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Friday, March 31, 2017

Friday Closing Livestock Market Summary

Closing Comments 
Light to moderate trade volume surfaced in several areas Friday with Southern markets better tested than Northern business. Most live transactions in the South were marked at $128.00, $2.00 lower than last week. Dressed deals in the North were reported in a wide range, from $200.00-$206.00. Note that the bottom of the dressed range generally included extra delivery days (i.e., stretching into mid to late April). The national hog base closed off $0.45 compared with the Prior Day settlement ($56.00-$62.50, weighted average $61.38). From Friday to Friday, livestock futures scored the following changes: Apr LC Off $2.15; Jun LC Off $1.98; May FC Off $1.10; Aug FC Off $1.52; Apr LH Off $1.60; May LH Off $2.37. Corn futures closed about 6 cents higher, supported by planting intentions that totaled 1 million acres short of expectations (i.e., 90 million acres). The stock market closed lower with the Dow off 65 and the Nasdaq down by 2.
LIVE CATTLE
Futures closed mostly higher up 22 to off 5. Live contracts spent most of the day underwater, pressured by long-liquidation and fears of softening beef demand. Yet decent buying interest regrouped near the lows of the day, allowing live issues to finish marginally in the green. Needless to say, spot April remains far below feedlot cash as traders worry about a disappointing combination of larger supplies and below-average demand in the second quarter. Beef cut-outs: lower to sharply lower (choice, $214.12 off $1.09, select $204.00 off $4.05) on light to moderate demand and moderate to heavy offerings (73 loads of choice cuts, 29 loads of select cuts, 08 loads of trimmings, 31 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL:
Steady to $2.00 lower. Monday's action will no doubt be limited to the distribution of new showlists. We expect ready numbers to be steady to somewhat larger. Next week's cash stability may hinge a great deal upon the ability of the box beef trade to stabilize.
FEEDER CATTLE
Futures closed higher to sharply higher up 55-140. As in the case of live futures, feeders ended Friday's session much better than they began. Indeed, most contracts settled 200 points or more above session lows. Apparently, lower prices in the early going were successful in attracting both short-covering and renewed commercial buying. CME cash feeder index: 03/30: $132.77, off $0.08.
LEAN HOGS
Futures closed mixed up 12 to off 65. Lean futures did a pretty good job Friday reacting to the logical implications of the March 1 hogs and pigs report. Specifically, nearby contracts were more pressured by evidence pointing to plentiful nearby supplies. On the other hand, deferred contracts held up much better, no doubt supported by smaller-than-expected sow numbers and farrowing intentions. Pork cut-out: $75.40 (FOB Plant) up $0.22. CME cash lean 03/29: $68.86, off $0.54 (DTN Projected lean index for 03/30: $68.30, off $0.56).
MONDAY'S CASH HOG CALL
Steady to $1.00 lower. Hog buyers seem likely to start out with steady/weak bids on Monday, mindful of ample ready supplies and the recent weakness of pork demand.

Friday Midday Livestock Market Update

GENERAL COMMENTS: 
Livestock futures have narrowed early market pressure seen Friday morning due to light trade activity. End-of-the-month and quarter position-taking has developed in cattle and hog markets, allowing for increased shifting markets. Corn prices are higher in light trade. May corn futures are 8 cents higher. Stock markets are mixed in light trade. The Dow Jones is 31 points lower while Nasdaq is up 8 points.
LIVE CATTLE:
Wide prices swings have narrowed significantly through the end of the morning with traders hovering the $120 price level. Trade volume remains extremely narrow Friday as traders continue to adjust for end-of-month and quarter positions as well as focus on fundamental supply shifts seen through the upcoming spring months. A break below the $120 per cwt level on the April contract, though, will create additional concerns in the upcoming weeks as traders are likely to focus on additional technical pressure associated with this move. Cash cattle trade has developed through the morning with activity likely finished in the South at $128 in both Kansas and Texas. This is generally $2 per cwt lower than last week's trade levels. At this point, cash trade is undeveloped in the North, but bids are seen at $205 to $206. It is expected that prices will be weaker than last week's market average by the time all is said and done, but overall, business is not inked at this point. Beef cut-outs at midday are lower, $0.65 lower (select) and down $2.13 per cwt (choice) with light movement of 76 total loads reported (28 loads of choice cuts, 16 loads of select cuts, 6 loads of trimmings, 26 loads of ground beef).
FEEDER CATTLE:
Lean hog futures have remained lightly traded through the entire session with strong losses seen through most of the morning. But the firm pressure has now been replaced by mixed trade as traders are squaring positions at the end of the month and quarter with nearby contracts now moving to positive price levels due to the lack of trade activity near market settlement. April contracts have moved back to $133 per cwt, and although this remains a far cry from the $136 levels seen last week, the thin trade may allow for buyers to move price levels in a wide range before the end of the month.
LEAN HOGS:
Lean hog futures remain weak at midday with nearby contracts holding moderate pressure following early losses. April contracts have continued to hang onto support above $65 per cwt through the end of the month with a 37-cent-per-cwt loss holding in front-month futures. Narrow single-digit gains are stepping into deferred contracts at midday, but this is unable to change the overall tone of the complex through the end of the session due to the light volume. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.06 at $60.77 per cwt with the range from $58.00 to $62.00 on 5,568 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 146 loads selling with prices adding $1.26 per cwt. Lean hog index for 3/29 is at $68.86 down $0.54 with a projected two-day index of $68.30 down $0.56.

