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Friday, June 30, 2017

Friday Closing Livestock Market Summary

GENERAL COMMENTS

The cash cattle market Friday was very slow with just a handful of sales reported in parts of Nebraska. Trade volume totals look no better than moderate for the week, suggesting that feedlot managers will be offering a plate of leftovers when trade resumes after July 4th. The national hog base closed off $1.28 compared with the prior day settlement ($82-$88, weighted average $85.76). From Friday to Friday, livestock futures scored the following changes: Jun LC off $0.10; Aug LC up $1.03; Aug FC Up $2.97; Sep FC Up $3.62; Jul LH Up $5.32; Aug LH Up $5.10. Corn futures closed 11 cents higher, ignoring a larger-than-expected planting total. The stock market closed mixed with the Dow up 62 and the NASDAQ off 3.
LIVE CATTLE
Futures closed mostly higher up 97 to off 110. Spot June expired Friday at $119.10, converging very close to most of this week's live business. New spot August will take the lead on Monday, discounted about $3 from the five-area steer average. The board did seem to find some stability this week, above the lows of last week. Yet the question remains of whether or not August and October are discounted enough given expectations of large third-quarter beef supplies. Beef cut-outs: lower (choice, $224.73 off $1.82, select $208.42 off $1.74) on light-to-moderate demand and moderate to heavy offerings (57 loads of choice cuts, 35 loads of select cuts, 10 loads of trimmings, 20 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL:
Steady to $2 lower. Monday will be typically slow with packers focusing exclusively on the distribution of new showlists. Our guess is that it will take until Wednesday or Thursday to gage the success of holiday meat clearance.

FEEDER CATTLE
Futures closed higher with deferred contacts gaining triple digits. Feeders were supported by further strength in deferred live contracts as well as the premium of the cash index. CME cash feeder index: 06/29: $149.23, up $0.53.
LEAN HOGS
Futures closed modestly to sharply higher, up 30 to 300. Apparently, many traders believed strong pork demand and the addition of several major packing houses will be more than sufficient to handle the likelihood of record pork production that was pretty much guaranteed by the USDA Hogs and Pigs report. Once again spot July stet a new contract high, surging over 90.00 thanks to the on-going strength of the cash index and signs of appreciating carcass value. Pork cut-out: $102.92 (FOB Plant) up $0.60. CME cash lean 06/28: $91.66, up $0.16 (DTN Projected lean index for 06/29: $91.72, up $0.06).
MONDAY'S CASH HOG CALL
Steady to $1 higher. Look for early week cash to be steady/firm, though buyers could be relatively cautious until work resumes in full force following the holiday.

Friday Midday Livestock Market Update

GENERAL COMMENTS:

Sharp gains have quickly moved into lean hog futures with traders focusing on strong nearby buyer support. This has moved July and August contracts to new contract highs as traders not only pushed strong support into nearby trade, but also through most deferred contracts. Aggressive losses in cattle markets have been quickly trimmed at midday with trader interest seemingly slowing significantly over the last hour of trade. Corn prices are higher in light trade. July corn futures are 5 cents higher. Stock markets are higher in light trade. The Dow Jones is 62 points higher while Nasdaq is up 2 points.

LIVE CATTLE:
Light losses are seen late Friday morning in live cattle futures as traders are heading toward the last hour of trade. With very light trade seen in the market, the inability for additional selling pressure to step back into the market has allowed losses to quickly back away from firm triple-digit moves in nearby contracts, to current shifts lower of 2 to 40 cents per cwt. The overall lack of trade volume in the market continues to be the largest factor in the complex are looking past early next week with the upcoming holiday on Tuesday, but now are focusing on most traders not stepping into the market until the middle of the week or later. Cash cattle trade is expected to be essentially done for the week with some clean-up trade possible through the rest of the day. A few bids have developed during the morning at $119 live basis and $190 dressed basis, and reports of a few cattle trading in the North at $119 live basis for delayed delivery. At this point, with prices falling $3 per cwt in the South and $4 to $5 in the North from last week, the market seems to have been set, and packers will be willing to gain access to additional numbers if the opportunity arises before month end. Beef cut-outs at midday are lower, $1.39 lower (select) and down $1.31 per cwt (choice) with light movement of 75 total loads reported (42 loads of choice cuts, 16 loads of select cuts, 6 loads of trimmings, 12 loads of ground beef).

Feeder Cattle:
Feeder cattle futures remain lower late Friday morning, but traders have quickly backed away from the aggressive triple digit losses that have held the first couple hours of trade. Even though nearby lean hog futures continue to trade 30 to 40 cents per cwt lower, the fact that markets have moved $1.50 to $2 per off of market lows during the session and likely will close the session higher is significant in helping to draw additional support back into the complex at the end of the month. This may help to stimulate some much needed market stability that had been focused upon over the last couple of trading sessions. Light trade is expected to be seen through the rest of the session, but the lack of trade interest may keep markets in a wide price shift. .

LEAN HOGS:
Light trade is seen through lean hog futures at midday, although the aggressive support which developed through the morning has continued to maintain early price rallies. This appears to be able to hold contract highs in both July and August contracts through the end of the month. The ability to maintain these levels, would help stimulate additional strong chart support through the entire lean hog futures over the next couple of weeks. August futures continue to lead the market higher with a $2.50 per cwt rally at midday as prices are holding at $83.25 per cwt. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $2.08 at $84.96 per cwt with the range from $82.00 to $87.00 on 2,496 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $2.35 at $86.11 per cwt with the range from $82.00 to $87.00 on 395 head reported sold. The National Pork Plant Report reported 115 loads selling with prices falling $0.81 per cwt. Lean hog index for 6/26 is at $91.10 up $0.48 with a projected two-day index of $91.50 up $0.40.

Friday Morning Livestock Market Update

GENERAL COMMENTS:

Although a limited amount of clean-up trade is possible Friday, we suspect that the cash cattle trade is essentially done for the week. Cattle remaining on showlists are priced around $122 to $123 in the South and $192 to $193 plus in the North. Live and feeder futures should open on a mixed basis thanks to a slow combination of residual buying and pre-weekend profit-taking. Spot June is set to expire at high noon.
Hog buyers are expected to resume work Friday with bids steady to $1 high. The June 1 Hogs & Pigs report contained few surprises. Herd expansion seems to be securely in place. The summer and fall farrowing intentions were marginally smaller than expected. Yet "intentions" are soft numbers to begin with so we don't think there's much here to hang your hat on. Lean futures are staged to begin with uneven price action tied to bull spreading and profit-taking.
BULL SIDE BEAR SIDE
1) Once again, live and feeder futures ignored bearish beef demand news by closing solidly higher on Thursday, further underscoring the potential significance of Wednesday's reversal off last week's lows. 1) The wholesale beef trade continued to implode on Thursday with cutouts quoted sharply lower again (i.e., choice and select off $2.80 and $2.51, respectively) and box supplies described as "heavy." From Thursday to Thursday, the choice and select box lost a staggering $16.33 and $6.76, respectively.
2) Beef exports last week totaled 14,900 metric tons, up 9% from the previous week and 8% from the prior four-week average. 2) For the week ending June 17, cattle carcass weights took a big jump: all cattle averaged 803 pounds, 7 lbs greater than the prior week but 13 lbs below 2016; steers averaged 855 lbs, 8 lbs heavier than the week before and 12 lbs lighter than last year; heifers averaged 782 lbs, 5 lbs bigger than the previous week and 12 lbs smaller than the year before.
3)
Spot July lean hog futures posted another new life of contract highs, settling at $89.48, still nearly a 220-point discount to Wednesday's two-day CME settlement index.
3) The pork carcass value faltered by more than a buck on Thursday with all major primal contributing except the belly.
4) Net pork export sales last week jumped to 26,200 MT, up 6% from the previous week and 43% from the prior four-week average. 4) Though generally well anticipated, the spring pig crop, at 32.3 million head, was documented historically huge. Specifically, it is the second largest March-May pig crop since estimates began in 1970.

