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Friday, September 29, 2017

Friday Closing Livestock Market Summary - Most Hog Futures Close Sharply Higher in Face of Prospects for Record Production

GENERAL COMMENTS
Moderate cattle trading surfaced in parts of the North Friday. Dressed sales were mostly marked at $172, $1 to $2 higher than last week's weighted average basis Nebraska. Some live business in Nebraska and Iowa was marked at $108, $1 lower than last week's weighted average basis Nebraska. The National hog base closed up $0.54 compared with the prior day settlement ($42.00-$49.50, weighted average $47.75). From Friday to Friday, livestock futures scored the following changes: Oct LC off $2.47; Dec LC off $2.17; Oct FC off $3.88; Nov FC off $3.62; Oct LH off $0.30; Dec LH up $3.33. Corn futures closed 2 to 3 cents higher, thanks to spillover buying from the bean market and a Sept. 1 corn stock total that was somewhat smaller than anticipated. Having said that, the corn stock total (2.295 billion bushels) was the largest seen in 30 years. The stock market closed higher with the Dow up 23 and the Nasdaq up 42.
LIVE CATTLE
Futures closed mixed, up 20 to off 70. The late-week action was rather lackluster with nearbys gaining modestly on deferreds. Large chart gaps created on Monday now stand as tough overhead resistance for would-be bulls to deal with. Beef cut-outs: steady to weak (choice, $196.62 up $0.21; select $188.50, off $0.61) on light-to-moderate demand and moderate offerings (59 loads of choice cuts, 28 loads of select cuts, 08 loads of trimmings, 25 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL:
Steady. Monday's activity will be typically limited to the distribution of showlists. If feedlots decided to carry over unsold cattle into next week, the early month offering could be somewhat larger.
FEEDER CATTLE:
Futures closed moderately lower, off 62 to 105. Feeders were pressured by profit-taking, long-liquidation and modest strength in the corn market. CME cash feeder index: 09/28: $153.06, up $0.98.
LEAN HOGS:
Futures closed mixed, but mostly sharply higher, off 15 to up 170. Spot October was the only contract to settle in the red, modestly pressured by the downward drift of the cash index. Even though the Hogs and Pigs report pointed toward record production in 2018, oversold futures bounced significantly higher. In addition to forces of technical correction, deferreds were supported by news of aggressive pork export sales last week. (i.e., totaling 36,700 metric tons, a marketing-year high). Pork cut-out: $73.33 (FOB Plant) up $0.88. CME cash lean 09/27: $55.54, off $0.71 (DTN Projected lean index for 09/28: $54.84, off $0.70).
MONDAY'S CASH HOG CALL:
Steady. The cash hog trade is likely to start out near steady when business resumes on Monday. Given the significant abuse the cash hog trade suffered through September, we may be due for at least a short period of stability.

Friday Midday Livestock Market Update - Triple-Digit Gains Flood into Hog Futures

GENERAL COMMENTS: 
Sharp gains have quickly developed in lean hog futures trade with markets focusing on the quickly and aggressively moving back into the market over the last week. These triple-digit gains could set up additional buyer activity during early October. Cattle futures are mixed to moderately lower as traders try to make final end of the month and quarter adjustments following the volatile market shift seen over the last couple of weeks. Corn prices are lower in light trade. December corn futures are 2 cents lower. Stock markets are mixed in light trade. The Dow Jones is 4 points lower while Nasdaq is up 40 points.
LIVE CATTLE:
Live cattle futures are mixed in a narrow trading range Friday morning with nearby contracts focusing on the overall lack of direction in beef values over the last couple of days while the support in cash cattle trade seems to be able to keep nearby traders slightly optimistic. The pressure seen in feeder cattle trade during late morning has had an impact on deferred live cattle contracts as traders look for increased overall market direction for the entire complex. Sluggish trade activity and light volume is expected to be seen through the next couple of hours as traders focus on market adjustments through the end of the month. Cash cattle activity has started to develop Friday morning in the North with light dressed trade taking place at $172 per cwt. This is steady with Thursday's trade that was seen through the last half of the day, but $1 to $2 per cwt higher than last week's levels. Bids are seen in the North at $108 per cwt live basis although no bids have redeveloped in the south at this time. Asking prices remain unchanged at $110 to $112 in the South and $173 to $175 in the North. Beef cut-outs at midday are mixed, $0.15 lower (select) and up $0.31 per cwt (choice) with moderate movement of 79 total loads reported (49 loads of choice cuts, 13 loads of select cuts, no loads of trimmings, 17 loads of ground beef).
FEEDER CATTLE:
Early mixed trade has continued to lack underlying buyer support through the end of the week with prices not seen 50 cents to $1.50 per cwt lower as traders try to make final end of the month and quarter adjustments prior to market close. October and November futures remain lightly traded with 30 to 50 cent losses at midday, while triple digit losses have quickly moved into the deferred contracts. No major change developed across the cattle market Friday, but the overall light volume is keeping the market vulnerable through the end of the week and month.
LEAN HOGS:
Lean hog futures have quickly turned higher Friday as traders are now focusing on the slightly bullish results from Thursday's hogs and pigs report. The overall lack of follow through pressure that started to develop in the first hour of trade has allowed for aggressive triple-digit gains to flood the market. December through April futures are holding gains of $2 to $2.70 per cwt at midday. Even though nearby contracts are nearing the daily trading limit of $3 per cwt, it appears that current support to hit this level may be short. This rally focused on a $4 per cwt gain over the last week, changing the overall course of the market with December contracts breaking through short term resistance levels. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.35 at $46.86 per cwt with the range from $42.00 to $48.00 on 2,170 head reported sold. Cash prices are not reported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report reported 116 loads selling with prices gaining $2.43 per cwt. Lean hog index for 9/25 is at $56.98 down $0.68 with a projected two-day index of $56.25, down 0.73.

