Cattle buyers and sellers would probably like to conclude business this week as soon as possible given the holiday schedule ahead. Yet that's not likely to mean an active Tuesday. Bids and asking prices should remain largely hidden until midweek. Smaller packer appetites may simply be offset by smaller feedlot offerings. Processing margins remain very solid, even though retail needs may slow through the end of the year. Live and feeder futures should open Tuesday on a mixed basis in slow pre-cash, pre-on feed volume.
Hog buyers should be thinking lower again Tuesday, working the path of least resistance given generally bearish fundamentals. Needless to say, they have plenty of live animals to choose from while wholesale demand is adequate (i.e., ensuring decent processing margins) without being unquestionable. Most analysts are betting that the USDA will confirm hog herd expansion by 2% to 3%. Clearly, 2019 lean premiums are already assuming that stronger global pork demand is waiting in the wings. Lean futures are also likely to open on both sides of unchanged tied to follow-through selling and profit-taking.
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The new fed cattle offering on display appears to be significantly smaller than last week, especially in Texas and Kansas.
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Although last week's total cattle slaughter was down by 13,000 head from the strong level of the previous week, it was 26,000 head above last year. The cattle kill is expected to be around 640,000 head or so this week. In other words, the strength of pre-holiday demand will remain important through the end of the week.
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Beef cutouts have opened the week significantly higher with early-week box movement described as "moderate to fairly good."
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Seasonally, December live cattle futures tends to increase toward Christmas, before dropping lower into the end of the year.
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The Dec. 1 on feed report due out Thursday is expected to be somewhat friendly in terms of placement activity with November in-movement 6% to 7% below the late fall of 2017.
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Beside the discouraging discount of the cash hog market relative to deferred futures, specs may be reluctant to embrace such tall 2019 premiums ahead of the uncertainty attending Thursday's Hogs & Pigs report.
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China confirmed two new cases of African swine fever, as the disease continues to spread through the world's largest hog herd, the Ministry of Agriculture and Rural Affairs said late on Sunday in a statement on its website.
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For the week ending Dec. 11 noncommercial traders reduced their long position in lean hog futures by 1,000 contracts, now long 22,100 contracts.
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CATTLE: (Feedstuffs) -- Agricultural Marketing Service (AMS) announced Dec. 14 that it has reached a consent decision with JBS USA Food Company, also known as Swift Beef Company (JBS Swift), Greeley, Colo., for alleged violations of the Packers and Stockyards (P&S) Act. The consent decision was signed by Acting Chief Administrative Law Judge Channing D. Strother, on November 21, 2018.
AMS conducted an investigation that revealed JBS Swift failed to maintain the identity of beef carcasses purchased on a hot weight basis to ensure accurate payment to livestock sellers at its Grand Island, Neb., facility. During the period of December 14, 2017 through March 31, 2018, JBS Swift failed to record accurately the weights, grades and prices of carcasses on accountings issued to sellers
JBS Swift was notified of such violations and immediately took corrective action by making adjustments to its carcass tracking procedures and computer software. Under the consent decision, JBS Swift agreed to remit amounts owed to livestock sellers resulting from the inaccurate recording of weights, grades, and prices of carcasses. In addition, the consent decision ordered JBS Swift to pay a $50,000 civil penalty, and to cease and desist from:
Failing to properly maintain the identity of each seller's livestock and the carcasses therefrom;
Failing, after determination of the amount of the purchase price, to transmit or deliver to the seller or his duly authorized agent a true written account of such purchase showing the number, weight and price of the carcasses of each grade (identifying the grade) and of the ungraded carcasses, an explanation of any condemnations and any other information affecting final accounting; and
Failing to maintain sufficient records to substantiate the settlement of each transaction.
According to the Organization for Competitive Markets (OCM), however, Nebraska cattle producer Steve Krajicek raised concerns last year with AMS over mishandling of his cattle.
Our yields have been lower than they are at other packing plants," Krajicek said. "Based on the AMS findings in this case, I wouldn't even know if JBS was paying me for my own cattle."
OCM said that too often, smaller producers are required to sell their cattle on carcass weight, forcing them to carry all the risk of shipment including tissue shrinkage and injury to the animal, and then unreasonably having to trust that JBS weighs and grades the animal correctly.
"Larger producers are given the opportunity to sell on live weight at the point of sale, skirting these risks. The result is small producers are abused by the large packer as set out in this case by AMS," the organization noted. A similar settlement agreement was reached between AMS and JBS in June for failing to maintain its carcass monorail scales at its Cactus, Texas and Greeley, Colorado facilities resulting in cattle producers being inaccurately paid for their cattle.
In the June 2018 consent decision, JBS paid a $29,000 civil penalty.
"Unfortunately, these civil penalties dim in comparison with the amount of dollars stolen from cattle producers in a pattern of repeated violations of the Packers & Stockyards Act," OCM said. Joe Maxwell, executive director of OCM, added, "It is like a thief stealing $5.00 and only being fined $1.00. Where is the incentive to stop stealing?"
HOGS: (CNA) -- Mainland Affairs Council (MAC) chief Chen Ming-tong accused China on Monday of mismanaging the African swine fever (ASF) outbreak and said its failure to bring it under control will deal a heavy blow to Taiwan's hog-raising industry.
"The epidemic is a very serious matter," Chen said, criticizing China for losing control of the epidemic across the Taiwan Strait.
"This demonstrates China's mismanagement of the infectious disease, which has forced Taiwan to step up its management and inspection," he said at a legislative hearing.
According to Chen, the MAC has asked China three times to hold bilateral talks on measures to combat ASF, including banning e-commerce platforms from selling foreign pork products, with the latest request issued Dec. 14.
"But the Chinese side has yet to respond," he said, urging China to set aside political considerations when fighting an epidemic across the strait.
Chen warned the public not to bring in Chinese meat products or risk a fine of up to NT$1 million (US$30,800).
ASF has spread across 22 provinces, cities and areas in China since its outbreak in early August, and Taiwanese authorities believe it could seriously hurt Taiwan's pig-farming industry, which has an annual output value of NT$150 billion per year, according to Chen.
To prevent the ASF virus from entering Taiwan, inspections have been tightened at sea ports and airports across the country.
Fines will be increased to NT$200,000 for first-time offenders and NT$1 million for repeat offenders for travelers caught smuggling meat products from ASF-affected countries, effective Tuesday.
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