Once again, the feedlot market has reached the
tail end of the week with hardly a hoof traded. But look for at least
moderate trade volume to develop Friday sometime between late morning
and early afternoon. Opening bids should start out around $110 in the
South and $180 dressed, still well below asking prices of $115 live and
$185 dressed. Live and feeder futures should open on a mixed basis as
specs and commercials position ahead of late-week cash news.
The cash hog market really seemed to heat up
this week thanks to tightening supplies of ready barrows and gilts. When
sharply higher packer bids fail to generate significant receipts, you
know you're on the sure trail of tightening live supplies. Lean futures
seem staged to open impressively higher thanks to the rapidly advancing
cash index and appreciating carcass value.
| BULL SIDE | BEAR SIDE | ||
| 1) | Though cattle buyers didn't get anything done Thursday, some bids did seem to be inching higher Thursday. Feedlot managers have demonstrated decent leverage the last several Fridays, and they may once again find decent leverage sometime thisFriday. | 1) |
For the second consecutive session,
live cattle futures failed to hold an early rally on Thursday,
suggesting that both specs and commercials remain nervous about summer
market potential and watchful for selling opportunities.
|
| 2) |
Beef export volume was 111,213
metric tons (mt) in April, up 11% year-over-year. Export value was
$676.7 million, up 23% and the fourth-highest on record (see article
below).
|
2) |
For the week ending May 26, cattle
carcass weights increased: all cattle averaged 796 pounds, 1 pound
heavier than the previous week and 5 pounds above 2017; steers averaged
848 pounds, 2 pounds more than the prior week and 10 pounds more than
last year; heifers averaged 784 pounds, 2 pounds more than the week
before and 12 pounds more than the previous year.
|
| 3) | The pork carcass value closed with solid gains again on Thursday with all primals contributing except the butt and rib. | 3) |
Net pork export sales last week sank
to 8,600 MT, down 60% from the previous week, 57% below the prior
four-week average, and a marketing year low. At the same time, actual
pork exports totaled 19,300 MT, down 7% from the previous week and 15%
from the prior four-week average.
|
| 4) | April pork export volume was 230,049 (mt), up 13% from a year ago and topping the previous high set in November 2016. April export value was $584.1 million, also up 13% (see article below). | 4) |
Despite firm cash action and
strengthening wholesale pork values, and prospects of a tightening hog
supply in the coming weeks, concerns regarding imposed Mexico tariffs,
and uncertainties tied to China trade negotiations are keeping a lid on
summer lean futures.
|
OTHER MARKET SENSITIVE NEWS:
CATTLE: (USMEF) -- Beef export volume was
111,213 mt in April, up 11 percent year-over-year. Export value was
$676.7 million, up 23 percent and the fourth-highest on record. Through
the first four months of 2018, exports were up 10 percent in volume to
429,286 mt. Export value was $2.59 billion, 20 percent above last year's
record pace.
Exports accounted for 14.1 percent of total beef
production in April, up from 13.6 percent a year ago. For muscle cuts
only, the percentage exported was 11.3 percent, up from 10.6 percent.
For January through April, exports accounted for 13.4 percent of total
production and 10.8 percent for muscle cuts, each up about half a
percentage point from last year.
Beef export value averaged $328.46 per head of
fed slaughter in April, up 16 percent from a year ago. Through April,
per-head export value averaged $318.91, up 17 percent.
Even with growth in red meat production, both
pork and beef exports have accounted for a larger share and contributed
more dollars per head, indicating strong international demand.
Japan maintained its position as the leading
volume and value market for U.S. beef, with April exports totaling
25,650 mt (up 9 percent from a year ago) valued at $166.6 million (up 16
percent). Through April, exports to Japan were steady with last year's
volume at 98,090 mt while value increased 10 percent to $626.1 million.
This included a 4 percent increase in chilled beef to 47,322 mt, valued
at $375 million (up 17 percent). Frozen shipments have regained momentum
now that the 50 percent safeguard duty rate has expired. But with a
38.5 percent rate in place for both chilled and frozen beef, the U.S.
remains at a large disadvantage compared to its top competitor,
Australia.
U.S. beef continues to build tremendous momentum
in South Korea, where April exports were up 62 percent from a year ago
in volume (19,185 mt) and 72 percent in value ($134.8 million). For
January through April, exports to Korea climbed 31 percent to 71,094 mt,
valued at $501 million (up 45 percent). Chilled exports totaled 15,480
mt (up 29 percent) valued at $148 million (up 40 percent). In contrast
to Japan, U.S. beef has a slight tariff advantage versus Australia, as
KORUS was implemented earlier than the Korea-Australia Free Trade
Agreement.
"The enthusiasm for U.S. beef in these markets
may be at the highest level I've ever seen," Halstrom said. "In nearly
every segment of the retail and restaurant sectors, U.S. beef is
attracting new customers with a wider range of cuts and menu items. It's
an exciting trend that's not just limited to Japan and Korea, with U.S.
beef's popularity also strengthening in other Asian markets and in the
Western Hemisphere."
For January through April, other highlights for U.S. beef include:
•In Mexico, exports were 5 percent ahead of last
year's pace in volume (78,435 mt) and 16 percent higher in value
($342.4 million). Demand was especially strong in April, as exports
totaled 21,396 mt (up 22 percent and the largest since August), while
value increased 33 percent to $92.1 million.
•Exports to China/Hong Kong increased 23 percent
in volume (46,043 mt) and surged 51 percent in value to $352.4 million.
China still accounts for a small portion of these exports, as shipments
to China were 2,299 mt valued at $21.3 million. China reopened to U.S.
beef in June of last year. While U.S. beef is not yet subject to
retaliatory duties in China, it remains on the proposed retaliation list
with a possible additional tariff of 25 percent.
