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Monday, April 30, 2018

Monday Closing Livestock Market Summary - Cattle Futures Close Month With Sharp Losses

GENERAL COMMENTS
Feedlot country was quiet through the day as packers limited efforts to the collection of new showlists. Ready numbers appear to be generally smaller than last week with only Nebraska showing more cattle. According to the closing report, the national hog base is $0.14 higher ($52-$59, weighted average $58.35). Corn futures settled 2-3 cents higher, supported by another round of dry forecasts for Brazil. The stock market closed lower with the Dow off 148 points and the Nasdaq down by 53.
LIVE CATTLE
The big question on the last trading day for spot April concerned the immediate future of the large June discount. Would the new early summer spot finally make a move toward cash or stick to its old defensive ways. Given how the board closed sharply lower, apparently the latter. Spot April closed down 70, near dead even with last week's 5-area steer average of $123.73. The rest of the market faltered by 90 to 197 points, essentially ignoring the late April cash and still convinced that second-quarter tonnage would eventually overwhelm beef demand (e.g., June settled at $106.10, roughly $18 below feedlot cash. Beef cut-outs: significantly higher, up $0.47 (select: $204.79) to $2.68 (choice: $224.42) with moderate demand and heavy offerings (53 loads of choice cuts, 39 loads of select cuts, 10 loads of trimmings, 14 loads of ground beef).
TUESDAY'S CASH CATTLE CALL:
Steady to $2 higher. Look for a typically quiet Tuesday with bids and asking prices remaining poorly defined.
FEEDER CATTLE:
Feeder futures also returned to their long-rehearsed bearish script, closing 160 to 205 lower and essentially erasing the short-covering rally seen on Friday. On an estimated run of 11,500 head (up from 4,952 last week and 5,001 in 2017), Oklahoma City sold feeder steers and heifers mostly steady to $3 higher. 04/27: $139.31, off $0.68.
LEAN HOGS:
The lean hog trade closed on a mixed basis in slow trade volume. Settlement ranged from 35 points higher to 75 lower. Seasonally, many specs would probably like to buy this market. Yet they need to first see either tighter numbers and/or better pork demand. So far, they seen few signs of encouraging supply or demand. Carcass value closed modestly higher with lower hams and loins overshadowed by better demand for butts, picnics, ribs and bellies. Pork cut-out: $68.73, up $0.12. CME cash lean index for 04/26: $61.75, up $0.52 (DTN Projected lean index for 04/27: $62.20, up $0.45).
TUESDAY'S CASH HOG CALL:
Steady. Hog buyers are likely to resume procurement chores in the morning with basically steady bids.

Monday Midday Livestock Market Summary - Position Taking Develops Monday

GENERAL COMMENTS: 
Cattle futures move lower in most contract months Monday morning as traders try to square positions ahead of month-end. Despite firm losses seen in early minutes of lean hog trade, short covering has started to develop, pushing nearby contracts moderately higher. Sluggish trade is expected to be seen through all livestock trade through the end of the Monday session. Corn prices are higher in light trade. May corn futures are 4 cents higher. Stock markets are mixed in light trade. The Dow Jones is 25 points higher while Nasdaq is down 34 points.
LIVE CATTLE:
Mixed to mostly lower trade developed late Monday morning with traders looking for increased overall support in the lightly traded April contract. The rest of the cattle market remains under pressure although trade volume is extremely sluggish. Most traders Monday have overlooked fundamental and technical shifts in the market and are focusing on end of the month adjustment opportunities following the aggressive rally seen during the month of April. Prices in April futures have rallied nearly $15 per cwt higher during the month, allowing many traders trying to square positions. Cash cattle interest is undeveloped with show list distribution and inventory taking the main order of business for the day. Even if packers need access to more cattle, they are likely to not float any bids at this point due to end of the month activity seen Monday. The light trade seen last week may help to spur additional interest, but we have seen many times that packers are able to manage until Thursday or Friday, and this week may not be any different. Boxed beef cut-outs at midday are higher, $0.88 higher (select) and up $2.76 per cwt (choice) with light movement of 56 total loads reported (23 loads of choice cuts, 18 loads of select cuts, 6 loads of trimmings, 9 loads of ground beef).
FEEDER CATTLE:
Triple-digit losses are seen Monday morning with extremely sluggish trade volume is allowing traders to quickly back away from late-week gains. The overall tone of the market is not likely to be affected by the move Monday due to most of the activity associated with late month position squaring. May feeder cattle futures are trading $1.12 per cwt lower with August futures leading the market lower with losses of $1.52 per cwt. The strong $6 per cwt discount continues to be seen in May futures as traders look for more long-term direction and potential buyer support developing through the summer months.
LEAN HOGS:
Light to moderate buyer support is seen in nearby contracts on the last session of April. The support seen in the market is focusing more on end of month positioning as traders turn attention on short covering activity. The general pressure seen over the last week is creating a great opportunity for light buyer support to move into the market midday. Even though prices ventured lower early Monday, the overall lack of volume and trade activity is not expected to be a factor as buyers try to insert their market direction into late April activity. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.07 at $58.28 per cwt with the range from $56.50 to $58.43 on 4,640 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.36 at $57.91 per cwt with the range from $56.50 to $58.25 on 1,330 head reported sold. The National Pork Plant Report posted 155 loads selling with carcass values adding $0.13 per cwt. Lean hog index for 4/26 is at $61.75 up 0.52 with a projected two-day index of $62.20, up 0.45.

