Well, here we are again. Despite last week's
smaller trade volume total, no one apparently had problems holding their
breath through the week, hoping that the other side would be forced to
come up for air first. But there must be plenty of blue faces in the
country at this point, forcing the development of at least moderate
business sometime between late morning and late afternoon. Look for
opening bids around $108 live and $170 to $173 dressed, well below
asking prices of $114 to $115 live and $180 plus in the North.
The July 1 Cattle on Feed report will be
released at 2 p.m. CT Friday. Generally speaking, analysts expect on
feed to be up 4%, placed in June to be up 1% to 2%; marketed in June to
be up 1%. At the same time, the midyear cattle inventory will be
unveiled. Total cattle numbers should be larger than last summer, but by
less than 1%. Beef cow totals are likely to be 1% larger, and the 2018
calves should total close to 36.5 million head, roughly 1.5% larger than
the 2017 crop. Live and feeder futures seem staged to open on a mixed
basis as traders position ahead of cash news and new USDA data.
Hog buyers have been swinging the hammer quite
effectively through the week, consistently lowering the value of cash
sales and moving acceptable numbers in the process. So it makes sense to
expect further price pressure Friday. Processing margins have
definitely improved through the week (just as finishing-floor margins
have consistently deteriorated), and that explains in part why
Saturday's kill is expected to be as large as 123,000 head. Lean futures
will probably open with uneven price action thanks to both long
liquidation and short-covering.
| BULL SIDE | BEAR SIDE | ||
| 1) | Actual beef shipments exports totaled 19,600 metric tons (MT) (a marketing-year high), up 28% from the previous and 11% from the prior four-week average. The primary destinations were Japan (6,300 MT), South Korea (5,900 MT), Mexico (2,000 MT), Taiwan (1,600 MT), and Canada (1,300 MT) | 1) |
Net beef export sales last week totaled 13,500 MT, down 17% from the previous week and 16% from the prior four-week average.
|
| 2) |
Net pork export sales last week
jumped to 19,700 MT, up noticeably from the previous week and up 33%
from the prior four-week average. At the same time, actual pork exports
totaled 18,700 MT, up 1% from the previous week and 3% from the prior
four-week average.
|
2) |
For the week ending July 7, cattle
carcass weights kept walking higher: all cattle averaged 810 pounds, 5
pounds bigger than the previous week and only 1 pound under 2017; steers
averaged 867 pounds, up 2 pounds from the prior year and 1 pound
greater than last year; heifers averaged 797 pounds, 5 pounds heftier
than the previous week and 7 pounds larger 2017.
|
| 3) |
The pork carcass value close moderately higher on Thursday with all primals gaining ground except the rib and the butt.
|
3) |
The cash hog trade took another hit
Thursday (i.e., the national dressed lost $1.32), further proof that
market hog numbers are already beginning to be difficult to manage.
|
| 4) |
The bellies firmed on Wednesday and
Thursday, after trending flat for a few days, signaling the gains are
not over yet for the summer, with another two weeks of support still
likely.
|
4) |
This week is still on pace for a
2.31-million-head harvest level, almost 5% larger than a year ago.
Weekly hog harvest levels are forecast to increase into fall, averaging
well above year-prior levels.
|
OTHER MARKET SENSITIVE NEWS
CATTLE: (The Cattle Site) -- Promoting US beef
tri-tip as a new steak cut in the Taiwanese market and working to
increase US beef sales for the country's foodservice operators, USMEF
organized "2018 Steaklicious US Beef Steak Month".
The campaign, which involved more than 100
restaurants in Taipei City, New Taipei City and Taichung City, was
funded by the Texas Beef Council and the Beef Checkoff Program.
"The goal was to reach a wider audience and
deliver more tailored messages to them about US beef and, specifically,
US beef steak," said Davis Wu, USMEF director in Taiwan.
"We cooperated with more than 40 foodservice
brands classified into four categories separated by price range and
brand type. Each category -- Steak For You, My Happiness Steak Time,
Special Steak Menu and Secret Edition Steak -- had a specially-designed
promotion throughout the month-long campaign."
According to Mr Wu, Taiwanese consumers have two
primary associations when it comes to US beef: grain-fed deliciousness
and versatility. US beef steak addresses both of those qualities.
"That's very important because steak has become highly popular among consumers in Taiwan," he said.
"We've had foodservice operators tell us they
serve steak items in their restaurants merely because of the feedback
from customers.
"Even though the price of a steak is usually higher than other meat dishes in most restaurants, it remains in high demand."
This affinity for steak led USMEF to develop
"Steaklicious" as the name of its first steak-themed promotion in
Taiwan. A press conference was held at a participating steakhouse prior
to the launch, with journalists from 23 media outlets invited.