OTHER MARKET SENSITIVE NEWS

CATTLE: (foodmarket.com) -- Pork and beef feature volume are nearly neck and neck heading into the Fourth of July holiday weekend. Beef features account for 26.6% of total protein features, while pork claims 25.6%. Seafood just barely misses the second spot with 25.3%, and chicken accounts for 17.2%. Question is -- which protein will dominate front page ad space?
Burgers and dogs are Fourth of July staples in American backyard cookouts. While retail beef prices have come down and have generally hovered around 3-year lows to date in 2017, average ground beef prices on 80% lean are still up $0.66 per lb. from the low set in April of this year. This week, 80% lean averages $3.36 per lb. on feature, however, it's worth noting that several large supermarket chains are offering prices at sub-$2 levels. Ground beef featured in the area of $1.79 per lb. has debuted on holiday front page ads this week, and will certainly command attention at the meat case.
Rounding out the beef complex, top round London Broil is on feature for $3.60 per lb., on par with year ago levels. The steak complex averages $7.80 per lb., which is slightly higher than Father's Day feature levels just a few weeks ago. Some chains are discounting more than others for Independence Day, with prices on T-bone steaks ranging anywhere from $6.99 to $9.99 per lb. on average.
One thing is for sure—it's hard to compete with the availability and cheap prices of pork this summer. Boneless, center-cut pork chops average $2.95 per lb. on feature this week, down roughly 50 cents per lb. from a year ago. Back ribs run $3.26 per lb. on average this week, but run as low as $1.77 per lb. in some areas. Pork shoulder, a hard to beat item at the meat case in terms of value and its ability to feed a crowd, ranges from $1.00 to $1.99 per lb. this week. Pork, in its various forms, has won top front page real estate throughout many ads this holiday as a competitively priced grilling item.
While boneless skinless chicken breasts might be pricing themselves out of the competition this holiday at an average $4.07 per lb., the dark meat complex ranges from $0.94 to $2.89 per lb. and could claim some space on the grill among poultry fans. Ground turkey averages about $3.60 per lb. this week.
For the seafood lovers out there from coast to coast, cooked shrimp runs $8.43 on average depending on count size. Tilapia averages $4.91 per lb., down 5% from a year ago. Cod fillets run $7.99 per lb., up 25% from a year ago. Atlantic salmon boneless fillets are featured at $9.66 per lb., compared to $7.85 a year ago.
HOGS: (National Hog Farmer) -- America's pig farmers are producing more pork with a 3% jump in production this year. As the U.S. pork industry produces more it is reasonable to expect prices to drag, explains Dermot Hayes, Ph.D., Iowa State University economist, to an audience at 2017 World Pork Expo.
Yet, hog prices this year are still decent, and the main reason is strong pork demand. Looking at second quarter numbers, Hayes points out that pork production climbs 3.4% whereas pork demand is a net increase of 4%. The growth in pork demand is not domestically as it remains relatively flat in 2017. Exports account for the majority of the increase in pork demand so far into the year.
"As of April this year, exports are up 15%. So, when you have 15% increase in a market that's responsible for almost one-third of your production that can explain why prices are high when production is high also, " states Hayes. "It is as if we added 4-5% more pork-consuming Americans to the base."
Looking at the big export picture, the United States is shipping more pork this year to its international markets except for China, which remains unchanged. Canada, on the other hand, is only up 5% from the previous year. Canada is exporting so much to China, up 123%, that all its other international marketplaces show negative gain from 2016.
China imported additional 3 million tons by the end of April 2017, making it the No. 1 pork importer last year. As a result, Hayes says it kept the European Union and Canada busy while the United States backfilled pork to the remaining countries. "We (U.S.) are getting the benefits of China without actually shipping a whole lot of product there," notes Hayes.
Turning to the European Union, the growth in Spanish pork exports is often overlooked. Hayes says Spain's pork exports to France and Italy are flat to down, but it is shipping substantially more to China. Currently, it is exporting 2,000 20-ton shipping containers to China monthly. Similar, Germany's pork shipments are up for China, but down to its other traditional markets.
Hayes presents global hog production benchmarking data from a collaborative international project (accounting for exchange rates). With the exception of Mato Grosso, Brazil, the U.S. hog production costs are lowest, especially for finishing hogs. Although Mato Grosso production costs calculate lower, the country has less access to international markets due to foot-and-mouth issues. In comparison, Canada beats the United States for sow costs, but the importing of grain to finish hogs drives its overall production costs higher.
China's much higher production costs are a result of expensive feed costs. Also, productivity is less as biosecurity is challenging with a greater density of sows in a geographic area. Examining the data, Hayes explains even with the extra transportation costs and import fees, it is cheaper to bring in pork from the United States. However, ractopamine-produced pork continues as a barrier.
As for sow numbers, South America and North America are trending higher while China and the European Union show a decline presently.
Although China and the European Union appear to be on a downward trend for sow numbers, the decline in sow numbers is the reflection of removing unproductive sows from the herd. Early in year reports from China indicating expansion mode was starting, however, Hayes presents a statement release from China from two weeks ago that states the opposite.
"Implementations of strict environmental regulations will further constrain China's sow herd recovery in 2017. Post is decreasing its 2017 sow estimates by 12% to 38 million head. This reduction will impact the 2017 pig crop, decreasing domestic pork production to 51 million metric tons."
Hayes explains this pencils to 6 million reduction in China's future sow numbers.
Hayes confirms that Ireland, Great Britain and Spain are adding sows to their herds.
"The one thing that might concern you is if all Americas are expanding then we better have a market for all this product. You don't often see all the countries expanding at once," notes Hayes.
Overall, U.S. hog farmers are extremely competitive with low production costs and superior efficiencies. As reflected in the USDA long-term projection for pork exports by country, the United States is an excellent position for export growth.

Thursday, June 29, 2017

Thursday Closing Livestock Market Summary

GENERAL COMMENTS
Light-to-moderate cash trading surfaced in most feeding states Thursday at lower prices. Live sales in the South were marked at $119, mostly $3 lower than last week. On the other hand, the lion's share of dressed biz in the North took placed at $189, $4-$5 lower. According to the closing report, the national hog base is $1.57 higher ($81.00-$89.50, weighted average $87.12). Corn futures finished generally 3 cents higher, boosted by spillover support from wheat and suggestions the drought in the northwestern Plains may be moving into parts of Nebraska and Oklahoma. The stock market closed lower with the Dow off 168 points and the Nasdaq down by 90.
LIVE CATTLE
Soon-to-expire spot June finished 5 points higher. Yet the balance of the market closed with respectable price progress (i.e., up 87 to 132). Once again, the board seemed to ignoring discouraging noise coming out of the wholesale trade. Furthermore, it was positive see the board build on Wednesday's bounce off last week's lows. Beef cut-outs: sharply lower, off $2.51(select, $210.16) to $2.88 (choice, $226.55) with light-to-moderate demand and heavy offerings (90 loads of choice cuts, 36 loads of select cuts, five loads of trimmings, 22 loads of ground beef).
FRIDAY'S CASH CATTLE CALL:
Steady with Thursday. Late-week business will probably be limited with some feedlots deciding to carry unsold steers and heifers into next week.

