Moderate cattle trading in Kansas and Texas
finally surface late Friday at $126, $2 lower than the prior week. On
the other hand, very little business developed in the North. It will be
interesting to see Mandatory summaries later this week, but we expect to
see the confirmation of small trade volume totals.
Monday's activity in feedlot country will be
typically slow with packers focusing exclusively on the distribution of
showlists. We expect ready numbers will generally be larger, padded to
some extent by unsold steers and heifers carried over from last week.
Asking prices could stay poorly defined for several days, but we suspect
that country pricing will start out around $128 plus in the South and
$205 plus in the North. Live and feeder futures seem staged to open
moderately lower thanks to follow-through buying and the premium status
of feedlot sales.
The cash hog trade is set to open with bids
steady to $1 lower. We expected fundamentals to remain largely defensive
through the month of April, and that could mean a steady continuation
of cash erosion for the next two to three weeks. Weekly kills should
remain around 2.3 million head, and better pork demand could be delayed
until early May. Lean futures should open on a mixed basis with nearby
losing ground to deferreds.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle buyers could pay a price for stonewalling the country trade last week. Many packers will start out this week extremely short bought and facing large meat orders that need filling. | 1) | Given last week's limited trade volume totals, smaller slaughter, a greater December/January placement activity, beef producers will probably be circulating larger showlists Monday morning. |
| 2) | Live and feeder cattle futures closed sharply higher on Friday, with virtually all contracts closing well above both 40-day moving averages and 10-day moving average highs. | 2) |
From Friday to Friday last week, the
choice and select cutouts imploded by $6.90 and $6.51, respectively.
Furthermore, the wholesale trade clearly remained on the defensive right
before the weekend break with box supplies described as "moderate to
heavy."
|
| 3) | The pork carcass value closed with impressive strength on Friday, bolstered by better demand for all primals except the ham. | 3) | During the week ending April 4, noncommercial traders were net sellers of lean hog futures, reducing the net long by 4,800 to the 23,700 contracts. |
| 4) |
The late Easter may help
explain why loins, butts and ribs have unusually all dropped rather
sharply in value the past three weeks. Once the holiday has passed, a
significant recovery may be in store.
|
4) | Last week's hog slaughter totaled as much as 2.306 million head, nearly 7% greater than last year. Such ambitious tonnage is clearly challenging early spring demand. |
OTHER MARKET SENSITIVE NEWS
CATTLE: (BEEF Central) -- AUSTRALIA's March beef
exports have mounted a modest recovery after a particularly slow start
to the trading year, but remain well down in monthly comparisons against
the previous few years.
Trade to all offshore markets in March reached
90,734 tonnes, back about 6000t or 6.2 percent on the same period last
year, and a deficit of almost 34,000t on March 2015, when the industry
was still in herd liquidation overdrive due to drought.
The March result is the lowest since the two wet
years of 2012-13, when beef producers were holding cattle back due to
bumper seasons.
While the general shortage of slaughter cattle
after two years of drought -- which has driven the national beef herd to
20 year lows -- is again the underlying cause behind the March figures,
Australia's beef export competitiveness in an increasingly congested
global market is also a factor.
Exports out of the US -- particularly to
Australia's premium markets of Japan and South Korea -- are resurgent
this year, as are Brazilian beef exports to markets like China and the
Middle East.
March trade into Japan, Australia's largest
export customer this year by volume and value, reached 28,245t, a rise
of 5500t or 24pc on February, and up about 17pc on this time last year.
Trade to Japan would have been higher in March,
but there was some strategic restraint shown by importers and exporters,
in order to benefit from the next import tariff reduction into Japan,
under the Japan Australia Free Trade Agreement, which took effect from
April 1. That would suggest April trade may carry a little more weight,
to compensate. Grainfed exports were 12pc higher year-on-year, and
grassfed beef was up 24pc.
After a sharp decline in trade during February
as the A$ surged, exports to the US showed a solid recovery in March,
totalling almost 22,000 tonnes. That compares with more than 26,200t in
March last year, however, representing a 16pc decline, and remains a
long way behind the boom times 18-24 months ago when US monthly exports
regularly topped 35,000t.
HOGS: (meatfyi.com) -- Brazil's Agriculture
Ministry said on Thursday it had found salmonella and staphylococci in
eight of the 302 samples of meat-based products collected from the 21
meat processing plants being investigated in a corruption probe.
The ministry said it had started procedures to
cancel the federal inspection licenses of at least two companies in
connection with the findings. Without such licenses, which certify that
products are safe, meatpacking companies cannot operate.
The ministry's audit work also raised issues
such as excess starch in sausages and water beyond the tolerated limits
in chicken samples. Such problems were found in 10.2 percent of the
samples, the ministry said.
The 21 plants involved in the audit were
implicated in a probe that alleged that major meatpackers bribed federal
health inspectors to allow production and marketing of irregular
meat-based products.
After concluding the audit work ahead of
schedule, the government said it would "intensify inspections" and
advance the audit calendar.
Inspections are being carried out in the states
of Bahia, Tocatins, Rio de Janeiro, Santa Catarina and São Paulo, the
ministry said.
"We want the audits to give us a real sense of
the state of inspection services in each state," said Eumar Novacki,
executive secretary at the Agriculture Ministry. The findings of the
audits will be shared with federal prosecutors and the federal police,
he said.
On March 17, an investigation of government
sanitation authorities implicated meat-packers such as BRF SA and JBS
SA, and prompted large buyers such as China and Hong Kong to ban
Brazil's meat products temporarily.
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