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Monday, December 31, 2018

Monday Closing Livestock Market Summary - Lean Hog Futures Close 2018 Mostly Higher

GENERAL COMMENTS: Cattle buyers limited their efforts Monday to the assessment of new showlists. Ready numbers are larger in all areas, especially Texas and Nebraska. The national hog carcass base closed $0.35 higher ($41.00 to $47.00, weighted average, $45.65). March corn traded lower most of Monday on light volume, ending the final session of 2018 down a half-cent at $3.75. The stock market closed a very volatile December on the right side of the ball with the Dow up 265 points and the Nasdaq positive by 50.

LIVE CATTLE: Live issues closed mixed, up $0.72 to off $0.30 in light volume. Spot December expired at $124.80, finally supported by decent feedlot cash that surfaced late Friday. Beef cut-outs closed significantly higher with the choice box up $0.94 ($215.35) and its select counterpart up by $3.16 ($210.66). Wholesale demand was called "good" with moderate offerings.

WEDNESDAY'S CASH CATTLE CALL: Steady to $2 higher. The cash cattle market at midweek will be poorly defined with concrete bids and asking prices probably not taking shape until Thursday or Friday.

FEEDER CATTLE: Feeder futures also settled mixed, up $0.72 to off $0.22. Most of the buying interest developed in the far deferreds. CME cash feeder Index for 12/28: $144.64, off $2.62.

LEAN HOGS. For the most part, lean contracts closed moderately higher, up $0.20 to $0.90. Of course the big question as we knock into the new year concerns the adequacy of domestic and export pork demand in the face of record production. Carcass value closed lower, moderately pressured by fresh cuts and hams. The pork cut-out for 12/31 totaled $70.19, off $0.27. (DTN Projected lean index for CME cash lean index for 12/28: NA) CME cash lean index for 12/27: $53.11, off $0.01.


WEDNESDAY'S CASH HOG CALL: Steady. Look for 2019 cash hogs to start out with generally steady bids.

#completeherdhealth

Monday Midday Livestock Market Update - New Year's Eve Trade Remains Sluggish

General Comments
Front month live cattle and lean hog futures are holding firm market support due to limited activity. The rest of the complex remains stuck within a very narrowly mixed trading range as most contract months are holding single-digit market shifts. The limited interest is allowing markets to stabilize through the end of the year with increased volume and activity likely the first few trading sessions of January. Corn markets are lower in light trade. March corn futures are 2 1/4 cent lower. Stock markets are higher in light trade. Dow Jones is 129 points higher with Nasdaq up 20 points.

LIVE CATTLE:
Lightly traded December contracts, which has limited interest due to expiration of contracts is leading market prices higher with an 80-cent gain at midday. The rest of the complex is contained to a narrowly mixed trading range with prices showing absolutely no sign of market direction Monday. Markets will remain closed Tuesday for the holiday, with normal trading schedules starting Monday. Activity through the last half of the week should become livelier, although little directional change is expected over the next few trading sessions. Cash cattle activity remains undeveloped Monday with limited interest seen before the holiday break. Most activity will develop Wednesday through Friday as traders return from the New Years holiday. Boxed Beef cut-outs at midday are higher, $3.45 higher (select) and up $0.14 per cwt (choice) with light movement of 49 total loads reported (31 loads of choice cuts, 9 loads of select cuts, no loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:
Feeder cattle futures remain sluggish with prices hovering in a mixed trading range as prices are contained to single digit moves. The inability to bring any significant direction to the market has more to do with markets closed Tuesday for New Year's Day, and traders willing to wait until later in the week before stepping into the complex. The way the holiday's fall this year, it has allowed for sluggish market activity to be seen on Christmas Eve and New Year's Eve due to limited market participation.

LEAN HOGS:
Limited market activity has entered the market Monday morning due to limited volume as many traders are content with current positions and willing to wait until early 2019 before stepping back into the market. With markets closed Tuesday for New Year's Day, prices are hovering in a narrowly mixed trading range with no real sense of urgency or direction seen through the complex. Front month February futures are leading the complex higher with a 47-cent gain at midday, although the lack of expected market moves through the end of the session will likely allow markets to hold current patterns over the next couple hours. Cash prices are unavailable at this time. Pork carcass values are higher on the morning report with prices gaining $0.47 per cwt at $70.93 per cwt with 202 loads traded. Lean hog index for 12/26 is $53.12, down 0.20, with a projected two-day index is $53.11, down 0.01.

#completeherdhealth

Monday Morning Livestock Market Summary - Cattle Paper Likely to Open Firm Thanks to Late-Week Cash Spending

GENERAL COMMENTS:

Market watchers who were willing to stay late enough on Friday eventually saw the development of moderate trade volume in most areas of cattle-feeding country. Furthermore, even maximum foot-dragging by packers could not excuse them from the need of spending more money for ready inventory. Most dressed deals in the North were marked at $195, as much as $5 higher than the previous week's weighted average basis Nebraska. Most live sales in the South were reported at $123, as much as $4 higher than the prior Friday's market test in Kansas and Texas.
Beef packers Monday will limited efforts to the assessment of new showlists. Our guess is that the offering will be steady to somewhat larger than last week. Market weather through the first week of January across much of the central Plains is anticipated to below normal.
The cash hog trade seems staged to open the holiday-disrupted week with bids steady to $1 lower. Market ready barrows and gilts remain plentiful with questions of adequate pork demand still up in the air. With plants dark Tuesday, you can bet that well-margined packers are planning another large Saturday kill, possibly close to 400,000 or better. Lean futures are likely to open on a mixed basis thanks to better seasonal optimism on one hand and pre-existing board premiums on the other.