Monday Morning Livestock Market Update - Cattle Futures Expected to Open Substantially Higher

GENERAL COMMENTS:
Cattle country should be staged for a typically quiet Monday with the distribution of new showlists about the only item on the agenda. Our guess is that the early May offering of fats will be steady to somewhat larger than last week. While bids and asking prices are likely to stay guarded for at least several more days, it's a good bet that feedlot managers will not hesitate to eventually price ready steers and heifers at least several dollars higher. Live and feeder futures seem likely to open significantly higher thanks to follow-through buying and aggressive packer spending on Friday.
The cash hog trade is expected to open Monday with generally steady bids. Last week's kill totaled 2.363 million head, 74,000 below the previous week. We look for this pace of erosion to persist over the next 30 to 45 days. As slaughter and pork production lightens, carcass value should be supported accordingly. Lean futures seem likely to open on a mixed thanks to follow-through selling and early-week short-covering.
BULL SIDEBEAR SIDE
1)Cattle feeders once again demonstrated on Friday that they possess superior leverage over packers by pushing live prices $2 higher in the South and $4 to 4.50 higher in the North.1)Once April live goes off the board at noon Monday, deeply discounted spot June could easily strip leverage from feedlot managers with the implicit advice "better to sell early rather than late."
2)After shivering through a cold, early-spring period, beef demand has finally found the heat of seasonal sun. From Friday to Friday, the choice and select cutouts exploded higher by $9.76 and $4.19.2)For the week ending April 24, noncommercials continued to liquidate their net-long position in live cattle futures (i.e., down another 6,400 loads to 22,700).
3)The pork carcass value closed solidly higher on Friday, supported by better demand for all primals except the picnic. Furthermore, last week's smaller slaughter (i.e., 2.36 million hogs) should help the wholesale pork trade this week.3)Lean hog futures have made a reversal with the June contract closing Friday nearly 500 points lower on the week, shifting the short-term market trend back to bearish.
4)
Specs may be gearing up for a seasonal rally in lean hog futures. During the week ending April 24, noncommercial traders reduced their net-short position by 400 contracts, now net-short 4,200 contracts.
4)The pork cutout could not gain significant momentum this week despite the gains in the loins and butts. The weakness in hams and bellies was enough to counter the other gains.
OTHER MARKET SENSITIVE NEWS
CATTLE: (Hoosier Ag Monday) -- The European Union is preparing to allow more tariff-free U.S. beef into the region as part of an attempt to avoid a trade war. The move comes at the same time French President Emmanuel Macron and German Chancellor Angela Merkel are making high-level diplomatic trips to Washington, D.C. Both leaders are trying to dissuade President Donald Trump from slapping tariffs on European steel and aluminum imports, set to begin on May 1.
An EU concession on American beef may go a long way toward appeasing the U.S. President, who has made it clear that Europe has "unacceptable" barriers to trade. "Our farmers can't send their product into the European Union as easily as they should," Trump says, "and we accept their products. So, we have to make a change, and they understand that." To make the change happen, the EU would have to alter a 2009 agreement which allowed the U.S. to export 45,000 tons of hormone-free beef without paying dues.
European agriculture associations typically do not favor more beef imports, but they seem to be supportive of tweaking the quota.
HOGS: (WIUM Tristates Public Radio) -- Dozens of congressional Democrats are opposing a recently proposed federal rule that would change hog-slaughterhouse inspections and the number of hogs that can be processed daily.
The Modernization of Swine Slaughter Inspection rule, which falls under the U.S. Department of Agriculture's purview, was announced in January. The politicians believe any such changes will will endanger workers at hog slaughterhouses and increase the risk for foodborne illness. But pork industry leaders argue the rule would provide a much needed update to a system that's become obsolete.
The proposed rule would lift the cap on how quickly pigs can be slaughtered. According the federal Bureau of Labor Statistics, the injury rate for employees in meatpacking plants is 2.4 times higher compared to other industries.
The proposal also would allow plant employees to carry out the initial visual inspection of incoming animals, which is currently the responsibility of federal inspectors. In turn, the agents would focus on other parts of the plant, like testing for harmful bacteria and ensuring the humane handling of animals.
The Food and Safety Inspection Service (or FSIS) has said the new regulations will place more emphasis on testing to prevent the spread of bacteria that can cause foodborne illnesses.
A push to increase slaughter speeds isn't isolated to the hog industry. Recently the FSIS introduced a waiver program for poultry slaughterhouses to process 175 birds a minute versus the former requirement, which was 140 birds per minute.
The letter sent to the USDA on Monday by 63 representatives (including Mike Quigley of Illinois, Emanuel Cleaver of Missouri and Dave Loebsack of Iowa) urged the USDA to "withdraw the rule immediately." In it, they also pointed to a 2018 report from Water and Food Watch alleging that similar programs had been unsuccessful. The report reviewed records from the USDA and found that 30 percent of plants operating under a similar pilot program, known as the New Poultry Inspection System, failed to comply with salmonella performance standards.
The National Pork Producers Council said the new swine inspection rule will modernize a system that has existed for 100 years. Dan Kovich, the council's director for of science and technology, said the old rules were designed during a time when visible health risks, like blemishes or cancers, were more common but slaughterhouses now need to focus more on microbiological issues.
"[The new system] allows both industry and FSIS to focus on things that are offline that can really make an impact on food safety," Kovich said.
Kovich also said that, regardless of speed or where federal inspectors are stationed, every slaughterhouse must still comply with federal laws and regulations to ensure safety and the humane treatment of animals. "Not everyone is just going to turn up a knob somewhere and just move faster without a lot of care, thought and intention into making sure that they can do it appropriately," he said.
The USDA is taking public comment on the proposed changes through Wednesday.

Friday, April 27, 2018

Friday Closing Livestock Market Summary - Cattle Futures Explode Sharply Higher, Fueled by Aggressive Packer Spending

GENERAL COMMENTS
Feedlot managers won another Friday showdown, forcing short-bought packers to pay significantly higher prices for ready cattle. Most of the live business in the South was marked at $124, $2 higher than last week. On the other hand, Northern packers paid as much as $126 on a live basis ($4 higher than last week basis Nebraska) and $198 to $199 on a dressed basis, $8 to $9 higher. The National hog base closed off $0.11 compared with the Prior Day settlement ($52-$58.50, weighted average $58.22). From Friday to Friday, livestock futures scored the following changes: Apr LC up $5.10; Jun LC up $3.28; May FC up $2.70; Aug FC up $3.75; Jun LH off $4.93; Jul LH off $3.80. Corn futures closed 3 cents plus higher, supported by dry conditions in Brazil and sharply higher bean trading. The stock market closed on a mixed basis with the Dow off 11 point and the Nasdaq up 1.