•Taiwan continues to display a growing appetite
for U.S. beef, especially for chilled cuts. Exports to Taiwan were 30
percent above last year's pace in volume (17,500 mt) and 42 percent
higher in value ($168.7 million). Chilled exports were up 43 percent in
volume (7,605 mt) and value ($96 million), as U.S. beef captured 74
percent of Taiwan's chilled beef market.
•Steady growth in the Philippines and a tripling
of exports to Indonesia pushed exports to the ASEAN region 35 percent
above last year's pace in volume (14,865 mt) and 37 percent higher in
value ($82 million).
•Exports to South America were up 14 percent in
volume (8,971 mt) and 28 percent in value ($43.5 million), with the main
destinations being Chile, Peru and Colombia. Leading market Chile was
up 20 percent in volume (4,137 mt) and 14 percent in value ($22.5
million), though shipments slowed in March and April following a strong
start to the year.
HOGS: (USMEF) -- April exports of U.S. pork,
beef and lamb were sharply higher than a year ago in both volume and
value, according to data released by USDA and compiled by the U.S. Meat
Export Federation (USMEF). Pork exports set a new volume record, fueled
by tremendous demand in Mexico, while beef exports posted the best-ever
results for the month of April.
April pork export volume was 230,049 metric tons
(mt), up 13 percent from a year ago and topping the previous high set
in November 2016. April export value was $584.1 million, also up 13
percent. For January through April, pork export volume was 4 percent
ahead of last year's record pace at 866,346 mt, while value increased 9
percent to $2.29 billion. (For pork muscle cuts, excluding variety meat,
April was also a record volume month at 184,487 mt, up 18 percent from a
year ago. Muscle cut export value was $480.6 million, up 14 percent.)
Exports accounted for nearly 30 percent of total pork production in
April, up from 28.4 percent a year ago, while the percentage of muscle
cuts exported also increased significantly (25.8 percent, up from 23.5
percent). Through April, the percentage of total production exported was
fairly steady with last year at 27.4 percent, while muscle cuts jumped
from 22.8 percent to 23.5 percent.
April pork export value averaged $58.45 per head
slaughtered, up 6 percent from a year ago, while the January-April
average increased 5 percent to $55.69.
Mexico was again the pacesetter for pork exports
in April, with volume reaching 79,019 mt -- up 34 percent from a year
ago and the second-largest on record. Export value to Mexico was $134.1
million, up 28 percent. Through the first four months of 2018, exports
to Mexico were 7 percent above last year's record volume pace at 282,675
mt, with value up 6 percent to $505.4 million.
Maintaining this pace will be challenging,
however, with Mexico announcing retaliatory tariffs on imports of most
U.S. pork products effective June 5. The tariff rate on chilled and
frozen pork muscle cuts is 10 percent until July 5, when it is set to
increase to 20 percent.
"The outstanding April performance for pork
exports to Mexico really underscores the importance of this market to
the U.S. industry and how it has been such a reliable trading partner
for hams, picnics and other pork cuts," said USMEF President and CEO Dan
Halstrom. "USMEF will continue to emphasize the quality and consistency
of U.S. pork to red meat customers in Mexico and make every effort to
help U.S. suppliers retain their business. But make no mistake about it,
the U.S. industry is going to have to fend off competitors who suddenly
have a significant tariff rate advantage and see a clear opening into
the Mexican market."
Pork exports to South Korea continued to build
momentum in April, with volume (25,370 mt, up 74 percent) and value
($74.1 million, up 81 percent) increasing significantly from a year ago.
Through April, exports to Korea are on a record pace, climbing 44
percent in volume to 94,888 mt, valued at $276.1 million (up 55
percent). Strong growth in consumer demand and duty-free access under
the Korea-U.S. Free Trade Agreement (KORUS) have fueled a rapidly
expanding presence for U.S. pork in Korea.
While pork exports to the China/Hong Kong region
were below year-ago levels in April, shipments remained relatively
strong despite the additional 25 percent tariff on U.S. pork that took
effect April 2. It is likely, however, that the trade impact will show
up more dramatically in May export data and in coming months. The tariff
increase essentially tripled China's standard rate on frozen pork
imports, taking it from 12 percent to 37 percent (the increase does not
apply to Hong Kong, which still charges zero duty). April exports to
China/Hong Kong were 41,567 mt, down 14 percent from a year ago, but
slipped only slightly in value to $95.9 million. For January through
April, exports to China/Hong Kong were 15 percent below last year's pace
in volume (153,248 mt) but steady in value at $356.6 million.
"It is encouraging to see that pork volumes to
China/Hong Kong held up fairly well in April, but the tariff
disadvantage is still having a negative impact on the U.S. industry and
has pressured prices for key export items," Halstrom noted. "It's
another situation in which our competitors are capitalizing on the extra
cost associated with importing U.S. pork."
For January through April, other highlights for U.S. pork include:
•Exports to leading value market Japan were 1
percent below last year's pace in volume (132,534 mt) but increased 1
percent in value ($544.8 million). This included a 5 percent decrease in
chilled pork volume (68,532 mt), valued at $330 million (down 1
percent).
•Strong growth in Colombia pushed pork exports
to South America up 23 percent from a year ago in volume (39,520 mt) and
24 percent in value ($96.7 million).
•Led by mainstay markets Honduras and Guatemala
and sharply higher shipments to Panama, exports to Central America
climbed 23 percent from a year ago in volume (26,459 mt) and 27 percent
in value ($63.3 million).
•Pork exports achieved solid growth in the
Philippines and more than doubled from a year ago to Vietnam, as exports
to the ASEAN region increased 20 percent in volume (15,435 mt) and 31
percent in value ($43.8 million).
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