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Thursday, March 29, 2018

Thursday Midday Livestock Market Summary - Cattle Futures Tumble Lower Thursday

GENERAL COMMENTS: 
Sharp, triple-digit losses have swiftly moved through cattle trade Thursday. This may add even more volatility to the complex moving into early April. Corn prices are higher in light trade. May corn futures are 12 cents higher. Stock markets are higher in light trade. The Dow Jones is 223 points higher while Nasdaq is up 83 points.
LIVE CATTLE:
Triple-digit losses have quickly moved through the complex with traders trying to salvage as much market support as possible before the end of the week. With markets closed Friday, any moves seen over the next couple of hours will account for not only week-ending closing prices, but also month- and quarter-ending closing prices. The sharp rally in grain markets is adding renewed pressure to all trade Thursday morning. This could lead to limit losses in light, late-day activity. Cash cattle sales in Texas have been reported at $121 per cwt through the morning. These prices are steady with trade earlier in the week, but $5 per cwt under last week's prices. It is uncertain if any additional trade will develop in the South, although Northern trade is still expected over the coming days. Bids of $192 to $194 are seen in Nebraska, which could spark some additional movement later in the day. Boxed beef cut-outs at midday are lower, $1.34 lower (select) and down $0.02 per cwt (choice) with light movement of 79 total loads reported (43 loads of choice cuts, 24 loads of select cuts, no loads of trimmings, 12 loads of ground beef).
FEEDER CATTLE:
Sharp losses have quickly flooded into feeder cattle futures. Even though March futures are showing only light losses due to market inactivity, the rest of the complex is holding losses near $4 per cwt at midday. The renewed pressure could quickly develop in limit losses at the end of the trading session. This would create increased volatility with traders looking at these closing price levels for both end of month and quarter targets.
LEAN HOGS:
Firm pressure is seen in all but front-month April contracts Thursday morning. The strong rally in grain markets following the USDA report has caused additional pressure to develop in all livestock markets. Most hog futures are trading in a narrow to moderate range of 10 to 50 cents per cwt. There is growing weakness in all contracts as traders square end-of-the-month positions. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.05 at $48.86 per cwt with the range from $45.00 to $51.00 on 4,690 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.36 at $48.88 per cwt with the range from $45.00 to $51.00 on 2,695 head reported sold. The National Pork Plant Report posted 141 loads selling with carcass values slipping $0.30 per cwt. Lean hog index for 3/28 is at $59.85, down 0.73 with a projected two-day index of $59.06, down 0.79.

Tips to improve calf survival

How do you prepare for spring calving? 
"Weather during our spring calving season can prove challenging with frigid temperatures and mud. When weather becomes a factor during calving, it can impact a calf's survival," said Taylor Grussing, SDSU Extension Cow/Calf Field Specialist. 
Here’s some research-based tips and insight into calf health products to keep on hand.
Colostrum
Colostrum, the first milk a dam produces after calving, contains a high concentration of antibodies and immunoglobulins such as immunoglobulin G (IgG).
"In order for newborn calves to receive maximum benefit and passive immunity from colostrum, research shows the calf needs to receive it within the first 12 to 24 hours after birth," Grussing explained. "Antibodies are not transferred across the placenta during gestation."
It is recommended that beef calves receive 2 to 3 quarts of colostrum within the first 24 hours of life. But what options are available when this first milk is not available?
"If colostrum can be sourced from well-vaccinated, disease-free herd, it can be frozen in quart size freezer bags for future use," Grussing said. 
To thaw frozen colostrum, take care to do it slowly by placing the bag in warm water of about 110 degrees Fahrenheit and stir every five minutes until the colostrum reaches a temperature of 104 to 110 degrees Fahrenheit.
Typically, this will take about 40 minutes. 
Do not use a microwave oven as overheating proteins in the colostrum will cause them to denature and deliver little immunity to the newborn calf.
Commercial colostrum replacements can be purchased. Replacement products will have greater than 100 grams of IgG per dose. 
Colostrum supplements are also available and will have 50 grams of IgG per dose. 
How do producers decide between using a colostrum replacement versus a supplement? 
If maternal colostrum is completely unavailable, a replacement product should be used. However, if some maternal colostrum is available to the newborn, but not the recommended 2 to 3 quarts, a colostrum supplement can help make up the difference. 
Price is reflected in the different options as colostrum replacements provide more IgG and will be more expensive, but both will help ensure more successful passive transfer of immunity and nutrients to the calf during the first 24 hours of life.
Other products
Oral Calf Paste/Gel: Oral calf paste/gel products that come in 30 milliliter tubes have become popular in recent years as an easy way to provide additional nutrients to newborn calves. But do these pastes provide the same immunity as colostrum?
Calf pastes will vary in design to provide all or some of the following supplements: energy, vitamins, minerals, E.coli prevention, probiotics and lactic acid to name a few. 
These pastes are not colostrum replacements or supplements. Therefore, it is important to not substitute one for the other based on calf needs.
"If a calf needs a small burst of energy on a cold day or appetite stimulation, these paste may be a convenient option for producers. Yet, long term benefits are not the goal of these products," Grussing said.
Electrolyte solutions
Electrolyte solutions should be used to provide fluid to calves that have scours. 
Livestock producers should purchase electrolytes that also contain vitamins and minerals, especially sodium, potassium, chloride and bicarbonate.
When a calf has scours, livestock producers should give the calf a 2-quart dose of electrolyte fluid every two to six hours as needed.
"Electrolytes are not a complete nutrient replacer, some energy and protein supplements may be necessary if the calf is not nursing consistently," Grussing said. "As long as the calf is not in severe dehydration, nursing does not prolong or worsen diarrhea." 
Keep in mind that the gut healing process is still taking place after scours have stopped; therefore, continued treatment is important for full recovery.

