Packer inquiry and cattle-selling interest will slowly start to reassemble Wednesday, but we suspect real cash potential to be delayed until Thursday or Friday. Asking prices will probably start out around $121 plus on a live basis and $192 dressed. Specs and commercials will be eager to catch up on official market reports, which were generally suspended on Monday. Live and feeder futures are staged to open on a mixed basis in slow volume.
Midweek hog buyers should return to work with cash bids steady to $1 lower. Although chain speed will be disruptive through the end of 2018, pork tonnage will remain more than ample, demanding a significant display of product just to minimize the erosion of carcass value. Lean futures should start out moderately lower, pressured by follow-through selling and uncertain fundamentals.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Retailers and food managers will slowly start to position ahead of the traditional surge in beef demand through the first half of January.
| 1) |
Although cattle buyers will need to climb back in the saddle soon after the Christmas tree is disposed of, their shopping list will remain limited given another holiday-shortened week immediately ahead.
|
| 2) |
The premium status of nearby live cattle futures should work to encourage higher asking prices by feedlot managers and steal their short-term resolve.
| 2) |
Last week's slaughter surpassed 2.7 million hogs, a new weekly harvest record set, with a strong Saturday estimate. Needless to say, there's an abundance of wholesale pork on the street through the end of the year.
|
| 3) |
If the Dec. 1 market hog weight breakdown is on the money, pork supplies in the first third of 2019 will be more manageable than previous thought. The largest discrepancy between analysts' projections and the USDA report came in the under-50-pounds category where the report pegged the number at 21.599 million head, up 0.9%, after analysts predicted it to be up 2.5%.
| 3) |
While pork producers remain firmly entrenched on the road of record tonnage, the expansion of slaughter capacity is running behind schedule. The Seaboard Triumph Foods plant in Sioux City, Iowa, is not yet running a full double shift as hoped for this fall (i.e., 40% or 50% on most days). The new Prestage Foods of Iowa plant near Eagle Grove is still under construction. The Prestage plant will probably not be up and running to any degree until March.
|
| 4) |
As adjusted by last week's inventory, September through November quarter's pig crop was 33.978 million pigs, a record large for that specific quarter, but well below the June through August quarter (also revised lower) by 177,000 pigs. ???
| 4) |
U.S. stocks plunged on Monday in their worst day of Christmas Eve trading ever, as the S&P 500 entered a bear market. The Dow dropped by 653 points Monday in volatile trading, falling below 22,000. Consumer confidence may be drifting into serious trouble.
|
CATTLE:(The Daily Beast) -- Finding a needle in a haystack is like finding a single cow among a heard of 2,000 head spread across 10,000 acres. At the Matador Cattle Company, cattlemen hope to use drones to do just. Rancher John Douglas Russel has been key to the drone adoption, citing time-saving benefits, "If you go prowling around looking for strays, you can kill a week in a hurry."
This Koch Industries-owned company will use the drones to search for strays and check in on specific animals they have concerns about, even eventually using infrared cameras to find strays' heat signatures. In the future, it hopes to use the drones across the entire ranch "mitigating invasive species, safely overseeing grass fires and even remotely scanning RFID ear tags to monitor cattle health."
HOGS: (Bloomberg) -- The spread of African swine fever in China and Eastern Europe could mean soaring hog prices in 2019, according to Ken Sullivan, the chief executive officer of Smithfield Foods Inc., the world's biggest pork producer. The pig-killing virus "has a real potential to have significant market impacts in 2019," he said in an interview at the company's headquarters in Smithfield, Virginia. With the disease spreading in China, the world's top pork consumer may be forced to tap international markets to help feed its 1.4 billion people. Hog futures could take off the way they did in 2014, when a disease called porcine epidemic diarrhea virus spread through the U.S. herd, Sullivan said. As supplies dipped, prices leaped to records. A potential resolution of the tit-for-tat trade spat between the U.S. and China could further jolt the markets if it further opens the door for American exports, he said.
"If the two governments can work out these tariff issues, I think it has the real potential to be really bullish for pig prices in 2019," Sullivan said. Currently, China has a 25 percent retaliatory duty on American pork. Sullivan said he's optimistic that the two countries have enough at stake that they'll have to come to an agreement. While U.S. exports to China ground to a halt earlier this year, they have recently returned. Smithfield, owned by Hong Kong-based WH Group Ltd., said it had resumed some shipments, but declined to comment on what orders it had on its books.
Most-active hog futures traded in Chicago are down about 13 percent this year. Still, prices have rebounded to about 62 cents a pound from this year's low of 47.825 cents in August.
"It'll be very helpful if the tariff situation is resolved," Sullivan said. "China's a huge market, and if we can resume shipments under a more fair tariff situation, then it'll be very beneficial for U.S. farmers -- not just Smithfield, but the entire farm complex."
Cases of African swine fever in China have been reported at farms in more than 20 provinces since August, and hundreds of thousands of hogs have been culled.
Smithfield, like the rest of the U.S. hog industry, is in a heightened state of alert on its farms, wary that African swine fever could come stateside. The company has changed protocols and restricted visitation, Sullivan said. Still, he noted that when porcine epidemic diarrhea virus spread through American herds in 2014, an increase for prices outweighed the animal losses for profits at the company. "Here is the irony of that: We are the world's largest hogs producer, and there's this hog disease, and we had it," Sullivan said. "That caused a disproportionate rise in prices and we actually ended up making more money, certainly on the farms, than we did in previous years. So the price impact outweighed the loss of animals and in productivity."
 |
| #chh |
No comments:
Post a Comment