Friday Morning Livestock Market Summary - Hog Paper to Open Lower in Response to Supply Reality

GENERAL COMMENTS:
Assuming that at least moderate trade volume was generated in Kansas and Texas on Thursday (i.e., $108, steady money), the cash market probably starts out this morning about half baked. In other words, if the South is essentially done, the North still has plenty of cattle to sell before area feedlot managers can call it a week. Asking prices are around $108-110 in the South and $172 plus in the North. Live and feeder futures are likely to open on a mixed basis as traders await more cash news.
Cash hog buyers should go to work this morning with bids steady to $1 lower. As if anyone doubted the generous live supplies waiting in the wings, the market hog weight breakdown leaves no doubt that the sky will be pretty much raining hogs for another 30-60 days. Note another daily kill record was set yesterday at 261,000 head. The Saturday slaughter is not projected to total close to 242,000 head. Lean futures seem staged to open under pressure thanks to long liquidation, follow-through selling, and of course the black and white of the September 1 H&P report.
BULL SIDEBEAR SIDE
1)Fed cattle sales in Kansas and Texas on Thursday were fully steady at $108, and a few dressed deals in the North were marked as much as $2 higher ($172). Such news should lend support to nearby live futures.1)For the week ending September 16, cattle carcass continue to grow: cattle averaged 831 lbs, 2 lbs heavier than the prior week and 6 lbs below last year; steers averaged 897 lbs, 1 lb bigger than the week before and 8 lbs lighter than 2016; heifers averaged 821 lbs, 5 lbs bigger than the previous week and 2 lbs below a year earlier.
2)Net beef export sales last week totaled 15,995 MT, up 28 percent from the previous week and 10 percent from the prior 4-week average. Actual exports last week totaled 16,954 MT, up 10 percent from the previous week and 1 percent from the prior 4-week average.2)Live cattle futures face tough overhead resistance linked to the bearish chart created on Monday when the board opened sharply lower.
3)Net pork export sales last week totaled 36,700 MT (a marketing-year high), up 82 percent from the previous week and 69 percent from the prior 4-week average. At the same time, actual exports totaled 20,600 MT, down 7 percent from the previous week, but up 6 percent from the prior 4-week average.3)Though generally well anticipated, the September 1 H&P underscored widespread assumption the record pork production is certainly in store for as long as the eye can see. More specifically, the market hog weight breakdown is even more front-load than assumed.
4)The U.S. economy expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years. Gross domestic product increased at a 3.1 percent annual rate in the April-June period, according to the Commerce Department.4)December and February lean hog futures closed sharply lower, repelled by 100-day moving averages. Besides ugly fundamental realities, this market has a very bearish technical profile.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (agrinews-pubs.com) --The Cattlemen’s Beef Promotion and
Research Board will invest about $38 million into programs of beef
promotion, research, consumer information, industry information,
foreign marketing and producer communications during fiscal 2018,
subject to U.S. Department of Agriculture approval.
In action at the end of its September meeting in Denver, the
Operating Committee approved checkoff funding for a total of 14
“authorization requests,” or proposals, brought by seven contractors
for the fiscal year beginning Oct. 1.
The committee, which includes 10 producers from the Beef Board and
10 members from the Federation of State Beef Councils, also
recommended full Beef Board approval of a budget amendment to reflect
the split of funding between budget categories affected by their
decisions.
The seven contractors had brought a total of $45 million worth of
funding requests to the Operating Committee — $7 million more than
what was available from the CBB budget.
“We showed up Tuesday morning ready to roll our sleeves up and get
to work. We knew that we were going to have to make cuts of about $7
million,” said Beef Board Chairman Brett Morris, a cattle producer
from Oklahoma.
“They are all good programs, and we hate for any of them to get
cut, but with the amount of resources we had to work with, we had to
make cuts,” Morris said. “I think the whole committee came through in
agreement. Bottom line, we had a great task to accomplish, and we got
there. I think the beef industry is in good shape because of it.”

HOGS: (foodmarket.com) -- October is known as National Pork Month. A
long held tradition along with large hog supplies at this time of the
year and attractive wholesale prices are expected to bring more chops,
shoulder roasts, and other pork cuts to the forefront in grocers’
advertisements in October.
Cooler temperatures usually result in increased sales of roasts and
generate a desire for heavier meals often prepared in the oven or slow
cookers. But there are still opportunities for grilling too throughout
the month including tail-gating at sporting events.
Hog supplies are record large this year, and slaughter rates this
month have been running about 3% above a year ago. Meanwhile,
wholesale pork prices based on Urner Barry’s daily cutout data have
averaged about 1.5% below a year ago. Price changes from a year ago
for individual pork cuts vary from the average, but in general the
wholesale levels have been attractive enough to generate active retail
features in the weeks ahead.
While pork is definitely expected to be more widely promoted next
month, beef, chicken and fish/seafood will also have a strong presence
in the advertisements. In the first week of October last year, beef
cuts held a larger share of the protein ad space than did pork by a
count of 26% to 23%, and seafood had a 25% share. Chicken came in at
17%. However, a repeat of the year-ago retail mix would represent a
more balanced offering than this week which is heavier on beef at
nearly 33% of the advertising space followed by seafood at 22.6%, pork
at 18.5% and chicken at 17.4%. Eggs, turkey, lamb and veal shared in
the remaining 8.6% of the ad space.
This week’s Urner Barry retail feature beef index was at $6.07 per
pound, up from $5.95 last week. Pork came in at $3.75 versus $4.01
last week, while chicken was at $2.87 this week, down from $2.94 a
week ago.
Shoppers should have a wide selection of protein options from which
to choose next month and at prices comparable with a year ago. 

Thursday, September 28, 2017

Thursday Closing Livestock Market Summary - Lean Hog Futures Pull Back Prior to H&P Release