Thursday Morning Livestock Market Update - Hog Traders Cautionaly Await Supply News via the Quarterly Inventory

GENERAL COMMENTS:
Cattle trade volume turned moderate plus in several feeding areas yesterday as nervous feedlot managers moved to accept sharply lower packer bids ($121 in the South; $190 in the North). Assuming that both buyers and sellers would like to complete business by today, we look for another round of light to moderate trade by the end of the day with prices probably no better than those seen on Wednesday. Look for live and feeder futures to open mixed thanks to a combination of follow-through buying and long liquidation.
Hog buyers shoukd resume procurement chores this morning with bids steady to $1 lower. Processors are moving toward slower chain speed surrounding the Easter holiday with Saturday and Monday slaughter estimated at 108,000 and 20,000 respectively. The March 1 H&P report is set to be unveiled this afternoon (i.e., 2:00 CST) with totals expected to confirm further herd expansion: all hogs, up 3-3.5 percent; kept for breeding, up 1-2 percent; kept for market, up 3-3.5 percent. Lean futures will probably open on a mixed basis as traders and producers position before the release of the new quarterly inventory.
BULL SIDEBEAR SIDE
1)If live cattle futures can find a way to keep extending Wednesday's rally (e.g.., spot April did seem to find support under 115), a weakening basis trend could help fortify country leverage and asking price resolve.1)The cash cattle trade broke hard on Wednesday with live sales in the South marked as much as $4 lower than last week. Northern dressed business crashed as much as $11 below the prior week.
2)The expanded trade agreement with South Korea just announced essentially removed previous threats to the U.S. meat trade in that part of the world, ensuring that strong South Korean demand for beef and pork will continue to support our export business (see article below).2)For the week ending March 24, U.S. hatcheries set 227 million eggs in incubators, up 2 percent from a year ago. At the same time, broiler growers placed 183 million chicks, up 1 percent from 2017.
3)The pork carcass value closed moderately higher at midweek, supported by new life in the belly primal, perhaps launching a seasonal strength in bacon demand that will last through midsummer.3)The Trump adminstration continues to threaten NAFTA success with a possible resumption of steel and aluminum tariffs, recently saying Mexico and Canada will face steel and aluminum tariffs if the North American Free Trade Agreement talks don't progress to U.S. likings by May 1. How does such bully talk grease the wheels of renegotiation?
4)Summer lean hog contracts spiked sharply higher from early session lows yesterday. The board may be getting ready to anticipate the seasonal tigtening of market hog supplies through the second quarter and into the early third.4)For the week ending March 24, Iowa barrows and gilts averaged 286.3 pounds, 1.3 pounds heavier than the prior week and 3.9 pounds greater than 2017.
OTHER MARKET SENSITIVE NEWS
CATTLE: (USMEF) -- Amendments and modifications to the Korea-U.S. Free Trade Agreement (KORUS) were announced Wednesday through a U.S.-Korea joint statement and a KORUS fact sheet issued by the Office of the U.S. Trade Representative (USTR).
U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom issued the following statement:
The announcement of a successfully revised KORUS trade agreement comes as excellent news for the U.S. beef and pork industries because it helps ensure that we will continue to be able serve the growing South Korean market and a critically important customer base. The United States is the largest supplier of beef to Korea and trails only the European Union as the second-largest pork supplier. U.S. red meat exports to Korea set a record last year of $1.7 billion, up 19 percent year-over-year and up 69 percent from 2012.
Under KORUS, most U.S. pork products now enter Korea duty free. The duty on U.S. beef has been reduced from 40 percent to 21.3 percent and will continue to decline each year until it is eliminated by 2026. It is especially important that these tariff rate reductions are maintained, because the other major pork and beef suppliers to Korea also have free trade agreements with similar market access terms.
HOGS: (agrimoney.com) -- The March 1 all hogs and pigs number in the US Department of Agriculture's quarterly report scheduled for release Thursday afternoon is expected to show an increase of 3.1% from a year ago, according to the average of analysts' estimates in the Urner Barry survey.
The average of the estimates for all hogs and pigs would project 72.893m head, compared with 70.701m a year ago. The all hogs and pigs number is expected to be the largest ever for that date along with the kept for marketing figure.
The survey showed on average the number of females kept for breeding at 1.5% above a year ago.
The rise in the breeding herd from last year would put the March 1 figure at 6.189m, versus 6.098m a year ago.
The number of pigs saved per litter in the December-February period was expected to be up about 1.1% from a year ago. That would put the projected figure at 10.54 pigs per litter.
The estimates for spring and summer farrowing intentions show additional growth at 2.1% and 1.7%, respectively.
The December-February pig crop is projected to be up 3.7% at nearly 33m head, a record high for that period and the fifth time in the past seven quarters to be above 32m, according to Bob Brown, private analyst in Edmond, Oklahoma.
The increase in production is expected to be absorbed by the additional processing capacity that is coming on board this summer and fall.
By year's end, the added processing capacity for this year is projected to be nearly 20,000 head, an increase of about 4%.
By the end of the first quarter 2019, daily slaughters could approach 500,000 head but may fall just short of that mark.
The kept-for-marketing estimates were at 103.4% of a year ago for the heaviest category, or 180 pounds and over, as of March 1.
For the 120-179 pound group, the kept-for-marketing figure was estimated at 103% of the year-ago figure, while readings for the 50-119 pound and under-50 pound categories were both expected to come in at 103.1%.

