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Friday, August 31, 2018

Friday Closing Livestock Market Summary - Cattle Futures Closed Lower Before Holiday Break

GENERAL COMMENTS
Moderate trading developed Friday afternoon in parts of the Northern tier of cattle feeding country. Most dressed sales were marked at $170, $2 lower than last week. On a live basis, steers and heifers in Nebraska and Iowa sold at mostly $107, $2 lower than last Friday. On the other hand, the South remains at a standstill. We can only assume that between contracts and formulas, packers in Kansas and Texas have sufficient numbers to get next week's kill started. The National hog base closed off $0.12 compared with the Prior Day settlement ($34 to $38, weighted average $37.57). From Friday to Friday, livestock futures scored the following changes: Aug LC up $0.55; Oct LC up $2.07; Sep FC up $1.98; Oct FC up $2.40; Oct LH off $1.35; Dec LH up $2.18. Corn futures closed 8 to 10 cents higher, supported by late-month short-covering and commercial-buying. The stock market closed on a mixed basis with the Dow down 22 points and the Nasdaq up 21 points.

LIVE CATTLE
Futures closed mostly moderately lower, off 10 to 300. Spot August expired down the limit at high noon, going off the board at $106.80. New spot October will start trade next Tuesday, still trapped in a lateral trading range that has persisted since early April. October has been unable to master overhead resistance near 110 to 111 for months. Beef cutouts: lower to sharply lower (choice, $209.69 off $2.04, select $201.27 off $0.94) on light-to-moderate demand and offerings (32 loads of choice cuts, 27 loads of select cuts, zero loads of trimmings, 24 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:
Steady to $2 lower. Post-holiday activity will be limited on Tuesday to the collection of new showlists. We expect ready numbers to be somewhat larger than late August. Positively, cattle buyers will take up the chore of funding the first full slaughter week of September.

FEEDER CATTLE:
Futures closed sharply lower, off 72 to 147. With the exception of spot September all feeder issues settled with triple-digit losses. Commercial buying is no doubt becoming more cautious given deteriorating margins. Furthermore, the feeder board was probably pressured by Friday's strong rally in the corn market. CME cash feeder index: 08/30: $149.98, off $0.11.

LEAN HOGS:
Futures closed mostly moderately higher, up 30 to 130. Friday's late-week bounce was supported by short-covering and ideas that post-Labor Day fundamentals could temporarily stabilize. Price history is below examples of improving cash prices in the early fall period, especially in years that saw serious price pressure through the month of August. 2018 certainly seems to qualify in that regard. Yet the ability of late third-quarter pork demand to absorb historically large tonnage could be the key. Pork cutout: $67.21 (FOB Plant) up $0.46. CME cash lean 08/29: $45.85, off $0.60 (DTN Projected lean index for 08/30: $45.63, off $0.22.

TUESDAY'S CASH HOG CALL:

Steady. Look for early week bids to be near steady when trade resumes on Tuesday.

Friday Midday Livestock Market Summary - August Live Cattle Futures Tumble

GENERAL COMMENTS: 

Sharp losses swept through August live cattle contracts as traders try to exit the expiring contract month. This has pushed prices $3 per cwt lower midday. Very little long term market direction is seen in all markets with traders adjusting positions ahead of the long weekend. Corn markets are higher in light trade activity. September corn futures are 9 cents higher. Stock markets are mixed in light trade. The Dow Jones is 79 points lower while Nasdaq is up 11 points.

LIVE CATTLE:
The thinly traded, and expiring front-month August live cattle futures have moved $3 per cwt late Friday morning as traders continue to try to exit the contract and move into other nearby contracts. The rest of the live cattle trade is hovering in narrow to moderate losses of 20 to 47 cents per cwt. Even though the sharp loss in August trade will not significantly impact overall trade interest due to the light open interest and sluggish activity, a close below $107 per cwt on the monthly chart will continue to add volatility to the market. Cash cattle trade still remains undeveloped as both sides move into Friday afternoon with the desire to get business done as quickly as possible before the holiday weekend. Bids have firmed slightly through the morning with current bids at $107 live and $168 to $170 dressed in most areas. It is likely that trade will become more active through the afternoon, with the expectation that trade will finish quickly once it starts to develop. Boxed Beef cut-outs at midday are lower, $1.56 lower (select) and down $1.73 per cwt (choice) with light movement of 53 total loads reported (13 loads of choice cuts, 18 loads of select cuts, no loads of trimmings, 22 loads of ground beef).

