32 percent higher in value ($29.5 million).
• Exports to Taiwan, which rebounded last year following a down year in 2016, continued to regain momentum in the first quarter. Exports increased 40 percent year-over-year in volume (3,603 mt) and 45 percent in value ($9.1 million).
No comments:
Post a Comment