Cash cattle potential will remain quite limited Tuesday with both bids and asking prices poorly defined. Our guess is that significant trade volume may not develop until the second half of the week. Live and feeder cattle should open on a mixed basis thanks to a combination of short-covering and long liquidation.
Look for cash hog bids to start out steady to $1 lower. Monday's base price was some lower, but not as much as the erosion seen last week. Perhaps numbers are becoming somewhat more manageable. Lean futures should also begin unevenly mixed with residual selling and short-covering.
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Beef cutouts closed sharply higher Monday with choice and select cutouts stronger by $2.60 and $1.37, respectively. Early-week box demand was described as "moderate to good."
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Cattle carcass weights are expected to continue increasing, with the year-over-year difference widening from late summer into early fall.
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Out-front boxed beef movement remains very impressive. According to the national comprehensive box report released Monday, box sales last week to be delivered in 22 days or more totaled 1,293 loads. Clearly, many are planning on decent beef demand after Labor Day.
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This week's Cattle on Feed report due out Friday afternoon is forecast to reveal larger year-over-year placements (probably 5% to 10% higher). While the Aug. 1 bunk line could be down modestly from the month before, the total should still be 4% to 5% over 2017 and record large for any August on record.
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China's Ministry of Agriculture said on Sunday that 88 hogs had died from African swine fever in the eastern city of Lianyungang, the third outbreak this month, as the highly-contagious disease threatened to spread through the world's biggest pig herd.
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Nearby lean hog futures may be running out of gas. For one thing, great uncertainty still hangs over tariff realities and the real future of Chinese demand for U.S. pork. Second, 100-day moving averages seem to represent tough overhead chart resistance.
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The pork carcass value closed moderately higher on Monday, supported by fresh cuts, picnics and hams.
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Bellies are still undergoing additional price corrections, losing handily throughout last week and into this week, with pricing getting cut in half the last four weeks.
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CATTLE: (American Farm Bureau Federation) -- The American Farm Bureau Federation and a broad coalition of business organizations have notified the federal district court in South Carolina they will appeal that court's ruling from Thursday that revived the overbroad, vague and illegal 2015 Waters of the United States Rule and made it the law of the land in 26 states. In a separate filing, the same coalition also notified a federal district court in Texas of the ruling by the court in South Carolina, urging the Texas-based court to issue a nationwide injunction against the illegal 2015 WOTUS Rule.
Two other federal district courts have already granted injunctions blocking the WOTUS Rule in a total of 24 states, citing immediate and "irreparable injuries" likely to result from the rule's implementation. "That is all the more true for the plaintiffs before this (Southern Texas) Court," the notice stated. "Allowing the WOTUS Rule to come into effect in 26 States will prove enormously disruptive to their operations, and indeed to the entire national economy."
Yesterday's decision out of South Carolina purports to block nationwide an Environmental Protection Agency rule that delayed application of the WOTUS Rule pending the agency's ongoing consideration of whether to repeal the rule. As a result of the court decision, the 2015 WOTUS Rule is now the law of the land in the 26 states that are not already protected by court injunctions preventing the rule's implementation while its lawfulness is decided by the courts.
Farmers, ranchers and others in those 26 states are now faced with "immediate irreparable harm," according to the Southern Texas filing. "Important and consequential national regulations like the WOTUS Rule should not apply differently depending on the happenstance of location." The groups urge the court not to allow a "crazy-quilt regulatory environment" and to grant a nationwide injunction against the 2015 WOTUS Rule "as expeditiously as possible."
HOGS: (KTIC) -- The North American Free Trade Agreement renegotiation effort passed the one-year anniversary this week. A year ago Thursday, the U.S., Canada and Mexico convened for the start of the renegotiation talks.
Now, the U.S. could be nearing a deal on NAFTA, at least with Mexico. Politico reports the political situation in both countries is such that each is more eager than ever to make a deal, setting up a scenario in which significant progress could be on the near horizon. Plus, the incremental progress, along with "good faith negotiations" between Mexico and the U.S. are offering signs of hope to U.S. farmers and business in the global trade arena.
Mexico says the list of items to resolve is "no longer a question of chapters, it's now a question of paragraphs and points." Meetings were scheduled to continue through the end of this week in Washington as negotiators seek an agreement, before moving on to striking a deal with Canada.
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