BULL SIDE BEAR SIDE
1)
Though cattle buyers will typically start the week with perfunctory chores, they are nonetheless aware of a bigger appetite for fed steers and heifer this week with the first full slaughter week of January right around the corner.
1)
For the week ended Dec. 25, net beef export sales totaled 10,200 MT reported for 2018 were down 1% from the previous week, but up 29% from the prior four-week average. At the same time, actual weekly exports totaled 17,300 MT, down 5% from the previous week, but up 2% from the prior four-week average.
2)
The next major move in beef cutouts will be higher in the next several weeks as retailers and food managers restock cases and coolers in the wake of holiday clearance.
2)
While the beef carcass value should stage a seasonal recovery in the weeks ahead, the sizzle will be somewhat cooled by the passing of holiday demand per se. More specifically, the choice/select spread is expected to continue narrowing into the new year, as choice middle meats come down at a faster pace than the select product.
3)
For the week ended Dec. 25, net pork export sales totaled 31,600 metric tons (MT), up 42% from the previous week and 63% from the prior four-week average. Increases were reported for Mexico (19,900 MT), Hong Kong (4,200 MT), South Korea (3,600 MT), Japan (1,100 MT), and Canada (1,100 MT).
3)
For the week ended Dec. 25, actual pork exports totaled 26,900 MT, down 3% from the previous week and 1% from the prior four-week average. The primary destinations were Mexico (10,000 MT), South Korea (4,200 MT), Japan (2,600 MT), China (2,200 MT) and Colombia (2,000 MT).
4)
China has detected the African swine fever virus in some protein powders made using pork blood and manufactured by a Tianjin-based company, the General Administration of Customs said in a statement early last week.
4)
Since the breeding herd was not revised lower on the Dec. 1 Hogs & Pigs report for prior quarters, it supports confidence in the level of sows and as long as producers farrow the average of sows for this quarter (i.e., more than 48%), the resultant pig crop and forward herd size going into 2019 will maintain its record-large status.


OTHER MARKET SENSITIVE NEWS

CATTLE:(Forbes) -- "There's nothing blockchain can do that a database software program can't do," says Sarah Taber, a crop scientist based in Fayetteville, North Carolina, recalling a conversation with a colleague about whether blockchain could be agriculture's food safety holy grail. Taber, an outspoken critic of the technology, says the industry should be looking within to solve food safety problems first. "It's not the tool that's the problem," she argues. "It's the people."

The food industry has experienced a number of foodborne disease outbreaks this year, most notably in romaine lettuce and ground beef. And on December 13, Adam Bros. Farming, a California grower named by the FDA as a source of the most recent romaine outbreak, issued yet another recall, albeit precautionary, this time of its cauliflower and red and green leaf lettuce.

In the past year, the food industry has begun looking to technology, specifically blockchain, as a solution to foodborne disease outbreaks. Most notably, Walmart announced that in 2019, all of its leafy greens suppliers would be required to join its blockchain in order to continue supplying to its stores.

Developed in 2008 as part of the cryptocurrency bitcoin, blockchain works by recording the transactions of a consensus of participating computer systems to the data chain. In the food industry, blockchain tends to be of the "enterprise" or "private" variety—that is, only a select group of participants are allowed to upload and access the data on the chain.

Blockchain technology has garnered plenty of food industry buzz this year, but Taber, who also hosts a podcast called Farm To Taber about agriculture and technology, has become an outspoken critic. As far as she's concerned, blockchain is a non-starter. "If you have a company that doesn't hire quality people, then no tool you use is going to work. Tracing a product like romaine lettuce should take a company like Walmart a matter of hours, not days, Taber argues. There should only be about a handful of middlemen to deal with, says Taber, and those middlemen should be keeping good records. If it takes longer than a few hours, says Taber, "that tells me your people are not using the tools they already have."

Taber says she recently spoke with an avocado distributor who, despite using an older computer system, can quickly trace his product internationally within a few hours. "They're taking avocados from Chile and Mexico and California," she says, "and washing them and packing them and then distributing them to local facilities all across the U.S. and Canada." Even though they're using not much more than a "DOS-based software from the 80s," she says, they can track their product within just two hours.

When it takes weeks, not hours, to trace product, it's impossible to get to the source of an outbreak. That's why it's so difficult for CDC and FDA investigators to find the source of contamination. "By the time you get to the field where it happens," says Taber, "whatever is dirty is gone."

Taber, who works as an auditor, primarily of fruit and vegetable growers, says bad record keeping is a symptom of a more insidious problem. "In agriculture," she says, there's kind of a big fuzzy zone between bad record keeping and outright fraud." It's impossible to know for sure what's really going on when nobody is watching, she says, and even an auditor can only see so much.

Taber also worked for years as a farm worker before becoming a crop scientist, and she believes the real reason we're seeing more foodborne outbreaks these days is because of the increase in immigration crackdowns. Farm workers, the people actually in the field working the harvest, are in the best position to spot a food safety problem and report it. But these days farm workers are living in constant fear, if they're even working in the fields at all anymore.

"You really just want to keep your head down and not make any noise," says Taber. "So if you're seeing a problem, you're not going to say anything." The raids have created a "chilling effect" throughout the agriculture industry, Taber argues, because workers are increasingly terrified of speaking up about anything, let alone food safety, which is a problem that's well beyond blockchain.
"It drives me crazy," says Taber, "because they're clearly telling us 'we're dysfunctional' [but] what everybody's hearing is 'oh, we need better tools.'"

Blockchain might offer a better way to record and access data, but if the workers aren't reporting the problems and the management isn't accurately recording the data, then it seems blockchain doesn't have much to offer.

HOGS: (Dow Jones) -- McDonald's Corp. wants customers to eat more breakfast during breakfast.
When the fast-food giant three years ago responded to widespread demand for breakfast beyond 10:30 a.m. by offering McMuffins, hot cakes and sausage burritos all day, consumers cheered -- and so did investors. McDonald's business got an immediate jolt, and all-day breakfast buoyed sales for nearly a year.

But the availability of breakfast anytime led to unintended consequences. More customers are forgoing morning visits and getting their McMuffin fix in the afternoon and evening, according to some franchisees. McDonald's has blamed slowing U.S. sales in recent quarters on softness in its morning breakfast business.

McDonald's recently added new Triple Breakfast Stacks, for a limited time, in an effort to generate excitement in a menu that has seen little change. The sandwiches with extra meat are offered beyond traditional breakfast hours only upon request.