A chef commissioned by USMEF demonstrated US beef tri-tip steak and more than 40 media references to the event resulted.
Specific promotions for the campaign's four categories were as follows:
•Steak For You featured a scratch card campaign
that allowed consumers to collect restaurant coupons while gaining
knowledge of USDA's beef grading system.
•My Happiness Steak Time included an online
interactive game in which consumers received customized recommendations
on individual restaurants, along with coupons to the restaurant.
•Special Steak Menu took place at high-end steakhouses that provided steaks as the centerpiece of limited menus.
•Secret Edition Steak focused on US.beef
tri-tip, a new cut introduced to the market in 2018. Two new tri-tip
dishes and a promotional video helped with the launch.
USMEF built and managed an official "2018
Steaklicious! US Beef Steak Month" website to help publicize the
campaign: www.usbeefsteak.com.tw. Event information was posted on the
USMEF-Taiwan Facebook page. USMEF has worked diligently to take
advantage of the food culture in Taiwan, launching several successful
campaigns over the past few years, including Beef Bowl Month in 2015 and
2016, Barbecue Month in 2016 and 2017 and the Hot Pot Month in 2017.
Mr Wu confirmed that the Steaklicious campaign
had similar success, noting that foodservice operators surveyed after
the event overwhelmingly believed it strengthened the positive image of
US beef.
It also won over Taiwan's steak lovers.
"The managers of the restaurants reported sales
of steaks grew two to three times during the USMEF promotion," Mr Wu
said. "They believe our event played an important role and helped
influence customers to choose the US beef steak items on their menus."
HOGS: (Bloomberg.com) -- President Donald Trump
said he may prioritize a bilateral trade deal with Mexico over Canada
and that he's building a good rapport with Mexican President-elect
Andres Manuel Lopez Obrador.
The U.S. and Mexico are "getting closer" to
reaching a trade deal, and the administration may advance separate talks
with Canada later, Trump told reporters at the start of a cabinet
meeting in Washington on Wednesday. The president added that he and
newly elected Lopez Obrador are "doing great."
"I just wanted to let you know that we have had
very good session with Mexico, with the new president of Mexico -- who
won overwhelmingly -- and we're doing very well on our trade agreement,"
Trump said. "So we'll see what happens. We may do one separately with
the Mexico and we'll negotiate with Canada at a later time. But we're
having very good discussions with Mexico."
The Mexican peso reversed earlier losses on Wednesday after Trump's comments.
Trump said earlier this year he may break up
talks for a new North American Free Trade Agreement into separate tracks
with Canada and Mexico. Officials from Mexico and Canada have expressed
support for a three-country deal. The three countries have failed to
nail down a deal to revamp the pact over almost a year of talks, with
wide differences remaining over key issues such as auto-content rules
and a sunset clause.
High-level negotiations were paused in mid-May
to allow the Mexican election process to play out. The three countries
are expected to make a push to advance the talks over the summer.
Mexican Economy Minister Ildefonso Guajardo said
on Wednesday he'll travel to Washington next week for ministerial-level
Nafta talks. U.S. Trade Representative Robert Lighthizer and Mexican
officials are in constant contact, according to a USTR spokesperson who
declined to be identified in an emailed response for a comment. The
spokesperson didn't mention interactions with Canadian counterparts.
Top Trump administration officials visited
Mexico City last week to meet the current and incoming administrations,
providing the first chance for Lopez Obrador to set a tone for
U.S.-Mexico ties after the July 1 election. The visitors included
Secretary of State Michael Pompeo, Treasury Secretary Steven Mnuchin,
Secretary of Homeland Security Kirstjen Nielsen and White House senior
adviser Jared Kushner. Lopez Obrador takes office Dec. 1.
Members of Lopez Obrador's Nafta team are
working with the Pena Nieto government as consultants for the talks
until the new administration takes over, Guajardo said last week.
White House economic adviser Larry Kudlow on
Wednesday said that there's been "good progress" in talks with Mexico,
which are paving a "promising avenue." He declined to elaborate on
specific issues. "We're having very productive talks with Mexico,"
Kudlow said at the CNBC Institutional Investor Delivering Alpha
conference in New York.
Trump on Wednesday mentioned Canada as an
example of a country that treats the U.S. unfairly on trade,
particularly over agriculture.
"We're breaking down barriers so that our
farmers can sell their goods to other countries like they sell their
goods to us," Trump said. "We're doing it as rapidly as possible."
Agriculture Secretary Sonny Perdue, speaking at
the same event as Trump, lauded the president's trade moves and said
farmers understand the president and his goals.
"I think your farmers understand that you're the
first one to attack this," Perdue said. "They're very anxiously
awaiting the win and they hope that the deal with Mexico and then Canada
can come along very quickly behind that. They're with you."
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