Friday Morning Livestock Market Summary

GENERAL COMMENTS:
Light-to-moderate trade volume is expected to develop in most areas of cattle feeder country as short-bought packers collect just enough live inventory to cover short-term slaughter needs. Limited business surfaced on Thursday with some live sales in Texas at $128 ($2 lower than last week) and $205 to $209 in parts of the North ($1 to $5 lower). Some deals were represented as low as $125 to $126 in the South and $202 to $205 in the North, but such discounts included extra delivery days (e.g., mid- to late April). Most showlists are still priced around $132 in the South and $213 to $215 in the North. Live and feeder contracts should also begin with uneven price action tied to residual selling interest and late-week short-covering.
The March 1 Hogs & Pigs report turned out to be generally well anticipated. For the most part, the new data supports widely-held assumptions of herd expansion. Nevertheless, the longer-term question remains: Are deferred lean contracts discounted enough, too much, or not enough? Assumptions of pork demand will obviously be key in sorting through this thorny puzzle. Look for the cash hog trade to open Friday with bids steady to $1 lower. Packers are understandably defensive given ample offerings and struggling beef demand. Lean futures seem geared to open with mixed prices in light volume.
 BULL SIDE BEAR SIDE
1)While the sharpest edge for spot cash cattle may be beginning to dull a bit, packers still seem willing to bid strong basis levels for steers and heifers to be delivered over the next two to four weeks (i.e., $5 to $6 over spot April). Such willingness implies a great deal of confidence in the friendly combination of supply and demand over at least the next 30 days.1)The wholesale beef trade remained in full retreat on Thursday with the choice and select boxes quoted $1.71 and $2.21 lower, respectively.
2)For the week ending March 18, cattle carcass weights plunged lower: all cattle averaged 817 pounds, 4 lbs. below the prior week and 19 lbs. lighter than 2016; steers averaged 872 lbs., 9 lbs. smaller than the previous year and 23 lbs. short of last year; heifers averaged 812 lbs., 7 lbs. lighter than the prior week and 22 lbs. smaller than 2016.2)The steam seems to be coming off foreign demand for U.S. beef as well. Net beef export sales last week totaled no more than 10,800 MT, down 26% from the previous week and 31% from the prior four-week average.
3)Hog & Pig data released Thursday clearly could have been worse. Both the size of the March 1 breeding herd and spring/summer farrowing intentions fell somewhat short of average trade expectations.3)The March 1 hog inventory certainly confirmed that producers have embraced a fairly aggressive pace of herd expansion. Indeed, the industry managed to set four new records in the December to February period: 1) most total hogs on March 1; 2) most hogs kept for market March 1; 3) largest December to February pig crop; and 4) most December to February pigs per litter.
4)Though pork export sales have cooled a bit from the impressive surge from mid-month, it remains quite strong. Net sales last week totaled 21,100 metric tons, down 30% from the previous week, but still up 8% from the prior four-week average. Furthermore, the softening dollar should help foreign demand going forward.4)The pork carcass values lost another buck on Thursday with all major primals quoted lower, especially the fresh cuts.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (US NEWS) -- Coming soon to McDonald's: Fresh beef.
The fast food giant said Thursday that it will swap frozen beef patties for fresh ones in its Quarter Pounder burgers by sometime next year at most of its U.S. locations. Employees will cook up the never-frozen beef on a grill when ordered.
That has been the biggest selling point at rival Wendy's. Yet there are larger forces at work that have prompted other menu changes at McDonald's, known for decades more for the billions of people that it has served, rather than its culinary choices.
The world's largest hamburger chain for some time has been attempting to improve its image as more people shun processed foods.
It has tinkered with its recipes, removed artificial preservatives from chicken McNuggets and it removed high fructose corn syrup from its buns.
The company is trying to stem a streak of adverse trends that led to an executive shakeup two years ago. The company brought in Steve Easterbrook as CEO to turn steer the company in a more promising direction. It's an ongoing endeavor.
Earlier this month, McDonald's acknowledged that it lost 500 million customer transactions in the U.S. since 2012, mainly to other fast food rivals.
McDonald's Corp., based in Oak Brook, Illinois, tested the fresh beef Quarter Pounders at more than 400 restaurants in Dallas and Tulsa, Oklahoma, for about a year before rolling out the changes nationally. By the middle of 2018, the fresh beef will come to most of its 14,000 U.S. locations, except those in Alaska, Hawaii and some airport locations.
HOGS: (foodmarket.com) -- Heading into April, the food sector is impacted by various seasonal factors that will ultimately translate to a shift in retail action.
Demand for grilling items, especially interest in premium cuts from the beef category, helps to lift the meat case and drive up the price of the basket, much to the delight of grocers. Cuts like strip steaks, rib steaks, porterhouse and T-bones, which see rather soft demand in the colder months, hit their peak usage period in the warmer months, and wholesale prices often begin to tick up sometime in April.
Historically, the start of April marks the beginning of the gradual wholesale climb in pork prices to their mid-summer peak. Demand for many pork items reaches its highest during the summer months when grilling usage is up and pork production seasonally slows. As the weather warms up and grilling returns, wholesale prices advance. In retail, pork remains a competitive protein with sub $3 per pound feature levels on numerous items.
Bacon, however, has been advancing higher since late February this year, and is currently featured at multi-year highs for the current week. Wholesale belly prices began to soar at the start of the year due to strong demand and lower inventories of product in cold storage, hitting uncharacteristically high levels for the season, but peaked about mid-February and are now trading at more normal seasonal levels. The impact from the Q1 climb, however, is still having a delayed effect on current retail offerings. This week, brand label bacon is on feature at $5.26 per lb. on average, up 10% from a year ago.
Hams for the Easter holiday are also making their way into store circulars to kick off the month of April. Bone-in ham varieties are featured between 90 cents and $1.56 per lb. this week. Easter is just over two weeks away, and sale themes are largely geared toward this Spring occasion.
Retailers have the opportunity to promote eggs aggressively for Easter this year, as wholesale prices are at some of the lowest levels seen in regard to the holiday over the last decade. Planners have responded with ads well below the dollar mark for large dozens, some even set to run below 50 cents. Ads will begin to break next week and run through the week of the holiday.