FEEDER CATTLE
Feeder issues settled 77 to 217 higher with Sep through May 2018 surging by triple digits. Deferred buying was clearly cheered on by solid progress scored in deferred live cattle. CME cash feeder index: 06/28: $148.70, up $1.84.
LEAN HOGS
Despite the traditional uncertainties surrounding H&P reports, bulls seemed to throw caution to the wind and proceed with the steady program of buying, especially in nearby contracts. Prices settled 32 to 155 higher with spot July setting a new contract high. The June 1 hog inventory tuned out to be generally neutral, fitting reasonably well with trade expectations: total hogs, up 3%; kept for breeding, up 2%; kept for marketing, up 4%. The carcass value stumbled more than a buck lower, pressured off $1.22. CME cash lean index for 06/27: $91.50, up $0.40 (DTN Projected lean index for 06/28: $91.66, up $0.16).
FRIDAY'S CASH HOG CALL
Steady to $1 higher. Look for cash hog buyers to conclude pre-holiday activity with a short round of steady/firm bids.

Thursday Midday Livestock Market Summary

GENERAL COMMENTS: 
Firm buyer support is seen across livestock trade Thursday as traders focus on aggressive nearby gains in the lean hog complex. This support in July lean hog futures continues to set contract highs with the focus on aggressive pork cutout values and firming cash markets leading traders to push nearby futures higher. Cattle trade has moved higher, although narrow trading ranges have held Thursday, which is a shift from the wild triple digit swings seen earlier in the week. Corn prices are higher in light trade. July corn futures are 3 cents higher. Stock markets are lower in light trade. The Dow Jones is 162 points lower while Nasdaq is down 99 points.
LIVE CATTLE:
Early mixed futures trade has been replaced by firming buyer support that has moved into the live cattle futures. June futures remain lightly traded with 12 cent gains, while August through December contracts have gained additional strong support with buyers quickly moving back into the market. This pushed prices 50 to 80 cents per cwt higher as traders rallied higher midday focusing on the potential to move away from support levels set last week. The ability to create a summer low through the middle of June and draw additional trade interest back into the complex through the next several weeks. Cash cattle is starting to develop with light activity starting to be seen in the South with prices seen at $119. This is generally $2 per cwt lower than last week's price levels, although at this point, trade remains extremely light and not enough volume to establish a full market trend. Bids are redeveloping in the North at $118 to $120 live and $188 to $190 dressed basis. These bids are steady to weak with where light trade was seen Wednesday. More active trade is expected to develop either late Thursday afternoon, or Friday. Even though both sides would desire to wrap things up early before the holiday weekend, active trade may push into late Friday. Beef cut-outs at midday are lower, $1.35 lower (select) and down $2.16 per cwt (choice) with light movement of 77 total loads reported (44 loads of choice cuts, 18 loads of select cuts, 1 load of trimmings, 14 loads of ground beef).
FEEDER CATTLE:
Lean hog futures have moved higher in a narrow range after traders have allowed prices to bounce higher and lower through the morning. Very little direction is being seen through the complex Thursday, which is a significant shift from the wide ranging triple-digit price swings seen each of the market sessions earlier this week. But the ability for markets to close higher midweek and hold these recent gains, is showing a renewed sense of market stability in both live cattle and feeder cattle trade, which could bring additional commercial support back to the market.
LEAN HOGS:
Strong nearby gains seen in July and August futures contracts have helped set the tone for the entire complex Thursday as firm commercial support has swept through all contract, replacing early pressure in deferred contracts. This lack of pressure through the market is offsetting the upcoming hogs and pigs report which is expected to post increased hog numbers and general expansionary tones through the market. The focus in nearby summer contracts continues to be driven by the aggressive fundamental support seen over the last few weeks as traders focus on firm cash market support and aggressive recent moves in pork values. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.43 at $84.12 per cwt with the range from $81.00 to $84.23 on 2,496 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 101 loads selling with prices falling $1.05 per cwt. Lean hog index for 6/26 is at $91.10 up $0.48 with a projected two-day index of $91.50 up $0.40.

Thursday Morning Livestock Market Summary

GENERAL COMMENTS:

Light to moderate trade surfaced in the northern tier of cattle feeding country. Dressed sales were mostly married at $190 to $191, $3 to $5 lower than last week. Once futures bounced higher off last week's lows, country selling interest seemed to dry up. Asking prices Thursday should start out around $122 to $123 in the South and $193 plus in the North. Live and feeder futures were moderately higher thanks to residual buying interest and short-covering.
The cash hog trade seems staged to open with bids steady to $1 higher. Look for the June 1 Hogs & Pigs report to be released Thursday afternoon. Average trade guesses call for all hogs to be 3% to 5% larger with the sow herd up by 2% to 3%. Lean futures should open on a mixed basis as the board positions ahead of the new quarterly inventory.
BULL SIDE BEAR SIDE
1) Live and feeder futures staged impressive reversals Wednesday with all contracts settling 150 to 350 plus above session lows. The action was all the more impressive given defensive signs from the wholesale trade. 1) Though Wednesday's cash cattle trade was not widely tested, dressed sales in the North were as much as $4 to $5 lower than last week. This crack seems wide enough to poison the well of the greater cash trade set †o surface Thursday and/or Friday.
2) Wednesday's major divergence between lower beef cutouts on one hand and higher futures on the other may be a sign of increasing bottom-picking activity. 2) Beef cutouts continued to dive bomb on Wednesday with the choice box losing more than $4 for the second consecutive session. Box supplies were described as "moderate to heavy."
3)
The pork carcass kept on its bullish roll at midweek and made new highs. The rally was powered mostly by stronger demand for ribs, picnics and bellies.
3) For the week ending June 24, U.S. hatcheries set 224 million eggs in incubators, up 2% from a year ago. At the same time, chicks placed totaled 183 million chicks; up 2% from 2016.
4) Nearby lean hog futures closed with impressive progress on Wednesday with spot July set a new contract high. Also, for the week ending June 24, Iowa barrows and gilts average 276.9 pounds, .6 lbs lighter than the week before and .9 lbs below 2016. 4) Long liquidation and commercial selling in lean futures prior to Thursday's release of the June 1 Hogs & Pigs report seems to be the most prudent behavior among traders.