GENERAL COMMENTS
Light-to-moderate cash cattle business surfaced in Kansas and Texas with live sales marked at $108, steady with last week. On the other hand, limited activity in the North involved a few scattered dressed deals at $172, $1-$2 higher than last week's weighted average basis Nebraska. According to the closing report, the national hog base is $0.03 lower ($43-$48.50, weighted average $47.44). Corn futures drifted 1-2 cents lower on the close tied to lackluster positioning ahead of Friday's Sept. 1 Stocks Report. The stock market closed higher with the Dow up 40 points and the Nasdaq near unchanged.
LIVE CATTLE
Waiting for a definitive cash market verdict, live contracts closed cautiously mixed, up 40 points to off 25. Large charts gaps created on Monday remain tough overhead resistance. Indeed, bulls may need a large serving of encouraging cash fundamentals from some corner in order to cut through this technical ceiling. Beef cut-outs: mixed, up $1.11 (choice: $196.41) to off $0.80 (select: $189.11) with light-to-moderate demand and light offerings (49 loads of choice cuts, 32 loads of select cuts, 17 loads of trimmings, 30 loads of ground beef).
FRIDAY'S CASH CATTLE CALL:
Steady to $2 higher. While cash business in the South could be essentially done for the week, Northern buyers and sellers must come to terms sometime on Friday. Look for light-to-moderate business to develop in the area Friday between late morning and midafternoon.
FEEDER CATTLE:
Feeder issues closed mixed in listless trade volume with prices settling up 45 to off 35. Nothing of technical significant occurred through the slow trading session. CME cash feeder index: 09/27: $152.08, off $0.35.
LEAN HOGS:
With the exception of a 15-point gain for spot August, lean hog futures closed significantly lower, off 35 to 137. Taking cover ahead of the quarterly snout count, Dec-April fell by triple digits, recoiling from overhead resistance near 40-day moving average. The H&P report turned out to be generally well anticipated: total hogs, 102%; kept for breeding, 101%; kept for marketing, 103%. Between a front-loaded weight breakdown of market hogs and only guarded increases in farrowing intentions, bear-spreading could be a popular reaction on Friday. Carcass value closed modestly lower as softer demand for loins, ribs, and processing items overshadowed strength in picnics and butts. Pork cut-out: $72.64, up $0.15. CME cash lean index for 09/26: $56.25, off $0.73 (DTN Projected lean index for 09/27: $55.54, off $0.71).
FRIDAY'S CASH HOG CALL:
Steady to $1 lower. Opening bids in the morning should be steady/weak as packer complete procurement chore supplying yet another record large weekly rounds of laughter.

Dairy product, milk price forecasts soften

Dairy Outlook: Exports decline 1.1% from last year.

The USDA both raised and lowered its milk production, dairy product and milk price forecasts for 2017 and 2018. University of Wisconsin dairy economist Bob Cropp says that forecast milk prices for the remainder of the year have softened from what was expected during August and September.

“The Class III price was $16.44 in June, fell to $15.45 in July, but increased to $16.57 in August, and was expected to continue to strengthen, reaching into the low $17s by October,” Cropp says. “But now the September Class III price will weaken to around $16.25. And it will take a rally in cheese prices to strengthen the Class III price October through December.”

The Class III price is driven by the price of cheese, dry whey and butter. The price of all three products weakened during September. On the CME, barrel cheese averaged $1.60 per pound in August, but weakened since then to $1.48 on Sept. 19. The 40-pound block price, which averaged $1.68 in August, also weakened, to $1.59. The spread between blocks and barrels was about 20 cents per pound in July, but fell to just 2 cents per pound by the end of August. By Sept. 19, it was back to 10 cents. Butter averaged $2.64 per pound in August and was $2.46 in mid-September.

USDA expects 2017 milk production to reach a record 216 billion pounds, up 300 million pounds from August’s forecast and 3.6 billion pounds higher than 2016’s record output. Milk production for 2017 is expected to be 1.7% higher than last year. 

For 2018, the milk production forecast is reduced from August due to slower growth in cow inventories. USDA now expects 2018 milk production to total 220 billion pounds, down 200 million pounds from the August forecast.

Butter, nonfat dry milk and dry whey prices are predicted to be lower for 2017, while cheese prices are predicted to rise. USDA predicts cheese prices will increase from $1.62 to $1.63 per pound, while butter is expected to increase from $2.35 to $2.39 per pound. Dry whey is forecast to increase from 44.5 cents per pound to 46.5 cents per poun,d while nonfat dry milk is expected to increase from 88 cents per pound to 90 cents per pound.

The 2017 Class III price is expected to average $16.25 per cwt. Higher forecast cheese prices offset lower dry whey prices. The Class III milk price for 2018 is expected to average between $16 and $17 per cwt, according to USDA.

Exports weaken

Dairy exports have added strength to milk prices, Cropp says. “But after 12 straight months of year-over-year growth, dairy export volume declined in July.”

Exports of nonfat dry milk and skim milk powder declined 13%, the first decline since June 2016. “Nonfat dry milk and skim milk powder exports are facing competition from the European Union. However, exports of butterfat were 66% higher, and cheese was 14% higher.

“On a total solids basis, exports were equivalent to 13.4% of U.S. milk production, compared to 14.5% last year and the lowest since January,” Cropp notes.

Thursday Midday Livestock Market Summary - Livestock Futures Back Away From Early Gains

GENERAL COMMENTS: 
Mixed trade is seen across the entire livestock market as traders have slowly backed away from early market support. There continues to be some uncertainty as to just how much additional market selling will be seen over the next couple hours with pressure in lean hog trade looking ahead to the release of the hogs and pigs report Thursday afternoon. Corn prices are lower in light trade. December corn futures are 2 cents lower. Stock markets are mixed in light trade. The Dow Jones is 48 points higher while Nasdaq is down 7 points.
LIVE CATTLE:
Narrow losses have swept through most live cattle futures as traders are holding price levels during the morning steady to 25 cents per cwt lower. This comes after moderate early gains were unable to hold. The lack of overall support in the market has more to do with extremely light trade volume than any recent shift in trader direction or overall market attitude. Cash cattle markets remain quiet mostly quiet through early morning, with just a few bids developing in the North at $167 to $169 per cwt seen until midday. At midday the report of 1000 head of cattle selling in Nebraska at $172 per cwt helped to bring some momentum to the market. Activity in the South remains quiet, which is expected to push the majority of cash cattle trade off until sometime Friday. Asking prices remain unchanged at $110 to $112 in the South and $172 to $174 in the North. At this point feedlot managers have very little incentive to change asking prices either, which will likely continue to stalemate until later in the week. Beef cut-outs at midday are mixed, $0.80 lower (select) and up $1.34 per cwt (choice) with moderate movement of 85 total loads reported (35 loads of choice cuts, 19 loads of select cuts, 15 loads of trimmings, 16 loads of ground beef).
FEEDER CATTLE:
Mixed trade is seen across all cattle markets with feeder cattle trade giving back firm early gains as prices are hovering from 45 cents lower to 30 cents higher at midday. The overall lack of support is impacting deferred contracts most as the light volume and lack of overall direction through the rest of the day is helping to maintain light gains in nearby contracts. Pressure in live cattle markets has also led to the pressure in deferred feeder cattle markets as traders remain focused on overall market uncertainty through the end of the week.
LEAN HOGS:
Moderate to firm pressure has developed across lean hog futures trade late Thursday morning as traders start to adjust to potential shifts possible following the hogs and pigs report. Even though the overall result of the report is not expected to shift trader interest significantly, the early expectations by most traders it to build some additional caution back into the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.14 at $47.33 per cwt with the range from $43.00 to $48.50 on 4,670 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.23 at $47.95 per cwt with the range from $46.00 to $48.50 on 2,300 head reported sold. The National Pork Plant Report reported 133 loads selling with prices gaining $0.03 per cwt. Lean hog index for 9/25 is at $56.98 down $0.68 with a projected two-day index of $56.25, down 0.73.