The company is pushing the idea of a "holistic" breakfast, with ads encouraging customers to pair its breakfast items and McCafe coffee drinks, and it is testing baked goods including coffee cakes and muffin tops. McDonald's has also started offering more competitive breakfast deals, including breakfast sandwiches for $1.

Getting breakfast right is critical for a chain that gets one-quarter of its sales in the morning. Rivals including Chick-fil-A and Burger King have upped their breakfast game with new products and deals.
They are all fighting for a shrinking market. Restaurant traffic growth at breakfast has slowed in the past three years as the entire eating-out market has softened, said David Portalatin, a vice president at market-research firm NPD Group Inc.

Still, breakfast sales are more profitable than lunch and dinner because ingredients such as eggs are cheap compared with the beef and chicken in sandwiches served later in the day, and fewer workers are generally needed to prepare breakfast items.

"What that means for us is that we need to sharpen the focus on breakfast around products, convenience and value," said Linda VanGosen, president of menu innovation at McDonald's.
Whether the moves will be enough to compel more people to stop in for breakfast is unclear. The chain is running up against shifts in consumer behavior that could run counter to the idea of the morning meal altogether. Levi Adams, a 21-year-old naval officer in San Diego, loves McDonald's breakfast burritos and McGriddles but doesn't have time to stop for breakfast on his way to work.


"When I was a teenager, I would get breakfast at McDonald's, eat lunch at school and then have dinner at home with my family," Mr. Adams said. "Now I wake up early every day, have coffee and an apple at home and get McDonald's breakfast on my way home in the evening. My eating habits have changed to fit my schedule." Numerous McDonald's customers want burgers in the morning, according to thousands of people who have tweeted about it. A spokeswoman for the burger giant said demand isn't strong enough to warrant running the burger grill in the morning. Offering a full menu all day adds complexity to restaurant kitchens, and the additions of all-day breakfast and fresh rather than frozen burgers in the afternoon have already slowed McDonald's service speed. Seeing a long line at a drive-through window can be a deterrent for consumers rushing to get to work in the morning. McDonald's Chief Executive Steve Easterbrook in October said it is difficult to give consumers what they want when they want it -- and at the speed they expect.

#completeherdhealth

Friday, December 28, 2018

Friday Closing Livestock Market Summary - Anticipating Late-Week Cash Strength, December Live Futures Close Sharply Higher

GENERAL COMMENTS: Northern cattle buying interest was light to moderate Friday afternoon, with some bids hiked as much as $192-$195, but still generally below asking prices of $195 plus. The spread between bids and asking prices remains even wider in the South (i.e., $122 bid versus $123-$125 asked). In short, we're still waiting for even minimal trade volume to develop. Such a vigil could take us into late afternoon or early evening. The national hog carcass base closed $0.26 higher ($41-$45.50, weighted average, $45.17). March corn closed up a penny, narrowing this week's loss to 3 cents through the holiday period of lackluster trading. The stock market closed mixed with the Dow off 76 points and the Nasdaq up 5.

LIVE CATTLE: Expiring spot December live closed sharply higher (up $1.15) while the rest of the complex advanced more moderately (up 12 to 40 cents). Helping both December and February push and hold over $124 were fears that a long stretch of adverse winter weather could significant curtail first-quarter beef production. Beef cut-outs closed mixed with the choice box off $0.89 ($214.41) and its select counterpart up by $0.30 ($207.52). Wholesale demand offerings were called "light to moderate."

MONDAY'S CASH CATTLE CALL: Steady to $1 higher. Activity on Monday will be limited to fed supply assessment as packers gather new showlists across the feeding area.

FEEDER CATTLE: Feeder issues closed the week on a mixed basis, up 22 cents to off 10 cents. Not many trading features to identify here. Volume was very thin with neither side eager to make their case. CME cash feeder Index for 12/27: $147.26, up $0.06.

LEAN HOGS. With the exception of a modest advance in spot February (up 17 cents), lean hog futures settled moderately lower with prices ranging from 7 to 25 cents lower. Chain speed (467,000) recovered from weather problems seen on Thursday, but still lagged behind last week. Carcass value held generally steady Friday with higher loins and hams offsetting lower bellies and picnics. The pork cut-out for 12/28 totaled $70.46, up $0.02. (DTN Projected lean index for CME cash lean index for 12/27: $53.11, down $0.01) CME cash lean index for 12/26: $53.12, off $0.20.


MONDAY'S CASH HOG CALL: Steady to $1 lower. The early week cash hog market is expected to open with bids steady to $1 lower. We'll probably see another large Saturday kill following New Year's as well-margined processors find time to swing carcasses whenever they can.

#chh

Friday Midday Livestock Market Summary - Early Cattle Gains Hold

General Comments
Limited direction is seen in livestock futures with cattle and hog futures pulling back from morning highs, although the overall tone of the market remains firm. Narrow gains are seen in nearby live cattle and lean hog futures at midday. December live cattle contracts are the exception Friday morning as the soon to expire contract is still holding solid gains due to limited activity. Corn markets are higher in light trade. March corn futures are 1 3/4 cent higher. Stock markets are higher in light trade. Dow Jones is 17 points higher with Nasdaq up 8 points.
LIVE CATTLE:
Firm gains have continued to hold in front-month December contracts. But prices have backed away from session high, in all nearby contract months. The ability to close at contract highs in nearby contract months is limiting any additional pressure in the market at this point. There may be some additional late-day market shifts developing across live cattle trade, but limited volume should keep prices higher in the last couple hours of trade. Cash cattle bids have developed at $117 live basis in all areas, although this still a world away from elevated asking prices. Dressed bids have yet to be seen, but could quickly develop through early afternoon. Asking prices remain at $123 and higher live and $195 to $198 dressed. Trade is expected through the afternoon, but at this point, it is uncertain how much trade will be seen through the end of the week. Boxed Beef cut-outs at midday are mixed, $0.08 lower (select) and up $0.13 per cwt (choice) with light movement of 53 total loads reported (25 loads of choice cuts, 7 loads of select cuts, 7 loads of trimmings, 15 loads of ground beef).
FEEDER CATTLE:
Support in live cattle futures is carrying the feeder cattle market during the lightly traded Friday session. Nearby contracts are hovering from 10 cents lower to 12 cents higher. Early-market support that swept through the complex based on spillover support after Thursday's gains is being limited by overall lackluster market direction and traders squaring positions ahead of the weekend.
LEAN HOGS:
Hog futures have traded mostly higher through most of the morning, although gains have remained limited. Trade pressure is seen at midday as gains have eroded due to overall lack of market direction and trade interest through the complex. Prices are hovering from 22 cents lower to 30 cents higher. Trade through the rest of the session Friday and likely limited trade Monday could allow markets to slowly fade into January with limited market direction. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.20 higher at $45.11 per cwt with the range from $43.00 to $45.41 on 3,457 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork carcass values are higher on the morning report with prices gaining $0.94 per cwt at $71.38 per cwt with 213 loads traded. Lean hog index for 12/26 is $53.12, down 0.20, with a projected two-day index is $53.11, down 0.01.

