Typically, activity in cattle country will be limited to the pre-holiday assessment of ready fed steer and heifer supplies. The late Friday cash trade looked light to moderate. Live sales in the South were mostly steady at $119. Dressed deals in parts of the North were marked at $188, roughly $1 higher than last week's weighted average basis Nebraska. Look for the new offering to be about steady. The bigger question may involve the exact hunger of the packers as they anticipate the disrupted holiday slaughter schedules ahead. Positively, processing margins remain very attractive. At any rate, bids, asking prices and trigger-pulling are likely to stay pretty foggy until at least midweek. Live and feeder futures seem staged to open the week in slow gear and with mixed prices.
The cash hog trade seem poised to resume work Monday with bids steady to $1 lower. There's plenty of product on the table as we move toward Christmas and New Year's. Last week's chain delivered as many as 2.612 million carcasses. We incorrectly stated on Friday that this was an all-time total. The record still stands several thousand above this high watermark. Nevertheless, it obviously represents a formidable demand challenge this week and next, exactly at a time when many consumers and most HRI venues already have their larders filled and ready for holiday action. Despite the standard slowdown of late December, don't be surprised if packers take another run at 2.6 million this week (the numbers are out there and processing margins are attractively heaped under the tree). Lean futures will probably open moderately lower with early-week buying cautious thanks to the late-year demand challenges and Friday's bearish slide in carcass value.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Although the choice beef cutout seems to be predictably fading through the holiday period ahead (probably hovering around $210 or lower through the end of 2018, many analysts are watching for it to regain strength in January, pushing back toward $215 or better.
| 1) |
Lining up slaughter needs for the Christmas ahead, meat packers are starting the week with smaller appetites and more modest procurement chores.
|
| 2) |
For the fourth week in a row, noncommercials added to their net-long position in live cattle futures, by 5,300 contracts (i.e., in the week of Dec. 11) to a total of 85,300.
| 2) |
While the increase in total beef production in 2019 could be somewhat smaller this this year, cow liquidation is expected to continue. 2018 beef cow slaughter is projected nearly 8.5% above year ago, with dairy cow slaughter up about 5%. Another increase in cow slaughter is expected for 2019.
|
| 3) |
There are talks of China halting the tariff increases last week, although facts are still emerging. More specifically, the relighting of the soybean promises to eventually fit well with renewed strength in the U.S./China pork trade.
| 3) |
The pork carcass value closed sharply lower on Friday, clobbered by struggling demand for picnics, hams and bellies.
|
| 4) |
If the spring and summer pig crops are actually revised lower by †he pending quarterly snout-count, the unusually tall Feb lean premium could actually work to inspire greater spot cash confidence.
| 4) |
Although virtually all agree that supply expectations are for record levels of hogs ahead, late 2018 slaughter totals simply have confirmed lesser magnitude than originally impressed by the prior two pig crop quarters. Due out Thursday, the Dec. 1 Hogs & Pigs report threatens to contain plenty of revisions. Such uncertainty may discourage pre-report board buying despite the premium of new spot Feb lean futures.
|
CATTLE: (Quartz) -- For the same reason many American farmers dislike president Trump's trade wars, the Olive Gardens, Applebees, and Texas Roadhouses sprinkled across the country love them. Trump's tit-for-tat tariffs are making meat a lot cheaper to buy, which in turn has allowed chain restaurants to implement sweeter dining deals as a way to lure people through their front doors.
Olive Garden is promoting a $8.99 dinner special. McDonald's is pushing a new $6 meal that includes a sandwich, drink, fries, and a pie. At Applebee's soon you'll be able to get an "all-you-can-eat" riblet dinner, or you can choose a new two-meat combination dinner for $12.99, according to Bloomberg.
Because the US implemented tariffs on Mexican metal going into the US, the Mexican government in July slapped a 20% tariff (pdf) on American chilled and frozen pork. In a similar retaliatory measure, China in April put the total tariffs and taxes on US pork at 78% (pdf), as well as a new tariff on US soybeans, which are a main component in animal feed.
Mexico and China are the US pork industry's first- and third-largest export markets, respectively. With tariffs in place, the US is doing less business with them, which has led to a glut in pork and soybean supplies. It's driven down prices, which is great for consumers but bad for the businesses that produce those commodities.
In November, the US Meat Export Federation took stock of the year, noting that tough times are likely ahead for the pork market. "Pork exports have also held up (pdf) relatively well, but unfortunately the obstacles US pork faces in China and Mexico are putting a lot of pressure on export value," the group said in a statement.
HOGS: (National Hog Farmer) -- The world needs the United States, and the United States needs the world.
American farmers know full well how we are in a global economy, and that has become even more evident as we are deep in "tariff times." The U.S. pork industry needs the global market to eat up our pork, as we were nearing 27% of U.S. pork production heading to export markets. We need more of that to continue as pork production increases here and the appetite for pork grows there.
The world wants pork, and we all know U.S. pork is the best to be found. With the reworked North American Free Trade Agreement, now called the U.S.-Mexico-Canada Agreement or USMCA, and the Trump-Xi trade war truce, most of the attention has been on trade with Mexico, Canada and China. Yes, those are key customers for U.S. pork and other American-made products, but let's not forget about the maybe smaller, but also important markets.
By now, hopefully you have read the account of South Dakota State University's Bob Thaler's experience in Vietnam. He was there for five months through a Fulbright scholarship earlier this year, just the latest of multiple times he has visited the country since 2009. Since his first trip, he has seen the country of almost 100 million people change, at least in the economic structure of the populace. Increasing wealth of a population usually results in people wanting to improve their diets, and that usually parlays into an increased appetite for protein. For Asians, that usually means a hunger for pork.
Though Thaler says the Vietnamese swine production resembles the U.S. systems of the 1980s, there has been an influx of larger operations, making the country self-sufficient in pork production. While pork production systems in Vietnam are growing, the farms remain small, 2 to 3 acres for the entire farm. This means they are reliant on other sources to feed their growing swine herd, currently the top importer of U.S. distiller's dried grains with solubles, and a top five importer of soybeans. As of 2017, Vietnam is the No. 6 market for U.S corn, and that hunger has grown 92% since 2013. Feed-grade wheat comes from Australia.
Though they are pork self-sufficient, Thaler says pork is No. 1, 2 and 3 for desired meat. Not to discredit the quality of Vietnamese pork, U.S. pork products could find a place on Asian tables with the right amount of sales spin. The National Pork Board and the U.S. Meat Export Federation, and other such organizations, are not sitting idly by waiting for the USMCA to get ironed out and the U.S.-China trade war to actually end. Global markets for U.S. pork, markets such as Vietnam, no matter how big or how small, are being sought out. A small sale Monday, may become a major player in the future. The Vietnamese market for pork would not replace that of any of our major pork customers, but every little bit helps.
We all need each other to make the global marketplace go around
 |
| #completecalfcare |
No comments:
Post a Comment