Thursday, September 7, 2017

Thursday Morning Livestock Market Summary - Hog Paper Staged to Open Moderately Lower

GENERAL COMMENTS:

Look for the cash cattle market to take on greater shape this morning with light to moderate trade volume likely to surface today and/or tomorrow. Opening bids should start out around $102-103 in the South and $162-163 in the North. Generally speaking, asking prices are around $107 plus in the South and $166-168 in the North. Live and feeder futures seem set for a mixed opening thanks to a pre-cash combination of long liquidation and short covering.
Relatively large negotiated volume was maintained in hog country at midweek, but the same could hardly be said about firm packer bids. Indeed, significantly lower bids yesterday were successful in moving decent numbers. Expect hog buyers to resume work this morning with bids steady to $1 lower. At this time, Saturday slaughter plans are expected to total close to 375,000 head. Such a big total is of course tied to last Monday's dark schedule as profitable packers move to make up for lost time. Lean futures should open moderately lower, checked by defensive fundamentals.
BULL SIDE BEAR SIDE
1) Beef cut-outs closed moderately higher yesterday with further evidence of decent post holiday demand (i.e., officially described as "moderate to fairly good." 1) Cattle carcass weights are expected to continue increasing seasonally into fall, peaking near mid-November.
2) By closing moderately higher on Wednesday, live and feeder cattle futures remained within (and therefore reinforced) the lateral trading range in place since early August. 2) Cow slaughter is trending seasonally higher as pasture gates begin to swing open. Weekly kills should reach 120,000 plus by early November, 5,000-10,000 than we are currently seeing.
3) The combination of attractive pork processing margins and larger packer appetites (read new plants) could actually prove to be cash supportive, especially if market numbers do not accelerate as fast as many think. 3) The pork carcass value took it on the chin at midweek, dropping more than a buck as the belly primal resumed its implosion (i.e., off $7.45).
4) October lean hogs have now reached that point in the year where prices tend to strengthen on into expiration of the contract the middle of next month. 4) For the week ending September 2, Iowa barrows and gilts averaged 279.8 pounds, 1.9 pounds heavier than the week prior and 3.1 pounds larger than 2016.