Wednesday, March 28, 2018

Wednesday Midday Livestock Market Summary - Livestock Futures Rally Wednesday

GENERAL COMMENTS: 
Strong price support has moved into cattle and hog futures with triple-digit gains developing in all markets. The shift from previously lower price levels has not totally eroded the weaker tone of the market, but a strong market close Wednesday may spark underlying buyer activity to move back into the complex. Corn prices are lower in light trade. May corn futures are 1 cent lower. Stock markets are higher in light trade. The Dow Jones is 203 points higher while Nasdaq is up 15 points.
LIVE CATTLE:
The aggressive price shifts higher in feeder cattle trade have helped to spark increased buyer support in live cattle markets Wednesday morning. This is pushing nearby contracts 90 cents to $1.20 per cwt higher at midday based on the expectation that additional buyer support will move into the market over the near future. Previous price erosion that developed near closing bell continues to be a concern once again as traders remain cautious as to just how much buyer support remains in the market. Trade volume is likely to remain sluggish through the rest of the week, with trade closed Friday due to the Good Friday holiday, and many traders are cutting out early due to this lack of activity. Cash cattle activity is undeveloped with live bids redeveloping, mostly across the South, at $120 to $121 per cwt. Current asking prices are seen at $125 to $126 per cwt live and $201 and higher dressed. It is likely that interest will improve through midday and could develop in cash trade by the end of the day given the support in futures trade. Although the speed of cash trade is hard to pinpoint, leaving some activity for Thursday or later. The Fed Cattle Exchange Auction today listed a total of 409 head, with 0 actually sold, 177 head listed as unsold, and 232 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 232 total head, with 0 head sold, 0 head unsold, 232 head listed as PO ($120.00-121.00); NE -- no cattle reported; TX 177 total head, with 0 head sold, 177 head unsold, and 0 head listed as PO; CO -- no cattle reported; IA -- no cattle reported; other states (OK, SD, MN) -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 409 head total, 0 head sold; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery -- no cattle reported. Boxed Beef cut-outs at midday are lower, $2.06 lower (select) and down $0.34 per cwt (choice) with light movement of 79 total loads reported (45 loads of choice cuts, 21 loads of select cuts, 5 loads of trimmings, 8 loads of ground beef).
FEEDER CATTLE:
Sharp gains have quickly developed across the complex. This is adding to the underlying support in all livestock markets. March feeder cattle futures remain lightly traded and generally stable, as most open interest has moved to the April and May contracts. April and May futures are also leading the price surge Wednesday morning, pushing prices $2 to $2.50 per cwt higher. There is growing support that may continue to develop across the complex, although firm momentum during the week could spark long-term buyer interest not only the rest of this week, but well into April.
LEAN HOGS:
With the exception of front-month April contracts, which are holding a 60-cent-per-cwt loss, the rest of nearby contracts have accumulated active buyer support back to the complex. This is adding even more support to the market with June futures leading the complex higher with a $2 per cwt rally. There is still concerns about the ability to hold midday gains through the end of the session, as prices have eroded in the recent days following a strong early rally. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.49 at $49.62 per cwt with the range from $45.00 to $50.50 on 4,127 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.03 at $49.87 per cwt with the range from $45.00 to $50.50 on 1,297 head reported sold. The National Pork Plant Report posted 187 loads selling with carcass values slipping $0.28 per cwt. Lean hog index for 3/26 is at $60.58, down 0.77 with a projected two-day index of $59.85, down 0.73.

Wednesday Morning Livestock Market Summary - Mixed Trade Likely Again Wednesday

GENERAL COMMENTS:
The ability for buyers to step into the market Tuesday is likely to help draw additional interest back to the table midweek due to some increased desire to help stabilize the complex through the end of the month. Even though there are two more trading sessions in the month of March, and the end of the first quarter, overall volume is likely to remain sluggish as several traders are already expecting to back away from the market based on the upcoming long weekend. Feeder cattle futures were the only market to hold gains at the end of the session Tuesday, which may limit follow-through support. Cash cattle trade remains undeveloped at this point, but bids and asking prices are likely to become much more active through the day Wednesday with the desire for both sides to accomplish needed business before Friday if possible.
Early activity is expected to be a mix of follow-through selling activity and short-covering as traders try to square positions over the next two trading sessions for the month andquarter's end. The overall tone of the market remains weak due to the expectation that increased concerns of demand weakness may continue to erode buyer support. Any buying activity that is in the market may be limited early in the session due to potential outside market weakness that may develop Wednesday morning. Cash hog values are expected to remain weak with bids steady to $1 per cwt lower in most areas. Overall packer runs are expected to be at 456,000 head Wednesday. Packers are already starting to look ahead to the reduced schedules surrounding the weekend. Friday runs are expected to be 430,000 head, Saturday runsare expected to be105,000 head, and Monday runs are expected to bereduced to 320,000 head.


