The Dec. 1 Cattle on Feed report turned out to
be well advertised, and we don't expect much reaction from the board
Friday morning. November placement was a bit larger than expected, but
hardly enough to ruffle any feathers. Rather, traders will be slowly
focusing on the late-week development of feedlot cash. Indeed, it
doesn't seem likely with Christmas vacation close at hand that buyers
and sellers will spend a great deal of time actually settling on cash
terms. Asking prices should remain firm at $120 to $122 live in the
South and $90 plus dressed in the North. Live and feeder futures seem
staged to open narrowly mixed in slow volume.
At the same time, the quarterly snout-count came
in quite close to trade expectations, and it's tough to imagine
significant CME price waves in its wake. Yes, both breeding inventory
and market hog inventories were down from last quarter but set new
fourth quarter records, at 6.33 million head and 68.2 million head,
respectively. But defenders of the tall 2019 lean premiums have traded
such likelihoods for many months. A sudden round of supply fears seems
unlikely. Look for late-week hog buyers to resume activity Friday with
bids steady to $1 lower. Lean contracts also appear geared to begin with
uneven price action with many players probably already gone for the
holidays.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Beef cutouts closed moderately higher Thursday and demand was described as "good on light offerings."
|
1) |
Though feedlot managers have enjoyed
excellent late-week leverage over more than a month of Fridays, country
bargaining power could be compromised Friday given the limited packer
appetite through the holidays ahead.
|
| 2) |
For the week ended Dec. 8, cattle
carcass weight fell, probably marking a seasonal top. Steers averaged
896 lbs., 3 lbs. lighter than the prior week; heifers averaged 835 lbs.,
also 3 lbs. smaller than the week before.
|
2) |
If retailers pay any attention to
the historical calendar, we probably remain 10 days to two weeks away
from a serious reassessment of red meat needs and rejuvenated buying
strategies.
|
| 3) |
The pork carcass value recovered on Thursday with the help of better demand for all primals except the rib.
|
3) |
The Dec. 1 Hogs & Pigs report
confirmed record pork supplies as we move into the next several quarters
of 2019. No surprises. Yet given the premiums in deferred lean futures,
the document supply realities certainly puts the emphasis squarely on
strong pork demand next year as well as the importance of bullish
implications of Africa swine fever.
|
| 4) |
China on Thursday said it had
confirmed a new outbreak of African swine fever in Fujian province, as
the highly contagious disease spreads through the world's largest hog
herd. China has already reported more than 90 cases of the incurable
disease since it was first detected in the country in early August.
|
4) |
Now that new quarterly data is
clearly on the table, the seasonal tendency is for February lean hog
futures to move lower into contract expiration.
|
OTHER MARKET SENSITIVE NEWS
CATTLE:(Successful Farming) -- The 2018 farm
bill is nearly official, having passed the House and Senate without the
vote of one if its stalwart supporters. After playing a key role in
development of the bill, Iowa Senator Charles Grassley voted "no" in the
final tally.
"I don't want it to sound like I think [Senator
Pat] Roberts isn't a good Ag Committee Chair or isn't fighting hard
enough for farmers. It's a good farm bill, and he and Senator Debbie
Stabenow, the Ranking Democrat on the Ag Committee, did a good job. It's
a bi-partisan bill and passed with a bi-partisan vote," Grassley
offered in his weekly Capitol Hill Report. "But there was an issue that
was left out, and if I had voted for the bill, I wouldn't have been
taken seriously again."
For the past three Farm Bills, Grassley has
advocated for caps on farm subsidies. In 2008, 2014, and again in 2018,
he introduced amendments that would limit payments to $125,000 per year
per person, $250,000 per couple, to be paid to one manager per farm --
one that is actively engaged in the farming operation.
All three rounds the measure was cut from the final version.
What we're doing is subsidizing the bigger
farmers to get bigger and making it harder for the young farmer to get
started," Grassley said, "when we should be protecting the small and
mid-sized guy."
The new bill eliminates the means test and makes
extended family members eligible to collect farm subsidies, sometimes
with multiple payees per farm, even if they do not directly work on the
farm.
