Look for bids and asking prices in feedlot country to start to take shape Wednesday morning. Showlists will surely be priced $2 to $3 higher as beef producers try hard to take advantage of appreciating beef carcass value. Having said that, significant trade volume may not develop until Thursday or Friday. Live and feeder cattle futures should open on a mixed basis with light trade volume.
The cash hog market is expected to resume business Wednesday with bids steady to $1 lower. Most expect that the week's kill will be seasonally large, possibly well over 2.6 million head. Lean hog futures are also expected to open on a mixed basis with nearby issues outperforming their deferred counterparts.
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Late October beef demand continues to look very impressive. Cutouts jumped significantly on Tuesday.
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Last week's cattle harvest increased to 633,000 head and a further increase above 640,000 head is expected for this week. Weekly cattle kill is projected to run modestly above year-ago levels through the fall with fewer steers and heifers in the mix being partly offset by more cows.
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| 2) |
Cattle carcass weights eased a bit during the week ending Oct. 13. Steer weights eased 4 pounds to 899 lbs. and were 3 lbs. heavier than last year. Heifer weights eased by 4 lbs. to 831 lbs., 12 lbs. above a year ago.
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The U.S. dollar index has edged above the August high and above 97.00 to the highest since June 2017.This represents bad news for U.S. ag exports.
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| 3) |
Margins moved sideways last week for packers, as there was only modest weakness in the cutout combined with similar weakness in the cash hog markets. Both are expected to ease further this week, on par with each other again, maintaining packer margins at this strong, double-digit level that's cash supportive.
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The continued spread of African swine fever in China is supportive but prospects of record-large hog supplies in the weeks ahead continue to weigh on the market.
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| 4) |
Late-year holiday ham demand still has considerable potential to support fourth quarter pork carcass value.
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Hog harvests likely will exceed 2.5 million for the next few weeks and continue to push new record highs into the fall and winter.
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CATTLE: (Oklahoma Farm Report) -- Several indications in the marketplace have been pointing to better beef demand thus far here in 2018. For example, many US customers on the international market have bought record levels of total beef pounds and at a higher value. Domestically, the exact numbers are a bit harder to pin down but seem to be doing well also. The numbers in the latest Cold Storage report, according to Extension Economist with Kansas State University Glynn Tonsor, are very encouraging.
"On the beef side, numbers are up 1% from the prior month and up 3% from the prior year. That's not surprising given the production values we have going on," Tonsor said. "To me, the fact those aren't up five to ten percent is the relevant point. So, I'd say that's good -- that's consistent with ongoing movement. I would summarize the beef numbers as an example that we are still moving product despite the fact that we're producing a lot. Indirectly, that's confirmation of a good demand situation."
Despite the positive numbers coming out in these reports -- Tonsor says there may be reason for concern in other areas outside of the beef market. Tonsor suggests the stock market and the recent volatility that has been observed is significant, given the implications. Although he is not to the point of raising any alarms, Tonsor does say that it is worth keeping an eye on in the event that any more cause for concern is raised.
"There is a host of grey clouds on the horizon that have people concerned. Discussions about increasing interest rates and the full impact of tariffs on our economy. Those types of things are underscoring volatility in the stock market and some of the uncertainty we've seen in markets is worth noting," he said...
HOGS: (Southeast AgNet) -- African swine fever could reshape the pork market in China.
A Rabobank report says the disease could accelerate a shift in pork production and boost import needs for 2019. Local supply shortages are being reported stemming from the ban on live hog transportation that was enacted to prevent further spread of the disease. The potential for radical change could "impact the international market," according to the report. Rabobank says China's pork imports in the first eight months of the year were down 0.6 percent from the year before and jumped ten percent year over year in August. The Chinese government said the country's sow herd declined 4.8 percent this year in August, which Rabobank said may be overestimated.
The decline in domestic pork production could allow other markets, including the United States, to become bigger suppliers of pork to China, pending the outcome of trade disputes.
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