BULL SIDEBEAR SIDE
1)The break in the trend of moderate-to-sharp losses in live cattle and feeder cattle trade Tuesday is creating some anticipation of increased buyer interest moving into the market.1)
Moderate-to-strong cash market pressure is expected through the end of the week due to the recent pressure that quickly developed across the live cattle and feeder cattle markets through the last couple of weeks.
2)
Lack of premium in nearby feeder cattle futures is allowing increased contract rolling through all spring and most summer contracts. This is expected to help stimulate growing open interest in the coming days and weeks.
2)
Aggressive discounts in summer live cattle futures compared to the spot month April contract has limited longer-term support. Currently, June futures are holding a $10 per cwt discount, which is limiting overall trade interest andwill likely erode longer-term cash markets through the summer.
3)
Buyer support that developed earlier in the week is expected to move back into the market as traders focus on increased seasonal pork demand building through the rest of the spring months. Overall demand for pork remains strong and is likely to help add trade interest over the near future.
3)Limited packer needs through the end of the week due to holiday schedules is expected to keep cash hog values under pressure. Packer reductions are expected to start Friday and run all the way through Monday. But the extended lower production through the next week will limitpacker access to hogs.
4)Strong summer premiums continue to hold in lean hog futures with June contracts trading nearly $18 per cwt above the April futures contract. This may add even more underlying support once active buying starts to develop late in the week.4)Pork cutout values have continued to weaken in the recent days. Sharp losses in belly markets despite the focus on upcoming possible summer demand and the expected pullback in the ham market after the Easter season is likely to add even more pressure to the complex.

Tuesday, March 27, 2018

Tuesday Closing Livestock Market Summary - Early Buyer Interest Fades at Closing Bell

GENERAL COMMENTS
Cash cattle markets remain quiet Tuesday following some additional token bids developing in several areas. Live basis in the North and South is ranging from $118 to $121 per hundredweight (cwt), while dressed bids are posted at $196 per cwt. Given the back and forth of futures trade, little to no development is seen in asking prices. But any asking prices that do develop are expected to be well above current bids. Feedlot managers are willing to hold out until later in the week, as many feel end-of-month and end-of-quarter position-squaring may help to firm packer bids. According to the closing report, the national hog base is $1.41 lower compared with the prior day settlement ($45-$51.50, weighted average $50.11). Corn futures were mixed in light activity with May futures steady Tuesday. The Dow Jones Index is 17 points higher with the Nasdaq down 103 points.
LIVE CATTLE
Initial support helped bring buyers back to the live cattle market Tuesday. But lack of follow-through support allowed mixed trade to develop at closing bell with futures ending mixed ($0.05 lower to $0.30 higher). The narrow trading range at closing bell showed little resemblance to the strong triple-digit gains in morning trade. With buyer support unable to hold through the end of the session, there is growing concern that pressure may develop in the next couple of trading sessions. Beef cut-outs: $1.22 lower (select, $214.24) and down $0.17 (choice, $222.36) with moderate demand and offerings (63 loads of choice cuts, 28 loads of select cuts, 9 load of trimmings, 16 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady to $2 lower. Bids have continued to develop through the week, although packer interest is expected to remain sluggish through most of Wednesday. With markets closed Friday, it's likely that both sides will try to wrap up business for the week by late Thursday.
FEEDER CATTLE:
Triple-digit gains early in the session helped keep buyers well rooted in the feeder cattle market. Even though prices pulled back from early highs, the ability to hold gains at closing bell was considered a minor victory. (Futures closed $0.17 to $1.05 higher). Even though moderate-to-strong support developed across the feeder cattle market, prices in several nearby contracts closed nearly $1.50 per cwt below session highs. This lack of follow-through support is more concerning than actual price moves at the end of the day. Significant uncertainty remains over just how much additional buyer activity will develop the rest of the week with many traders expected to exit early ahead of the long holiday weekend. CME cash feeder index for 3/26 is $136.22, down $0.46.
LEAN HOGS:
Limited trade volume allowed for early gains in lean hogs. But this support evaporated near closing bell as traders refocused on the underlying weak market structure. Futures closed mixed, $0.45 lower to $0.20 higher. The inability to hang on to market support is expected to create additional pressure as traders focus on a hog market that has given back nearly $20 per cwt in the first quarter of the year and over $10 per cwt in March alone. This may add even more weakness to the market as traders continue to focus on eroding cash market values and limited interest in futures markets through the end of the month. Pork prices posted strong losses with bellies losing $6.57 per cwt and ham prices down $1 per cwt. Pork cut-out: $69.72, down $1.20. CME cash lean index for 3/23: $61.35, down $0.97. DTN Projected lean index for 3/26: $60.58, down $0.77.
WEDNESDAY'S CASH HOG CALL:
Steady to $1 lower. Very little is expected to change the rest of the week with packers securing enough hogs for scheduled runs without having to dig deeper in their pockets. This may continue to limit any cash market support until after Easter. Plant processing schedules Wednesday are expected to be at 455,000. Friday runs are expected at 430,000 head, with Saturday at 106,000 head and Monday estimated at 320,000 head.