#completeherdhealth

Friday Morning Livestock Market Summary - Meat Futures Staged to Open Late-Week Business With Mixed Price Action

GENERAL COMMENTS:
Welcome to the last Friday of 2018. Such last-minute delays in the cash cattle trade has produced positive dividends for much of the fourth quarter. Is there one more round of Friday strength left in the feedlot trade? Time will tell. The answer should be evident at least by mid to late afternoon. Opening packer bids should be around $118 to $119 on a live basis, well below asking prices around $121 to $122. Look for opening dressed bids close to $190 in the face of asking prices near $195. Live and feeder futures seem geared to open mixed thanks to follow-through buying on one hand and profit-taking on the other.
Cash hog buyers are expected to conclude the week's procurement chores with bids steady to $1 lower. Most private sources believe the Saturday kill schedule will total close to 422,000 head. Lean futures should open with mixed prices thanks to a slow combination of short-covering and long liquidation.
BULL SIDEBEAR SIDE
1)
Thursday's intense ice and snow storm across much of the Central Plains and beef production country sparked new contract highs in nearby live cattle futures. This kind of production-negative weather could easily be bullish longer term.
1)
It seems unlikely that cattle buyers will find themselves short-bought enough on the last Friday of the calendar year to be forced to spend more money in feedlot country.
2)
Last week's total boxed beef sales were slightly larger than the previous week and 4% above last year. Declines in spot sales and formula sales were offset by gains in forward sales. Export sales jumped significantly to the largest level since August, entirely due to sales for overseas destinations.
2)
The wholesale beef trade closed on a sloppy basis with cutouts quoted moderately lower. Box demand was called light on "heavy" offerings.
3)
Any demand for hogs has been corrected off last week's quarterly inventory report, with the bullishness on June, July, and August contracts still pricing in fears of African swine fever adding to demand for U.S. pork.
3)
The pork carcass value closed moderately lower with belly and rib weakness overshadowing substantial picnic primal demand.
4)
The structure of the lean hog futures market is bullish with large premiums remaining in the spring and summer contracts relative to the February contract.
4)
Given icy roads Thursday, complicating the movement of market hog and workers, chain speed dropped to 45,500 head. The slowdown could extent into Friday, leading into the disruptive kill schedule surrounding the New Year's holiday. It's possible that early January could struggle with a few too many backed up numbers.
OTHER MARKET SENSITIVE NEWS 
CATTLE:(Drovers Journal) -- Heifer and beef cow slaughter levels have surged over the last year. USDA-NASS Livestock Slaughter report places total heifer slaughter under federal inspection up 7.3% above last year in data through October 2018. Beef cow slaughter under Federal Inspection (FI) in that same report is estimated to be up 10.7% above last year's. Taking a cursory look those large slaughter figures, it may seem difficult to believe that the U.S. beef cow herd could show another year-over-year gain on January 1, 2019. But, by our estimates, that is what we are expecting.
The number of beef cows that have calved has grown over the last four years adding 2.6 million head since 2014. This incredible growth pattern has led to larger calf crops, and the economics has supported retaining a large number of heifers in recent years to continue adding to that beef cow number. Over the last 30 years, the proportion of Federally Inspected (FI) slaughter of beef cows and heifers in the previous year leading up to the January 1 inventory has been about 40%. In recent years, as the cow herd has gained momentum that proportion has fallen to 35%. This year, the number of heifers and cows that have been slaughtered as a percent of the January 1, 2018, has risen back up to 38%. That suggests a return to more normal cull rates in 2018 and a slowdown in beef cow herd growth. In years of herd contraction, that proportion climbs over 40% and is closer to 42% or 43%.
There are still two more months of slaughter data left for this year, but based on our current estimates we see the January 1, 2019, beef cow herd count will be over 31.8 million head, and will likely show very modest growth at 100.2-100.4% of a year ago.
HOGS: (Dow Jones) -- When President Trump signed his new Nafta accord last month with the leaders of Mexico and Canada, Prime Minister Justin Trudeau almost didn't show up. The reason: Mr. Trump still hasn't lifted the steel and aluminum tariffs as he promised he'd do if America's two neighbors signed a revised trade deal.
A month later they're still waiting. The delay is damaging the U.S. economy and America's credibility as a trading partner. Though Mr. Trump likes to use tariff threats as a negotiating tactic, his Administration also promised relief from the levies he imposed under Section 232 of U.S. trade law. Commerce Secretary Wilbur Ross told Congress in June that the "objective" of the metals tariffs "is to have a revitalized Nafta, a Nafta that helps America and, as part of that, the 232s would logically go away, both as it relates to Canada and as to Mexico."
In July U.S. Trade Representative Robert Lighthizer told a Senate hearing that "resolving the NAFTA issue -- we would expect, or hope, that we would resolve the steel and the aluminum issues with both Mexico and Canada." Last March no less than the President himself tweeted that "tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed." Yet U.S. officials now say signing new Nafta isn't enough. They also want Canada and Mexico to agree to new quotas on their metals exports to the U.S. before the U.S. will lift the Section 232 tariffs. This is politically managed trade that responds to lobbying in Washington, not free trade that responds to market supply and demand.
Canada is the largest foreign supplier of steel to the U.S., with a 20% import share, so the goal of quotas would be to limit steel supply to keep prices in the U.S. high. Canada and Mexico are understandably resisting since they thought a new Nafta would mean the end of arbitrary tariffs imposed in Washington. Meanwhile, American steel consumers continue to suffer from the tariffs. One loser is the American beer industry, which says the tariffs amount to a $347 million tax on U.S. brewers. Beer Institute President Jim McGreevy says U.S. brewers used more than 36 billion aluminum bottles and cans last year and the tariffs "could cost the beer industry more than 20,000 jobs."
Hundreds of American metal fabricators are also finding it difficult to acquire the steel to compete with foreign producers. Riverdale Mills Corp., in Northbridge, Mass., makes "aquamesh," a marine wire-mesh used in 85% of lobster traps made in North America. The company is the largest global supplier for lobster fishermen and makes 95% of the wire mesh used for oyster cultivation. It exports 45% of what it makes.
Riverdale needs specialty steel, which CEO James Knott says the company would like to buy in the U.S. But suppliers often can't make the high-quality grade he needs and his steel prices have doubled since January. He's losing market share at home and abroad.
"My foreign competitors are buying steel at half the price I'm paying, and some of them face no tariffs when [exporting] to the U.S," he says. The company has received some exclusions, but they account for less than 3% of their steel purchases. Mr. Knott says he's cut his workforce to 150 from 200.
New Nafta opens a slightly larger share of the Canadian dairy market to U.S. producers. But Mexico is the largest destination for U.S. dairy exports, and American dairy farmers are getting hammered by the 25% tariff that Mexico imposed on U.S. dairy products in retaliation for the steel and aluminum tariffs. The marginal gain in Canada may not make up for the export losses to Mexico. "We're not ready to celebrate," CEO David Ahlem of Hilmar Cheese Co., based in Hilmar, Calif., said when new Nafta was announced in October. "As long as 232 retaliatory tariffs are still in place . . . we can't enjoy the benefits of having a modernized NAFTA and be back to where we were."
Mr. Trump's broken Nafta promise will make it harder to negotiate new trade deals with Europe and Asia. Other countries worry that even if they sign a new deal, Mr. Trump or some future U.S. President will roll out 232 tariffs any time there's domestic political pressure. Congress intended 232 to be used for "national security" emergencies, not as an all-purpose trade weapon. Mr. Trump's tariff trickery with Mexico and Canada is one more reason Congress should restrict his 232 license.