OTHER MARKET SENSITIVE NEWS

CATTLE: (Business Insider) -- ABC News and Beef Products Inc. reached a settlement in a $5.7 billion lawsuit that claimed a story ABC ran in 2012 misled viewers and caused hundreds of layoffs.
On Wednesday, ABC announced it had reached an "amicable resolution" with BPI. The terms of the settlement are confidential, the Sioux City Journal reported.
BPI's attorney, Dan Webb, said that the settlement "vindicates" the company and its production of "lean finely textured beef," the product that ABC dubbed "pink slime" in its 2012 reports, Sioux City Journal's Nick Hytrek reported.
"Although we have concluded that continued litigation of this case is not in the Company's interests, we remain committed to the vigorous pursuit of truth and the consumer's right to know about the products they purchase," ABC said in a statement.
The news comes less than a month after lawyers made their opening statements in a trial that could have resulted in a verdict of as much as $5.7 billion if BPI had won.
In the suit, BPI alleged that ABC misled viewers by calling "lean finely textured beef" (LFTB) "pink slime." LFTB is a commonly used ingredient in beef products and is safe to eat, which ABC noted in its report. However, even with assurances that the ingredient, which is made from the trimmings of a cow and treated with ammonia to kill bacteria, wasn't dangerous, the phrase "pink slime" allegedly turned off customers.
"They ignored the proper name," BPI's lawyer, Dan Webb, said in his opening argument, according to the Hollywood Reporter. "When you have a major news organization that is calling the product 'slime,' witnesses will say they can't imagine anything worse. It connotes something disgusting, inedible."
BPI said it had to close three plants and lay off 700 workers due to "pink slime" backlash.
Meanwhile, ABC's attorney argued that the "pink slime" reports brought light to the fact that BPI and other ground beef producers had been using an mostly-unknown beef product that most shoppers and customers were unaware they were eating.
HOGS: (Wallaces Farmer) -- The new $300 million pork processing plant being built at Sioux City is set to open in September, giving hog farmers in northwest Iowa and bordering states a new market. Officials of Seaboard Triumph Foods outlined their plans at a press conference at the recent World Pork Expo in Des Moines.
"We're still on schedule and getting close to opening," says Mark Porter, CEO of Seaboard Triumph. "We are planning to begin operations no later than the first week of September." The Sioux City plant is an equal partnership between Seaboard Foods and Triumph Foods.
Company officials say the Sioux City location gives them good access to a supply of market-ready hogs. The plant has access to transportation, an experienced workforce and a pro-business environment. "We're very happy to be in Sioux City," says Terry Holton, president of Seaboard Foods.
The facility is initially set to process about 10,000 hogs per day in a single shift. Seaboard Triumph officials say they plan to expand to a second shift next year, raising daily processing capacity to 21,000 hogs.
Seaboard and Triumph will each supply one-third of the hogs for the packing plant from producers who already contract to sell to each company. The remaining one-third of the hogs will be purchased from independent producers. The companies have been actively seeking production contracts with local farmers in recent months, preparing for the plant's opening.
"One of the questions we get is what impact will the plant have on hog prices?" says Holton. "It will probably raise them, because we have new capacity and it will add to the demand for hogs. That's how the market works."
Seaboard Triumph plans to slowly ramp up production this fall as it trains new employees. The plant will create 1,100 new jobs, accounting for $48 million in payroll initially. The starting wage for production workers is expected to be $15. Holton says the majority of the jobs will be filled by local residents, adding to wages in a region that already has a relatively low unemployment rate. Sioux City's unemployment rate has been running slightly below Iowa's 3.1% unemployment rate.
Seaboard Triumph is also working with city and state leaders to assist immigrant refugees who are in need of jobs to fill some positions, says Porter. While the plant will initially employ 1,100 workers, officials expect to add an additional 1,000 workers by next summer, when it begins operating a second shift. Filling the 2,100 Iowa jobs may be tough, considering there are competing livestock and poultry processing plants in the area.
In addition to recruiting workers regionally, Seaboard Triumph is working with the state of Iowa to make Sioux City a primary refugee resettlement location. The company has also talked with government agencies about supplying workers through a federal visa program.
"If we create the right working environment for people and offer fair benefits and wages, we believe we can attract the workers we need," says Holton.
Another pork processing plant is under construction in northern Iowa. Prestage Foods, headquartered in North Carolina, is building a $240 million pork processing plant that's expected to open in 2019. This plant, in Wright County in north-central Iowa, is expected to initially employ 920 workers.

Wednesday, June 28, 2017

Wednesday Closing Livestock Market Summary

GENERAL COMMENTS
Cash cattle trade started to develop in feedlot country late Wednesday morning with a few deals in the North; dressed bids of $190 to $191 per cwt. There were a few live bids at $117. Generally, asking prices should become more focused Thursday as traders concentrate on ending the month and getting ready for the upcoming holiday weekend. The Fed Cattle Exchange Auction report Wednesday listed a total of 2,554 head, with 480 actually sold, 1,868 head listed as unsold, and 206 head listed as PO. The state-by-state breakdown looks like this: Kansas 384 total head, with 100 head sold at $119.00, 159 head unsold and 125 head PO ($119.50); Nebraska 1,428 total head, with 160 head sold at $120.00, and 1,268 head unsold; Texas 536 total head, with 220 head sold at $119.75, and 316 head unsold; Colorado 81 total head, all listed as PO ($117.00); Iowa 125 total head, all unsold; other states, no test. The weighted averages were: 1-9 day delivery 320 head, with a weighted average of $119.51; 1-17 day delivery 160 head, with a weighted average of $120.00. According to the closing report, the national hog base is $0.22 lower compared with the Prior Day settlement ($81.00-$87.50) weighted average $85.59. Corn futures moved lower Wednesday in light activity. July futures were 2 cents lower. The Dow Jones Index is 143 points higher with the Nasdaq up 87 points.
LIVE CATTLE
Moderate commercial buying in live cattle redeveloped at midday Wednesday, eroding early weakness and allowing contracts to clos $0.60 to $1.10 higher. This supportive move also pushed feeder cattle trade to triple-digit higher. June live cattle futures closed at $120.25 per cwt with increased market support potential at the end of the week. Beef cut-outs: lower, $2.59 lower (select, $212.67) to down $4.48 (choice, $229.43) with light demand and heavy offerings (77 loads of choice cuts, 48 loads of select cuts, 20 loads of trimmings, 19 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL:
Steady. Light trade started to develop Wednesday with a small number of cattle selling in the North at $190 to $191 per cwt on a dressed basis, while live cattle traded on the Fed Cattle Exchange from $119 to $120 per cwt. This could indicate market direction through the end of the week, although active bids and asking prices are still hard to pin down given the shifting moves in futures and wide variation of losses in boxed beef values. Active cash cattle trade may be delayed until late Thursday or Friday.

FEEDER CATTLE
Feeder cattle futures posted strong, triple-digit gains Wednesday despite starting sharply lower early in the session. The abrupt market turnaround could be the turning point in the week for the cattle complex ($0.60 to $2.10 higher). Even though sharp losses developed in beef values at midday, the start of light cash cattle trade seemed to ease most cattle traders minds a bit as traders in both live cattle and feeder cattle markets quickly replaced moderate to strong losses with firm gains at closing bell. The volatility through the week continues to drive widespread market shifts in all cattle markets, and could lead to even more market uncertainty not only at the end of the week, but also through the end of June. CME cash feeder index: 6/27: $146.86, up $0.44.
LEAN HOGS
Lean hog futures ended mixed following strong early gains in nearby contracts and early support in pork values ($0.47 lower to $1.45 higher). Active trade in the pork complex continued to spark increased buyer interest in summer contracts, once again moving July futures to contract highs. July futures rose to $87.92 per cwt as traders remain focused on the ability to quickly and efficiently move pork through the system this summer. Even as active commercial interest remains focused on nearby contracts, deferred futures moved lower as traders are still focusing on production gains and concerns that long-term demand may not continue to keep pace with production levels. Carcass values surged higher on moderate volume. Gains in all primals except hams left strong support in picnics and ribs to direct the overall cutout values. Pork cut-out: $103.54 up $1.23. CME cash lean index for 6/26: $91.10, up $0.48. DTN Projected lean index for 6/27 $91.50, up $0.40.
THURSDAY'S CASH HOG CALL
Steady to $1 lower. Light to moderate pressure through the last half of the week is expected to trickle into the cash markets as traders focus on upcoming holiday schedules. The support in pork values is likely to create some additional market momentum, but may not sustain higher cash values before the holiday weekend or end of the month. Expected slaughter numbers Thursday are 435,000 head with an estimated 21,000 head likely on Saturday.