LIVE CATTLE
Futures closed sharply higher, up 10 to 265. The late-week bullish reaction was mostly tied to greater cash spending in feedlot country. Technical-buying also became a factor as contracts scored multi-month highs. Note that June gained significantly on spot April, erasing some of its enormous discount as it prepares to assume the spot position next Tuesday. Beef cutouts: higher on choice and steady on select (choice $221.74, up $1.59; select $204.32, off $0.16) on moderate demand and light offerings (30 loads of choice cuts, 27 loads of select cuts, 8 loads of trimmings, 26 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:
Steady to $2 higher. Activity on Monday will be typically limited to the distribution of new showlists. We expect ready numbers to be steady to somewhat larger. Bullish-minded feedlot managers will certainly not hesitate in pricing cattle at least $2 to $3 higher.

FEEDER CATTLE:
Futures closed mostly sharply higher, up 175 to off 42. Feeder traders were obviously motivated to keep pace with rising prices in the live market. Note that the August contract closed the week above its 100-day moving average, landing its best close since March 12. CME cash feeder index: 04/26: $139.99, up $0.50.

LEAN HOGS:
Futures closed mostly sharply lower, off 35 to 137. Summer lean hog issues experienced a tough week, repeatedly hit hard by long liquidation and fears of unmanageably large lean supplies. The June contract closed at 72.62, the lowest level seen since April 3. Seasonally, there is still plenty of time for bulls to put together a decent rally. Having said that, it doesn't appear as though anyone is anticipating better news around the next corner. Pork cutout: $68.61 (FOB Plant), up $0.76. CME cash lean 04/25: $61.23, up $0.79 (DTN Projected lean index for 04/26: $61.75, up $0.52.

MONDAY'S CASH HOG CALL:

Steady. Hog buyers are expected to resume business on Monday with steady bids, hoping that this week's smaller kill will help stabilize and firm the wholesale pork trade.

Friday Midday Livestock Market Update - Firm Feeder Cattle Gains Hold At Midday

GENERAL COMMENTS: 
Firm gains have developed through the cattle market with traders focusing on increased buyer support in feeder cattle trade. This may not help to solidify any significant buying through the end of the week, but traders may focus on increased trade activity at the end of the month. Corn prices are higher in light trade. May corn futures are 2 cents higher. Stock markets are higher in light trade. The Dow Jones is 7 points higher while Nasdaq is up 8 points.

LIVE CATTLE:
Live cattle futures are mixed to mostly higher with traders focusing on the nearby support to help draw additional traders to the complex. This may bring increased overall support back to the market through the end of the session. Cash bids are becoming more evident through the morning, but packers are unwilling to add to bids at this point, delaying activity until later in the afternoon. Bids are seen at $121 live basis in the South and $192 dressed basis. Asking prices are now seen at $123 and higher live basis, and $200 to $203 per cwt dressed. Boxed Beef cut-outs at midday are higher, $0.10 higher (select) and up $1.14 per cwt (choice) with light movement of 58 total loads reported (19 loads of choice cuts, 14 loads of select cuts, 8 loads of trimmings, 15 loads of ground beef).

FEEDER CATTLE:
Feeder cattle futures are leading the market higher with increased overall support developing across the market. There is increased trade volume moving into the complex which is pushing May futures to $1 per cwt gains. Although gains in other nearby contracts have remained sluggish, there is growing focus on the ability to draw traders back to the market over the near future.

LEAN HOGS:
Early stability in lean hog futures quickly eroded through the end of the morning with additional pressure seen in cash markets, and the unwillingness of buyers to step back into the complex has added even more weakness to the complex. There is growing movement that trades may continue to back away from the complex through the end of April. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.20 at $58.13 per cwt with the range from $52.00 to $58.37 on 3,290 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $3.92 at $54.54 per cwt with the range from $52.00 to $56.50 on 66 head reported sold. The National Pork Plant Report posted 111 loads selling with carcass values adding $1.03 per cwt. Lean hog index for 4/24 is at $60.44 up 1.44 with a projected two-day index of $61.23, up 0.79.

Friday Morning Livestock Market Summary - Cattle Futures Seem Staged to Open Mixed as Traders Position Ahead of Cash News

GENERAL COMMENTS:

Friday cattle traders are moving into the third consecutive of late-week showdowns. Fridays have proven pretty lucky for feedlot managers this month, and it will be interesting to see if sellers can once again demonstrate superior leverage over packers sometime between late morning and late afternoon. Opening bids will probably be renewed at $121 in the South and $192 in the North. We expect feedlot managers to dig in their heels regarding asking prices of $125 in the South and $200 to $203 in the North, at least through the noon hour. Look for live and feeder futures to open on a mixed basis as traders cautiously jockey ahead of cash news. 

Look for cash hog buyers to wrap-up late-week procurement with basically steady bids. This week's country trade has clearly been less encouraging than last week and perhaps that fact was tied to last week's surprising large slaughter. Some argue that the recent increase in live weights support the idea that finishing floors had to be swept clean last week in order for producers to become more current. Is a resumption of an impressive cash rally just around the corner? Furthermore, the week's smaller kill (probably around 3.8 million head) could help spark better pork demand next week. Lean futures should open lower, pressured by residual selling and softer carcass value. 