FEEDER CATTLE:
Light to moderate pressure is seen in feeder cattle futures as traders continue to focus on the inability to draw buyers back into the complex late in the week. October feeder cattle trade remains under pressure, holding $1.15 per cwt as the overall focus is pushing prices below $150 per cwt. A close at these levels at the end of August could create some uncertainty through the entire cattle market despite the expectation that firm demand support is likely to be seen through the upcoming weeks.

LEAN HOGS:
Sharp gains have quickly developed Friday morning across the entire lean hog complex. This is adding to some additional support across the market as triple digit gains are seen in all nearby contracts. Even though prices have slowly backed away from session highs, the desire to move into the complex before month end has helped to push prices above recent market pressure. The lean hog complex continues to remain in a sideways trading range following the wide price shift seen during the month of August. This range could contain prices through the next few months. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is $0.29 lower at $36.40 per cwt with the range from $34.00 to $38.00 on 4,140 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $0.12 lower at $36.66 per cwt with the range from $33.00 to $37.00 on 1,502 head reported sold. The National Pork Plant Report posted 182 loads selling on the morning report. Pork carcass values fallen $0.06 per cwt at $66.69 per cwt. Lean hog index for 8/29 is at $45.85 down 0.60 with a projected two-day index of $45.63, down 0.22.

Friday Morning Livestock Market Summary - Cattle Paper to Open Mixed as Traders Jockey Around Cash Potential

GENERAL COMMENTS:

The cash cattle trade will surface sometime Friday with both sides running out of time before breaking for the long Labor Day weekend. Expect opening bids to be around $107 live and $170 dressed. Asking prices should be restated around $111 to $112 live and $175 plus dressed. Live and feeder futures should open on a mixed basis thanks to residual buying on one hand and long liquidation on the other.
Look for the cash hog trade to open with generally steady bids. Packer margins are decent, but so far, country offerings have been large enough to make greater spending for live inventory unnecessary. Lean contracts are set to open moderately higher, supported by late-week short-covering and firming carcass value.

BULL SIDE BEAR SIDE
1)
Net beef export sales last week totaled 20,600 metric tons (MT), unchanged from the previous week, but up 13% from the prior four-week average. At the same time actual beef exports totaled 17,800 MT, up 5% from the previous week, but unchanged from the prior four-week average.
1)
Beef cutouts closed significantly lower Thursday with box demand described as no better than "light."
2)
African swine fever has infected 185 pigs on a farm in Wuhu city in eastern China's Anhui province, the Ministry of Agriculture and Rural Affairs said on Thursday, in the country's fifth case of the deadly disease in less than a month.
2)
For the week ending Aug. 19, all cattle averaged 819 pounds, 1 pounds more than the prior week and 1 pounds below 2017; steers averaged 886 pounds, 5 pounds heavier than the week before and 2 pounds more than last year. Only heifers were lighter: 810 pounds, 1 pound smaller than the week before but 4 pounds more than last year.
3)
???Net pork export sales last week jumped to 29,100 MT, up 9% from the previous week and 2% from the prior four-week average. At the same time, actual exports totaled 22,100 MT, up 6% from the previous week and 17% from the prior four-week average.
3)
Spot October lean hogs took a big hit on the chin Thursday, closing under $50 for the first time since Aug. 8. Put another way, the nearby action doesn't suggest much confidence that a cash market bottom is near.
4)
The pork carcass value exploded with strength on Thursday, gaining more than $2 thanks to stronger demand from fresh cuts and bellies.
4)
The short week following Labor Day will start out loaded with pork. In order to keep channels clear, further wholesale discounting may be necessary.


OTHER MARKET SENSITIVE NEWS

CATTLE: (Rabobank) -- Japan and South Korea beef imports are on the rise. In 2017, combined imports by Japan and South Korea were up 9%, and at their highest level since 2002. Along with improved economies and lower global beef prices, the availability of beef from Australia and the U.S. is fueling this growth. Australian exports to Japan and South Korea are up 11% for the YTD (June), while the US appears to be focusing more on South Korea, with exports up 41% while up only 6% to Japan. Japan has also granted access for Argentina to export fresh beef into the country for the first time with the first shipment, albeit small, arriving in July. This decision would be a positive indication for Brazil who is also entertaining the prospect of gaining access to Japan.