OTHER MARKET SENSITIVE NEWS

CATTLE: (KHOU-TV) - The Texas Army National Guard has been working around the clock to assist southeast Texas since Hurricane Harvey hit the area. On Tuesday, their attention turned to stranded cattle.
KHOU 11 cameras were allowed on board a Chinook helicopter on a unique mission. Pilot Randolph Robinson was in command.
"Today's mission was feeding cows," said Robinson.
It's not as easy as it sounds. A 40-minute ride from Brookshire to Beaumont is only the beginning
"Roads are still underwater, areas where folks' homes are, are still underwater," said Robinson.
Robinson has seen it all from the cockpit. The devastation is real, but their focus now is on keeping animals alive.
"The request came down from ranchers that cows had been underwater for several weeks and they had nothing to eat," said Robinson.
The Chinook lands in a Beaumont High School parking lot where trailers and teams of ranchers, volunteers and guardsmen waste no time filling the Chinook with thousands of pounds of hay.
The helicopters don't even power down. There's no time. A few minutes later they're ready to lift off again to head right towards the distressed cattle.
"They are on these little islands completely surrounded by floodwaters," said Robinson.
Two Chinooks in formation hover above. That's when the real work begins.
"It's difficult, nothing makes cows scatter like a CH-47 overhead, but if we can get somewhere near our drop point, we'll just kick it out," said Robinson.
Bale after bale, each one weighing more than 40 pounds, is lifted and tossed out the back while Robinson keeps the Chinook level from just a few hundred feet off the ground.
It's a delicate aerial dance that in a matter of minutes allows a two man crew in the back of the chopper to drop more than 100 bales to the ground below.
"Once we're gone they come find the hay," said Robinson. "They're pretty hungry. So they're finding it."
"We're trying to keep them from succumbing to starvation right now," said Robinson.
This unique operation only started 24 hours ago, but since then the Texas Army National Guard has dropped more than 75,000 pounds of hay to struggling cattle. But for many cattle in southeast Texas, it's already too late.
"I know I've seen a few dead from the air myself," said Robinson. "We're just trying to keep that death toll down by delivering all this hay."
And the Teas Army National Guard isn't alone. Guardsmen from 11 other states are assisting. KHOU also learned the Singapore Air Force, who trains near Dallas, is flying supply missions across southeast Texas as well.
HOGS: (Sioux City Journal) -- Mark Porter gushed with pride late Tuesday afternoon as the Seaboard Triumph Foods plant neared the end of its first day of commercial production.
"I couldn't be more proud," Porter, the plant's chief operating officer, told the Journal in an interview. "We exceeded all of my expectations on Day 1. The product quality looks great. The speed is better than I expected on Day 1. The workforce couldn't be more engaged and enthusiastic."
The plant slaughtered "just shy" of 1,000 hogs on the first day, Porter said.
"We're well ahead of our planned schedule," he said. "We will continue to add to that each day as we move through the coming weeks until we reach our full one shift mark of 10,000."
There also will be a corresponding increase in the first shift employment, which eventually will grow to around 1,100. About 700 employees reported to work Tuesday, including about 200 office staff and 500 production workers. An additional 150 hourly workers have been hired and are going through training and the orientation process and will move to the production floor by the end of this week or early next week, raising total employment to around 850, Porter said.
The $300 million plant, announced in May 2015, had been under construction for nearly two years in Sioux City's Bridgeport West Industrial Park, located just north of Sioux Gateway Airport and west of the Missouri River. Some work will continue through the winter in preparation for the addition of a second shift in late spring or early summer. A second shift could require hiring an additional 900 production workers, bumping total employment to around 2,000.
The final phases of street improvements designed to ease congestion and accommodate growth in the area surrounding the pork plant also are expected to last well into next year. Despite the road work and the added vehicles, traffic flowed in and out of the plant relatively smoothly Tuesday, Sioux City Police Sgt. Jason Allen said. The police department posted squad cars at two key intersections -- at Singing Hills Boulevard and the off ramp for Interstate 29, and the intersection of South Patton Street and Boulevard of Champions -- from 6 to 8 a.m. and from 3 to 5 p.m.
Allen said staggered shifts at the plant helped further reduce traffic. Some workers arrived at work by 3 a.m., hours before the patrols began. Most production workers clocked in between 6 and 6:30 a.m. while the office staff generally reported between 7 and 7:30 a.m.
Police officers will return to the same intersections on Wednesday to monitor traffic. The department then will evaluate whether future patrols are needed, he said.
During the plant construction, many businesses in the Bridgeport area complained of increased traffic congestion that interfered with their operations and warned the situation would only get worse once the plant opened, unless the city took additional steps such as adding temporary traffic signals.
Allen noted some motorists, seeking a short cut to the plant, were observed Tuesday driving through parking lots owned by hotels and restaurants.
"We would encourage people to stay on the road, don't cut through private lots," Allen said. A T-intersection at Patton Street and Boulevard of Champions also has tested some motorists new to that area of the city, he said.
With the plant slaughter at less than 10 percent of capacity, only a handful of trucks rumbled in and out of the complex. Porter said the truck traffic will increase significantly as the plant ramps up the number of hogs brought to the site.
About two-thirds of the animals will come from the plant owners, a joint venture between Guymon, Oklahoma-based Seaboard Foods and St. Joseph, Missouri-based Triumph Foods. The rest will be purchased on the open market from independent producers who meet Seaboard Triumph Foods standards.
The 925,000-square-foot facility features robotics and innovative technologies to produce a full line of fresh pork products for retail, international, food service, and further processing markets.

"We want to thank of the many people who contributed to make this project a reality," Porter said. "We're proud of Sioux City. We've very excited about the days, weeks and months ahead."

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