Tuesday Midday Livestock Market Summary - Firm Gains Hold Midday Tuesday

GENERAL COMMENTS: 
Moderate to strong gains quickly developed in livestock futures Tuesday. The entire complex was seen oversold during the past week following aggressive price reductions. The support seen in the market is struggling to find additional interest, which may limit long-term support. Corn prices are mixed in light trade. May corn futures are steady Tuesday. Stock markets are higher in light trade. The Dow Jones is 145 points higher while Nasdaq is down 29 points.
LIVE CATTLE:
The move away from sharp losses seen over the last few trading sessions has quickly drawn more buyers to the market. This is expected to help support the overall complex through the rest of the week despite concern of additional pressure that may develop through the rest of the week. Prices in nearby contracts at midday still remain firmly higher, but have quickly backed away from previous session highs seen early in the session. This may add late day pressure as traders look for potential buyers to step back into the market. But it may be hard to find additional participants. Cash cattle trade is still quiet with asking prices undeveloped at this point. There are a few token bids starting to develop through the morning with live bids entering the market at $118 to $121 per cwt with dressed bids at $198 per cwt. It is expected that asking prices will be well above these levels, although solid asking prices may not be seen until sometime Wednesday. Boxed beef cut-outs at midday are mixed, $0.36 lower (select) and up $0.57 per cwt (choice) with light movement of 53 total loads reported (29 loads of choice cuts, 14 loads of select cuts, no loads of trimmings, 10 loads of ground beef).
FEEDER CATTLE:
Strong gains continue to hold across the cattle complex Tuesday morning with the feeder cattle market leading the upward price surge. Prices posted strong triple digit gains in most contracts through much of the morning. Even though markets have pulled back from early session highs, the firm buyer support in the complex continues to hold. This is keeping April contracts $1 per cwt higher with very limited focus on the need to erode these prices at this point. There still is some concern that current buyer support may be unable to hold through the end of the day given the light volume expected to be seen in the last hour of trade. This could leave markets shifting in a moderate range just before closing bell.
LEAN HOGS:
Firm buyer support is moving into the complex with 70 to 90 cent gains holding at midday. The aggressive move higher in cattle trade has slowly but firmly eroded initial selling pressure and replaced that with moderate buyer activity as the day continues. The current gains do very little to build any long-term support in hog futures where prices have moved sharply lower over the last month. Even if prices are able to find solid support near $58 per cwt, the ability to bring traders back to the table in the near futures is an additional challenge completely. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.26 at $51.78 per cwt with the range from $48.00 to $52.19 on 3,157 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.74 at $50.48 per cwt with the range from $48.00 to $51.25 on 460 head reported sold. The National Pork Plant Report posted 210 loads selling with carcass values slipping $0.61 per cwt. Lean hog index for 3/23 is at $61.35, down 0.97 with a projected two-day index of $60.58, down 0.77

Tuesday Morning Livestock Market Update - Lean Hog Futures to Open Mixed as Traders Start to Position Ahead of Hogs & Pigs Report

