Look for the potential of the cash cattle market
to start taking on some definition in terms of preliminary bids and
asking prices. The situation at midweek seems so balanced between bulls
and bears that significant bids may not surface until Thursday or
Friday. Live and feeder futures should open on a mixed basis with both
sides reluctant to press their cases until someone gets a better handle
on cash potential.
The cash hog trade will be under pressure once
again Wednesday. Expect opening bids to be at least steady to $1 lower.
Week-to-date slaughter is already running substantially above last
week's number. Indeed, some actually believe the total kill for the week
could be dangerously close to 2.5 million head. Lean futures should
open at least moderately lower, checked by a further deterioration of
fundamentals.
| BULL SIDE | BEAR SIDE | ||
| 1) |
The October/December live cattle
spread remains wider than the previous five years for this point in late
summer. Part of this late-year optimism seems tied to assumptions that
feedlot placement in the late summer/early fall will slow significantly.
|
1) |
Cattle bulls may want to talk the
talk, but few seem to want to walk the walk. Live cattle open interest
has declined under 300,000, near the lowest levels since before
Christmas 2016.
|
| 2) |
Favorable beef processing margins are expected to continue encouraging packers to pull on available fed cattle inventories.
|
2) |
Seasonally, August live cattle tends to strengthen into mid-August and then deteriorate toward expiration.
|
| 3) |
African swine fever problems in
China seem to be slowly growing. Nearly 15,000 pigs have been culled
after an outbreak of African swine fever in the city of Lianyungang, in
east China's Jiangsu Province, local authorities said Tuesday.
|
3) |
Another alarming thing about
imploding hog prices this month is that hog slaughter has actually been
lower than indicated by USDA's June 1 market hog inventory estimates.
The market hog numbers implied that June-August market hog slaughter
would be up 3.3%, and thus far, summer hog slaughter has been up only
2.3%. How low would hog prices have dropped if slaughter had been 1%
above expectations rather than 1% below?
|
| 4) |
Since hog prices this summer started
to fall out of bed extraordinarily early this year, the premium status
of lean futures may be suggesting that market lows this fall will also
come and go much faster than normal.
|
4) |
The pork carcass value lost nearly a buck on Tuesday, pressured by softer demand for loins, picnics and hams.
|
OTHER MARKET SENSITIVE NEWS
CATTLE: (QRS Web) -- Although A&W locations
in the U.S. are not offering meat-free burgers, Canadian units added the
Beyond Meat Burger to the menu in July. The burgers-- made from
so-called pulse crops, such as peas and mung beans rich in protein--
have been so popular that they are out of stock as of late last week,
according to a press release.
The burgers should be back in restaurants over
"the next few weeks," A&W Canada said. It has also invited customers
to sign up for a Beyond Meat Mailing List to get immediate word of when
the meat-alternative concoctions return.
"We're working hard to offer guests the
mouthwatering burger again very soon, and to ensure that when it's back,
it's back for good," said A&W Canada President and CEO Susan
Senecal, said in the release. "The Beyond Meat Burger will be a
permanent menu item and we are delighted that Canadians are as excited
about it as we are."
A&W Canada introduced the burger alternative
on July 9 and offers it with lettuce, tomato, red onion, pickles,
ketchup, mustard, and mayo.
In the U.S. A&W Vice President of Marketing
Sarah Blasi said the separately owned chain and its leadership is
watching what's happening with the brand's offering in Canada and
elsewhere.
"We are monitoring the trend towards
meatless/vegan options and are also reviewing the Beyond Burger for
possible introduction in the U.S., but have yet to make a commitment,"
Blasi said in an email to QSRweb. "It is something we are reviewing with
our franchise community. We know Canada has been very successful with
this burger and we support their decision to add this to their menu.
A&W in the States has begun a number of burger-quality upgrades, which she said has two phases.
"The Phase 1 changes we are making at this time
are operational, (and) are improving the end-quality of the beef patty,"
Blasi said. "Those changes are rolling out in the field as we speak.
"Phase 2 is reviewing and improving the quality
of the beef itself, and that's a bit longer road because of the high
hurdle we've set as a target internally. We are working with our
suppliers and supply chain to review the antibiotics and hormones in the
beef we use.
"We are trying to stick within the '100 percent
U.S. Beef' guardrails we've set, while still improving the quality. For
the most part, our competitors that have made (the) strongest beef
claims are not getting their meat from the U.S because of supply
limitations. High quality is a long-term defensible proposition, and
that is our focus."
A&W is a worldwide chain and has a particularly strong presence abroad and is quickly gaining steam again on the U.S. front.
HOGS:(Sioux City Journal) -- Pork processor
Sioux-Preme Packing Co. is planning a $29 million addition to its Sioux
Center facility that will add 50 jobs.
The project received approval for $894,403 in tax credits from the Iowa Economic Development Authority Board on Friday.
The company plans to construct a two-story,
50,000-square-foot addition to its existing facility south of Sioux
Center, which currently employs 191 workers. The expansion will include
automated pork cutting equipment and water jet cutting technology that
will "position Sioux-Preme to compete in the rapidly growing antibiotic
free and organic markets domestically and internationally," according to
IEDA agenda documents.
Construction of the building is expected to be
complete in January, with equipment installation by July and testing by
September of next year.
Sioux-Preme started in 1970 as a supplier to
domestic and international customers. It purchased its first Iowa
facility in 1995 and began processing pork hams, rib, bellies, loins and
shoulders, as well as started antibiotic-free or breed-specific lines.
The company was acquired by Perdue Farms in 2015
as part of its acquisition of Natural Food Holdings and its brands.
Sioux-Preme's product now goes to upscale restaurants, retail food
markets and countries including China, Japan, Mexico and Canada.
The IEDA board on Friday approved the award
through the High Quality Jobs program. Ten of the 50 jobs qualified for
the program.
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