Grassley, a member of the Senate Ag Committee,
and one of 13 Republican Senators to vote against the bill, was not
invited to participate in the Conference Committee that hammered out the
final bill. But last fall, he and other senators sent a letter to the
committee stating: "Current law allows for most farmers who organize
their farms as general partnerships or joint ventures to designate an
unlimited number of farm managers for the purposes of collecting
additional farm subsidies. The impact of this loophole is that large
farms crowd out young and beginning farmers by increasing the price of
land and cash rent. The fact that few young people are starting farms
and staying in rural America is not surprising considering they have to
compete with established farmers who have millions in equity and access
to unlimited farm subsidies."
According to the USDA, 77% of commodity
subsidies, around $158 billion, goes to farms in the top 10% of sales.
In addition, with more than half of the nation's farmland rented, the
subsidies often benefit the landowner rather than the farmer. Grassley
criticized the "dark rooms of conference committee meetings" and said
Washington lobby groups and their members are the real winners. As of
the September 30 lobbying disclosure deadline, more than 500 groups and
companies hired lobbyists in 2017 and 2018 to advocate for them during
farm bill negotiations, making it the fourth most-lobbied bill in the
115th Congress.
The farm bill does offer much for farmers to
celebrate. Lawmakers were able to protect crop insurance, an element
most farmers claim is vital, and allows for smoother navigation of the
PLC and ARC programs as well as expanded funding of the popular EQIP
program. It also legalizes hemp production, allowing the USDA to
regulate the plant and giving hemp farmers access to government
programs. Hemp proponents claim the plant has potential for products
ranging from clothing to biodegradable Legos.
There are changes to the Conservation Reserve
Program (CRP), including expanding the program by 3 million acres to 27
million acres nationwide. "The bill corrects a couple of things from the
2014 Farm Bill," Grassley explained. "In the old version, the
government could pay more than cash renters could pay, and farmers could
put whole farms in the program." Both of those measures made available
pasture in short supply, particularly in the Midwest.
In the 2018 version, government payments are
capped at 80% of the average cash rent for the area, and whole farms are
no longer allowed. "The point of the CRP program is to help the
environment by targeting environmentally fragile land," said Grassley.
"When the whole farm is put in the program, that means the productive
land is put in, too, not just the environmentally fragile land. That's
not the best use of the government's money."
The $867 billion farm bill passed the Senate
87-13 and the House 386-47, without the work requirements for SNAP the
House originally wanted.
HOGS:(thepigsite.com) -- With the recent surge
in cases of African swine fever around the world, and its prevalence in
Eastern Europe, stakeholders in the agricultural sector are keener than
ever to gain a deeper insight into the causes, management and
implications of these outbreaks.
As the name indicates, African swine fever (ASF)
originally comes from Africa, where it is endemic. It first appeared in
Eastern Europe in Georgia in 2007, and from there the virus spread to
Russia and other countries, reaching the European Union in 2014. Now,
following the 2018 outbreak of ASF in Belgium, there is a pressing need
to find the best measures for both preventing and controlling the
disease.
ASF is a viral disease that only wild boars and
domestic pigs are susceptible to. No vaccine against African swine fever
is available. Research into the spread of ASF in Eastern Europe
indicates that human intervention played a major role, which is
suggested by the often large distances between outbreaks.
The virus spreads directly from animal to animal
and indirectly through contaminated materials, biting flies and ticks
(in which the virus multiplies). It is also easy for the virus to enter
into the feed chain via food waste or offal from infected pigs. The
diagram below shows how animals can become infected.
The incubation period for ASF varies from
between two and 10 days, depending on the virulence of the virus.
Laboratory tests are always essential to make a definitive diagnosis.
Clinical symptoms may look similar to those of classical swine fever:
fever, listless pigs, a lack of appetite, red skin, (bloody) diarrhoea,
vomiting. Bleeding, cyanosis (blue skin) and necrosis of parts of the
skin (blackening) may occur. Sows may abort upon infection. Pigs may
suddenly die without symptoms being observed beforehand.
Domestic pigs can experience mortality of up to
100 percent, and 30 and 70 percent for lower mortality-rate strains.
Pigs surviving the acute phase may remain carriers of the virus for
several months; symptoms may disappear but can return at a later stage.
The virus may be found in sick animals in the
blood, tonsils, lymph nodes, spleen and liver, among other places.
Laboratory tests are always essential to make a definitive diagnosis.
 |
| #completecalfcare |
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