Thursday, March 30, 2017

Thursday Closing Livestock Market Summary

Closing Comments 
Though cattle buying interest seemed light to moderate Thursday, packers didn't seem to have enough money to own many cattle. A few scattered deals were evident in Texas (i.e., $128, $2 lower on a live basis) and parts of the North (i.e., $205-$208, $2 to $5 lower dressed). According to the closing report, the national hog base is $0.75 lower ($56.00-62.50, weighted average $61.92). The corn market drifted a penny or so lower tied to cautious jockeying before Friday's USDA Planting Intentions and Grain Stocks reports. The stock market closed higher with the Dow up 69 points and the Nasdaq positive by 16.
LIVE CATTLE
Spooked by defensive cut-outs and the possibility of a topping cash market, live contracts retreated with particular selling pressure on spot April. Generally speaking, contracts finished 35 points lower. April closed right on 120, the price level that previously defined tough overhead resistance. Beef cut-outs: sharply lower, off $1.71 (choice, $215.31) to $2.21 (select, $208.05) with light to moderate demand and moderate offerings (75 loads of choice cuts, 31 loads of select cuts, 9 loads of trimmings, 15 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL:
Steady to $2 lower. Look for light to moderate trade volume to finally surface before the weekend break. While some packers are short-bought, processing margins are clearly narrowing.
FEEDER CATTLE
Feeder issues closed sharply lower with most contracts settling with triple-digit losses. Aggressive long liquidation was triggered by ideas that feedlot sales may have already seen a seasonal top come and go. CME cash feeder index: 03/29: $132.85 off $0.51.
LEAN HOGS
Given the aggressive sell-off seen over the last several weeks, many specs and commercials decided to engage in short-covering right before the release of a major quarterly inventory. When the final smoke cleared, lean issues settled 25 to 150 higher, pleasing to country feelings but hardly of technical significance. The March 1 H&P report published Thursday afternoon generally fit nicely with trade expectations: all hogs, up 4%; kept for breeding, up 1%; kept for marketing, up 4%. The carcass value lost another buck Thursday with all major primals quoted lower. Pork cut-out: $75.18, off $1.04. CME cash lean index for 03/28: $69.40, off $0.38 (DTN Projected lean index for 03/29: $68.86, off $0.54).
FRIDAY'S CASH HOG CALL
Steady to $1 lower. Hog buyers should continue to use the bearish ammo of generous country offerings and struggling pork demand as procurement leverage. Expect them to open in the morning with steady to $1 lower bids.

Thursday Midday Livestock Market Summary

GENERAL COMMENTS: 
Lean hog futures have bounced quickly higher as short-covering has moved into the market ahead of the release of the Hogs and Pigs report Thursday afternoon. Cattle trade remains under pressure as trades are squaring positions at the end of the month following previous market support and concerns of fundamental seasonal pressure. Corn prices are lower in light trade. May corn futures are 1 cent lower. Stock markets are higher in light trade. The Dow Jones is 47 points higher while Nasdaq is up 6 points.
LIVE CATTLE:
Light trade activity is seen in cattle markets Thursday as trades appear to be squaring positions at the end of the month. April futures are testing support near $120 per cwt as all nearby and deferred contracts are holding moderate to firm losses through the morning. Traders are looking for additional losses with pressure in feeder cattle trade and uncertainty in cash cattle markets as the week continues. The lack of support in beef values through the end of March is unable to draw commercial buyers back to the table at this point also, bringing lack of overall support to the market in many areas. Cash cattle markets are starting to become more active with bids developing in all areas with bids seen from $126 to $128 live and $206 to $208 dressed. This is still $2 to $4 per cwt lower than last week's price levels, at this point, and has most feedlot managers waiting for improved price levels later in the week. Asking prices remain at $132 in the South and $213 to $215 in the North. It may be sometime Friday before active trade develops. Beef cut-outs at midday are lower, $0.30 lower (select) and down $0.80 per cwt (choice) with light movement of 68 total loads reported (45 loads of choice cuts, 17 loads of select cuts, no loads of trimmings, 7 loads of ground beef).
FEEDER CATTLE:
Sharp losses have developed in feeder cattle futures with the biggest losses in deferred contracts. This pressure has quickly pulled back from the previous gains in the complex and caused a moderate correction through the summer and fall contracts. Light trade is seen in all markets as August through October contracts are holding losses over $2 per cwt at midday, and are likely to continue to hold this pressure through the end of the trading session due to the lack of interest in the session.
LEAN HOGS:
Strong buyer support has quickly moved back into lean hog futures trade as traders anticipate the upcoming Hogs and Pigs report, which will be released following markets close Thursday afternoon. This has pushed May through August contracts firmly higher as traders remain focused on aggressive market activity and the potential to turn around the previous weakness in the complex seen over the last several weeks. April futures remain lightly traded, but have turned higher with a 25-cent gain at midday, moving above $65 per cwt. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.73 at $61.94 per cwt with the range from $56.00 to $62.50 on 4,671 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 217 loads selling with prices falling $0.03 per cwt. Lean hog index for 3/28 is at $69.40 down $0.38 with a projected two-day index of $68.86 down $0.54.

