The door on the feedlot trade seems to be narrowing. Opening bids should start out around $110to $114 live and $178 to $180 dressed. Yet bullish asking prices could easily delay significant trade volume until sometime Friday. Live and feeder futures are likely to open moderately higher, supported by appreciating carcass value and bullish technical advances.
Hog buyers seem staged to resume procurement chores with bids steady to $1 lower. Saturday's kill could easily exceed 200,000 head given strong packer margins and generous country offerings. Lean futures should open moderately lower in light volume.
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The wholesale beef margins continue to be on a roll. Carcass value strength grew further on Wednesday, increasing the likelihood that cattle buyers will ultimately be willing to spend more for the next round of ready steers and heifers.
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Further increases in live cattle open interest on Tuesday put the numbers up by a little over 8,000 in the first two days of the week to a total near 345,000 contracts. This is the highest since late May. The contract high in December of $119.75 will provide considerable overhead resistance.
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Given new spot December live cattle, the premium structure in the futures market will continue to encourage producers to resist lower bids from the packers.
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The two-day total on boxed beef sales of choice and select cuts is just 129 loads, the lowest since late September of last year. Sales are especially slow on loins and chucks.
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During the week ending Oct. 27, U.S. hatcheries set 219 million eggs in incubators, down slightly from a year ago. At the same time, broiler growers placed 174 million chicks for meat production, down slightly from a year ago.
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The pork carcass value dropped hard on Wednesday with all primals loosing significant price territory except the butt.
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While bearish supply and demand realities currently point toward bearish pork production margins, country profits could surface if African swine fever in China can truly create additional demand for world pork redistribution.
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For the week ending Oct. 27, Iowa barrows and gilts averaged 284.4 pounds, .5 lb. heavier than the prior week and .4 lb. bigger than 2017.
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CATTLE: (Dow Jones) -- Australia becomes the sixth country to ratify the 11-nation pact, triggering tariff cuts as soon as December
A trade pact between 11 Pacific Rim nations will come into force this year after Australia became the sixth country to ratify it, nearly two years after President Trump withdrew the U.S. from talks.
The Trans-Pacific Partnership trade deal, agreed in March, is the largest free-trade agreement completed in Asia, and comes at a time of rising trade tensions between the U.S. and China.
The deal's backers say it may be the most important trade agreement reached in more than two decades, modernizing agreements to reflect the rise of digital trade, services and copyright in a fast-growing region that includes Japan and longtime U.S. allies.
Mr. Trump last year pulled the U.S. out of the original negotiation in one of his first acts as president, saying it would disadvantage U.S. workers. The agreement was backed by the Obama administration and many congressional Republicans, but died in the 2016 election season.
The 11 remaining nations that went on to agree to a revised deal -- Japan, Canada, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam -- pledged to lower barriers to trade of goods and services, as well as protecting intellectual property rights in a region of almost 500 million people accounting for about 13% of global GDP.
New Zealand's Trade Minister David Parker, whose country is coordinating the process, said the trade deal would start delivering tariff cuts as soon as December. It will remove tariffs on an estimated 95% of goods traded between member countries, which have a combined GDP of some $10 trillion. Brunei, Chile, Malaysia, Peru and Vietnam have yet to ratify the deal. But Australia's approval—the sixth after Canada, Singapore, New Zealand, Japan and Mexico—provided the necessary trigger for two rounds of tariff reductions starting December 30 and another early next year. The deal will also phase out duties on sensitive products such as agricultural imports in countries including Japan and Mexico. Many tariffs will fall to zero on the first day, while agricultural products will become duty free within three to seven years.
"I expect other signatories will come on board after the (deal) enters into force, as many are working hard to progress their applicable domestic procedures," said Mr. Parker in a statement Wednesday.
Longtime U.S. allies, including Japan, have pushed the deal as a way to counter Chinese economic influence in the region.
The U.S. president told lawmakers in April he had asked his advisers to study whether the U.S. should re-enter the TPP. But he pointed to a tough road ahead in any negotiations, saying in a tweet that he "would only join TPP if the deal were substantially better than the deal offered" to Mr. Obama.
HOGS: (Smithfield Foods) -- Ruling says trial judge's order fails First Amendment scrutiny, has "chilling effect" and "has already inflicted serious harm" A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit ruled unanimously Monday that the trial judge's gag order in the North Carolina hog farm nuisance lawsuits was an unconstitutional violation of the First Amendment to the U.S. Constitution. The panel granted the request by defendant Murphy-Brown LLC that the gag order be struck down.
In a strongly worded decision, the court wrote that "the gag order contravened the First Amendment in basic respects." They added:
"The gag order has already inflicted serious harm on parties, advocates, and potential witnesses alike. It has muted political engagement on a contested issue of great public and private consequence. It has hamstrung the exercise of First Amendment rights. Even in short doses, these harms are hostile to the First Amendment. Indeed, as petitioner notes, the threat of a gag order will hang over these trials as a sort of 'Sword of Damocles,' dangling by the thread of the court's displeasure...Its chilling effect is evident and unacceptable."
The panel's decision also said:
"The gag order harmed petitioner (Murphy-Brown). Petitioner has identified various attacks on its business practices and public policy involvement to which it could not respond while the gag order was in effect. It also could not respond to a flood of news coverage. The gag order assertedly forced petitioner into an untenable posture of silence, imposing real consequences above and beyond the particulars of the legal proceedings."
"The gag order harms farmers. North Carolina farmers...assert they are prohibited from commenting on what they perceive as the almost existential threat posed by large nuisance suit verdicts to an industry they claim provides some 46,000 jobs for North Carolina. The gag order in their view is forcing them into a posture of passivity at a time when they have every right to be outspoken."
The decision noted that District Court Judge Earl Britt, who issued the gag order on June 27, 2018, sought to rescind his order on August 31, 2018. The panel said the judge's attempt to rescind the gag order was "invalid...ill-advised...infirm" and "in error" because the order was already under appeal. The August 31, 2018 order "plainly undercut the court of appeals in the orderly exercise of its own jurisdiction." The panel directed the district court to vacate both the June 27, 2018 and August 31, 2018 orders: "The parties are to start from square one with respect to this issue under the guidance set forth in this opinion, and then only if exceptional circumstances warrant."
The imposition of the gag order was supported by the plaintiffs' attorneys in the lawsuits. They also defended the order on appeal to the Fourth Circuit.
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