BULL SIDE
BEAR SIDE
1) For the week ending April 14, cattle carcasses fell hard: all cattle averaged 810 pounds, 6 pounds lighter than the previous week and 7 pounds heavier than last year; steers averaged 867 pounds, 5 pounds smaller than the prior week and 19 pounds bigger than 2017; heifers averaged 801 pounds, 8 pounds below the previous week and 6 pounds heavier than a year ago. 1) Net beef export sales last week totaled 18,500 MT, down 7% from the previous week and 9% from the prior four-week average.
2) Actual beef exports of 15,700 metric tons (MT), up 3% from the previous week and 2% from the prior four-week average. 2) While the composite beef carcass value is currently 3% (i.e., roughly $6) higher than last week, the year-over-year increases in the comprehensive cutout is likely to rapidly fade in the weeks ahead as the rocketing strength seen last spring is not expected to resurface this year.
3) Net pork export sales last week jumped to 26,400 MT, up 47% from the previous week and 32% from the prior four-week average. At the same time, actual pork exports increased to 25,000, up 55% from the previous week and 20% from the prior four-week average. 3) The stubborn realities of significantly large discounts in summer live cattle futures on one hand and struggling premiums in summer lean hog futures seem to feed into each other (i.e., both reflect the possibility of a burden of red meat supplies through the summer quarter).
4)
Would-be longs in lean hog futures may be getting somewhat discouraged as premiums sag, but seasonal players know there's still plenty of time for a decent second quarter rally. The index for June lean hogs tends to chop around until the end of April before trending higher into expiration. 

4) The pork carcass was further pressured on Thursday, checked by softer demand for bellies, hams and ribs.
OTHER MARKET SENSITIVE NEWS
CATTLE: (Agriculture) -- After a 13-year ban, American beef is back on the menu in China. The embargo was imposed in 2003 when mad cow disease was traced to an animal in Washington state. As the door to beef trade once again opens to the world's second-largest buyer of beef, an Iowa start-up is working to fill the country's growing appetite. 

"China imports 800,000 tons of beef annually, primarily from Brazil, Australia, and Argentina," says Justin Kean, executive VP of business development, Global Agriculture Company, Ltd. (GAC). "It is the fastest-growing economy in the world, and its middle class is leading the pace. Yet, the country doesn't have the natural resources to keep up with demand. The U.S. has the ability to sell more beef to China's growing economy."

Through exclusive partnerships with a number of buyers (including the largest state-owned food producer in eastern China's six provinces), GAC recently exported six containers (228,000 pounds) of U.S. beef.

"Bright Food Group is responsible for feeding over 400 million people, which includes a global luxury hotel chain and China's largest e-commerce food company," he says. "This first shipment is the largest single shipment of whole-cut beef sent to China from the U.S. in 14 years, and it is nearly 22% of the year-to-date quantity exported to China. The group is eager to purchase more."

GAC President Tim Johnson says the inaugural delivery will build market confidence in China.
"This is just the beginning of a sustainable U.S. beef supply to China," he says. "Our buyer wants to reach 2,000 containers annually. We are only scratching the surface of what we can export to China."

HOGS:(Farmers Weekly (UK)) -- Higher pig numbers and weaker exports could put EU pig prices under pressure over the coming months, particularly if African swine fever (ASF) continues to spread in Europe.

Global banking group Rabobank says it expects EU production to reach record levels in 2018, as herds gradually increase in Germany, Spain, Poland, Denmark and the Netherlands.

In its quarterly update on the pork market the bank says rising supply is a reflection of better returns seen over the past year, but could put pressure on prices. It also highlights a range of uncertainties including trade disputes, disease risks and feed availability issues which could hit global trade.
The report says ASF could disrupt traditional trade flows if its spreads into the commercial pork production areas of the EU, with Germany and Denmark believed to be most at risk.

Restrictions on pork exports -- which can last for years -- are imposed in a buffer zone once ASF is confirmed in either wild pigs or on a holding.

The threat is sufficiently serious that Denmark has recently announced that it is constructing a 70km fence along the German border, designed to keep wild pigs from moving freely between the two countries.

Germany has also stepped up hunting of its wild boar population to control the spread of ASF.
The report suggests that a stronger euro reduced EU pork exports during 2017, with shipments to China particularly hit hard.

Chinese exports are expected to remain weak throughout Q2 2018 with the US-China trade war not expected to generate much additional trade in the coming months because China's own market is already oversupplied.

Record hog numbers in the US, along with 25% tariffs on exports of any pigmeat shipped to China, are expected to weigh down the American market, with futures prices falling as a result.
According to AHDB figures, the UK exported 7,711t of pork to the US in 2017 -- but this accounted for only 2% of US pork imports.

Trade analyst Bethan Wilkins said: "While an increasing US domestic supply may be detrimental for UK export prospects, as falling US prices reduce the competitiveness of imported product, the high-welfare niche occupied by UK product could help support trade."

Thursday, April 26, 2018

Thursday Closing Livestock Market Summary - Longs Continue to Run From Summer Lean Hog Futures

GENERAL COMMENTS
While a few more bids were tossed on the cattle table (e.g., $121 in the South, $192 in the North), no buyers were willing to show enough powder needed to generate selling interest. Some steers and heifers were priced around $125 live in the South and $200-$203 in the North. According to the closing report, the national hog base is $0.02 higher ($52-$59, weighted average $58.32). Corn futures closed fractionally lower at the conclusion of a listless round of trading. The stock market seemed to reclaim traction Thursday with the Dow closing 238 points and the Nasdaq advanced by 114.
LIVE CATTLE
Reflecting higher cut-outs and general optimism regarding the eventual surfacing of higher feedlot sales, spot April successfully closed 60 points higher. Yet the balance of the trading field closed 27 to 125 lower. June through October settled with triple-digit losses. Summer contracts remain trapped below 40-day moving averages and 38% retracement of the Jan-Mar price break. Beef cut-outs: significantly higher, up $1.33 (select: $204.48) to $1.55 (choice: $220) with moderate-to-good demand and moderate-to-heavy offerings (78 loads of choice cuts, 37 loads of select cuts, zero loads of trimmings, 23 loads of ground beef).
FRIDAY'S CASH CATTLE CALL:
Steady to $2 higher. Friday will mark another round of now-or-never time. Look for at least moderate trade volume to develop sometime between late morning and early afternoon.
FEEDER CATTLE:
Spot April expired Thursday at high noon (i.e., 140.177, up 32 points, a little above the lagging cash index). All other contracts settled 32 to 105 lower, obviously pressured by struggling live prices. The August contract once again bumped its head on 62% retracement of the first-quarter sell-off. 04/25: $139.49, up $1.39.
LEAN HOGS:
Lean futures closed 10 to 135 lower with the first three contracts catching the most bearish heat. Traders continue to fear that summer premiums remain too much of a challenge for the cash market. Yes, seasonal chain speed will be slower but still faster than a year ago. Furthermore, many are worried that wholesale pork demand (as well as export demand) will lose a step or two compared with the aggressive buying pace of 2017. Carcass value closed moderate lower, pressured by processing items, ribs and picnics. Pork cut-out: $67.85, off $0.64. CME cash lean index for 04/24: $60.44, up $1.44 (DTN Projected lean index for 04/25: $61.23, up $0.79).
FRIDAY'S CASH HOG CALL:
Steady. Look for near-steady bids in hog country Friday with most packers having immediate slaughter needs pretty much in hand.