At the start of 2018, Rabobank referred to growing competition and complexity in global markets, and the opportunities and pressures this could bring to margins along beef supply chains. Part way through the year we have seen corporate results reflecting this mix of challenge and opportunity. Some global beef companies have revised down their earnings expectations, due to a combination of trade disruptions and ample protein supplies, while others have credited beef with contributing to high earnings. On balance, we see more margin pressure looming.

Several outbreaks of African Swine Fever (ASF) were recorded in China in recent months, which raises the possibility of China -- the world's largest consumer of pork -- being caught short. While the extent and timing of any herd liquidation remain uncertain, if ASF takes hold, it is likely that China will increase imports of pork -- and other meats such as beef -- in 2019. An associated lift in global pork prices could also benefit beef supply chains in other regions.

HOGS: (Rabobank) -- The Chinese animal protein market will continue to be a growth story, but growth will be driven by value rather than volume. Meat consumption will change in three dimensions, related to where, what, and how meat is consumed. Meat companies have three avenues to success -- regionalisation, finding new markets, and adding value/providing a service.

The sheer size of China's consumer base and its rising middle class seems to suggest that its animal protein market will continue to be a strong one, with many growth opportunities. In reality, China's animal protein consumption has been volatile over the past two decades, with little evidence of a consistent growth trend. We forecast that, in the coming years, the average animal protein consumption growth will markedly slow down.

Changes in Friday's society are having a remarkable impact on Chinese consumer behaviour. A better understanding of the current trends helps to predict what will happen in the coming years. Three changes are most relevant: demographics, trading up or down, and new retail and foodservice channels.

With all of the changes in the consumer market, we see three dimensions of change that will take place in animal protein consumption: where the products are consumed, what product attributes are preferred, and how these products are eaten.

"While China's population is expected to peak soon, the demographic dividend will continue to drive value growth in the meat market," according to senior animal protein analyst Chenjun Pan. "To capitalise, meat companies need a regionalisation strategy. They will see greater growth opportunities by expanding into 'new tier-one' cities and surrounding areas, where the population is younger." As live hog production will move away from these regions, it will be even more important to allocate resources to value-added businesses in these new, densely-populated cities, in order to stay attuned to the quickly changing consumer needs.

In a massive market like China, a volume-driven strategy is important. However, given the three dimensions of change discussed above, volume-driven companies will run into the threat of their traditional markets shrinking. They need to find new markets through emerging channels that offer more growth. In combination with maintaining market share in the traditional market, animal protein companies need to look into new concepts in retail and foodservice, which increasingly are taking over the preparation of food from consumers.


The changes in China's consumer market provide excellent opportunities for developing a value-driven strategy. Animal protein companies need to identify what new attributes consumers are looking for. In our view, traditional products -- such as frozen meat, hot (just slaughtered) fresh meat, and cooked meat products sold in traditional agriculture markets -- will likely see a decline, while branded chilled meats in small packages, meat-based snack food, freshly cooked convenience food, and meal kits will see strong growth. These products reflect the new consumer values of convenience, food safety, freshness, variety, and service. Frozen convenience food and Chinese-style/western-style meat products may need to broaden their marketing focus, away from tier-one and tier-two cities to lower-tier cities and rural areas.

Thursday, August 30, 2018

Thursday Morning Livestock Market Summary - Livestock Paper Staged to Open With Mixed Prices

GENERAL COMMENTS:

Our guess is that cattle traders will try to stir the pot hard enough Thursday to get sufficient business completed and then break for a long holiday weekend. Maybe not. Look for packer bids to open around $106 on a live basis and $170 dressed. On the other hand, asking prices are around $111 to $112 live and $175 plus dressed. Live and feeder futures are expected to open on a mixed basis as specs and commercials bide time waiting for cash news to develop.
Look for the cash hog trade to open with near steady bids. If the Saturday kill comes close to 124,000 head, the weekly total slaughter should be around 2.4 million head. Lean futures should start out with uneven price action as traders wrestle to get a better hold on late-month fundamentals.