Thursday Morning Livestock Market Update - Livestock Futures Set for Mixed Opening

GENERAL COMMENTS:
Cattle buying inquiry could start to gear up Thursday with opening bids around $104 in the South and $167 to $168 in the North. Encouraged a bit by Wednesday's board recovery, feedlot managers should put asking prices around $110 to $112 in the South and $172 to $174 in the North. If the impasse deepens, significant trade volume could once again be delayed until Friday. Live and feeder futures should open on a mixed basis as specs and commercials position ahead of late-week cash news.
Negotiated sales in hog country on Wednesday were huge, more than 29,000 head, according to the national summary. The weight average price was lower, but not by much. At the very least, it seems like the erosion of cash sales seems to be slowing, even as slaughter levels continue to grow. Does this mean that greater packer competition is working to support country prices? Maybe. Opening cash bids are expected to open steady to $1 lower. Of course, Thursday's big event comes in the afternoon at 2:00 p.m. CDT when the Sept. 1 Hogs & Pigs report will be released. Generally speaking, analysts are expecting to see total hog numbers to be about 3% larger than last year. The sow herd is likely to be confirmed 2% greater. Lean hog futures are staged for a mixed opening as traders cautiously position ahead of the report.
BULL SIDEBEAR SIDE
1)Cattle futures rallied sharply higher at midweek. Although live contracts still face significant overhead resistance, December did manage to nose back above its 100-day moving average.1)The spread between spot October live cattle and December is becoming dangerously wide (i.e., $6.33 as of Wednesday close). The temptation to feed cattle more and make them heavier may get irresistible.
2)Total open interest in live cattle futures continues to increase with bullish involvement from the noncommercials probably working to further inflate their net-long positions.2)Beef cutouts closed sharply lower at midweek, reversing a good part of the early-week gain and suggesting that retailers now have their boats loaded.
3)December and February lean hog futures caught a decent pre-report bounce on Wednesday with both contracts nosing back over 40-day moving averages.3)
For the week ending Sept. 23, 2017, U.S. hatcheries set 223 million broiler eggs in incubators, up 4% from a year ago. At the same time, chicks placed totaled 179 million, up 3% from 2016.
4)Iowa barrows and gilts last week averaged 282.1 pounds, actually down a little from the previous week (282.2 lbs.) and 2.1 lbs. more than 2016. Given the aggressive marketing seen of late, is it possible that producers are pulling numbers forward.4)The Sept. 1 Hogs & Pigs will be released Thursday afternoon, and nearly everyone believes it will confirm a higher level of expansion. Indeed, the only question seems to be the exact level of aggressive herd growth.
OTHER MARKET SENSITIVE NEWS 
CATTLE:(The Star Tribune) -- Beef continues to bolster Cargill Inc.'s financial results with high consumer demand and ample cattle supply helping the company's bottom line.
The Minnetonka-based conglomerate reported a profit Wednesday of $973 million for the first quarter of its fiscal 2018, which ended Aug. 31. That's a 14 percent gain from the same period a year ago. Revenue was slightly up at $27.3 billion.
"We're off to a good start in our new fiscal year, powered by the significant work we've done over the last few years and continuing to accelerate our performance," said David MacLennan, Cargill's chairman and chief executive. "Even as market conditions vary across our sectors, our teams are delivering for our customers and achieving results to fuel future growth."
Its protein business carried over its momentum from last year. The cattle supply has fully rebounded following years of drought in Texas and the southern U.S. Plains states, meaning Cargill can process more head through its massive slaughterhouses and sell beef to customers. This is passed on to consumers who are responding by buying more beef. Cargill is also exporting more beef abroad. The company's chicken business, which operates outside the U.S., land its global animal feed business lagged slightly over a year-ago.
Cargill's food ingredient business was its second-largest contributor to financial gains, led in most regions by cocoa and chocolate products, as well as food sweeteners and starches.
The company's origination and processing business — or its agricultural supply chain — was down from last year's strong comparative quarter. While global demand for grain and oil continues to grow, Cargill said an overabundance of production during the last four crop cycles has depressed commodity prices and market volatility.
Cargill's industrial and financial services, which includes shipping, metals trading and structured finance, was down slightly from a year ago. Strengths within this business included earnings from iron ore and steel trading in Asia, and from trade and structured finance services in emerging markets.
During the first quarter, Cargill sold its North American power and gas business to Australia-based Macquarie Group. It also agreed to sell its U.S. metals business to Metal One, a Japanese steel trader and distributor. Cargill will still be a player in the energy industry through its Asia metals business, as well as in biofuels, tanker shipping and bio-industrial businesses.
HOGS: (Brownfield) -- The director of congressional relations for American Farm Bureau says it's probably a reach to believe the renegotiation of NAFTA will be finalized by the end of the year.
Dave Salmonsen tells Brownfield trade officials from the U.S., Canada and Mexico are working hard to come to an agreement using an accelerated schedule.
"So as trade negotiations go along, you hear about progress or a lack of progress. But all of this is very usual when you're dealing with 28 chapters in the agreement, some pretty significant ideas out there for change. It just takes a while to work through them all."
He says most issues are on the table, but tough negotiations lie ahead.
"There are some more contentious areas where negotiating texts really haven't really been put out there for discussion yet. That's not unusual. You try to get the progress you can on a lot of things that are probably easier to accomplish because you've done them before."
Salmonsen views dispute settlement, rules of origin in the manufacturing sector, and Canada's supply management system for dairy and poultry as some of the bigger sticking points.
The third round of NAFTA negotiations concludes Wednesday in Ottawa, Canada.