Thursday Morning Livestock Market Update

GENERAL COMMENTS:
Cattle market watchers could start to see more evidence of buying interest and definite bids. But if feedlot managers are determined to dig in with highest asking prices (i.e., $132 to $133 in the South; around $215 in the North), significant trade volume could easily be delayed until sometime Friday. Live and feeder futures seem likely to open with a mixed basis thanks to a combination of follow-through buying and long liquidation.
Look for cash hog bids to remain on the defensive Thursday with opening bids ranging from steady to $1 lower. The March 1 Hogs & Pigs will be released Thursday afternoon at 2 p.m. CDT. Generally speaking, private analysts are expecting to see official confirmation of fairly aggressive herd expansion: all hogs, up 4% to 5%; kept for breeding, up 1% to 2%; kept for market, up 4% to 5%. Lean futures seem ready to open on a mixed basis as bulls and bears, specs and commercials position ahead of the quarterly inventory.
 BULL SIDE BEAR SIDE
1)Though not proving much definitely, cattle futures closed solidly higher at midday and remain within striking distance of last week's high water mark.1)Beef cutouts plunged sharply lower at midweek with both the choice and select box scoring the worse one-day loss since Jan. 11. Over the last six business days, the choice box has lost a bit over $8.
2)Between last week's large kill, limited trade volume totals generated last week, and this week's only slightly slower chain speed, cattle buyers should be moving into the tail end of the procurement week still short bought and needing live inventory.2)For the week ending March 25, U.S. hatcheries set 221 million broiler eggs in incubators, up 3% from a year ago. At the same time, chicks placed in the United States totaled 182 million chicks; up 2% from 2016.
3)The seasonal trend for April lean hog futures is neutral to positive from now into expiration the middle of next month.3)For the week ending March 25, Iowa barrows and gilts averaged 282.4 pounds, .8 pounds heavier than the previous week and 1.1 lbs. lighter than 2016. Seasonally, weights could trend higher for another 30 days before turning lower from late spring to midsummer.
4)Hog carcass weights for last week were slightly above the prior week, but the next major, prolonged trend will involve multiple months of smaller carcasses.4)The pork carcass value was hit hard again Wednesday, pressured by all major primals except the belly.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (Nebraska Rural Radio Association) -- The National Cattlemen's Beef Association sent a coalition letter to President Donald Trump, urging him to raise the restoration of U.S. beef access to China when he meets with Chinese President Xi Jinping in April. Leaders from the U.S. Meat Export Federation and the North American Meat Institute also signed the letter.
American beef producers have been denied access to China -- a $2.6 billion import market — since 2003. Last fall China announced that it had lifted its ban on imports of U.S. beef, but attempts since then to negotiate the technical terms of access have been unsuccessful.
"We believe that access to the large and growing Chinese beef market is essential to the future health of the U.S. beef industry," read the letter, which was signed by NCBA's CEO, Kendal Frazier. "We understand that you have many important issues to discuss with President Xi, but we strongly encourage you to take this important opportunity to convey the urgent need for China to reopen its market to U.S. beef."
In 2016, American beef producers sold $6.3 billion worth of U.S. beef to customers around the world, with three of the industry's top foreign markets located in Asia.
HOGS: (Bloomberg News) -- After 11 days of arrests, bribery allegations and a full-blown international food-safety scare, the worst may finally be over for Brazil's embattled meat industry.
Having been shut out of some of its most important markets, Brazilian meat companies have regained access to most of them in recent days. Hong Kong, the largest destination for Brazilian beef, was the latest to ease restrictions.
"It brings relief for the industry," said Francisco Turra, a former minister of agriculture who now heads the Brazilian Animal Protein Association. The move also "reduces the possibility of supply glut in domestic market."
Federal police in Curitiba in Brazil's Parana state announced their so-called Carna Fraca ("Weak Flesh") investigation on March 17. They said 21 companies were involved in the bribing of federal meat inspectors, and provided lurid details of contaminated and adulterated meat. The intense domestic attention garnered by the revelations was soon followed by a massive media campaign mounted by Brazil's meat sector and a government push to reassure the public. The overall impact on domestic demand for beef and chicken is seen as limited so far.
Brazil's Agriculture Minister Blairo Maggi, who's been on a diplomatic offensive since the meat scandal broke, announced Tuesday that none of the 174 samples collected in 22 states since the scandal emerged provide evidence of meat that's unfit for human consumption.
That's good news for what is one of Brazil's most important industries, at a time when the country is still struggling to emerge from its worst recession. Brazil accounts for 20 percent of the world's red-meat exports and 40 percent of its chicken. Domestic demand is also vital for Brazilian meat companies, with low-cost beef a staple of lunch and dinner.
A total of 45 nations implemented some kind of restrictions on imports from Brazil at some point, from increased checks to an outright ban, according to Agriculture Ministry data compiled by Bloomberg. Trade figures released Monday showed a 19 percent plunge in weekly meat-product shipments.
But as of Tuesday, only 13 markets remain closed, among them Mexico and Qatar. Altogether those nations accounted for just about 5 percent of Brazil's meat exports last year, the government data show. Hong Kong said Tuesday that it had narrowed the scope of its import suspension to 21 plants under investigation. Brazil's Agriculture Ministry had said that Hong Kong reopened the market.
The European Union wants more information from Brazil about its investigations and their is strong pressure from European nations for stricter measures, Agriculture Minister Maggi said on Wednesday after a meeting with the European Commissioner for Health and Food Safety Vytenis Andriukaitis in Brasilia. There is a further meeting planned for Thursday.
Brazil's biggest meat companies, JBS SA and BRF SA, appear to have largely weathered the storm, despite being implicated in the police probe (both deny any wrongdoing). While its shares are down 12 percent since the crisis began, JBS, the world's biggest meat company, said Monday it may now restore production at its shuttered slaughterhouses.
BRF, Brazil's largest poultry supplier, closed 4.2 percent higher on Tuesday, its biggest gain since July, helping to make up for the most of the losses since March 17. The company is setting up a group to conduct an audit.
As concerns ease over the impact on Brazil's meat exports and its producers, attention has turned back to the police and their investigation. Investigators have tried to shift the focus toward the alleged corruption and away from the sanitary aspects amid growing criticism from the government, meat companies and even from within the police. While Weak Flesh is an important probe, the way it was announced was "jumbled" and exaggerated, Louis Boudens, the head of the national federal police association, said in a March 25 note posted on the group's website.
"That is when the operation stopped to be a service for society to become a threat to the economy and the country's institutional relations," Boudens said.