BULL SIDE BEAR SIDE
1)
Though lightly tested days before expiration, spot August live cattle surged back over $109 Wednesday, certainly a positive sign of confidence in late-week cash strength.
1)
The live cattle futures market continues to gyrate within the relatively wide trading band that has been in place over the last few months. There is overhead technical resistance in the October contract in the $110 area, and then at $111. The late July high was $112.25. Overhead resistance in the December contract exists in the $114 to $115 area, with the recent high in late July being $115.87.
2)
Cattle markets essentially ignored Wednesday's USDA announcement that a Florida cow was found with atypical BSE. This is a good sign of general market confidence rather than a group of nervous traders looking for any excuse to panic.
2)
Australian export opportunities to China have seen exceptional growth, up 43% throughout the first half of the year. Global competition for market share continues to increase, and the latest round of drought, while detrimental to Australia's cattle industry, will further pressure the trade woes of the United States as well.
3)
???China's agriculture ministry said on Wednesday it cannot rule out the possibility of new African swine fever outbreaks. The ministry said in a statement on its website that it was not clear how widely the disease had spread, and there was much uncertainty on how the situation would develop.
3)
For the week ending Aug. 25, U.S. hatcheries set 226 million eggs in incubators, up slightly from a year ago. At the same time, chicks placed totaled 187 million, up 1% from 3017.
4)
There is evidence that pork producers are fighting hard to stay current through aggressive marketing. For the week ending Aug. 25, Iowa barrows and gilts averaged 277.6 pounds, only .2 pounds heavier than the prior week and .3 pounds lighter than 2017. Furthermore, producers have done a decent job with weight given the cooler temperatures of late.
4)
Concerns regarding prospects of increasing hog supplies in the coming months and whether the additional product will be able to clear both domestic and export channels continues to overshadow the market.


OTHER MARKET SENSITIVE NEWS

CATTLE: (USA AgNet) -- All cattle and calves in the United States and Canada combined totaled 116 million head on July 1, 2018, up 1 percent from the 115 million head on July 1, 2017. All cows and heifers that have calved, at 46.6 million head, were up 1 percent from a year ago.
For just the U.S., the total was 103 million head, 1 percent above the 102 million head on July 1, 2017. All cows and heifers that have calved, at 41.9 million head, were up 1 percent from a year ago.
All cattle and calves in Canada was 12.4 million head, down 1 percent from the 12.5 million head on July 1, 2017. All cows and heifers that have calved, at 4.70 million head, were down 1 percent from a year ago.

HOGS: (Farm Journal) -- Details of the $12 billion trade mitigation package were announced by USDA Monday, offering $8 per head of 50% of a producer's inventory as of Aug. 1. View the full details, including payment limits, here.

Dustin Backer, deputy director, economics & domestic production issues for the National Pork Producers Council says the amount is helpful, but long-term, the solution is ending trade disputes.

While some grain farmers questioned USDA's relief pricing, Baker says the $8 figure for pig farmers was determined by several USDA economic models. Furthermore, about 6% of the overall expenditures in the market building programs under tariff relief will go to the pork industry.

"More than 40% of our pork exports are facing retaliatory tariffs Thursday. The export markets are incredibly important to the bottom line of all producers in the U.S.," Baker says. "In 2017, we exported over a quarter of production and that added about $53 to every head that was marketed in the U.S. So, the export markets are critically important to our industry and to the future of our industry."

"USDA announced their trade mitigation programs Wednesday—it's really a three-pronged approach to help alleviate the pain that America's farmers are facing and in the face of retaliatory terrorists," Baker says.

1.Direct payment to producers based on actual production: $8 per hog based on 50% of the number of animals owned as of Aug. 1, 2018.
2.USDA will purchase $559 million of pork products for federal nutrition assistance and child nutrition programs.
3.USDA will spend $200 million for developing foreign markets for the agricultural trade promotion program.

To show eligibility, producers will have to show they have ownership interest in hog production and they had an adjusted gross income average over the past three years of less than $900,000. This means large contract pig owners (Smithfield, Tyson, etc) would likely not be eligible for the program. There is a payment cap of $125,000 per person or entity.

"By no means does this payment make our producers whole, but it does certainly provide some short-term relief in the face of the retaliatory tariffs," Baker says. "Perhaps just as importantly, as part of the food purchase and Distribution Program, USDA is committed to purchasing $559 million worth of pork products to put into food assistance programs, which is about 45% of their total expenditures for that overall program. So that's definitely some positive news for us."

That purchase should help keep cold storage numbers low moving into the seasonal uptick.
Producers can work with their local Farm Service Agency beginning Sept. 4, to sign up for these programs. Grain payments and associated limits are separate from livestock payments. Visit www.farmers.gov/MSP for more details.

Looking ahead at the U.S.-Mexican trade agreement, Baker says it's still too early in the process to know how that will affect the current tariff situation with that country.

"When we look at the Mexican market, they take an incredible amount of our hams and shoulders [cuts} that we produce," Baker says. Mexico is our No. 1 market for U.S. pork by volume, and a 20% tariff is significant pressure for producers.