#completeherdhealth

Thursday, December 27, 2018

Thursday Closing Livestock Market Summary - Nearby Live Futures Close With New Contract Highs

GENERAL COMMENTS: It was another tough day to actually nail down packer bids in feedlot country. We saw a few dressed bids of $190 on some ready steers and heifers in parts of the North. Asking prices were generally renewed at $121-$122 in the South and $192-$195 in the North. The national hog carcass base closed $0.33 higher ($41-$45.41, weighted average, $44.82). Corn futures closed about a penny plus higher in light trade volume. At the conclusion of a very volatile session, equities closed higher: the Dow settled 260 points higher and the Nasdaq advanced by 25.
LIVE CATTLE: The late-year winter storm was supportive, another sign that extended adverse weather could be a bullish check on beef production in the months ahead. Accordingly, live futures opened sharply higher, closing up by 67 cents to $1.57. Spot December and February scored new contract highs. Beef cut-outs closed moderately lower with the choice box off $0.39 ($215.30) and its select counterpart down by $0.38 ($207.22). Wholesale demand was called light on heavy offerings.
FRIDAY'S CASH CATTLE CALL: Steady to $1 higher. The last market corner dawns in the morning. Look for light-to-moderate trade volume to develop sometime between late morning and late afternoon.
FEEDER CATTLE: Following the bullish lead of the live market, feeder futures closed in the green by 22 to 90 cents with nearbys outperforming deferreds. CME cash feeder Index for 12/26: $147.20, off $0.51.
LEAN HOGS: Lean future closed on a mixed basis, up 20 cents to 52 cents lower. The carcass value closed modestly lower with sharply lower picnics overshadowing higher ribs and bellies. The pork cut-out for 12/27 totaled $70.44, off $0.19. CME cash lean index for 12/21: 53.32, down $0.55.
FRIDAY'S CASH HOG CALL: Steady to $1 lower. Opening cash bids in the morning should be steady/weak.

#CCC

Thursday Midday Livestock Market Update - Live Cattle Futures Surge Higher

General Comments
Active buyer support has quickly moved into the live cattle complex. This is sparking some additional underlying support through the entire market, allowing for triple-digit gains in nearby live cattle and feeder cattle trade. Hog futures are much more subdued as early spillover support from cattle markets has quickly eroded, leaving prices mixed in a moderate range. Corn markets are higher in light trade. March corn futures are 3/4 cent higher. Stock markets are lower in light trade. Dow Jones is 380 points lower with Nasdaq down 140 points.
LIVE CATTLE:
Strong triple-digit gains have flooded into live cattle trade as end-of-year buying support has broken through recent resistance levels, setting contract highs in December and February futures. The underlying fundamental support is based on the expectation that additional beef demand will develop during early 2019, helping to sustain commercial and investment trade activity through the end of the year. Cash cattle bids are still unavailable midday Thursday, likely pushing trade into Friday. With the holiday next week limiting overall procurement, there is expected to be only light to moderate trade seen through the end of the week. But trade should develop before the end of Friday, causing packers to become more aggressive in the near future. Asking prices are seen at $122 live and $195 dressed. Strong futures market moves are likely to help support feedlot managers resolve through the end of the year. Boxed Beef cut-outs at midday are unreported at this time.
FEEDER CATTLE:
Strong underlying support in live cattle futures has quickly rekindled buyer support in nearby feeder cattle trade. Although strong support is limited to winter and spring contact months, the focus on the ability to sustain active price support in live cattle futures is helping to spark some additional underlying support through the entire cattle complex. January futures are holding $1.30 per cwt gains moving to $149.40 per cwt with increased underlying support in all nearby trade.
LEAN HOGS:
Lean hog futures are holding limited price shifts at midday Thursday following lack of follow-through interest seen during early trade. The focus on lackluster direction in pork values and cash markets through the end of the week is eroding support in spring and summer months. February futures are still holding a 30-cent gain based on strong spill over support in the cattle trade helping to bring buyers back to the table. Limited market direction is expected to be seen through the end of the session, leaving prices mixed in a moderate range. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.59 higher at $45.08 per cwt with the range from $43.00 to $45.41 on 2,306 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork carcass values are unreported at this time. Lean hog index for 12/21 is $53.32, down 0.55, with a projected two-day index is $53.12, down 0.20.


