It was the short trading day before Christmas
and all through the CME house, barely a trader was stirring not even a
day-trading mouse. Forgive this lame verse, but anticipating business on
Christmas Eve doesn't seem to deserve much more. Whatever futures
action we see Monday morning is scheduled to be cut short around noon
(CST), an hour before normal trading time.
Cattle buyers who aren't preoccupied with last
minute shopping and perfecting eggnog recipes may check out the size of
late-December showlists (we suspect the post-Christmas offering will be
about even with last week). But such an effort might be understandably
minimal. Along the same lines, the procurement energy of hog buyers is
likely to be running on low Monday morning with a few scattered bids
steady to $1 lower.
Needless to say, look for meat futures to open
narrowly mixed in light trade volume. A larger trading herd will no
doubt regroup on Wednesday, but many specs and commercials will no doubt
stay on break through the end of the year.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Beef cutouts closed sharply higher
on Friday, hopefully a small hint of packer anticipation regarding
renewed product strength once retailers begin to look beyond holiday
doldrums.
|
1) |
U.S. feedlots are not alone in
reporting large early-winter population (i.e., Dec. 1 cattle-on-feed
inventory was reported at 11.7 million head, 102% of a year ago and the
largest Dec. 1 feedlot inventory since 2011).
|
| 2) |
Sharp declines on ribs and
tenderloins were mostly offset by strength on the other portions of the
beef carcass, with the weekly average for the choice cutout declining by
just a half dollar last week (i.e., fairly impressive stability given
the awkward pre-holiday calendar). The grading report for the week of
Dec. 7 showed a new record level of prime grading at 11.03% of steer and
heifers slaughter. Even though historical grading specs have recently
changed vis-a-vis the determination of carcass aging, prime always sells
higher than choice.
|
2) |
CanFax released the Cattle on Feed
report for Alberta and Saskatchewan last week, documenting a Dec. 1
feedlot inventory of one million head was 107% of last year. Total
pounds of beef in freezers as of Nov. 30 were down slightly from the
previous month but up 6% from last year.
|
| 3) |
In the process of publishing the
Dec. 1 Hogs & Pigs report released last week, the USDA went through
more than a few erasures. Revisions were widespread over the prior
twelve months, all of them lower. Still producing a record number of
hogs for those relative quarters in history, producers are still in an
expansion mode but now appear to have started to slow down the strong
expansion growth in recent years.
|
3) |
At the same time, frozen pork
supplies were down 11% from the previous month but up 1% from last year.
Stocks of pork bellies were up 38% from last month and up 5% from last
year.
|
| 4) |
China's agriculture ministry on
Friday reported a new outbreak of African swine fever in the
southwestern province of Guizhou, which has killed 42 pigs on a farm of
156 pigs. China has already reported more than 90 cases of the incurable
disease since it was first detected in the country in early August.
|
4) |
Total frozen poultry supplies on Nov. 30, were down 13% from the previous month but up 2% from a year ago.
|
OTHER MARKET SENSITIVE NEWS
CATTLE:(Beef Magazine)-- International trade has
arguably been the most important hot-button issue facing agriculture in
2018. On any number of fronts, there's been concern about how tariffs
and trade negotiations will influence various commodities going forward.
And clearly, those concerns will continue to be pressing for
agriculture.
In the meantime, though, the beef industry has
seemingly slipped through the net of worry. And not only slipped
through, but actually prospered in the face of all that noise. USDA's
most recent tallies are up to date through October -- and beef's
performance is nothing short of stellar.
The beef complex has been able to generate $6.8
billion in exports through the first 10 months of the year. For some
context, that's nearly $1 billion ahead of 2017 on a year-over-year
basis. And it's clear that 2018 will establish a new annual record with
two months to go.
From a more tangible standpoint, it's equivalent
to an additional $363 per head for every fed steer and heifer marketed
through October. Accordingly, this week's illustration highlights what
those values mean to the fed market.
The $363 per head export value is equivalent to
roughly $27 per cwt, and at this pace will also be a new record. That's
an important premium that ultimately gets passed back up through the
value chain to stocker operators and cow-calf producers.
HOGS: (FarmJournal's Pork)-- It's hard to say
how the current trade truce between the U.S. and China will impact pork
trade for the next few months. Chenjun Pan, senior analyst with
RaboResearch, predicts some U.S. pork imports into China, but says there
is uncertainty around how much will be imported, due to weak demand.
China agreed to import a substantial amount of
U.S. products from Dec. 1, 2018 to March 1, 2019. Prior to 2018's tariff
troubles, pork was the second-largest U.S. agricultural export product
to China. Now, with the African swine fever (ASF) situation in China and
the approaching Spring Festival, many expect pork to be one of the
major agricultural products shipped from the U.S. to China during the
truce. However, the size of these shipments is in question because of a
weakening Chinese demand for pork.
Prices are staying high in the southern part of
the country due to a strong consumer preference for fresh meat rather
than frozen meat. Frozen meat can be supplied from the North at present,
so imported pork, which is frozen, cannot meet the market needs, Pan
says.
Currently northern China is experiencing an
oversupply of live hogs which cannot be transported, so these have to be
slaughtered in the region. The high storage levels are expected to take
a few more months to lower, meaning limited additional imports will be
needed before the end of the 90-day truce.
"Additional imports from the U.S. are possible
during the trade truce, but they will reflect political rather than
market needs," Pan says.
To date, nearly 100 cases of ASF have been
reported in China with no sign of the disease spread slowing down,
despite government measures. Because the Chinese hog industry relies on
the transportation of live hogs from north to south, the transport ban
hit the industry harder than the disease itself, she says.
"The price difference between northern and
southern China has been widening as a result of the uneven distribution
of hogs and slaughtering capacity, as there is surplus in the north and a
deficit in the south," she adds.
 |
| #completecalfcare |
No comments:
Post a Comment