Thursday Midday Livestock Market Update - Triple-Digit Losses Sweep Through Hog Futures

GENERAL COMMENTS: 
Widespread pressure has developed across cattle and hog futures midday Thursday. The early support seen in cattle trade has quickly evaporated due to limited follow through buyer interest and traders showing concern about additional short-term gains. Hog futures have posted triple-digit losses, with weakness seen despite firming pork values. Corn prices are lower in light trade. May corn futures are 1/4 cent lower. Stock markets are higher in light trade. The Dow Jones is 220 points higher while Nasdaq is up 104 points.
LIVE CATTLE:
Trade in live cattle futures at midday is mixed to mostly lower with June futures leading the complex lower with a $1 per cwt loss. There remains some uncertainty in the market as traders have quickly adjusted to the recent market support in all contracts. Trade volume has remained slow through the morning with traders unwilling to aggressively focus on long term market direction due to some position taking likely being the main order of business for most traders. There is expected to be some additional longer term shifts that may move into the market, although end of month adjustments may quickly add to market volatility. Cash bids are starting to improve through the morning with bids seen in nearly all areas of cattle country with the expectation that additional interest will develop late in the day. It is uncertain at this point if feeders will be willing to settle at this point with the possibility of follow through support developing late in the week. Live bids are seen at $121 per cwt, while dressed bids are seen at $190 to $192 per cwt. Asking prices are now seen at $125 live basis, and $200 to $203 per cwt dressed. Boxed Beef cut-outs at midday are higher, $1.76 higher (select) and up $1.22 per cwt (choice) with active movement of 85 total loads reported (42 loads of choice cuts, 27 loads of select cuts, no loads of trimmings, 17 loads of ground beef).
FEEDER CATTLE:
Lightly traded April contracts continue to hold moderate gains which developed in early trade Thursday morning. But the rest of the complex remains under moderate pressure with traders looking for increased softness through the end of the week, and likely the rest of April. May contracts are now leading the market lower with an 80 cent per cwt loss. May futures have quickly eroded the premium that had been evident over the last couple of weeks as traders focus on May as the spot-month contract.
LEAN HOGS:
Triple-digit losses have moved into lean hog trade with May through July futures posting losses of $1.20 to $1.45 per cwt. The overall lack of support returning to the market following midweek market gains has opened the door on additional liquidation through the complex. Trade volume remains sluggish, as traders continue to focus on firming pork values, although there is growing concern that the strong supplies seen through the spring and summer may make it much more difficult to maintain current supply levels. But upcoming seasonal summer demand should help to draw buyer activity back into the market over the near future. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.02 at $58.32 per cwt with the range from $53.00 to $58.50 on 2,850 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.40 at $58.09 per cwt with the range from $53.00 to $58.50 on 550 head reported sold. The National Pork Plant Report posted 124 loads selling with carcass values adding $0.61 per cwt. Lean hog index for 4/24 is at $60.44 up 1.44 with a projected two-day index of $61.23, up 0.79.

Thursday Morning Livestock Market Summary - Meat Futures Likely to Open With Firm Undertone