Wednesday Midday Livestock Market Summary

GENERAL COMMENTS: 
Mixed trade is starting to develop in live cattle trade as lack of selling pressure has been seen through the complex. Despite the sharp losses in beef cutout values, the potential for cash cattle trade to develop through the day could help to stabilize the cattle market through the last half of the week. Hog markets have rallied higher following a strong move higher in pork values. Corn prices are lower in light trade. July corn futures are 2 cents lower. Stock markets are higher in light trade. The Dow Jones is 157 points higher while Nasdaq is up 71 points.
LIVE CATTLE:
Live cattle futures are mixed at midday after traders were unable to bring additional pressure back into the complex following early losses. The narrow market moves through the complex could bring about additional stability midweek as cash markets appear to be starting to develop in several areas. Cash cattle trade started to trickle into the market through the North at $190 and $191 per cwt. At this point there are just over 200 head report sold in Nebraska and 250 head sold in Iowa, which is not enough to establish a trend. But this could create additional movement through the rest of the week. Bids are seen at $117 per cwt live basis early Wednesday. Activity on the Fed Cattle Exchange Auction report today listed a total of 2,554 head, with 480 actually sold, 1,868 head listed as unsold, and 206 head listed as PO. The state by state breakdown looks like this: KS 384 total head, with 100 head sold at $119.00, 159 head unsold and 125 head PO ($119.50); NE 1,428 total head, with 160 head sold at $120.00, and 1,268 head unsold; TX 536 total head, with 220 head sold at $119.75, and 316 head unsold; CO 81 total head, all listed as PO ($117.00); IA 125 total head, all unsold; other states, no test. The weighted averages are as listed: 1-9 day delivery: 320 head, with a weighted average of $119.51; 1-17 day delivery 160 head, with a weighted average of $120.00. Beef cut-outs at midday are lower, $2.07 lower (select) and down $4.19 per cwt (choice) with active movement of 99 total loads reported (45 loads of choice cuts, 28 loads of select cuts, 18 load of trimmings, 8 loads of ground beef).
Feeder Cattle:
Moderate pressure is holding through the feeder cattle market as traders continue to focus on weaker cattle markets midweek with front month August contracts holding a $1 per cwt loss at midday. The lack of support through the complex is limiting trade interest in deferred markets, although the inability to bring buyers back to the table may leave prices eroding quickly lower through the rest of the week. If these market lows continue to be seen at the end of June, traders could focus on additional market softness during early July, concerned that open interest and additional commercial liquidation may develop over the next couple of weeks.
LEAN HOGS:
Sharp gains in pork values has helped to spark additional nearby commercial buyer support through the futures market Wednesday morning. This pushed July and August futures to triple digit gains once again with July contract moving $1.10 per cwt higher and trading at $87.60 per cwt. The ability to set new contract highs continues to bring additional market interest back into not only nearby futures trade, but also the rest of the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.81 at $85.00 per cwt with the range from $81.00 to $86.50 on 6,709 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $1.29 at $85.15 per cwt with the range from $81.00 to $86.50 on 1,044 head reported sold. The National Pork Plant Report reported 209 loads selling with prices adding $1.76 per cwt. Lean hog index for 6/26 is at $91.10 up $0.48 with a projected two-day index of $91.50 up $0.40.

Wednesday Morning Livestock Market Summary

GENERAL COMMENTS:


Although the cattle market seemed to start the week on a renewed note of optimism, psychology has quickly soured thanks to crashing futures and imploding beef cutouts. Such a false start could make it tough for feedlot managers to hold the cash line over the next several days. FCE internet business later this month could spark country trade volume in one direction or the other. Live and feeder futures are expected to open significantly lower, checked by residual selling interest, long liquidation and signs of struggling beef demand.
Expect the cash hog trade to open Wednesday with bids steady to $1 higher. This week's slaughter should be around 2.18 million head, up slightly from last week. Carcass weights trended seasonally lower last week. Weights are below last year as well as the five-year average, and are expected to trend lower over the next eight weeks. Lean futures are likely to open mixed as traders cautiously position ahead of the June Hogs & Pigs scheduled to be unveiled Thursday.

BULL SIDE BEAR SIDE
1) Although late summer cattle slaughter is scheduled to be more than ample, most expected July chain speed to be moderate relative to June before cracking back up in August. 1) Beef carcass value collapsed on Tuesday with the choice box quoted as much as $4.66 lower. It would appear that the best of early summer demand is in the rear view mirror.
2) Bullish hopes that continued lighter cattle carcasses from 2016 and increases in weekly beef export sales may keep enough seasonal demand in play to clear expanding fed cattle inventories do not seem unfounded. 2) Cattle futures quickly surrendered Monday's advance Tuesday, pretty much exposing it as a dead cat bounce with little technical significance.
3)
The pork cutout jumped solidly higher Tuesday with all major primals making decent contributions (especially the fresh cuts and ribs).
3) The pork cutout may seem hot now, but in just two weeks or so it will begin experiencing successive price decreases through to September. Even if the bellies continue to move upward, the forecast weakness in the other primals should temper the entire cutout.
4) While hog buyers tried to limit bids on Tuesday, they didn't manage to move many numbers. The seasonal trend is for cash hog prices to strengthen over the next few weeks. 4)
Not only are most analysts expecting the USDA to confirm a 2% to 3% increase in the breeding herd when the Hogs & Pigs report is unveiled on Thursday, most number-crunchers are assuming that previous farrowing estimates will be increased.


OTHER MARKET SENSITIVE NEWS

CATTLE:(Hoosier Ag Wednesday) -- U.S. Secretary of Agriculture Sonny Perdue will travel to China this week, joining with U.S. Ambassador to China Terry Branstad, to formally mark the return of U.S. beef to the Chinese market after a 13-year hiatus. In events in Beijing and Shanghai on Friday, June 30, 2017 and Saturday, July 1, 2017, Perdue will meet with Chinese government officials to celebrate the return of American beef products to the enormous market after shipments were halted at the end of 2003. On Friday in Beijing, Perdue and Branstad will ceremonially cut prime rib that originated in Nebraska and was shipped by the Greater Omaha Packing Company. "I will be proud to be on hand for the official reintroduction of U.S. beef to China," Perdue said. "This is tremendous news for the American beef industry, the agriculture community, and the American economy in general. We will once again have access to the enormous Chinese market, with a strong and growing middle class, which had been closed to our ranchers for a long, long time. There's no doubt in my mind that when the Chinese people taste our high-quality U.S. beef, they'll want more of it."
China has emerged as a major beef buyer in recent years, with imports increasing from $275 million in 2012 to $2.5 billion in 2016. The United States is the world's largest beef producer and in 2016 was the world's fourth-largest exporter, with global sales of more than $5.4 billion.
HOGS: (Agrinews) -- U.S. pork exports continue to be a focus of attention and concern as U.S. pork supplies and prices stay plentiful.
"It's exports," said Dr. Dermot Hayes, professor of economics and finance at Iowa State University and the Pioneer Hi-Bred Chair in Agribusiness at ISU.
Hayes is a livestock economist, as well, focusing on the swine market.
"If we produce more, the price should be down," he said at the World Pork Expo National Pork Board-sponsored PORK Academy seminar on U.S. exports and international trade.
While lower weights or domestic consumption could be an answer for pork supplies that are plentiful and prices that are remaining steady, Hayes said exports are the key to the puzzle.
"We have more pork coming at us, and we still see some decent prices. If your supply is growing by 3 percent and your demand is growing by 4 percent, then that can happen," he said.
As of April 2017, U.S. pork exports were up 15 percent, and between 25 percent and 30 percent of U.S. pork production is exported.
Hayes has traveled to and studied the China market for three decades, and he was preparing to travel there following the World Pork Expo.
"I'm interested in China because the numbers are big," he said.
While U.S. pork is largely kept out of the Chinese market over the U.S. use of ractopamine, Hayes said the U.S. is benefiting from Canada and the European Union increasing exports to China.
"We are getting the backfill," he said, adding that the U.S. is benefiting in a way that surprised him.
Hayes has long talked about the trade benefits to the U.S. if the U.S. industry dropped the use of ractopamine, a feed additive that promotes leanness, which is banned in China.
"I was pessimistic about what would happen if we didn't drop ractopamine. I didn't see this happening, but we are kind of getting the benefits of the Chinese market without actually shipping a lot of product there," he said.
China imports some 3 million tons of pork annually. Hayes said countries such as Spain are stepping up production to supply that market.
The U.S. remains the world's low-cost producer of pork, along with the Brazilian state of Mato Grosso. But with foot and mouth disease in the hog population in Mato Grosso, Hayes said that is keeping the Brazilian pork from entering some major markets.
Even with added costs for the Chinese market, Hayes said the U.S. still can produce pork more economically than the Chinese can.
"If I took the price and added on 15 cents a pound for transportation, then 20 cents a pound for the duty and then 12 cents for value-added, we can still get pork into China at a price that is lower than their production costs," he said.
But ractopamine remains the roadblock.
"If we didn't have this ractopamine issue, we would be very competitive against Chinese carcasses," Hayes said.
As the U.S. and others, including South America, continue to expand their breeding herds, Hayes said certainty in trade and in foreign markets is vital.
"If all of the Americas is expanding and Europe starts to expand, we better have a market for all of this product," he said.
Prices for domestic Chinese pork have been falling, and Hayes said some groups who focus on the China market have suggested that the country is cutting back production due to environmental and housing concerns and high land costs, which will keep production stifled.
However, with concern over the Trump administration's talk on trade and tariffs against China, fears of a trade war could prompt protectionism and an expansion of the Chinese sow herd. A swing toward a protectionist China could be devastating for the U.S. and the rest of the world's pork producers.
"If it goes toward protectionism, the Chinese are going to rebuild their herd, and we've got 3 million tons of surplus on the world market," Hayes said.
If not, he said he expects China's pork imports to stabilize around 3 million to 5 million tons per year, in addition to variety cuts.