Wednesday, September 27, 2017

Wednesday Closing Livestock Market Summary - Cattle Futures Stage Triple-Digit Recovery

GENERAL COMMENTS
The cash cattle trade remained in neutral with both bids and asking prices only sketchily defined. A few token bids were noted in the South at $104, far below asking price suggestions near $110 to $112. According to the closing report, the national hog base is .16 lower ($43.00-48.50, weighted average $47.47). Corn futures settled generally 2 cents higher, further rocking back and forth in a narrow trading range. The stock market closed higher with the Dow up 56 points and the Nasdaq better by 73.
LIVE CATTLE
Live contracts advanced by 30 to 142 points, lifted by short-covering and some encouraging signs of cash stability. December did succeed in nosing back over its 100-day average on the close. Yet the big gap created on Monday (i.e., 115.20-117.42) looks like formidable resistance. Beef cut-outs: sharply lower, off $1.48 (choice: $195.30) to $3.20 (select: $189.91) with light to moderate demand and moderate offerings (67 loads of choice cuts, 44 loads of select cuts, 14 loads of trimmings, 26 loads of ground beef).
THURSDAY'S CASH CATTLE CALL:
Steady to $2 higher. Packer inquiry could start to improve Thursday, but significant trade volume may be delayed until sometime Friday.
FEEDER CATTLE:
Feeder futures closed sharply higher, up 182 to 287. The midweek pop of recovery was fueled by short-covering and the premium status of the cash index. As in the case of cattle charts, the large gap area created earlier this week (e.g., 153.47-156.10 basis) now represents tough overhead resistance. CME cash feeder index: 09/26: 152.43, up .11.
LEAN HOGS:
Lean hog futures finished unevenly higher, up 155 to off 22. Dec and Feb attracted the most buying interest with both managing to close slightly above 40-day moving averages. Before closing modestly higher, spot October slipped to another new contract low. Carcass value held about steady with stronger demand for hams, ribs, and picnics offsetting weakness in fresh cuts. Pork cut-out: $72.64, up .15. CME cash lean index for 09/25: 56.98, off .68 (DTN Projected lean index for 09/26: 56.25, off .73).
THURSDAY'S CASH HOG CALL:
Steady to $1 lower. Look for the cash hog trade to open with steady/weak bids as packers work to supply another large Saturday kill (around 240,000 head).

Wednesday Midday Livestock Market Update - Cattle Futures Rally Higher on Short-Covering Activity

GENERAL COMMENTS: 

Strong triple-digit gains have quickly developed through the cattle and hog complex with gains in cattle futures leading the way. This has posted gains of $1 to $2 per cwt in live cattle markets while gains in feeder cattle have moved as high as $3 per cwt higher midday. Corn prices are mixed in light trade. December corn futures are 1/4 cent lower. Stock markets are higher in light trade. The Dow Jones is 16 points higher while Nasdaq is up 42 points.
LIVE CATTLE:
Strong buyer support has moved into all cattle trade as short covering is being focused on following pressure early in the week. October futures remain sluggish with a 33 cent per cwt gain, while the rest of nearby contracts have surged higher with triple-digit gains. As December futures have moved back above $115 per cwt, commercial traders are starting to step back into the market, as they shrug off the pressure seen early in the week. Cash cattle activity still remains generally sluggish with just a few scattered bids seen in the South through the morning. Bids of $104 per cwt are seen in both Kansas and Texas through the morning, but this is limiting the ability to draw feeder's interest into the market given the support in futures trade. Asking prices are seen around $110 to $111 in the South and $172 to $174 in the North. The Fed Cattle Exchange Auction report today listed a total of 1,342 head, with zero actually sold, 394 head listed as unsold, and 948 head listed as PO. The state by state breakdown looks like this: KS 706 total head, with zero head sold, and 706 head listed as PO ($106.25-107.50); NE no cattle reported; TX 636 total head, with zero head sold, 394 head unsold, and 242 head listed as PO ($107.50); CO no cattle reported; IA no cattle reported; other states no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 841 head total, zero head sold; 1-17 day delivery 501 head total, zero head sold; 10-17 day delivery none reported; 17-30 day delivery none reported. Beef cut-outs at midday are lower, $2.02 lower (select) and down $1.29 per cwt (choice) with moderate movement of 91 total loads reported (46 loads of choice cuts, 22 loads of select cuts, 4 loads of trimmings, 20 loads of ground beef).
FEEDER CATTLE:
Strong triple digit-gains have quickly developed across the feeder cattle futures complex. This is adding to increased overall market support and gains of $1.50 to $3 per cwt. The focus on firming underlying support ant the potential that additional commercial buyer interest will continue to move back into the market is helping to draw buyer interest to both nearby and deferred contracts.
LEAN HOGS:
Despite the narrowly mixed trade early in the trading session, buyer support stepped into the market at midday. This has pushed December contracts to triple-digit gains, leaving markets focusing on renewed buyer support and the potential to draw additional longer-term support back into the market. October futures, which held light to moderate losses through the entire morning, has not moved higher, holding a 22 cent gain, even though trade volume remains sluggish in front month futures. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.30 at $47.33 per cwt with the range from $43.00 to $48.50 on 14,848 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.16 at $47.96 per cwt with the range from $43.00 to $48.50 on 5,587 head reported sold. The National Pork Plant Report reported 231 loads selling with prices gaining $1.10 per cwt. Lean hog index for 9/25 is at $56.98 down $0.68 with a projected two-day index of $56.25, down 0.73.

Wednesday Morning Livestock Market Summary - Cattle Paper Likely to Open Moderately Higher at Midweek