GENERAL COMMENTS:
The cash cattle market could get started sometime Tuesday, but much depends on the stability (or lack) of the board and basis opportunities. While it's a tough call, our guess is that feedlot managers will start out pricing showlists around $5 plus over the board. You could make the case that buyers and sellers would like to take care of business by Thursday. Live and feeder futures seem set to open moderately lower, pressured by follow-through selling and cash uncertainty.
The cash hog trade is likely to remain on the defensive Tuesday with packers once again leading into cash. Lean futures will probably open on a mixed basis as specs and commercial begin to position ahead of the March 1 Hogs & Pigs report set to be unveiled Thursday afternoon.
BULL SIDEBEAR SIDE
1)Not only did the national beef cutout continue to plow significantly higher again last week, out-front demand (i.e., with delivery of 22 days or more) took an impressive jump to 1,142 loads, the most in a month and possibly a sign that meat buyers are starting to anticipate the grilling season ahead.1)
New showlists distributed in feedlot country were generally larger with more ready cattle especially noted in Kansas and Texas.
2)
Given the smaller Jan. 1 feeder cattle supply (i.e., off 2% to 3% from the prior year), aggressive placement cannot be sustained for more than a month or so longer.
2)
Cattle futures simply cannot find the brakes, closing sharply lower again on Monday. Spot April live is now at its lowest level since the first week of last September. Furthermore, the extraordinarily strong basis makes it nearly impossible to resist lower packer bids in the country.
3)
It would appear that trade war talk is cooling a bit. Maybe the U.S. and China can "make nice," at least enough to get past the March 31 line in the sand that China marked last week for retaliatory tariffs on pork (and other items).
3)Lean hog futures tried to rally Monday on suggestions that the Chinese threat had been overplayed, but bearish cash and technical realities quickly resurfaced and drove prices far below session highs.
4)The pork cutout should try hard to stabilize above $70. Further easing is possible but the forecast is for some support at the primal level forming a base over the next to two or three weeks.4)Though this week's slaughter will fall below 4 million head, that fact is tied to the late-week holiday situation. Hog supplies remain ample and are still expected to average more than 3.5% above last year well into April.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (Fox News) -- Wendy's is out to prove its rhymes are as fresh as its "never frozen" beef in a new mixtape that dropped on Friday
The fast food chain revealed their album, titled "We Beefin'," in a Twitter post at 11 am Friday.
"The mixtape drops now. Not pulling punches. We Beefin'," the tweet reads beneath a screenshot of the playlist filled with rap battle-ready verses.
About an hour and a half after the drop, the mega-chain tagged McDonald's in a post, instructing Mickey D's "don't sleep on this mixtape." Wendy's also sent along a link to the album on Spotify.
The five-track compilation -- also available on Google Play and Apple Music -- held nothing back with tracks like "Rest in Grease" and "Clownin," which directly reference McDonald's.
Lyrics for "Rest in Grease" call out the chain's broken ice cream machine, rapping "You No. 1? That's a joke / Why you ice cream machine always broke? / Why you drive-thru always slow? / Why you innovation just can't grow? / It's queen Wendy, need I say more?"
While "Clownin" takes direct jabs at Ronald McDonald:
"You hide from funk / That's prolly why you go paint your face / My meals are great, people lining up like everyday / Leave you in shame, make you run back to Cirque du Soleil / That's cold game / But what you expect from tryna play / Won't say no names but you a clown / Get it, OK?"
However, McDonald's wasn't the only one Wendy's roped in to their fast food feud.
In "Holding It Down," the redhead takes aim at Burger King with rhymes, "And BK, don't think that you got away / You copied my old menu and put it out on replay."
HOGS: (The Canadian Press) -- U.S. President Donald Trump's plan to impose tariffs on up to US$60 billion of Chinese imports could help Canadian retailers by further easing cross-border shopping, even though a full-fledged trade war between the world's two economic superpowers would damage Canada's economy, experts say.
The Retail Council of Canada said Friday that U.S. tariffs that would raise the prices of Chinese consumer goods, such as electronics, sold in the United States could prompt more Canadians to shop at home.
The United States buys half a trillion dollars' worth of goods from China every year, from toys to shoes to cellphones, and prices of those products could surge due to a tariff plan announced Thursday. Specifics about which sectors will be targeted remain sparse and a detailed list of products is expected to be developed in two weeks.
U.S. officials say they will try to minimize the impact for American shoppers by mostly targeting products that business buys like computers, IT products, industrial machinery and aircraft parts.
But even if tariffs attempt to avoid consumer sectors, businesses could still pass on any higher costs to consumers.
"Obviously if U.S. prices increase you're going to see an impact," said council vice president Karl Littler.
Littler added that lower U.S. demand for Chinese-made goods could help Canadian retailers to drive better bargains from Chinese factories looking to replace lost sales.
And transnational retailers such as Costco, Best Buy and Walmart may ship directly from Canada instead of transporting goods from the U.S. to avoid tariffs, he said.
Canadian Association of Importers and Exporters president Joy Nott also thinks higher prices for goods could encourage more Americans to shop in Canada. "Not in waves or anything but I think it will level the cross-border type activity," she said in an interview.
Canadian products that are similar to Chinese goods could also be substituted by American buyers, helping to boost Canada's export sector.
Further retaliation by China could open the door for more Canadian exports to replace higher-priced American goods, particularly in agriculture.
"That could be of assistance to Canada's own pork exporters," said CIBC chief economist Avery Shenfeld.
"We could end up replacing the U.S. as a supplier to China if China imposes restrictions on U.S. products."
However, there's still the looming and much bigger problem of an escalation of the battle into a full blown trade war that causes a slowdown in global economic growth, he added.
Because Canada is a nation that depends on exports of commodities, a weaker Chinese economy would also hurt the Canadian economy by reducing sales and prices of raw materials, added Conference Board of Canada chief economist Craig Alexander.
"The tariffs as they're currently announced is a negative but you're really worried about is how this can escalate."
If that happens, there is a risk that the world's trading system collapses, added Yves Tiberghien, distinguished fellow at the Asia Pacific Foundation of Canada.
"If the trading regime really collapses then we suffer massively," he said from Washington.
Tiberghien said the Chinese will make the fight long and painful. The result will be a U.S. government that is distracted by China -- which could ultimately be good news for NAFTA, he said.
The U.S. has recently softened up on Canada, by exempting it and Mexico from steel and aluminum duties and making concessions in NAFTA concerning automobiles.
"So the ground is completely different from last week."

Monday, March 26, 2018

Monday Closing Livestock Market Summary - Cattle Futures Continue in Freefall

GENERAL COMMENTS
Early week cash activity was typically quiet with efforts on both sides limited to the distribution of showlists. The new offering appears to be mixed, larger in the South and smaller in the North. Overall, ready numbers appear to be somewhat larger. According to the closing report, the national hog base is $1.48 lower ($48-52.50, weighted average $51.56). The corn market closed generally 3 cents lower, disappointed by weekly export inspections. The stock market recovered Monday, supported by easing trade-war talk. The Dow closed 669 points higher with the Nasdaq better by 227.
LIVE CATTLE
Live traders just can't find the brakes here, essentially ignoring the premium status (albeit eroding) of cash feedlot sales. Prices slumped 45 to 127 points lower with issues covering the second half of the year getting hit the hardest. Selling action was linked to long liquidation, technical-selling and the bearish implications of February's larger-than-expected placement total. Beef cut-outs: lower $0.56 (choice: $222.53) to $0.94 (select: $215.46) with light-to-moderate demand and moderate offerings (45 loads of choice cuts, 27 loads of select cuts, 10 loads of trimmings, 12 loads of ground beef).
TUESDAY'S CASH CATTLE CALL:
Steady to $2 lower: Barring the surfacing of attractive basis opportunities, cash activity on Tuesday will remain quiet with significant trade volume probably delayed until Wednesday or later.
FEEDER CATTLE:
Feeders bled right along with the bloody mess in the live market, closing 77 to 175 lower. Troubled by falling cash bids and narrowing margins, feedlot managers are getting tough on new replacement costs. On an estimated run of 4,600 head (down from 6,065 last week and 6,104 in 2017), Oklahoma City sold feeder steers $3-$6 lower. A light test of their heifer mates looked mostly $3 lower. Steer calves were marked $1-$3 lower (heifers not well tested). CME cash feeder index: 03/23: $136.68, off $1.30.
LEAN HOGS:
Initially relieved by signs of most promising negotiations between U.S. and Chinese trade officials over the weekend, lean contracts bounced substantially higher through midsession. But then short-covering ran out of energy as cash news continued to sour. At the end of the session, most lean contracts settled no better than 5 to 40 lower. Spot April closed off 40, apparently still comfortable in leading the cash index lower. Carcass value closed modestly higher as stronger bellies, ribs and butts offset weakness in loins and picnics. Pork cut-out: $77.23, off $0.02. CME cash lean index for 03/22: $62.32, off $0.71 (DTN Projected lean index for 03/23: $61.35, off $0.97).
TUESDAY'S CASH HOG CALL:
$1-$2 lower. Look for buyers to stay on the defensive Tuesday as long as the country offering remains plentiful.