Tuesday, June 27, 2017

Tuesday Midday Livestock Market Summary

GENERAL COMMENTS: 
Cattle futures remain sharply lower with triple-digit losses quickly developing Tuesday morning. This lack of support in the complex has added to the market pressure. Hog markets are lightly traded with narrow moves limiting activity and keeping volume light. Corn prices are higher in light trade. July corn futures are 2 cents higher. Stock markets are lower in light trade. The Dow Jones is 21 points lower while Nasdaq is down 51 points.
LIVE CATTLE:
Sharp losses are seen in cattle trade with triple-digit losses seen in all live cattle markets. Even though live cattle futures are posting losses from $2 to $2.70 per cwt losses, the expanded trading limits available due to Monday's gains could create even wider market swings before the end of the session. There continues to be some significant market shifts available to the complex and this could shift the tone of the market through the end of the week. Cash cattle markets remain generally quiet Tuesday with a few bids trickling into Iowa at $119 live basis through the morning. Asking prices are undeveloped in all areas at this point. It is expected that additional bids will develop either later in the day or earlier Wednesday, but active trade may not be seen until sometime Thursday or Friday. Beef cut-outs at midday are lower, $1.40 lower (select) and down $2.36 per cwt (choice) with light movement of 60 total loads reported (25 loads of choice cuts, 20 loads of select cuts, 8 load of trimmings, 7 loads of ground beef).
Feeder Cattle:
Sharp losses have continued to develop through feeder cattle markets which is limiting overall support through the entire market. With expanded trading limits during the session, traders remain concerned that traders will have the opportunity to extend losses beyond the $4.50 per cwt gains seen Monday and create even more bearish selling pressure as the week continues. This could not only create added volatility into the market but uncertainty through the entire cattle complex.
LEAN HOGS:
Narrow trading ranges are holding in lean hog futures with the hog complex trading between 20 cents lower and 30 cents higher at midday. The lack of direction in the complex given the aggressive losses across the cattle complex appears to be focusing on firm fundamental support still able to develop across the complex. This may help to draw buyer support back into the complex through the rest of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.79 at $84.99 per cwt with the range from $82.00 to $86.00 on 3,632 head reported sold. Cash prices are unreported on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report reported 167 loads selling with prices adding $1.23 per cwt. Lean hog index for 6/23 is at $90.62 up $0.45 with a projected two-day index of $91.10 up $0.48.

Tuesday Morning Livestock Market Summary

GENERAL COMMENTS:
After being beaten to a pulp over the last two weeks, cattle feeders are desperate to find a corner they can defend. Monday's triple-digit rally in futures may be a promising serving of hope in that regard. Needless to say, the board will need to do more work before it can lend cash potential any legs. Accordingly, bids and asking prices will probably remain poorly defined Tuesday with both sides monitoring the board for greater credibility. Our guess is that significant trade volume will not surface until Wednesday or Thursday. Live and feeder futures should open higher, supported by follow-through buying and ideas of cash stability.
Hog buyers are expected to resume work Tuesday with basically steady bids. This week's slaughter should be close to last week's level (i.e., 2.14 million head). Supplies continue to tighten on a relative basis and should be tighter throughout June and the tightest in July, year over year. Lean futures seem staged to open some higher with nearby once again advancing at a faster pace than deferreds.
BULL SIDEBEAR SIDE
1)New showlists distributed in feedlot country on Monday were generally smaller than last week with only Colorado showing about the same number of ready steers and heifers.1)The volume of out-front booked beef sales last week dropped to the lowest level seen since mid-January.
2)Live and feeder contracts impressively reversed from a lower opening on Monday to close with triple-digit gains. Most months closed above moving average highs for the first time since early June.2)As nice as it was to see triple-digit gains in cattle futures Monday, the action may represent nothing more than a big dead cat bounce. Surpassing last week's high of 118.50 basis is key to fueling a sustained rally. Tough resistance at 40-day moving averages need to be taken out.
3)With the cash hog index digging in above 90, the discounts of spot July and August will keep would-be bears nervous, warning them of the danger of getting too bearish and/or overstaying their negative welcome.3)Uncertainty regarding the rate of herd expansion is likely to keep lean hog traders defensive before Thursday's Hogs & Pigs report.
4)Bellies had another round of aggressive price movements upward last week, with risk that more price hikes could occur. Currently, at price points rivaling last February's highs, the seasonal risk to price is higher right now than during a typical February timeframe.
4)The spread between spot July lean hogs and August is aggressively expanding, suggesting a fear among traders that a major supply shoe will drop somewhere around midsummer.
OTHER MARKET SENSITIVE NEWS 
CATTLE:(Food Safety News) -- The jury trial involving the South Dakota Agricultural Food Products Disparagement Act continues Monday, beginning its fourth week of courtroom action in Elk Point, SD.
Dakota Dunes, SD-based Beef Products Inc. (BPI) is suing Disney-owned ABC Television and reporter Jim Avila under the Disparagement Act for calling its beef product "pink slime" on more than 350 occasions during a 27-day period in 2012.
Under the Disparagement Act, were BPI to prevail, its $1.9 billion claim against ABC could be tripled to a breath-taking $5.7 billion. The overall narrative was known before the trial began on June 5. After Avila and others on ABC News aired and posted a series of reports on "lean finely textured beef," repeatedly calling it "pink slime," and keeping tallies on which retailers still sold it, BPI experienced an immediate and dramatic loss of sales that resulted in the closure of three of its four production facilities and layoffs of about 750 workers.
How this all stacks up with the facts and law has been left to a Union County, SD, jury and four alternates. Those 11 women and five men are being asked to be ready to decide when the trial, scheduled for eight weeks, finally comes to an end. They will have only the exhibits and their memories to go on. The judge has allowed note-taking, so long as notes are held by the County Clerk when court is not in session. At the end of the trial, the jurors who did take notes will have the option of taking them home or having them destroyed by the clerk.
The trial in the newly constructed basement courtroom continues Tuesday with BPI's Chicago attorneys still putting on their case. Winston & Strawn attorneys Dan K. Webb and J. Erik Connolly have a sort of layer cake approach going, while still having to defend against ABC's lead attorney Dane H. Butswinkas of the Williams & Connolly firm in Washington D.C.
Last week, the beef-packer's legal team began with Rich Jochum, BPI's corporate administrator, still on the stand. His job was to testify about how outrageous the ABC reports were from the company's standpoint, and how depressing it was to be forced to lay off employees, including some who'd worked for BPI for 30 years. Jochum said Avila was taking credit for it.
Butswinkas, however, brought up documents showing BPI lost customers before March 7, 2012, when ABC's reports began. The ABC attorney also pointed out that USDA's Food Safety and Inspection Service (FSIS) does not support referring to lean finely textured beef (LFTB) as meat because of the low-temperature rendering and centrifugation used in its production.
Jochum and Butswinkas also sparred over BPI's loss sales prior to 2012. The ABC attorney asked the witness if there was concern about 60 percent of BPI's business being "gone" prior to February 2012. Jochum said that kind of customer turnover is an opportunity and the trend was up going into March 2012.
After Jochum's lengthy testimony, BPI's attorneys presented a series of video depositions from beef industry players who, for the most part, added their voices to those who feel that ABC did an injustice to BPI with its "pink slime" reports.
National Beef continued to buy LFTB from BPI, but had to reduce its purchases by 80 percent. The company's vice president for business planning and analysis, said: "It was devastating. Not only losing our ability to sell LFTB in our ground beef, we also lost the ability to sell our trimmings to BPI to make it. We ended up having to render a lot more.
After this week, the jurors will get a four-day break from the trial with the courthouse closed and the trial in recess until July 5.
HOGS: (National Hog Farmer) -- You don't have to pay real close attention to the happenings in our nation's capital to know that there is constant motion. Of course, at other times it seems as though there is no activity taking place in the legislative chambers.
Constant motion is one thing true of most bills as they work their way through the process, such as we will find out as the health care debate ensues shortly.
Hog producers will be happy to hear that Mandatory Price Reporting, though authorized for five years, is a fluid, living and breathing rule.
As hog markets evolved over the years, MPR was seen as a way to improve transparency of markets and price discovery. Initially approved in 1999 as the Livestock Mandatory Reporting Act, MPR was reauthorized in September 2015, and is up for reauthorization in 2020.
Five years can be a long time to live with rules, especially when dealing with hog producers' markets. Recent changes to the law have added prices for wholesale pork cuts, export sales data, a new "Negotiated Formula" category, and a requirement that hogs sold after a 1:30 p.m. reporting deadline be included in the next day's price report.
During the recent World Pork Expo, Taylor Cox with the USDA Agricultural Marketing Service, told our friends at Swinecast that AMS is always open with industry groups, keeping an open ear and door to their concerns. At the end of March, AMS met with pork industry stakeholders and new reporting guidances already have, or are about to, take effect.
AMS is already accepting emailed inquiries from producers to verify their reported swine trades at LPS-LMRHogs@ams.usda.gov.
Effective July 3, all swine packing companies subject to Livestock Mandatory Reporting will report their swine purchases under the following new guidance, if applicable:
* Swine purchases based on the CME Lean Hog Index:
* All purchases of swine where the base price is based on the CME Lean Hog Index as the pricing mechanism should be reported as a Swine or Pork Market Formula Purchase. These hogs are currently reported as Other Market Formula Purchases.
* Any swine purchases formulated off of a future or option will continue to be reported as Other Market Formula Purchases. Following implementation, AMS will update the published reports by placing "Futures/Options" underneath the Other Market Formula label as a descriptor on the reports.
* Formula purchases where the base price is known
* Any formula based purchases of swine where the base price is known at the completion of negotiation should be reported as a Negotiated Purchase.
* Any swine purchases using a formula price with an undetermined price at the completion of the negotiation will be reported as either a Negotiated Formula Purchase or a Swine or Pork Market Formula Purchase depending on the terms and times associated with the purchase.
Effective July 7, AMS will begin publishing the National Weekly Negotiated Sales Pork Reports (LM_PK610 and LM_PK611) on Friday afternoon of the current week instead of Monday morning of the following week.
Cox says AMS values to input from the livestock industry, "we enjoy the regular feedback." He adds that some changes in the statute itself will require action from the House and Senate, and though the current MPR authorization is good until 2020, work is already under way for the next version. "We need to report to Congress in March of 2018, so we're working on that now and we look forward to reauthorization," he tells Swinecast. "We like to be adaptive" to the industry.
And who says government doesn't listen?