GENERAL COMMENTS:
Cattle-buying inquiry could start to show more life Wednesday, at least in terms of more starter bids of the time. At the same time, preliminary asking prices should become more evident. Our guess is that the South will initially price showlists around $110 to $112 live. Northern feedlots are likely to begin asking somewhere in the $172 to $174 plus neighborhood. Both buyers and sellers will be monitoring the board as well as the FCE internet auction for clues regarding cash prospects through the balance of the week. Chances are the development of significant cash volume will be delayed until sometime Thursday or Friday. Live and feeder futures seem geared to open moderately higher Wednesday, supported by midweek short-covering and the early-week appreciation of beef carcass value.
The cash hog market seemed to stabilize a bit on Tuesday. While weighted averages were still lower, bids needed to move significantly. Country trade volume seemed closer to steady than we've seen in several weeks. No big deals, but possibly a sign that cash has become oversold for a minute or two. Time will tell. So look for opening bids to be no worse than steady to $1 lower. Needless to say, there's still an abundance of live inventory for packers to choose from. Furthermore, processing margins remain very attractive, attractive enough to probably plan a Saturday kill close to 240,000 head. Lean futures are likely to open mixed in slow volume as traders jockey ahead of the Sept. 1 hog inventory scheduled for release on Thursday.
BULL SIDEBEAR SIDE
1)For the second consecutive session, beef cutouts exploded sharply higher on Tuesday with box movement once again described as "moderate to fairly good." Packers seem to be quickly recovering any loss in profit margins suffered last week.1)Nearby live futures continued to retreat on Tuesday with December underscoring Monday's technical damage by sliding further below the 100-day moving average (settling below its eight-day moving low for the first time since Aug. 21).
2)Although losing more ground Tuesday, spot October live cattle did seem to dig in above its 40-day moving average at 108.12. If bulls can draw a line in the sand here, feedlot managers will roll up their sleeves again with higher asking prices.2)Now that spot October has fallen a bit below last week's 5-area steer average (i.e., $108.50), renewed basis strength could make it tougher for feedlot managers to hold for higher asking prices.
3)Hams moved into cold storage in August at a below normal rate, hinting that holiday needs later this year could work to stabilize prices later this fall even as fresh production increases. Additionally, trade sources suggest that Mexican demand for bone-in hams remains excellent.3)
Bearish expectations in lean hog futures continues to dominate the CME marquee with spot October once again setting a new contract low on Tuesday (i.e., $55.02).
4)Though most analysts believe that prior farrowing estimates by the USDA have been understated, if the new Hogs & Pigs report due out Thursday happens to affirm previously estimated farrowing levels, support could enter the marketplace with a tighter supply moving forward than current pricing would suggest.4)After the shortest of reprieves, pork carcass value is back on the defensive, closing more than a buck lower on Tuesday thanks to struggling demand for bellies, ribs, and picnics.
OTHER MARKET SENSITIVE NEWS 
CATTLE:(RABOBANK) -- US beef exports are up 11% YOY in volume for the year to July and up 15% YOY in value terms. This highlights the ongoing availability of product for export from the US, as well as challenges in exporting from Australia and Brazil. US beef exports are up for the year to date to Japan (22% YOY), Hong Kong (33% YOY), and Canada (5% YOY).
Australia has been restricted by availability of beef for export, while the 'weak flesh' scandal in Brazil slowed exports of all proteins in 1H 2017. At the same time, the US has recorded stronger-than-expected beef imports, which are up for the year to date by 11% YOY.
After reaching the trigger level, the Japanese government introduced safeguard measures and increased the tariff on imported frozen beef to 50%. This will impact all nations sending beef to Japan, apart from Australia, Mexico, and Chile, which have trade agreements.
Argentina is trying to start shipments of fresh beef to the US. In August 2017, negotiations appeared to have taken a step closer to reaching an agreement, when Argentina announced that it had opened its market to American pork products, showing that bilateral meat trade is under discussion. If Argentina is successful in gaining entry to the US fresh beef market, it will have access to a 20,000-tonne beef quota.
After having declined by more than 8% during 1H 2017, Brazilian beef exports have shown a strong recovery during Q3 2017. In August 2017, they reached their highest level in four years. Consequently, beef exports reversed the negative results and have already increased slightly for the first eight months of 2017. Moreover, Brazilian beef exports are likely to sustain volumes above 2016 levels during Q4 2017.
HOGS: (nationalhogfarmer.com) -- With a clearer vision on how to elevate U.S. pork as the global protein of choice, three National Pork Board officers and two members of the senior leadership team have returned from an Asian trade mission. The team representing the Pork Checkoff toured Japan and China from Sept. 5-16, visiting with pork processors, distributors and retailers, as well as importers and traders. Asian team members of the U.S. Meat Export Federation also accompanied the Pork Checkoff crew.
"Pork is the No. 1 most consumed protein in the world, and that was certainly obvious as we toured parts of Japan and China," says National Pork Board CEO Bill Even. "It is important for us to see firsthand how pork is raised, processed and promoted in Asia. The Asian customer and consumer culture is unique, and we need to understand the global motivation to purchase U.S. pork."
The United States is facing record-breaking pork production in 2017. The Pork Checkoff is committed to growing demand, not only in the United States, but also among top customers in Asia. In terms of pork volume (pounds), China/Hong Kong and Japan are currently the No. 2 and 3 export customers of the United States. Combined volume in these areas is 534,953 metric tons (or about 1.18 billion pounds). In terms of pork value (U.S. dollars), Japan is No. 1 and China/Hong Kong is No. 3, with a combined value of nearly $1.6 billion of exports, both according to the most recent (through July) USMEF data.
"Marketing pork comes down to building long-term relationships and having a safe, dependable, high-quality product that is presented well to the buyer," says Pork Board President Terry O'Neel, a producer from Friend, Neb. "Consumers are encouraged to experience U.S. pork through fun events and social activities."
While in Japan, the trade team was able to see specifically how U.S. pork is marketed, including through USMEF's current Gochipo (sumptuous pork) campaign. That marketing campaign extols the virtues of high-quality, delicious U.S. pork and the rising value of U.S. pork products.
"My most distinct takeaway as a producer is the vital and versatile role that U.S. pork plays in the Asian diet," says Pork Board Treasurer Brett Kaysen, a producer from Nunn, Colo. "No matter the level of retail outlet in Japan — from discount to high-end — U.S. pork is present."
After spending five days on the ground in Japan, Checkoff leadership traveled to China. While in China, O'Neel and Even presented the U.S. pork production perspective at the annual China Swine Industry Symposium. O'Neel spoke on managing financial, environmental and labor risk in U.S. pork production.
"China is a huge market in terms of volume and opportunity," says Pork Board Vice President Steve Rommereim, a producer from Alcester, S.D. "While China is 98% self-sufficient in pork production, we need to further our outreach efforts here. The economic growth and infrastructure development we saw in China is intimidating, to say the least. This level of growth points to a greater dependence on foreign market imports, with price a key buying criteria."
Kaysen adds, "In China, I envision cold pork storage experiencing dramatic growth as the population grows and as the country continues to consume more meat. Our job is to make U.S. pork truly recognized in the meat case at the retail level in China as much as it is in Japan."
"Our leadership gained a greater understanding of the Asian market by visiting with people in the Japanese and Chinese meat trade," O'Neel says. "U.S. pork is doing well in Asia, but we can do more to improve. Free trade issues remain both a barrier and a pathway to future U.S. pork export growth."
Rommereim agrees, saying, "This was an important trip for the officers to make. As the U.S. pork industry expands, our dependence on these markets becomes even more important and valued. Through increasing our level of knowledge, we are better qualified to spend Checkoff dollars wisely to expand exports."
Including both muscle cuts and variety meat, exports have increased to 27.5% of total production in 2017 (up from 25.6% last year). Growing that amount is the result of developing Asian customer relationships and working with the USMEF and the National Pork Producers Council.