Monday Midday Livestock Market Summary - Cattle Market Pressure Continues

GENERAL COMMENTS: 
Sharp losses have developed in cattle trade with most nearby contracts posting losses greater than $1 per cwt at midday. The lack of follow-through support after early gains developed has put even more pressure on the market. Hog futures remain firm to higher with short covering gaining momentum during the Monday session. Corn prices are lower in light trade. May corn futures are 3 cents lower Friday. Stock markets are higher in light trade. The Dow Jones is 440 points higher while Nasdaq is up 106 points.
LIVE CATTLE:
Triple-digit losses have quickly developed through the entire live cattle futures complex. There is growing uncertainty that buyer support will be able to develop after early gains were quickly washed away. All remaining 2018 contracts have posted triple-digit losses midday, which may add more pressure to the entire complex over the near future. Cash cattle activity remains undeveloped and likely will remain that way until midweek or later. Overall show lists appear to be generally larger for the week, given the overall defensiveness of activity in all markets. Asking prices and bids are undeveloped at this point, and may remain that way until Tuesday or later. But given the pressure in the entire complex, it is expected that all cash bids and asking prices will shift lower from last week's levels. Boxed Beef cut-outs at midday are lower, $0.65 lower (select) and down $0.57 per cwt (choice) with light movement of 60 total loads reported (28 loads of choice cuts, 18 loads of select cuts, 6 loads of trimmings, 9 loads of ground beef).
FEEDER CATTLE:
Triple digit losses have quickly swept through the entire feeder cattle market. There is growing uncertainty as to just how much additional buyer support will be seen through the end of the month. Initial gains in all cattle trade Monday morning were quickly washed away by pressure from the cattle on feed report Friday and overall underlying technical and fundamental pressure seen across all cattle futures. April and May contracts are leading the market lower with losses of $1.30 to $1.40 per cwt at midday.
LEAN HOGS:
Mixed trade continues to be seen through the entire complex. This is holding prices higher in most nearby contracts, although losses are sprinkled through the mix with front-month April contracts holding a 20 cent loss. Other nearby summer contracts are holding prices of 20 to 60 cents per cwt higher with the focus on trying to stabilize the aggressive losses seen last week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.14 at $51.82 per cwt with the range from $48.00 to $52.50 on 5,585 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.25 at $51.47 per cwt with the range from $48.00 to $52.50 on 2,750 head reported sold. The National Pork Plant Report posted 119 loads selling with carcass values slipping $0.26 per cwt. Lean hog index for 3/22 is at $62.32, down 0.71 with a projected two-day index of $61.35, down 0.97

Monday Morning Livestock Market Update - Meat Futures Seem Likely to Open at Least Moderately Lower