Wednesday, March 29, 2017

Wednesday Midday Livestock Market Update

GENERAL COMMENTS: 
Livestock markets remain mixed at midday with cattle futures moving higher. Feeder cattle futures are leading the complex higher with triple digit gains. All but March feeder cattle futures are holding strong triple digit gains, focusing on strong commercial buying support. Stability is starting to be seen in lean hog futures trade with mixed trade developing in a narrowly mixed trade from 15 cents lower to 15 cents higher. Corn prices are lower in light trade. May corn futures are 0.5 cent lower. Stock markets are mixed in light trade. The Dow Jones is 51 points lower while Nasdaq is up 14 points.
LIVE CATTLE:
Light to moderate buyer support has trickled into live cattle futures markets Wednesday morning despite very little movement in the cash cattle market. Commercial buyer support remains stable to firm through midweek with some end of the month buyer support likely to develop and position squaring being seen over the next couple of days. But traders seem to be finding more stability in the cattle market following the cash market and beef values through heading into the spring and summer months as they look into seasonal support and looking at tighter supplies. There could be some additional shifts coming from the Brazilian beef issues, but this may not move the market greatly as previously expected, and could become more of a trickledown effect. Cash cattle traded on the Fed Cattle Exchange Auction reporting a total of 3,963 head, with 1,898 actually sold, and 2,065 head listed as unsold. The state by state breakdown looks like this: KS 222 head at $128.75-$129.00; NE 1,125 head at $131.00-$133.00; TX 407 head, at $126.00-$129.00; CO no test; IA no test; other states no test. The weighted average was $131.17, down $2.18 from last week's weighted average of $133.35. Cash trade is quiet through the rest of the feedlot trade with bids are yet to be developed for the week. Asking prices in a few placed are seen at $132 to $133 in the South and $215 in the North. It may be Thursday or Friday before active trade will be seen in most areas.
Beef cut-outs at midday are lower, $1.25 lower (select) and down $0.50 per cwt (choice) with light movement of 71 total loads reported (28 loads of choice cuts, 28 loads of select cuts, 5 loads of trimmings, 20 loads of ground beef).
FEEDER CATTLE:
Strong upward movement has been seen through the morning in feeder cattle futures as buyers are quickly shaking off the pressure seen early in the week. March futures seem to have been put to bed for the most part with traders quickly focusing on April and May contract months with $1.30 to $1.40 per cwt gains through morning trade Wednesday as the support is redeveloping. Even though current price levels remain nearly $2 per cwt below previous resistance levels seen last week, the correction in the market could give some traders the ability and market support to quickly step back into the market through the end of the month and early April.
LEAN HOGS:
Mixed trade continues to be seen in lean hog futures with prices wandering in a narrow range on either side from 15 cents higher and lower on either side of unchanged. The ability to bring a sense of stability back into the market following strong market losses in the complex over the last several trading days has been a breath of fresh air to the entire market, but there is but at this point there is little support redeveloping in long term fundamentals as supplies are growing through the summer and fall. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.37 at $62.94 per cwt with the range from $60.50 to $63.00 on 3,451 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The weighted average price fell $0.77 at $63.57 per cwt with the range from $59.00 to $64.50 on 237 head reported sold. The National Pork Plant Report reported 199 loads selling with prices falling $1.84 per cwt. Lean hog index for 3/27 is at $69.78 down $0.46 with a projected two-day index of $69.40 down $0.38.