#completecalfcare

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

GENERAL COMMENTS:

Cattle buyers and sellers could start to get serious about the parameters of cash potential Thursday. Our preliminary guess is that packers will cautiously open with bids around $117 to $119 on a live basis, well below asking prices of $121 plus. But betting on Friday business may be the safer way to roll the dice. Live and feeder futures seem likely to open with mixed price action as traders jockey ahead of cash clues.
Look for hog buyers to resume procurement with bids ranging from steady to $1 lower. After a slow start to pork production thanks to Christmas, we look for the kill to slip into high gear as soon as possible. Barring any weather disruptions or adverse development of outside markets, the weekly slaughter should easily total close to 1.92 million head. Lean futures are geared to open moderately lower, checked by plentiful late-year hog numbers and dubious pork demand.

BULL SIDE BEAR SIDE
1)
Beef cutouts scored significant gains at midweek, especially the choice box. This week's slower chain and pace of production is likely to be price supportive.
1)
Beef ribs and tenderloins have more downside risk into winter lows. Forward sales are being made at a significant discount to spot market levels.
2)
For the week ended Dec. 18, there was a big jump in the net-long live cattle positions held by noncommercials, up 10,000 contracts to a total of 95,300. This was the highest level since the first quarter of the year and came about primarily from additions to the long side.
2)
Seasonally, December live cattle tends to increase toward Christmas, before dropping lower into the end of the year.
3)
Sales during the U.S. holiday shopping season rose 5.1% to over $850 billion in 2018, the strongest in the past six years, according to a MasterCard report, as shoppers were encouraged by a robust economy and early discounts.
3)
The pork carcass value closed moderately lower with all primals losing ground except the rib and ham.
4)
???Well-margined pork processors seem eager to make-up for holiday downtime. Specifically, Saturday's slaughter schedule may total as large as 425,000 head.
4)
For the week ended Dec. 18, noncommercial traders reduced their long position in lean hog by 400 contracts, dropping to long 21,700 contracts. The seasonal tendency is for February hogs to work lower into contract expiration.


OTHER MARKET SENSITIVE NEWS

CATTLE:(Restarant News) -- McDonald's is making yet another change to its value lineup.
The company is ditching its $6 Classic Meal Deal less than two months after introducing the offer in a bid to win over value customers.
Instead, the Chicago-based giant is bringing back its 2-for-$5 Mix and Match deal offering two from a variety of premium items for a single price. The offer includes a Big Mac, Filet O' Fish and 10-piece Chicken McNuggets as well as a Quarter Pounder with Cheese, which it didn't make available under the offer in previous iterations.

In addition, the company said that it would give local markets and franchisees flexibility on the 123 Dollar Menu that was kicked off earlier this year. The idea is to enable those operators to tweak the menu to fit local tastes and demands. "Our customers have told us value is important to them, so value continues to be key in sustaining our long-term growth," McDonald's Chief Marketing Officer Morgan Flatley said in a statement.

McDonald's has struggled to generate traffic all year long despite the new dollar menu as well as other value offers that are traditionally supposed to bring customers in more often.

The company has struggled to develop compelling since shifting away from the Dollar Menu in 2012. It kicked off a series of individualized "McPick" offers in 2016 before ultimately bringing back the evolved dollar menu earlier this year. The decision to give local markets more flexibility has also come as the chain met resistance from operators, who formed an independent franchise association for the first time in the company's storied history.

HOGS:(porkbusiness.com) -- Trade uncertainty and African swine fever top the list of the biggest game changers of 2019 in a recent PORK Poll. Topping the poll this month is trade with 36% of respondents saying the uncertainties surrounding trade could swing the marketplace either direction in the year ahead.

"I'm optimistic that we will get these trade differences settled," says Chris Hurt, Purdue University agricultural economist. "The signing of the U.S.-Mexico-Canada (USMCA) trade agreement calms trade conflicts with Mexico and Canada, although it still needs approval in each country. In addition, it leaves in place the U.S. tariffs on steel and aluminum. It was these tariffs that caused Mexico and Canada to place restrictions on U.S. pork. Those tariffs still need to come off."

Hope for a cooling of the trade conflicts with China are potentially supportive to hog prices, Hurt adds.

"China needs food, so if we come up with a big trade package with China that says they'll buy $70 or 80 billion in total goods from the U.S., some of that will be ag and some will be pork," he says. "I think that feels pretty positive right now." Meanwhile, 30% said African swine fever was their pick and 24% said too many hogs in the marketplace.

Hurt agrees that ASF is a significant factor, but we still can't determine the magnitude. China is such a large market and primarily produces its own pork -- 97% of the pork consumed in China is produced there, Hurt says. If China loses 1% of its hogs to ASF, it will need to increase imports by about 33% to cover that tonnage.


"That gets the world pork market excited and that will drive prices higher," Hurt says. "Will it come from the U.S.? That doesn't make a difference. If it comes from other countries, then we will get a benefit even if they don't buy from us."