GENERAL COMMENTS:
Cash cattle potential could take on greater definition Thursday, both in terms of more specific bids and asking prices. Opening live bids should be around $119 to $120 in the face of higher asking prices of $125 or better. Yet if the board stays firm, significant trade volume may not develop until sometime Friday. No delivery intentions were announced against the April live contract on Wednesday. Live and feeder futures seem staged to open moderately higher, supported by follow-through buying and cash optimism.
Look for the cash hog trade to open with bids steady to a $1 higher. Although the development of bullish fundamentals have slowed this week, the supply/demand mix is expected to sweeten through the month of May. WTD is running a bit over last week, but late-week chain speed should reverse that trend (especially assuming a Saturday kill close to 53,000 head). Lean futures should open generally higher with nearbys outperforming deferreds.
BULL SIDEBEAR SIDE
1)Spot April live cattle opens Thursday roughly even with last week's cash market. Given large premiums that have held over the last several months, such a relatively "weak" basis should lend feedlot managers decent leverage in the late-week cash trade.1)Whether cattle prices are moving higher or lower, the April/June live spread just keeps widening. Summer bears just can't stop worrying about the possibility of unmanageable beef supplies ahead.
2)Beef cutouts continue to roll higher on Wednesday as retailers and food managers respond to warming spring weather, increasing outdoor activity and improving red meat demand.2)While cattle carcass value will surely drift seasonally lower over the next several months, most analysts believe weights will remain well above the levels of 2017, further compounding the potential of beef production through the balance of the second quarter.
3)The pork carcass value moved moderately higher at midweek, supported by better demand for all primals except the loin.3)For the week ending April 21, U.S. hatcheries set 229 million eggs in incubators; up 3% from a year ago. At the same time, chicks placed totaled 183 million chicks, up 1% from 2017.
4)
Seasonal demand and tightening production should push the pork cutout consistently higher over the next eight weeks or more (especially powered by fresh cuts and bellies).
4)For the week ending April 21, Iowa barrows and gilts averaged 286.2 pounds, 1 pound heavier than the previous week and 1.3 pounds bigger than 2017.
OTHER MARKET SENSITIVE NEWS
CATTLE: (drovers.com) -- In the face of growing beef production, all eyes are on beef demand in 2018. Beef production is up about 1.5 percent so far this year but total production is projected to increase roughly five percent year over year by the end of the year.
Choice retail beef prices in March were $5.871/lb., up from $5.828/lb. in February but down 0.6 percent from one year ago. The All Fresh beef retail price for March was $5.598/lb., up from $5.53/lb. in February and up 0.9 percent from one year ago. Choice boxed beef cutout has declined from a February high of $224.46/cwt. to $213.34/cwt. in mid-April but remains 1.6 percent higher year over year for the latest weekly data.
In the last four weeks, higher primal values for the rib, chuck, brisket, short plate and flank have been partially offset by lower loin and round values. Brisket values are especially strong, with wholesale value up over 30 percent year over year, while Ribeye values are down some from earlier highs but still up six percent from last year in the last four weeks. Higher chuck values are led by strong Flat Iron steak and Chuck Roll prices, up roughly 28 percent from one year ago. Short Ribs are also up about 27 percent, likely supported by strong export demand.
Lower loin values are a short term concern and a continuation of a longer term trend of weaker relative loin values. Loin values have declined relative to other parts of the carcass over the last decade. Currently wholesale values for Tenderloin are down about 11 percent year over year while Loin Strip prices are roughly 7 percent lower than one year ago.
Retail beef prices continue to hold up well relative to pork and poultry pries. March retail pork price was $1.502/lb., up from $1.478/lb. in February and down 0.7 percent from one year ago. Composite broiler retail price in March was $1.867/lb., up slightly from the February level of $1.861/lb. and down 0.6 percent from last year. The ratio of retail beef price to both pork and broiler continues to hold strong despite growing supplies of beef, pork and poultry. Production of beef, pork and broilers are all expected to be record large in 2018 leading to record large total meat supplies of nearly 103 billion pounds, up 3.3 percent year over year. This includes other chicken, turkey, lamb and mutton and veal production.
Net meat exports are projected to move just over 12 percent of total meat production offshore this year and hold per capita domestic meat consumption to 219.4 pounds, retail weight. This level is 1.3 higher than last year and the highest total meat consumption since 2007 but below the record level of 221.9 pounds in 2004. Strong domestic and international meat demand will be critical to minimize the supply pressure on meat prices in 2018.
HOGS: (GlobalMeatNews) -- The European Union (EU) and Mexico have agreed, on 21 April in Brussels, a momentous revised trade deal meaning 99% of products will be traded duty-free, and potentially substantially increasing the EU's pork exports to Mexico.
Under the agreement, which will replace a year 2000 trade deal, there will be duty-free trade for virtually all pork products, where customs duties now range up to 20%.
Its terms also mean that Mexico will ease import health checks on pork imports from EU slaughterhouses. Notably, inspectors will no longer have to check every slaughterhouse before clearing them to export meat products to Mexico.
EU commissioner for agriculture Phil Hogan told journalists on 23 April that the deal would help the meat sector in particular, where "trade is low at present".
In a European Commission communiqué, Paulino Tello Cano, CEO of the Toledo, Spain-based Tello Group, said the accord would make "our high-quality pork products much more competitive on the Mexican market". Mexico will also remove its high tariffs on "economically relevant poultry products", where tariffs can be as high as 100%, the Commission said.
But the deal was not so generous for beef, where only limited amounts will be exported tariff-free. EU farm association secretary-general Pekka Pesonen told GlobalMeatNews that he considered Mexican beef exporters would get too much access to EU markets because of the deal: "An import quota of 10,000 tonnes for beef is 10,000 tonnes too much."
Paolo Patruno, deputy secretary general for the EU's Liaison Centre for the Meat Processing Industry (Clitravi), said: "In general we are happy with the agreement, if we assume duties on processed meat will disappear."
The agreement will also boost protection from imitation for 340 European food and drink products in Mexico, including Parma ham, Nürnberger Bratwürste (German sausage) and Szegedi szalámi (Hungarian salami).

Wednesday, April 25, 2018

Wednesday Closing Livestock Market Summary - Cattle Futures Rebound Linked to Cash and Product Optimism

GENERAL COMMENTS
Cattle buyers and sellers pretty much kept to themselves Wednesday, perhaps intuitively knowing that they didn't share much in common regarding ideas of price this early in the game. A few packers left token calling cards with $119 bids. Some asking prices were suggested around $125 on a live basis, but firming futures may boost bullish expectations even more through the second half of the trading week. According to the closing report, the national hog base is $0.28 higher ($52-$59, weighted average $58.35). Corn futures surged 5-6 cents higher, supported by noncommercial buying and another friendly swing in wheat prices. Equities closed mixed with the Dow up 59 and the Nasdaq off 3.
LIVE CATTLE
Live contracts quickly rebounded from Tuesday's correction, closing 27 to 82 higher. Yet the summer months still refuse to close the sprawling gap with spot April (which expires next Monday) and feedlot cash. Beef cut-outs: significantly higher, up $0.88 (choice: $218.53) to $1.04 (select: $203.15) with moderate demand offerings (71 loads of choice cuts, 37 loads of select cuts, 13 loads of trimmings, 21 loads of ground beef).
THURSDAY'S CASH CATTLE CALL:
Steady to $2 higher. We should start to see a few more bids thrown on the table, but bullish feedlot psychology is such that significant trade volume could easily be postponed until Friday.
FEEDER CATTLE:
Unbothered by the decent bounce is corn futures, feeder issues advanced a bit ahead of their live counterparts. Prices here settled 35 to 120 higher. August closed just 15 points below its 100-day moving average. 04/24: $138.21, up $0.13.
LEAN HOGS:
Lean contracts closed on a mixed basis with settlements ranging from 110 higher to 10 lower. You would have to risk eyestrain to find much corrective action vis-a-vis Tuesday's prices slide. July and August nudged back above 40-day moving averages, but that's about it. Carcass value closed moderately higher with all major primals quoted higher except the loin. Pork cut-out: $68.49, up $0.41. CME cash lean index for 04/23: $59, up 1.12 (DTN Projected lean index for 04/24: $60.44, up $1.44).
THURSDAY'S CASH HOG CALL:
Steady to $1 higher. Look for hog buyers to resume business in the morning with steady/firm bids.