Wednesday Morning Livestock Market Summary

GENERAL COMMENTS:
Besides a few scattered sales with extended terms of delivery reported in parts of the South (i.e., $125 to $126), the cash cattle trade remained at a standstill on Tuesday. Cattle buying interest could start to improve Wednesday, but if feedlot managers dig in with higher asking prices (e.g., $132 to $133 in the South and $215 in the North), significant trade volume will probably be delayed until Thursday or Friday. Live and feeder seem staged to open Wednesday on a mixed basis in light trade volume.
The cash hog trade shouldresume at midweek with bids steady to $1 lower. For the moment, ready market hog numbers continue to trump early spring product demand. Lean futures are expected to open on a mixed basis thanks to both follow-through selling and eroding pork carcass value.
 BULL SIDE BEAR SIDE
1)Live cattle futures still remain above last week's technical breakout and could easily move back into the passing lane, especially if this week's cash trade holds relatively firm.1)Hong Kong announced on Tuesday it has lifted a ban on the import of Brazilian meat, removing one of the last blanket bans by a major importer less than two weeks into the scandal.
2)Brazil ordered three more food processing plants to suspend production on Monday amid an investigation into alleged corruption in its meat industry as the world's biggest beef exporter. The European Union has maintained a partial ban on products from the 21 meatpacking plants under investigation. This story still remains in play.2)Most analysts are looking for another substantial cattle kill this week, possibly as big as 610,000 head, somewhat smaller than last week and 12% or more above 2016. Slaughter levels will grow into the spring.
3)Given the persistence of decent pork packing margins, there is still plenty of incentive to run large slaughter schedules as long as hogs remain available.3)The pork carcass value was hit hard on Tuesday, especially pressured by struggling demand for bellies and hams.
4)The oversold character of lean hog charts prior to the release of the March 1 Hogs & Pigs report suggests that the board may be more vulnerable to a bullish surprise than a bearish one.4)Lean futures continued to slide lower and lower Tuesday with spot April closing at its lowest price level since early December. The cash index has now fallen below $70 and the board clearly believe country bleeding will continue over the next several week.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (The Weekly Times) -- The Australian red meat industry cannot directly oppose US, Japanese and Dutch bids to export chilled and frozen beef to our shores.
That was the message from Red Meat Advisory Council chairman Don Mackay in ­response to the Federal Government's draft review that gives conditional approval to the import bids.
Mr Mackay said the Australian beef industry could not afford to simply reject the bids, given the US and Japan are Australia's biggest beef export markets.
"Trade is a two-way street," he said. "We go overseas and expect to be allowed into these countries, so to stand in total opposition (to imports) is not something we can do."
But RMAC was all too aware of the risks to Australia's beef industry if things went wrong, he said, citing the collapse of the Australian prawn industry in the wake of the recent outbreak of white spot disease linked to imports.
"We've seen the devastation of white spot in prawns where there's been a failure in control of produce after arrival," Mr Mackay said.
A similar failure in the livestock industry wouldn't fade away within a couple of weeks. "It would affect thousands of jobs and billions in export earnings," he said.
Industry groups had until March 15 to lodge submissions on the Department of Agriculture and Water Resources review of the US-Japanese import bid.
The review, which analysed proposals from Japan, the US, the Netherlands, New Zealand and Vanuatu, outlined the risk management measures the US and other countries must meet, including:
NO imports of brain, pulmonary and reproductive organs, and udders (and associated lymph nodes).
CERTIFICATES of freedom may be required for diseases such as foot and mouth disease and rift valley fever.
THEY must prevent import of Salmonella enterica (serotype typhimurium DT104), which is a serious disease of humans and has been found with multiple antibiotic resistance.
While the risk was "very low", it must still be addressed through pre-export testing and abattoir surveillance and reduction schemes.
One major issue was the ability of the US beef industry to trace livestock.
As for Australian demand for US and Japanese beef, Mr Mackay said Japan was seeking export markets for Wagyu and US exporters had access to cheap cattle and grain.
HOGS: (National Hog Farmer) -- Iowa is becoming more globally dependent, especially as it welcomes new business like Prestage Foods pork processing plant to the northern part of the state. That's a strategic move that Creighton University economics professor Ernie Goss says is smart for Iowa's future.
For economists, "it is always exciting to see actual production -- something that people eat, wear or use," notes Goss.
The Prestage plant is a net gain of $13 million in annual state and local tax collections for the surrounding ten counties and the state overall, according to a comprehensive report conducted by Goss. He presented the results of economic analysis for the plant being built south of Eagle Grove, Iowa, at several forums last week. The ten counties considered in the report are Calhoun, Franklin, Hamilton, Hardin, Humboldt, Kossuth, Palo Alto, Pocahontas, Webster and Wright.
Goss explains the region's shrinking population and dense livestock population are clear economic signals that greater development is needed for the area. These counties have seen a significant decrease in population and employment compared to the rest of Iowa and the entire United States. While the number of farms has grown in the area, the non-agriculture and manufacturer enterprises have not. Regarding livestock production, this region almost 30 times the concentration of the United States and even higher than the rest of Iowa without the presence of a processing facility.
Examining the regional economic impact from construction through one year of operation, overall sales in the region would increase by $1.7 billion in the first 36 months. Between construction of the plant and the first year of operation, a total of approximately $46 million will be collected in state and local taxes alone.
A true boost for the area is the substantial increase in new jobs. "Direct jobs, you're talking about at least on the first shift, 900 to 1,000 jobs at the facility itself. When you take into account the spillover jobs in the 10-county area, you're in the neighborhood of 3,072 total jobs, so that's quite significant. (That does not even include the plant construction jobs)," states Goss.
Still, new business development does translate to an increase in $32.7 million annual costs for the local communities. New jobs bring new families to the region which increases the number of children in schools, requiring more teachers. The cost was calculated at $21 million for the period.
Moreover, an increase in government dollars will be necessary for the additional police and fire protection. According to the study, the cost is penciled at $1.3 million for the first 36 months. More trucks on the highway will mean an additional $8 billion spent on roads and other infrastructure.
The largest surprise to Goss in completing the all-inclusive study was the lack of processing plants in the region. In terms of pork production, the region produces 25 times more than the rest of the United States with one-fifth the processing capacity. Basically, the pigs are being shipped many miles and across state lines to be processed.
For the 811 hog farms in the 10-county area, local access to new global market opportunities may compute to increased revenue streams. According to the Prestage family, in the first year of production 40% of the hogs will be purchased from independent hog farmers with the goal to market the pork products worldwide.
According to the report, hog prices are estimated to grow by 3.5% with $724 per farm boost annually for the operations in the region. The true cost saver is the reduction in transportation costs, projected at $16,000 per farm.
Nationwide, packing capacity is extremely tight as America's pig farmers send a record number of hogs to market. Last year's commercial hog slaughter reached 118.2 million head, surpassing the old record set in 2008. Market analysts forecast this year's hog slaughter total will easily exceed 121 million hogs and may exceed 123 million head. As a result, there will be more hogs than shackle space.
The Iowa Prestage plant is one of five new processing facilities coming on line by 2018, increasing the U.S. packing capacity by 8%.
Construction is set to begin this spring and will take 18 to 21 months to complete. Once the plant is open for business, it will process 50,000 pigs a week. At first, Prestage Farms will supply 30,000 of the pigs to the plant, and the remainder will be purchased from independent producers. If the plant goes to a second shift, then the additional pigs will also be purchased from independent producers in the Upper Midwest.
Value-added agriculture fuels economic growth locally and statewide. That is a real value of the Prestage pork plant to Iowa. "The future looks very bright. Although farm income is down for the fourth year in a row, looking long-term value-added agriculture and agriculture is the place to be," concludes Goss.

Tuesday, March 28, 2017

Keep an eye out for washy spring forage

Loss of body condition on heifers and even cows grazing early spring forage can hurt conception rates.

Early spring forage, if not growing among old forage so they must be grazed together, is high in protein and water content, and fairly low in energy. Runny manure in many herds every spring testifies to the effects of washy forage.

Patrick Gunn, Iowa State University Extension cow-calf specialist, recently noted that although water content of a feed is not a limiting factor for intake, there is a limit to the number of bites a cow can and will take in a day.
He said experienced, mature grazing animals may take as many as 60 bites per minute, eight hours per day, totaling perhaps 130 pounds of forage eaten. Young cows and heifers, on the other hand, may graze 20% to 40% less than mature cows and commonly have a lower rumen capacity.
Because dry matter content of that washy grass may be only 15% to 30%, together with the higher protein content, the ability of these younger cows and heifers to have a positive energy balance is difficult in most environments in early spring. It can be even worse when transitioning from a drylot to fresh pasture.

Reproduction repercussions

Here’s the problem: If these are bred heifers or young cows, this adds another dimension to the problem and could decrease pregnancy success rates.

Research at South Dakota State University showed heifers moved from drylot onto pasture immediately following timed AI lost nearly 1.5 pounds per day during the first week on grass, whereas heifers that had been on pasture for 44 days prior to AI gained more than a pound per day during that same week.

Gunn noted that research at other universities supports the SDSU data, with reports that heifers that do not maintain a positive average daily gain for the first 21 days after AI have compromised pregnancy rates to that insemination.