#completeherdhealth

Wednesday, December 26, 2018

Wednesday Midday Livestock Market Summary - Narrow Price Shifts Develop

General Comments
Narrow trading ranges are holding in livestock trade live cattle futures under limited pressure. This is keeping markets sluggish through as traders move back into the market following the Christmas break. Narrow gains are holding in nearby lean hog trade with limited activity seen through the entire complex. Corn markets are lower in light trade. March corn futures are 4 1/2 cent lower. Stock markets are higher in light trade. Dow Jones is 527 points higher with Nasdaq up 212 points.
LIVE CATTLE:
Spot month December contracts are holding moderate gains in very limited activity. While the rest of the complex remains steady to lower. Sluggish trade activity has been seen through the morning Wednesday with prices bouncing higher and lower in a light to moderate range. This limited direction is expected to continue through the end of the year with many traders likely opting to wait until early 2019 to move back into the complex. Cash cattle markets are undeveloped with bids and asking prices still unavailable. It is expected to be late in the week when cattle market trade develops given the holiday break and overall lack of intensity through the entire market. Boxed Beef cut-outs at midday are higher, $0.04 higher (select) and up $0.78 per cwt (choice) with active movement of 102 total loads reported (51 loads of choice cuts, 16 loads of select cuts, 23 loads of trimmings, 13 loads of ground beef).
FEEDER CATTLE:
Extremely light trade is seen as traders stepped back into the market Wednesday. The focus on increased market direction is focusing on overall lack of support from outside markets and general apathy from most traders at the end of the year. Nearby contracts are holding gains of 10 to 15 cents per cwt in most contracts, while deferred futures are steady to slightly lower based on movement in outside markets.
LEAN HOGS:
Narrow trading ranges are seen through most contracts with traders holding nearby prices 10 to 20 cents per cwt higher. There is expected to be some additional underlying buying seen through the next couple of days as traders try to focus on firmness in pork values. Limited volume is expected to be seen the rest of the week as most traders have squared positions for the end of the year. Cash prices are unreported due to confidentiality on the National Direct morning cash hog report Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork carcass values gained $0.30 per cwt at $71.62 per cwt on 272 loads. Lean hog index for 12/20 is $53.87, down 0.78, with a projected two-day index is $53.32, down 0.55.

#completecalfcare

Wednesday Morning Livestock Market Update - Look for a Slow and Mixed Return of Cattle Traders Following Christmas Hiatus

GENERAL COMMENTS:
Packer inquiry and cattle-selling interest will slowly start to reassemble Wednesday, but we suspect real cash potential to be delayed until Thursday or Friday. Asking prices will probably start out around $121 plus on a live basis and $192 dressed. Specs and commercials will be eager to catch up on official market reports, which were generally suspended on Monday. Live and feeder futures are staged to open on a mixed basis in slow volume.
Midweek hog buyers should return to work with cash bids steady to $1 lower. Although chain speed will be disruptive through the end of 2018, pork tonnage will remain more than ample, demanding a significant display of product just to minimize the erosion of carcass value. Lean futures should start out moderately lower, pressured by follow-through selling and uncertain fundamentals.
BULL SIDEBEAR SIDE
1)
Retailers and food managers will slowly start to position ahead of the traditional surge in beef demand through the first half of January.
1)
Although cattle buyers will need to climb back in the saddle soon after the Christmas tree is disposed of, their shopping list will remain limited given another holiday-shortened week immediately ahead.
2)
The premium status of nearby live cattle futures should work to encourage higher asking prices by feedlot managers and steal their short-term resolve.
2)
Last week's slaughter surpassed 2.7 million hogs, a new weekly harvest record set, with a strong Saturday estimate. Needless to say, there's an abundance of wholesale pork on the street through the end of the year.
3)
If the Dec. 1 market hog weight breakdown is on the money, pork supplies in the first third of 2019 will be more manageable than previous thought. The largest discrepancy between analysts' projections and the USDA report came in the under-50-pounds category where the report pegged the number at 21.599 million head, up 0.9%, after analysts predicted it to be up 2.5%.
3)
While pork producers remain firmly entrenched on the road of record tonnage, the expansion of slaughter capacity is running behind schedule. The Seaboard Triumph Foods plant in Sioux City, Iowa, is not yet running a full double shift as hoped for this fall (i.e., 40% or 50% on most days). The new Prestage Foods of Iowa plant near Eagle Grove is still under construction. The Prestage plant will probably not be up and running to any degree until March.
4)
As adjusted by last week's inventory, September through November quarter's pig crop was 33.978 million pigs, a record large for that specific quarter, but well below the June through August quarter (also revised lower) by 177,000 pigs. ???
4)
U.S. stocks plunged on Monday in their worst day of Christmas Eve trading ever, as the S&P 500 entered a bear market. The Dow dropped by 653 points Monday in volatile trading, falling below 22,000. Consumer confidence may be drifting into serious trouble.
OTHER MARKET SENSITIVE NEWS 
CATTLE:(The Daily Beast) -- Finding a needle in a haystack is like finding a single cow among a heard of 2,000 head spread across 10,000 acres. At the Matador Cattle Company, cattlemen hope to use drones to do just. Rancher John Douglas Russel has been key to the drone adoption, citing time-saving benefits, "If you go prowling around looking for strays, you can kill a week in a hurry."
This Koch Industries-owned company will use the drones to search for strays and check in on specific animals they have concerns about, even eventually using infrared cameras to find strays' heat signatures. In the future, it hopes to use the drones across the entire ranch "mitigating invasive species, safely overseeing grass fires and even remotely scanning RFID ear tags to monitor cattle health."
HOGS: (Bloomberg) -- The spread of African swine fever in China and Eastern Europe could mean soaring hog prices in 2019, according to Ken Sullivan, the chief executive officer of Smithfield Foods Inc., the world's biggest pork producer. The pig-killing virus "has a real potential to have significant market impacts in 2019," he said in an interview at the company's headquarters in Smithfield, Virginia. With the disease spreading in China, the world's top pork consumer may be forced to tap international markets to help feed its 1.4 billion people. Hog futures could take off the way they did in 2014, when a disease called porcine epidemic diarrhea virus spread through the U.S. herd, Sullivan said. As supplies dipped, prices leaped to records. A potential resolution of the tit-for-tat trade spat between the U.S. and China could further jolt the markets if it further opens the door for American exports, he said.
"If the two governments can work out these tariff issues, I think it has the real potential to be really bullish for pig prices in 2019," Sullivan said. Currently, China has a 25 percent retaliatory duty on American pork. Sullivan said he's optimistic that the two countries have enough at stake that they'll have to come to an agreement. While U.S. exports to China ground to a halt earlier this year, they have recently returned. Smithfield, owned by Hong Kong-based WH Group Ltd., said it had resumed some shipments, but declined to comment on what orders it had on its books.
Most-active hog futures traded in Chicago are down about 13 percent this year. Still, prices have rebounded to about 62 cents a pound from this year's low of 47.825 cents in August.
"It'll be very helpful if the tariff situation is resolved," Sullivan said. "China's a huge market, and if we can resume shipments under a more fair tariff situation, then it'll be very beneficial for U.S. farmers -- not just Smithfield, but the entire farm complex."
Cases of African swine fever in China have been reported at farms in more than 20 provinces since August, and hundreds of thousands of hogs have been culled.
Smithfield, like the rest of the U.S. hog industry, is in a heightened state of alert on its farms, wary that African swine fever could come stateside. The company has changed protocols and restricted visitation, Sullivan said. Still, he noted that when porcine epidemic diarrhea virus spread through American herds in 2014, an increase for prices outweighed the animal losses for profits at the company. "Here is the irony of that: We are the world's largest hogs producer, and there's this hog disease, and we had it," Sullivan said. "That caused a disproportionate rise in prices and we actually ended up making more money, certainly on the farms, than we did in previous years. So the price impact outweighed the loss of animals and in productivity."