Wednesday Midday Livestock Market Summary - Cattle Buyers Step Back Into the Market

GENERAL COMMENTS: 
Firming support has moved into the cattle market through late morning. This is helping to bring additional underlying support to the entire complex. Lean hog futures remained under pressure early in the session, but have moved higher at midday in nearby contracts. Corn prices are higher in light trade. May corn futures are 5 cents higher. Stock markets are mixed in light trade. The Dow Jones is 19 points lower while Nasdaq is up 2 points.
LIVE CATTLE:
Moderate to strong buyer support is attempting to step back into the live cattle trade. This may help to draw additional buyer interest through not only late Wednesday trade, but through the rest of the week. April futures are leading the market with an 82 cent gain, as buyers seem content to back away from early price pressure. Cash cattle interest is sluggish with only a few bids developing in the South at $119 per cwt. Interest is likely to increase through the day, although trade may be held off until later in the week. The Fed Cattle Exchange Auction today listed a total of 3,194 head, with zero actually sold, 2,966 head listed as unsold, and 228 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 365 total head, with 0 head sold, 137 head unsold, 228 head listed as PO ($120.25-$121.00); NE 2,829 total head, with 0 head, 2,829 head unsold, and zero head listed as PO; TX - no cattle reported; 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: 3,194 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 higher, $1.55 higher (select) and up $0.96 per cwt (choice) with active movement of 85 total loads reported (41 loads of choice cuts, 20 loads of select cuts, 11 loads of trimmings, 12 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have posted moderate gains at midday after struggling to gain much momentum through the morning. Early mixed trade have given way to light buyer activity with prices 20 to 50 cents per cwt higher. Given the price shift late morning, some additional buyer support may continue to move back into the complex and add underlying interest to the market.
LEAN HOGS:
Early pressure seen in lean hog futures has eased at midday with the overall lack of additional volume moving into the market allowed nearby prices to shift higher. May contracts are leading the complex higher with a 42 cent per cwt gain. Other nearby contracts are hovering between 10 and 25 cents per cwt higher with the focus on market activity and trade volume through the rest of the complex. Pressure in deferred markets continue, but this is limiting any additional movement into most contracts. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.16 at $58.23 per cwt with the range from $52.00 to $59.00 on 3,441 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report posted 167 loads selling with carcass values adding $1.46 per cwt. Lean hog index for 4/23 is at $59.00 up 1.12 with a projected two-day index of $60.44, up 1.44.

Wednesday Morning Livestock Market Summary - Meat Futures Staged for Mixed Opening at Midweek

GENERAL COMMENTS:
The cash cattle market could start to take on greater potential this morning, at least in terms of more specific bids and asking prices. Asking prices are around $125 on a live basis and $196-198 dressed, barring the development of significant better basis opportunities, the development of trade volume may not surface until Thursday and Friday. CME officials announced late Tuesday that 10 loads were retendered for delivered against April live cattle for $1, all at Dodge City. All 10 loads were demanded. Live and feeder futures should open on a mixed basis thanks to a combo of spillover selling and pre cash short covering.
Look for the cash hog trade to open with bids steady to $1 higher. The country trade continues to appreciate, albeit at a slower pace. Yet the board remain quite servous about the ability of cash prices to evenly justify board premiums. Lean futures are also geared to open with uneven prices tied to residual selling and profit taking.
BULL SIDEBEAR SIDE
1)Spot boxed beef spending is definitely on a roll at long last, especially relative to choice product. The choice cut-out jumped another $2.54 on Tuesday, closing at its highest level since April 4. Box demand in general was described as "good."1)After posting early gains Tuesday, live cattle futures contracts ended the session mixed to mostly lower. The short-term trend has shifted from neutral to higher, while the longer-term trend line in the continuous chart continues to be negative.
2)Furthermore, out-front beef sales are exploding. Last week saw box sales with delivery of 22 days or more surging to 1,537 loads, the largest weekly total with such specs since late May 2012.2)Weekly cattle slaughter totals are expected to accelerate into the range of 630,000 to 640,000 heads into mid-May, before breaking into and sustaining the lower to middle 640,000-head area.
3)Even though hog buyers firmed bids somewhat yesterday, country receipts on Tuesday remained relatively slow. More aggressive bidding in the days ahead will probaby be necessary to fund even reduced slaugter plans.3)Supply worries may be breaking down the technical support and promise of summer lean hog futures. July and August closed below 40-moving averages on Tuesday.
4)Although pork processing margins have narrowed since midmonth, they still remain decent with signs of improving wholesale prices waiting in the wing. But the Saturday hog kill may be no larger than 53,000 head possibly a good sign that ready numbers of barrows and gilts are getting tighter.4)Some trade sources fear Japan-European Union trade agreement is threatening U.S. pork exports to Japan. The U.S. may be losing market share since abandoning the Trans Pacific Partnership deal.
OTHER MARKET SENSITIVE NEWS
CATTLE: (News OK) -- Agricultural officials on Monday estimated the Rhea and 34 Complex wildfires burning in Dewey and Woodward counties have killed about 1,100 head of cattle so far.
Jim Reese, Oklahoma's secretary of agriculture, said Monday that's fewer cattle than Oklahoma ranchers lost in a series of wildfires in six western and Panhandle counties just more than a year ago, although he added he expects more ranchers are being hurt by this year's fires.
As for the estimated cattle losses so far this year, Reese said it could be worse.
He said there was a greater availability of cultivated wheat pastures in areas near this year's fires that ranchers could use as temporary sanctuaries for their animals, compared to a year ago.
Last year's wildfires burned 318,025 acres across parts of Beaver, Ellis, Harper, Roger Mills, Woodward and Woods counties, according to information recently released by Oklahoma's Forestry Services division. Oklahoma ranchers reportedly lost about 3,000 head of cattle to those fires.
While state agricultural statistics data shows there were more than a half million acres of wheat planted in those six counties, those acres were planted across a much larger area.
This year's fires, in contrast, so far have consumed about 350,000 acres primarily in Woodward and Dewey counties. Data shows 87,000 acres of wheat was harvested from Woodward County in 2016, and that 112,000 acres of the crop was grown in Dewey County in 2017.
HOGS: (AP) --- Jurors in North Carolina are getting a round-up of testimony in a lawsuit filed by more than 500 neighbors of an industrial-scale swine operation.
The plaintiffs contend that open-air cesspools inflict them with intense, putrid smells that can't be removed from clothing or household fabrics for years.
Lawyers for Virginia-based Smithfield Foods maintain that the smells, traffic and noise don't hurt the neighbors' ability to enjoy their own property.
The jury has heard three weeks of testimony. This is the first of a series of test cases against the low-cost, high-volume methods of hog-production division used by the Chinese-owned company.
Lawyers for the neighbors say alternative methods don't cause such a nuisance, but the company uses open-air cesspools because they're cheap.