Tuesday, September 26, 2017

Tuesday Closing Livestock Market Summary - Meat Futures Settle With Mixed Results

GENERAL COMMENTS
Feedlot country remained generally quiet with just a few preliminary bids noted here and there (i.e., $104 in the South; $168-$169 in the North). Asking prices were few and far between as the defensive board probably discouraged producers from price ready cattle prematurely. According to the closing report, the national hog base is $0.15 lower ($43-$48.75, weighted average $47.59). The corn market closed a penny plus lower as the listless market remained stuck in a narrow trading range. The stock market closed mixed with the Dow off 11 points and the Nasdaq up 9.
LIVE CATTLE
Live futures closed on both sides of unchanged with final settlements ranging from 40 points higher to 95 lower. Nearbys October and December continued to feel the bearish heat from Monday's big crash thanks to follow-through selling and technical concerns. While spot August closed just above its 40-day moving average ($108.12), December slipped further below overhead resistance at it 100-day moving average ($114.65). Beef cut-outs: sharply higher, up $2.22 (select: $193.11) to $2.82 (choice: $196.78) with moderate-to-good demand and light offerings (47 loads of choice cuts, 17 loads of select cuts, 24 loads of trimmings, 17 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL:
Steady to $2 higher. The parameters of cash potential may take on better definition at midweek, though significant trade volume will probably be delayed until Thursday or Friday.
FEEDER CATTLE:
Feeders also followed Monday's implosion with a round of mixed business. Final settlements ranged from 90 higher in the far deferred to up 95 in the nearby. Technically speaking, charts suggesting decent support around $146-$147 basis October. CME cash feeder index: 09/25: $152.32, off $0.28.
LEAN HOGS:
Spot October once again set a new contract low at $55.02. But most lean issues finished 10 to 67 higher. To no one's surprise, nothing surfaced of technical importance. Understandably, few have enough courage to rock the boat right before the release of a quarterly inventory due out Thursday. Carcass value slumped more than a buck lower thanks to softer demand for bellies, ribs and picnics. Pork cut-out: $72.49, off $1.01. CME cash lean index for 09/22: $57.66, off $1.42 (DTN Projected lean index for 09/25: $56.98, off $0.68).
WEDNESDAY'S CASH HOG CALL:
Steady to $1 lower. Expect hog buyers to open the cash market is the morning with bids steady to $1 lower. While the live trade seemed to stabilize a bit on Tuesday, the wholesale product market stayed on the defensive.

Tuesday Midday Livestock Market Summary - Follow-Through Pressure Holds in Live Cattle Trade

GENERAL COMMENTS: 
Strong market pressure continues to be seen in live cattle futures which is holding triple-digit losses in nearby contracts. The mixed moves in lean hog trade continues to put pressure on spot October lean hog futures, holding contract lows, as buyers try to step into other nearby contracts. Corn prices are lower in light trade. December corn futures are 1 cent lower. Stock markets are higher in light trade. The Dow Jones is 9 points higher while Nasdaq is up 2 points.
LIVE CATTLE:
Triple-digit losses are seen in October and December live cattle futures with traders focusing on the overall lack of buyer interest seen in nearby contract months. Although narrow gains have slowly developed in deferred futures, the overall weak tone of the market carried over from Monday's limit losses is keeping most buyers bearish. Cash cattle bids have started to slowly develop through the market with bids in the South seen at $104 per cwt while dressed bids in the North are seen at $169 per cwt. Asking prices are still hard to pinpoint in many areas, with cattle priced in the South expected to be around $110 per cwt and $175 and higher in the North. Beef cut-outs at midday are higher, $2.78 higher (select) and up $2.29 per cwt (choice) with light movement of 63 total loads reported (23 loads of choice cuts, 8 loads of select cuts, 23 loads of trimmings, 9 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have stabilized slightly at midday with prices mixed in a wide range. Although firm pressure continues to hold in October through January contracts with triple-digit losses seen in October futures. Light buyer support is trickling back into the complex. This is allowing for increased buyer activity to slowly but steadily move into the complex, and instill a sense of stability through the market.
LEAN HOGS:
Lean hog futures remain mixed in a wide trading range Tuesday morning. The overall lack of support in front month October contracts continues to drive uncertainty into the complex with spot month prices holding a $1.10 per cwt loss, trading at $55.22 per cwt. October contracts have continued to post contract lows, leading to increased liquidation through the last week of September. December through June contracts are holding light to moderate gains, although very light activity is seen in the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.90 at $46.84 per cwt with the range from $43.00 to $48.75 on 3,519 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.72 at $47.10 per cwt with the range from $43.00 to $48.75 on 412 head reported sold. The National Pork Plant Report reported 182 loads selling with prices gaining $0.81 per cwt. Lean hog index for 9/22 is at $57.66 down $1.42 with a projected two-day index of $56.98, down 0.68.

Tuesday Morning Livestock Market Summary - Livestock Futures Staged for Mixed Opening