GENERAL COMMENTS:
Needless to say, the big question among cattle traders in the last week of March is whether board discounts can start to stabilize and stop pulling spot feedlot cash sales. Yet we may have to wait until Wednesday or later to get an answer. Activity Monday will be limited to the distribution of new showlists. We expect the new offering to be steady to somewhat smaller than the previous week. Live and feeder futures are likely to open at least moderately lower, pressured by follow-through selling, technically bearish concerns and uncertain cash prospects.
The cash hog market is expected to restart Monday with bids steady to $1 lower. The board seemed to slump into free fall on Friday with nearby issues falling to new contract lows. While most market watchers readily admit that the beginning of the large spring/summer rally is in the offing, few at this time seem willing to predict a starting date. Remember, USDA is set to release the quarterly Hogs and Pigs report on Thursday, at 2 p.m. CDT. Lean futures seem set to open lower, restricted by bearish momentum and defensive late-month fundamentals.
BULL SIDEBEAR SIDE
1)Given oversold charts and historical deep board discounts, cattle traders could easily ignore any bearish implications of the Cattle on Feed report, perhaps focusing more on the better risk/reward bet of bottom-picking.1)
The March 1 Cattle on Feed report turned out to be somewhat bearish, which confirms larger-than-expected February placement activity (i.e., up 7% versus the average pre-report guess of up 4.5%).
2)
For the week ending March 15, actual beef exports totaled 16,700 metric tons (MT), up 10% from the previous week and 7% from the prior four-week average.
2)
Net beef export sales for the week ending March 15 totaled no more than 6,000 MT (a marketing-year low), down 70% from the previous week and 66% from the prior four-week average.
3)
The seasonal index for April lean hog futures tends to be mostly stable for the very near term, but then increases as the contract moves towards expiration the middle of the month.
3)During the week ending March 20, noncommercial traders were net sellers of lean hog futures, decreasing their net-long position by 1,000 contracts to the 8,400 contract level.
4)The short-term lean futures market trend is strongly negative as the cash market, but/the long-term futures market trend is still positive.4)The hog market is not sure how to weigh the potential impact of China reducing its U.S. pork consumption. The April lean contract closed on Friday at $58.43, down 290 points on the day and 700 points lower on the week.
OTHER MARKET SENSITIVE NEWS 
CATTLE: (Fox News) -- Nothing gets fast food lovers salivating like a new menu item -- especially when it comes to burgers.
So when McDonald's Australia announced they were dropping a "world-first limited edition burger," social media went flippin' mad.
At about 10.30 a.m. on Wednesday (local time), restaurants across the country launched the new burger which has a recommended retail price of $10.75 AUS, or about $8.29 U.S.
The new menu item includes a 100-percent Australian-bred Wagyu beef patty in between a gourmet bun (made to a new recipe), with a specially created sauce, crispy bacon strips, caramelized onion, tomato, lettuce and a slice of cheese.
The burgers, which will only be available for a limited time and while stocks last, is the first time the fast food chain has offered Wagyu beef as part of their menu.
While the burger has its fans, some take issue with its taste and its suggested price of $10.75 AUS, or about $8.29 U.S. But critics haven't been kind to the new edition, with some claiming the "wagyu is dry", tastes like "cardboard," and that charging over $10 "is taking the p-ss."
Posting to a Facebook group called Fatties Burger Appreciation Society, which has around 10,000 followers, the new burger has left enthusiasts less than impressed.
"Patty cooked to death sometime last week and presented with unmelted cheese, tomato, bacon, a crap-ton of wilted lettuce and a smear of nondescript sauce on a dry oversized bun," one poster, David Winch, wrote on the page. "Inferior in every way to even a McFeast ... and [charging] over a tenner is taking the p-ss."
His post, which gave the burger a rating of just one out of five, was met with comments questioning the price, and how the patty had been cooked.
"For a company knowing they need to up their game in the burger market (especially in Australia), Maccas look like they f---ed up with this one," one person posted.
"Had one earlier on the back of all the hype. Haven't had Maccas cardboard burgers for a while but thought I'd give this a shot even though I knew it was gonna be cardboard V2. It's rubbish."
"I'm having this really strange feeling of disappointment," another added.
On the McDonald's Australia's Facebook page, social media users were quick to call out the price tag of the new burger.
"Went to get one but not paying that much for it!" one person wrote.
"Go to a proper burger place or cafe in [Melbourne] and pay $15 with chips and salad."
But others were in favor of the new addition to the menu, saying the wagyu patty was perhaps the best they'd tried from the fast food chain.
"The meat is divine," one person said.
"Just had one for lunch … not bad at all," another added.
HOGS: (Bloomberg) -- China struck back at U.S. import tariffs with its own set of reciprocal ones targeting, among other products, pork.
The world's biggest pork producer, consumer and importer is planning a 25 percent tax on U.S. pork imports, the Ministry of Commerce said in a statement on Friday. The tariffs would be in addition to current duties.
China's plans for reciprocal tariffs on $3 billion on products from pork to wine come in response to steel and aluminum duties ordered by U.S. President Donald Trump earlier this month. Agricultural commodities could be a feature of any ongoing tit-for-tat trade war. China is already investigating sorghum imports from the U.S. and people familiar with the matter said last month that the country was studying the impact of restrictions on U.S. soybeans, used to feed the Asian country's pigs.
"China is showing its capacity to fight back," said Monica Tu, an analyst at Shanghai JC Intelligence Co. The measures aren't expected to "impact fundamentals a lot," she said, as imports from the U.S. only account for about 14 percent of China's purchases.
Still, China and Hong Kong combined is the second-biggest market for U.S. pork, according to the U.S. Meat Export Federation. Analysts at Vertical Group said this week that U.S. pork was an "easy target" for China, citing a decline in its domestic pork and hog prices.
The National Pork Producers Council warned that possible Chinese tariffs on U.S. pork could have a significant negative impact on rural America. "No one wins in these tit-for-tat trade disputes, least of all the farmers and the consumers," it said in a statement.
WH Group Ltd., the world's largest pork company, dropped 4.7 percent. The company acquired U.S. pork and hog producer Smithfield Foods Inc. in 2013. Shares of Muyuan Foodstuff Co., the country's third-biggest pig breeder, rose 0.6 percent. Guangdong Wens Foodstuffs Group Co., the largest pig breeder, advanced 3.7 percent. New Hope Liuhe Co., China's top animal-feed producer, added 0.1 percent. Jiangxi Zhengbang Technology Co., a feed producer, increased 2 percent.
Soybean meal on Dalian Commodity Exchange climbed as much as 4.3 percent to 3,128 yuan ($494) a metric ton before closing 1.5 percent higher at 3,046 yuan. The surge reflects concerns that an expansion in tariffs could impact the supply of U.S. soybeans to China, according to Tu.
A consolidation of China's pig industry has seen small farms shut due to environmental concerns, while large-scale operations are expanding. The country's pork imports are forecast to decline in 2018 as an increase in domestic production reduces the need to buy meat from overseas, according to the U.S. Department of Agriculture.