Monday, June 26, 2017

Monday Closing Livestock Market Update

GENERAL COMMENTS
Action in feedlot country was typically slow as the new week began with packers focusing exclusively on the gathering of new showlists. Ready numbers are generally smaller than last year with only Colorado offering a steady supply. According to the closing report, the national hog base is .02 higher ($82.00-87.50, weighted average $85.82). Corn futures settled 1-2 cents higher thanks to light short-covering. The stock market closed on a mixed basis with the Dow up 14 points and the Nasdaq off 18.
LIVE CATTLE
Live cattle futures briefly opened lower in deference to the negative implications of the June 1 Cattle on Feed report released Friday. But new buying interest quickly surfaced, sparking the best rally seen in weeks. When the smoke cleared, contracts closed generally 220 to 300 higher. Soon-to-be-spot August closed up the limited, landing its best finish since June 13. Most contracts settled above moving average highs for the first time since early June. Beef cut-outs: mixed, up .94 (select, $217.66) to off $1.18 (choice, $238.57) with light to moderate demand and moderate offerings (59 loads of choice cuts, 20 loads of select cuts, 21 loads of trimmings, 14 loads of ground beef).
TUESDAY'S CASH CATTLE CALL:
Steady to $2 higher. Bids and asking prices are likely to remain poorly defined with significant trade volume possibly delayed until the second half of the week.

FEEDER CATTLE
Feeder issues exploded higher with the first three months closing up the 450-point limit. In one fell swoop, the board has gone from discount to the cash index to a substantial premium. On an estimated run of 6,200 head (near even with both a week and year ago), Oklahoma City sold feeder steers and heifers mostly steady to $3 lower. CME cash feeder index: 06/23: 145.84, off 1.25.
LEAN HOGS
For the most part, lean hog contracts settled moderately higher (i.e., up 2 to 55). Only spot July, closing as much as 172 higher (a new contract high), reflected more bullish energy thanks to the premium status of the cash index. Carcass values closed modestly higher as stronger demand for hams and bellies offset lower rib business. Pork cut-out: $101.35, up.20. CME cash lean index for 06/22: 90.17, up .87 (DTN Projected lean index for 06/23: 90.62, up .45). 
TUESDAY'S CASH HOG CALL
Steady. Hog buyers seem set to resume work in the morning with basically steady bids.

Monday Midday Livestock Market Summary

GENERAL COMMENTS: 
Sharp gains in cattle futures seen midday have created a welcome surprise to the market which started out with a defensive tone. This lack of support through the complex continues to focus on the potential for increased market activity through the rest of the session with the potential of hitting trading limits before closing bell. Corn prices are higher in light trade. July corn futures are 1 cent lower. Stock markets are higher in light trade. The Dow Jones is 41 points higher while Nasdaq is up 2 points.
LIVE CATTLE:
Triple-digit gains continue to hold in live cattle market following the morning surge in feeder cattle trade which is helping to pull live cattle futures higher at midday. The potential for limit higher trade activity is starting to develop following what seemed to be a bearish start and created some concerns that increased cattle placements would weaken the overall long term outlook of the market for the rest of the summer. August futures currently lead the complex higher with gains of $2.60 per cwt as traders try to keep up with sharp gains in feeder cattle markets. Cash cattle activity is undeveloped with show list distribution and inventory taking the main order of business of the day. Bids and asking prices may be delayed until midweek. Beef cut-outs at midday are higher, $2.08 higher (select) and up $0.03 per cwt (choice) with light movement of 71 total loads reported (38 loads of choice cuts, 10 loads of select cuts, 16 load of trimmings, 7 loads of ground beef).
Feeder Cattle:
Aggressive buyer support has taken over at midday across feeder cattle trade with August futures holding a $3 per cwt rally. This move counters early morning losses that focused on the bearish cattle on feed report and increased placement levels seen on the Friday report. But the inability for traders to continue to hold the market lower has quickly allowed a flurry of buyer activity to move back into the market and active triple digit support to move back into the complex. It is uncertain just how much long-term support will develop through the complex as traders will continue to focus on feeder cattle buyer interest through the day.
LEAN HOGS:
Overall lack of trade volume has been seen though most of the morning with firm gains holding across the lean hog complex. July futures continue to be only contract to hold triple digit gains. Even though front-month futures have backed away from session highs, the ability to focus on bullish fundamental support continues to keep commercial traders active in the market as well as looking for increased market support through the end of the month. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.95 at $84.85 per cwt with the range from $82.00 to $86.00 on 3,045 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $2.77 at $83.57 per cwt with the range from $82.00 to $86.00 on 35 head reported sold. The National Pork Plant Report reported 127 loads selling with prices adding $0.12 per cwt. Lean hog index for 6/22 is at $90.17 up $0.87 with a projected two-day index of $90.62 up $0.45.