Cows affected, too

Cows also are affected by this early-spring forage problem.

Data from the University of Minnesota have shown that cows consuming only 80% of their dietary requirements for the first seven days post-AI had reduced embryo quality and fewer live cells in those embryos at uterine flush.
A research project in Illinois showed spring-calving cows supplemented with a low-quality energy ration in early spring actually achieved higher first-service conception rates by 67%, vs. 45% for unsupplemented cows.
The supplement was 4 pounds per head of a mix containing 45% soybean hulls, 45% ground corncobs and 10% molasses.
Interestingly, body condition did not vary between the two cow groups, and neither did overall rebreeding rate over the entire breeding season. But there was an early difference in reproductive performance, even in cows.
Walker and George Perry, SDSU Extension beef reproductive management specialist, recently wrote that research outcomes such as these make it clear: Postbreeding management can affect reproductive performance in early spring.
They suggested a grazing adaption period for heifers prior to the breeding season, or supplementation when bred heifers are moved to lush pasture.
Another option is forage management that “stockpiles” enough standing old forage to graze through early spring, which will be increasingly mixed with young, high-quality forage as summer nears.

Here’s why spring forage is a problem

Finding data on the nutritional content of early-spring forage is nigh impossible, but a small amount of data exist.
Some of the earliest data on high crude protein in relationship to energy in physiologically immature forage came from early rotation-grazing trials in Europe, in which cattle actually died from too much protein and not enough energy.
More recently, some authors in the U.S. have begun to address the energy deficiency in beef diets.
Physiologically immature forage refers mainly to the stage of growth or regrowth, and whether the plant has developed adequate aboveground leaf material to be fully operating on photosynthesis, and whether composition of the plant has changed to more energy and less protein.
This is controlled by weather and grazing pressure or mowing pressure. For example, fresh regrowth in a recently mowed hay field would be classified as “young” forage.
Here are three situations in which forage should be unusually high-protein and low-energy.
1. early spring growth of any forage with no old grass or hay to supplement it
2. too-rapid return to grazing paddocks which are not fully recovered in a rotation grazing system
3. wheat pasture or other high-quality and lush forage that is young and immature

Tuesday Closing Livestock Market Summary

Closing Comments
Cattle feeding country remained dead quiet Tuesday with both bids and asking prices few and far between. A small handful of showlists in parts of the South were priced around $132-$133. According to the closing report, the national hog base is $0.39 lower ($58.00-$63.75, weighted average $63.31). The corn market closed generally 2 cents higher, cautiously supported by noncommercial buying and short-covering. Encouraged by stronger consumer confidence, the Dow closed 150 points higher and the Nasdaq advanced by 34.
LIVE CATTLE
Spot April sagged further on the close, adding another 30 points to Monday's sell-off. Yet the rest of the market managed to stage a moderate recovery (i.e., up 15 to 52) with the help of light short-covering and recent feedlot premiums. Beef cut-outs: moderately lower, off $0.34 (choice, $219.57) to $0.60 (select, $213.02) with light to moderate demand and offerings (53 loads of choice cuts, 24 loads of select cuts, 13 loads of trimmings, 31 loads of coarse grinds).
WEDESDAY'S CASH CATTLE CALL:
Steady to $2 higher. Cattle buying interest could start to take shape at midweek, but significant trade volume is likely to be delayed until Thursday or Friday.
FEEDER CATTLE
Closing feeder futures ranged from 62 points higher to 15 lower. Generally speaking, the trade closed moderately higher in very light trade volume. CME cash feeder index: 03/27: $133.26 up $0.17.
LEAN HOGS
Though the opening hour saw a short spasm of short-covering and higher prices, selling interest quickly resumed ties to worries over large supplies and inadequate pork demand. Contracts settled 55 to 107 lower with spot April walking away from its poorest landing since Dec. 6. The carcass value was hit hard again Tuesday with the belly and ham primals losing $7.70 and $1.85, respectively. Pork cut-out: $77.61, off $1.51. CME cash lean index for 03/24: $70.24, off $0.67 (DTN Projected lean index for 03/27: $69.78, off $0.4667).
WEDESDAY'S CASH HOG CALL
Steady to $1 lower. Look for hog buyers to remain on the defensive at midweek, bidding generally lower in the face of big supplies and softening product demand.

Tuesday Midday Livestock Market Summary

GENERAL COMMENTS: 
The cash cattle trade remains untested with just a few asking prices in the South identified at $132-133. Strangely, Mandatory did report more than 3,000 head sold in Iowa on Monday at $208/$123.70). According to the midday report, the national hog base is 0.88 lower compared with the Prior Day settlement ($61.00-69.00, weighted average $66.99). Corn futures are a penny plus higher in late-morning business. Light commercial buying seems somewhat evident in largely featureless activity. Boosted by strong evidence of consumer confidence, the stock market is higher near midday with the Dow up 93 points and the Nasdaq better by 18.
LIVE CATTLE:
Live futures are holding moderate gains at midday (i.e., up 10 to 57 points), supported by short covering/profit taking following Monday's crash. Chart supports appear to be above 120 basis April. Tall country premiums should continue to cause aggressive bears to think twice. Beef cut-outs are higher at midday, up 0.29 (choice, $220.20) to 0.80 (select, $214.42) with very light box movement (29 loads of choice cuts, 9 loads of select cuts, zero loads of trimmings, 9 loads of coarse grinds).
FEEDER CATTLE:
Feeder issues are narrowly mixed near the top of the noon hour (i.e., from 22 points higher to 27 lower). Trade volume is very light with most focusing on potential developments in the live market.
LEAN HOGS:
Lean contracts are moderately lower as the trade prepares to move into the final hour of business. Pressure is tied to spillover selling from yesterday's implosion and nervousness regarding the ability of wholesale demand to handle the high tide of early spring production and tonnage. The pork carcass value fell by more than a buck according to the noon report, particularly pressured by a lower belly primal (i.e., off $6.42). Pork cut-out: $77.94, off $1.18. CME cash lean index for 03/24: 70.24, off 0.67 (DTN Projected lean index for 03/27: NA).