GENERAL COMMENTS:
The cash cattle market will stay poorly defined Tuesday with both buyers and sellers probably sitting on their hands until the second half of the week. All eyes will be on the board, eager to discover whether Monday's crash was just a one-day reaction to the Cattle on Feed report or something much more serious. Live and feeder futures are likely to open on a mixed basis Tuesday, shattered by a combination of follow-through selling and short covering.
Hog buyers seem likely to resume procurement chores with opening bids of a buck or so lower. Lean futures are also set to open mixed as specs and commercials cautiously position ahead of the Hogs & Pigs release on Thursday. Further unwinding of bear spreads should mean nearby issues gain on deferred counterparts.
BULL SIDEBEAR SIDE
1)Beef cutouts have opened the week with new strength, closing sharply higher on Monday. Furthermore, box demand was initially described as "moderate to fairly good."1)Cattle futures crashed and burned following last Friday's news that August placement activity was larger than expected. The large bearish gap created on charts could prove to be a trend stopper if bulls cannot counter the sell-off quite soon.
2)The comprehensive boxed beef report released Monday indicated that out-front business (i.e., deals with 22 days or more of delivery) remains very strong, totaling 1,333 loads, 171 more than the previous week and 218 more than 2016.2)If nearby live futures continue to slide lower through midweek, the strength basis could work to significantly damage the country leverage of feedlot managers.
3)The pork carcass value finally caught a bounce on Monday, closing solidly higher thanks to better demand for butts, picnics and hams.3)Despite Monday's token rally in nearby lean hog futures, the short-term trend and the long-term market trends are solidly negative. Furthermore, the discount on the board reflects traders' bearish price expectations over the next three weeks as the October futures is well under the current cash index.
4)While record pork supplies over the foreseeable future are virtually a given, expectations are that exports are going to expand and temper the impact of larger supplies on the domestic market.4)Chain speed set another daily record on Monday with estimated hog kill of 460,000 head. The amazing and demand-challenging pace of pork production continues to accelerate.
OTHER MARKET SENSITIVE NEWS 
CATTLE:(Ottawa Citizen) -- There are now fewer Canadians cows than at any point since the early 1990s and, according to analysts, it's partially millennials' fault.
On Jan. 1, Statistics Canada counted 11,850,000 total cows in Canada-- already a 26-year low.
Now, U.S. authorities monitoring the Canadian cattle market suspect that by 2018 it will drop even lower, to 11,725,000. "Canadian cattle farm numbers have continued to contract as ranchers retire out of the industry without a successor," reads a new report by the United States' Foreign Agricultural Service.
If the 2018 projection holds true, the year will rank as the ninth-lowest year for Canadian cattle numbers since 1970.
It also means that Canada's ratio of cows to citizens remains in steep decline. In 1945, there were seven cows for every 10 Canadians. At the beginning of 2017, that ratio had dropped to only three cows per 10 Canadians.
Part of the recent decline in cattle numbers has been due to drought in the Canadian Prairies reducing the output of grazing land. Faced with keeping their herds alive with trucked-in feed, many farmers opted to send cows off to slaughter or sell them to the United States.
Cattle producers have also cited production being hamstrung by labour shortages. "Many readers, I'm sure, know first-hand how hard it is to find someone to work on a ranch or in a feedlot," reads a 2015 article in Canadian Cattlemen.
In its report, the Foreign Agricultural Service placed special emphasis on what it called "producer attrition." With old ranchers retiring and young ones not stepping up to replace them, there are simply fewer places in Canada raising cattle. Since 2005, the number of cattle farms has gone down by more than third.
The paper noted that Canada's remaining cattle farms were swelling in size, indicating consolidation. However, "the loss of farms continues to outpace the rate of growth in cattle per farm, dragging down the size of the total cattle herd," it wrote.
There's also the simple fact that Canadians aren't eating as much beef as they used to.
In 1980, the year that Terry Fox began his Marathon of Hope, the average Canadian ate 38.8 kilograms of beef per year; the equivalent of 420 McDonald's hamburgers's worth.
In 2017, per capita beef consumption has dropped to 25 kilograms, a reduction of 35 per cent.
Compare that to chicken, which has gone from 16.88 kilograms per year in 1980 to an all-time high of 32.51 kilograms in 2016 — twice as much.
Indeed, most of the reductions have been seen in the beef sector, which constitutes by far the largest share of Canadian cows. In 2017, there are 9.9 million beef cows to 1.9 million dairy cows.
Dairy cows, like all aspects of the Canadian dairy industry, are not subject to normal market pressures as a result of supply management policies. With dairy cow herds strictly regulated by marketing boards, they stay relatively consistent year after year.
Meanwhile, the situation is almost the exact opposite in the pork sector. At the beginning of 2017, there were 14.13 million hogs in Canada, an increase of 290,000 over the previous year.
"Canadian pork exports are projected to continue to reach record high levels in 2018 driven by consumption patterns in Asian markets," wrote the Foreign Agricultural Service.
HOGS: (Bloomberg News) -- Cheap pork is here for American football fans firing up the grill for tailgate parties.
While meat costs in the U.S. tend to drop as summer wraps up, this year the declines are more pronounced. Wholesale pork has fallen to the lowest seasonally since 2009, which could bring down grocery-store bills.
Carnivores can thank a boom in U.S. production for cheaper grocery bills, with output expected to reach an all-time high in 2017. There are signs that prices will stay low. December hog futures are on pace for a third straight monthly loss, and hedge funds have lowered their bets on a rebound in five of the past six weeks.
"There's no shortage of meat," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. "The retail price is probably going to stay under pressure."
American pork production is forecast to rise 3.6 percent this year, with even more meat coming in 2018, according to the U.S. Department of Agriculture. Beef and chicken output are also climbing as steady corn prices keep feed costs low for livestock producers.
In Chicago, hog futures for December settlement slumped 3.2 percent last week to 56.625 cents a pound, the biggest drop in a month.
Speculators aren't showing much enthusiasm for a rally. Investors' net-long position, or the difference between bets on a price increase and wagers on a decline, rose just 1.6 percent to 56,732 futures and options contracts in the week ended Sept. 19, according to U.S. Commodity Futures Trading Commission data released three days later. What's more telling: the holdings are down 33 percent from this year's high in mid-July.
Wholesale meat prices typically start to fall in mid-summer as buying for the grilling season wanes. Pork has tumbled about 30 percent from its July peak, and pork-bellies -- the cut used for bacon -- have dropped almost 60 percent. That could curb costs at the grocery store, when tend to lag wholesale declines. In August, retail bacon was a record $6.241 a pound. And while chops are down from historical highs, prices also ticked up at supermarket coolers last month.
Expanding supplies signal lower costs ahead. Total U.S. meat output may top 100 billion pounds for the first time ever this year.
U.S. pork processors are adding plants in the Midwest, and capacity may rise as much as 10 percent by mid-2019, according to a June report from CoBank, an agricultural lending cooperative based in Greenwood Village, Colorado. Hog-slaughter weights have been rising recently, which adds to production. The USDA is scheduled to release its latest figures on the domestic hog herd in a report next week.
One thing that meat eaters should watch out for: A rise in beef prices.
While wholesale costs for the commodity are heading for a fourth month of declines, investors are signaling they're preparing for a turnaround. The cattle net-long position rose 5.3 percent last week to 86,652 contracts, the CFTC data show. That marked a second straight gain, the longest streak since the end of May.