Tuesday, April 24, 2018

Tuesday Closing Livestock Market Summary - Hog Futures Continue to Slide Lower

GENERAL COMMENTS
Cash cattle trading was a non-event Tuesday with both bids and asking prices poorly defined (a few showlists in the South were priced around $125). According to the closing report, the national hog base is .23 higher ($53.50-to-$59.00, weighted average $57.96). Corn futures climbed several cents higher, supported in part by rebounding wheat prices. The stock market took it on the chin again Tuesday as investors continue to stew over the prospects for higher interest rates. The Dow closed as much as 424 points lower with the Nasdaq off 121.
LIVE CATTLE
This market opened higher thanks to follow-through buying interest from Monday, but prices seemed to steadily weaken from midmorning through the close. When the dust settled, most months ended moderately lower, off 17 to 80. June was the only issue to finish some higher (i.e., up 17), probably benefiting some from bull spreaders taking profits. Although contracts settled much closer to session lows than session highs, the sell-off did not appear to be technically significant. Beef cut-outs: sharply higher, up $.39 (select: $202.11) to $2.54 (choice: $217.65) with good demand and moderate to heavy offerings (75 loads of choice cuts, 44 loads of select cuts, six loads of trimmings, 21 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL:
Steady to $2 higher. While some bids and asking prices could become better defined at midweek, we don't expect to see significant trade volume until Thursday or Friday.
FEEDER CATTLE:
Marginally supported by the strengthening cash index and approaching expiration (i.e., Thursday, the 26th), spot April closed 7 points higher. Yet the rest of the market pretty much settled moderately lower, off 37 to 52, thanks to long liquidation and profit taking. (DTN Projected lean index for 04/23: $138.08, off $.05).
LEAN HOGS:
Spooked by large supplies and the possibility of inadequate demand, lean futures slumped lower for the third consecutive session, closing 47-to-155 in the red. The monthly cold storage report released Monday documented significantly more frozen pork as March 31 than a year earlier. July and August have been trapped between 40-day and 100-day averages all months, but fell bellow 40-day averages Tuesday, a stumble that could prompt further technical selling Wednesday. Carcass value pushed a bit higher Tuesday thanks primarily to better demand for fresh cuts. Pork cut-out: $68.08, up $.21. CME cash lean index for 04/20: $57.88, up $1.08 (DTN Projected lean index for 04/23: $59.00, up $1.12).
WEDNESDAY'S CASH HOG CALL:
Steady to $1 higher. Look for steady/firm bids in the morning. Early week receipts have been pretty slow and buyers may need to sweeten the pot in order to fund near-term slaughter plans.

Tuesday Midday Livestock Market Summary - Buyers Pull Back From Early Gains

GENERAL COMMENTS: 
Mixed trade is seen in live cattle futures at midday as traders continue to back away from early gains. Hog futures are under additional pressure with increased market weakness developing in all contracts. Corn prices are higher in light trade. May corn futures are 1 cent higher. Stock markets are lower in light trade. The Dow Jones is 389 points lower while Nasdaq is down 106 points.
LIVE CATTLE:
Mixed trade is seen midday Tuesday with very limited activity seen across the complex. There is likely to be some additional market activity likely to be seen. The early gains may help to bring some additional support to the complex, although trade activity remains light. Cash cattle interest remains extremely quiet with very limited activity seen through the complex Tuesday morning. Bids are yet to be established with very light activity seen through the entire complex. A few asking prices have trickled through the market in the South, starting near $125 per cwt. But it may be the last half of the week until significant interest develops. Boxed Beef cut-outs at midday are higher, $0.39 higher (select) and up $1.88 per cwt (choice) with active movement of 81 total loads reported (42 loads of choice cuts, 24 loads of select cuts, no loads of trimmings, 15 loads of ground beef).
FEEDER CATTLE:
Strong early support has slowly eroded through the morning, although price are still trading higher at midday. Contracts are holding a tight trading range from 10 to 40 cents per cwt higher with underlying support seen from initial buyer activity. It is possible that additional pressure may soon develop across the complex as traders look for increased overall movement in the complex. This could add even more price shifts through midweek.
LEAN HOGS:
Moderate pressure continues to develop in lean hog futures with June futures leading the market lower with a $1 per cwt loss. The overall pressure in the complex continues to bring additional price softness to all trade with most contracts 45 to 70 cents lower in light activity. There is growing uncertainty about the additional market softness and how much follow through pressure will develop through the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.03 at $57.70 per cwt with the range from $53.50 to $58.50 on 3,640 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.12 at $58.10 per cwt with the range from $55.00 to $58.50 on 1,036 head reported sold. The National Pork Plant Report posted 216 loads selling with carcass values adding $0.58 per cwt. Lean hog index for 4/18 is at $55.97 up 0.92 with a projected two-day index of $56.80, up 0.83.