Tuesday Morning Livestock Market Summary

GENERAL COMMENTS:
Cattle traders are probably in for a typically slow Tuesday with neither side in a hurry to define bids or asking prices. Our guess is that some cattle will be priced around $132 to $133 in the South and $215 in the North. Live and feeder issues should open lower, pressed by residual selling interest and late-month beef demand.
Hog buyers seem likely to resume procurement chores Tuesday with bids ranging from steady to $1 lower. Negatively, plentiful supplies seem to be flowing curb-to-curb. Positively, packet margins are improving with the cost of live inventory slipping lower and carcass value firming. Lean futures seem staged to open lower, checked by spillover selling and pre-report long liquidation.
 BULL SIDE BEAR SIDE
1)New showlists distributed in cattle feeding country Monday looked mostly smaller with only Colorado beef producers offering more ready steers and heifers.1)Beef cutouts started the week with a crash, plunging sharply lower on Monday in the week of last week's big kill of 613,000 head.
2)Advanced boxed beef sales (i.e., negotiated with delivery 22 days plus) continue at a very aggressive pace. Last week such action totaled 1,135 loads, the third consecutive week over 1,000 loads and the largest round of business since mid-February. Packers will need to keep chain speed cracked up through April to fill these orders.2)Cattle futures retreated sharply lower on Monday with long liquidation and technical selling tied to the sudden normalizing of Brazilian meat exports.
3)The pork carcass value closed moderately higher to start the week, supported by stronger demand for bellies, butts and ribs.3)Lean hog futures were also hammered by triple-digit losses Monday with nearby contracts closing at new 2017 lows.
4)Bird flu, domestic and abroad, continues to bode well for U.S. pork prices. Additionally, this week is forecast to be seasonally lower than last week.4)The USDA will issue the March 1 Hogs & Pigs inventory on Thursday and it will probably confirm record large numbers in virtually every category of the report. The total hog inventory could be up 5% or more and the winter pig crop will likely be 4% larger.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (North American Meat Institute) -- USDA's Grain Inspection, Packers and Stockyard Administration (GIPSA) should abandon its regulatory end-run around Congress and the Courts that was initiated via three separate livestock and poultry marketing rules in the final days of 2016, the North American Meat Institute told GIPSA in three strongly worded sets of comments submitted on Friday.
"Anything less than withdrawal of these stale and controversial rules will simply line the pockets of trial lawyers, while making our industry less competitive and our livestock producer-partners less profitable," Institute President and CEO Barry Carpenter said.
The Institute's comments responded to an interim final rule (IFR) that Congress blocked for six subsequent years after it was proposed in 2010, but failed to block in 2016, leaving an opening for GIPSA to move ahead in the final weeks of the Obama Administration. The so-called "scope" interim final rule would make it unnecessary for a disgruntled producer to show harm to competition generally when challenging a particular practice by a packer. This change would represent a major reversal of long settled case law.
"GIPSA, through the IFR, is conducting an administrative end run to accomplish what it has failed to do before the courts and before the Congress," the Institute said. "As the agency concedes, that action will set in motion a cascade of litigation brought under the Packers and Stockyards Act. The impact of that litigation, or the threat of it, will be to undermine and likely roll back the significant progress made by the livestock and meat and poultry industry in meeting consumer demands during the past quarter century."
The Institute pointed out that before and after the rule was originally proposed in 2010, courts have ruled and their decisions show that the rule is even more legally problematic than originally thought.
In addition, the Institute noted that the rulemaking violates the Presidential Executive Order on reducing regulations and controlling costs, which requires that two regulations must be identified for repeal before a new regulation may move forward; that requirements has not been met. Further, the rule's costs violate the spirit of the Executive Order: "By GIPSA's own analysis, the rule would impose almost $100 million [in costs], and in reality, based on the Research Triangle Institute analysis, the cost will be much higher. "
The Meat Institute also objected to a proposed rule, originally published in 2010 and blocked repeatedly by Congress, on unfair practices and undue preferences. The proposal would impose unwarranted burdens on meat companies and discourage the use of marketing agreements that GIPSA acknowledges in its Federal Register "have increased the economic efficiency of the livestock markets and yielded benefits to producers, packers and consumers alike." Marketing agreements are used when a packer needs particular livestock to match their brand, like livestock that were raised organically, that were only grass fed or that are a certain breed.
Finally, the Institute urged GIPSA to withdraw a proposal that it claims would "facilitate a level playing field and foster fair competition in poultry grower ranking systems," theorizing that more efficient growers are rewarded and less efficient growers are penalized. "Live poultry dealers already have powerful incentives to identify growers who raise poultry most efficiently—that is why dealers use a competitive ranking system," the Institute said. "This proposal will dismantle much, if not all, of the existing system and rather than reward excellent performance it will encourage mediocrity," the Institute said.
"These two proposals were misguided when proposed in 2010, which is why Congress objected to them, and they have not improved with age," Carpenter said. 'All three should be withdrawn and the marketplace should be allowed to continue operating in its dynamic and competitive manner."
HOGS: (Farm Journal)--Mexico's top pork producer, Granjas Carroll, said on Thursday it plans to double its sow count in the next four years as part of a $550 million expansion plan, as it eyes the risk of a crossborder trade spat with the United States.
The firm's sow tally will reach some 137,000 heads by 2021, while the company will also build a $94 million slaughterhouse that can process 600 pigs per hour, said Chief Executive Officer Victor Manuel Ochoa.
"We're not just thinking about growth, we're also going to enter the meat market," he said in an interview.
Once the expansion is complete, the company will annually produce some 2.8 million pigs, or about 140,000 tonnes of meat, and the slaughterhouse will be the largest ever built in Mexico.
Uncertainty over the future of the North American Free Trade Agreement (Nafta) is forcing Mexico to look to new markets for pork, both for imports and exports, said Ochoa.