Monday Morning Livestock Market Summary

GENERAL COMMENTS:

As feedlot managers move into the final week of June, and the second quarter, they are hoping that the cash market can somehow find a way to pull out the bearish tailspin of the last two weeks. A crucial first step would no doubt involve the stabilization of live and feeder futures. For that to happen, we may first have to quickly digest the June 1 Cattle on Feed report, which some saw as somewhat disappointing in terms of larger than expected May placement. Cash activity will be limited to the distribution of new showlists. The late-month offering is likely to be somewhat larger than last week. Asking prices may not be well defined until midweek or so. Live and feeder futures should open lower, pressured by on feed implications and long liquidations.
The cash hog trade is expected to resume Monday with bids steady to $1 higher. Last week's slaughter fell to 2.14 million head, the smallest non-holiday kill seen so far in 2017. This week's chain speed should be as small or smaller, and of course, next week's production scheduled will be shorted by Independence Day. This should all be good news in terms of wholesale pork demand and prices. Look for lean contracts to open higher, supported by Friday's rebound in carcass value and bull-spreading interest.

BULL SIDE BEAR SIDE
1) Gross beef processing margins are starting the week near record-high levels thanks to the way cattle costs have imploded much faster than carcass value over the last several weeks. If deemed necessary, cattle buyers have an abundance of incentives to support the cash trade. 1) The June 1 Cattle on Feed report turned out to be somewhat more negative than expected with May placement surpassing the average trade guess and May marketing somewhat short of the average trade guess.
2) The fact that discounts in the late summer and fall live cattle contracts remain wider than average may suggest that any negative implications in the June 1 Cattle on Feed report are already fully dialed into the board. Furthermore, oscillators suggest that cattle futures are generally oversold. 2) Given the holiday-shortened week ahead, cattle buyers will start this week with shorter shopping lists and with less need to support the cash market.
3) The pork carcass market quickly reclaimed its mojo on Friday, surging significantly higher in all primals except the ham. 3) Despite impressive spot fundamentals, lean hog specs seem to be getting nervous about market prospects around the next corner. For the week ending June 20, noncommercial traders were net sellers of 3,200 contracts, decreasing their net long to 51,600 contracts.
4) Despite the weakness in the lean hog board late last week, both the short- and long-term market trends remain positive. 4)
Though we are now probably seeing the tightest market hog supplies of the season, the next major shift in tonnage will be bearish. Following the July Fourth holiday, kill levels look to slowly increase, with significant supply gains expected for August.


OTHER MARKET SENSITIVE NEWS

CATTLE: (Kyodo) -- U.S. Trade Representative Robert Lighthizer urged Japan on Wednesday to make "unilateral concessions" on beef imports as part of an effort to reduce its trade surplus with the United States.
"I think in the areas like beef and the others, they ought to make some unilateral concessions -- at least temporary concessions," Lighthizer said at a hearing at the Senate Committee on Finance, prodding Japan to further open its beef market.
It was not known what kind of concessions Lighthizer was referring to, but he may be calling for reducing a 38.5 percent tariff Japan imposes on fresh and frozen beef cuts imported from the United States.
"And I don't quite understand why that doesn't happen," he said. "That's a simple way to get that trade deficit down and doesn't cost them anything."
Lighthizer's remarks may reflect concern that the United States lags behind other major farming nations, such as Australia, in exporting beef to Japan, the world's third-largest economy.
Japan, for example, has begun lowering its tariffs on Australian beef from 38.5 percent in stages since a Japan-Australia free trade agreement took effect in 2015.
Lighthizer criticized Japan for maintaining a trade surplus with the United States "for decades," adding that Tokyo does not seem to be interested in holding trade negotiations bilaterally with Washington.
President Donald Trump's administration, which withdrew the United States from a 12-nation trade deal known as the Trans-Pacific Partnership in January, is conducting a strategic and economic analysis of which of the remaining 11 TPP members the country should start bilateral trade talks with, according to Lighthizer.
"The president's idea is to have a series of bilateral agreements," he said. "We're in a process of trying to determine which of those countries should come first."
Lighthizer made it clear that the United States is unlikely to return to the TPP fold, which includes Japan. "They are hoping the United States will come back and join the TPP, which obviously is not going to happen," he said.
In Tokyo, the Japanese government's top spokesman said Thursday he was aware of Lighthizer's remarks, but that Tokyo has not formally received any such request.
"The U.S. government has not made any specific calls for increased market access in talks between us, including the Japan-U.S. economic dialogue that was held recently," Chief Cabinet Secretary Yoshihide Suga told a press conference.
At the first round of the dialogue in April, helmed by Japanese Deputy Prime Minister Taro Aso and U.S. Vice President Mike Pence, the two sides agreed to discuss a bilateral framework for trade and investment rules.
"In any case, we will hold constructive discussion in that dialogue about what sort of bilateral framework is best for Japan-U.S. economic ties," Suga said.
In his Senate confirmation hearing in March, Lighthizer called Japan "a primary target" for greater market access for U.S. farm products.
Similarly, the Office of the USTR in March urged Japan to fully open its market to U.S. beef and beef products from "animals of all ages."
In the 2017 National Trade Estimate Report on Foreign Trade Barriers, the office called for removing the remaining part of the import ban Japan imposed in 2003 following the detection of an animal with mad cow disease in the United States.
Currently, Japan allows imports of U.S. beef and beef products from cattle less than 30 months of age slaughtered in the United States.
HOGS: (Quartz) -- China, the world's biggest pork consumer, is struggling with too much meat.
The country devours millions of tons of pork every year and expects to own some 700 million hogs (link in Chinese) by the end of this year. But producers are cranking out more pork than consumers can handle.
The "lean-type pork price index," which reflects the nation's pork spot price, was earlier this month down around 25% (paywall) compared to January. The index data, not freely available, comes from the agriculture ministry and Sublime China, a Shandong-based research firm that tracks China's commodity markets. "The demand [for pork] has shown no obvious positive signs," reads a June 20 report from Sublime.
Pork prices in China have long been volatile, in part because the market is dominated by small-scale farmers highly sensitive to swings. Ominously for the industry, though, the recent slide comes after consumption fell in both 2015 and 2016—the first two-year decline since the 1970s.
China's pig-farming industry suffered "huge losses" in 2014 because of oversupply, notes Alice Xuan, a commodity analyst at Shanghai JC Intelligence. The losses have persisted since then, she adds, and Monday producers are "still dealing with the overcapacity problem."
Their struggles are also reflected in the number of imported breeding pigs.
Declining prices will continue for some time, many believe. Wan Long, chairman of China-based WH Group—the world's largest pork producer—predicted last August that the downward trend would last for 15 months.
But another trend should, perhaps, worry the nation's pork producers more: Many Chinese consumers, prodded by the government, are shifting to more vegetables and less meat for health reasons.