#chh

Monday, December 24, 2018

Monday Closing Livestock Market Summary - Lean Hog Futures Settle Lower in Holiday-Shortened Session

GENERAL COMMENTS: Between Monday's abbreviated session and the government shutdown, most closing reports from USDA were not available. New showlists distributed just before the Christmas break look mixed, smaller in Texas and Colorado, larger in Kansas, and about steady in Nebraska. Due to the holiday, the closing national hog base is not available. Corn futures closed fractionally lower in extremely light trading. On one hand, outside markets exerted bearish influence while parts of the federal government remains unfunded. Wall Street continued to crash big time, 
putting in the worst Christmas Eve ever. The Dow closed 653 points lower with the Nasdaq off 140.

LIVE CATTLE: Closing an hour earlier than normal linked to the Christmas holiday, live futures settled mostly 7 to 40 cents higher. There wasn't much to talk about in terms of consistent trading features. Through the balance of the week, traders will be monitoring the development of a heavy winter storm in the Midwest, which could cause cattle prices to jump sharply. Closing beef cut-outs were not available.

WEDNESDAY'S CASH CATTLE CALL: Steady to $1 higher. Cash cattle traders should slowly start to reassemble at midweek with preliminary bids and asking prices fielded. Significant trade volume may not surfaced until Thursday or Friday.

FEEDER CATTLE: Business was minimal here as well with prices finishing moderately higher thanks in part to a general lack of selling interest. Early settlements ranged from 2 to 65 cents higher with deferreds outperforming nearbys. CME cash feeder Index for 12/21: NA.

LEAN HOGS: Lean hog futures were no doubt interested in an outbreak of African swine fever reported in the Guangdong province of China. Reportedly, this the second outbreak of the disease reported in the province. Though the further spread of AFS could result in greater U.S. pork exports to China, such theories didn't have much currency in Monday's slow trading affair. Closing contracts closed off 12 to 82 cents. Closing wholesale pork data was not available. (DTN Projected lean index for CME cash lean index for 12/21: NA) CME cash lean index for 12/20: $53.87, off $0.78.


WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Look for hog buyers to resume procurement chores on Wednesday with generally defensive cash bids.

#completeherdhealth

Monday Midday Livestock Market Summary - Limited Trade Seen Monday

General Comments
Limited trade is seen through the entire livestock market Monday during the holiday shortened trading schedules Monday. Cattle futures have trickled higher, led by steady gains in live cattle. Lean hog futures have eroded through the morning as outside market softness is adding to increased market pressure in nearby contracts. Corn markets are lower in light trade. March corn futures are 1 1/4 cent lower. Stock markets are lower in light trade. Dow Jones is 496 points lower with Nasdaq down 88 points.

LIVE CATTLE:
Very light buyer support is expected to be hold through the last hour of trade due to markets closing early Monday. With very light activity developing through the first couple hours of trade, prices have moved from narrow losses to narrow gains. The overall lack of activity is the main reason for directionless trade. Nearby contracts are holding gains from 10 to 20 cents higher with limited interest likely to be seen through rest of the day. Markets will remain closed until Wednesday morning, although trade volume through the rest of the week is likely to remain limited. Cash cattle interest is essentially non-existent Monday due to packer schedules remaining very light due to the holidays. Some of the initial show lists are expected to be delayed until Wednesday with active trade likely to be pushed off until Thursday or Friday. Boxed Beef cut-outs at midday are mixed, $1.02 higher (select) and down $0.64 per cwt (choice) with light movement of 69 total loads reported (40 loads of choice cuts, 11 loads of select cuts, 8 loads of trimmings, 10 loads of ground beef).

FEEDER CATTLE:
Trade Monday in feeder cattle futures is mixed in a very narrow range due to very limited activity ahead of the Christmas holiday. Nearby contracts are trading 2 to 10 cents per cwt lower while deferred futures are steady to 27 cents per cwt higher. This overall lack of support in the market is more based on holiday schedules than anything else early in the week. Even though more activity is likely later in the week, volume is still expected to be subdued until after the first of the year.

LEAN HOGS:
Moderate price pressure is seen through the entire complex with prices 55 to 70 cents per cwt lower at midday Monday. Trade volume remains extremely sluggish with many traders already exiting the market for the Christmas holiday. Markets will close at 12 Monday and will remain closed until Wednesday morning. This may add some additional underlying pressure through the rest of the morning with prices likely to hover in the current price ranges as the market limps toward closing bell. Cash prices are unavailable at this point. Pork carcass values are unavailable at this time. Lean hog index for 12/19 is $53.87, down 0.78, with a projected two-day index is $53.87, down 0.35.

#completeherdhealth