"Our No. 1 priority at NPPC for America's pork producers, is to continue to push for a quick and swift resolution to the trade disputes in order to continue to be able to export our product across the world," he adds.

Wednesday, August 29, 2018

Wednesday Closing Livestock Market Summary - Meat Futures Settled on a Mixed Basis

GENERAL COMMENTS
The cash feedlot trade essentially remained a nonevent Wednesday. We saw a few more bids tossed in the ring (i.e., $106 live; $168 to $170 dressed), but very little attractive enough to spark meaningful business. Asking prices were around $111 to $112 live and $175 dressed. According to the closing report, the national hog base is $.23 lower compared with the Prior Day settlement ($33.00 to $37.00, weighted average $36.82). The corn market settled fractionally higher, modestly supported by light short covering and strength in the wheat trade. The stock market closed higher with the Dow up by 61 points and the Nasdaq positive by 79 points.
LIVE CATTLE
As expiration nears, spot August attracted enough buyers to push the settlement back over 109 (i.e., up 137 points). This seems to be an impressive sign regard solid late week cash expectations. The rest of complex settled narrowly mixed, up 27 to off 47. News of a Florida cow found with atypical BSE (and successfully kept out of the food channel) did not have any impact on either cash or CME trading. Beef cut-outs: mixed, up $.28 (choice: $212.68) to off $.73 (choice: $203.55) with light to moderate demand and offerings (73 loads of choice cuts, 22 loads of select cuts, zero loads of trimmings, 21 loads of ground beef).
THURSDAY'S CASH CATTLE CALL:
Steady. If traders are planning on a long weekend, they will need to agree on price levels sometime Thursday in order to generate at least moderate volume.
FEEDER CATTLE:
Lackluster action was seen through the session with neither side showing great deal of determination. The late summer trading range remains relatively narrow and quite predictable. When everything was said and done, feeder futures settled 2 to 97 points lower with 2019 issues losing ground on 2018 contracts. CME feeder index 08/28: $150.23, off $.37.
LEAN HOGS:
Trading in lean hog futures was about as directionless as you can get. Indeed, the limited and inconsistent prices movement may have been even more boring than the business seen throughout the cattle complex. Price changes at the final settlement were narrowly mixed, up 37 to off 50. The carcass value closed modestly lower with defensive demand for fresh cuts overshadowing belly and rib strength. Pork cut-out: $64.68, off $.22. Cash lean index: 08/27: $47.09, off $.70 (DTN Projected lean index for 08/28: $46.45, off $.64).
THURSDAY'S CASH HOG CALL:
Steady. Look for hog buyers to resume procurement activity on Thursday with steady bids.

Wednesday Midday Livestock Market Update - Cattle Futures Erode Wednesday

GENERAL COMMENTS: 
Light to moderate pressure has redeveloped in cattle trade, allowing most contracts to shift lower through morning activity. Hog futures are mixed following firm buyer interest moving back into the market. Corn markets are higher in light trade activity. September corn futures are 3/4 cent higher. Stock markets are higher in light trade. The Dow Jones is 87 points higher while Nasdaq is up 70 points.
LIVE CATTLE:
Sluggish trade remains in live cattle futures with front month August holding a narrow 20 cent gain. The rest of the complex is holding light to moderate losses ranging from 50 to 80 cents per cwt. There is growing pressure as deferred feeder cattle trade is holding losses of $1 per cwt. This is likely to leave markets under light to moderate pressure through the rest of the session. Cash cattle bids have started to develop through the morning Wednesday with live bids of $106 evident in several areas. Dressed bids are seen at $168 to $170 per cwt through the North. This is in line with the limited trade seen in Iowa Tuesday, and could help to firm the tone later in the week. Asking prices are seen at $111 to $112 live and $175 and higher dressed. The Fed Cattle Exchange Auction today listed a total of 751 head (328 head for Kansas, and 423 head for Nebraska), no cattle actually sold, and no cattle were listed as PO (Passed Offer). Asking prices ranged from 108.00-108.50. All cattle listed were set for a 1-9 day delivery. Boxed Beef cut-outs at midday are mixed, $0.65 lower (select) and up $0.56 per cwt (choice) with light movement of 63 total loads reported (37 loads of choice cuts, 13 loads of select cuts, zero loads of trimmings, 12 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have posted moderate to strong losses following the pressure seen Tuesday. The announcement that a 6-year-old beef cow in Florida has tested positive with atypical BSE has created some uncertainty in the market, although this is not expected to have any significant market impact. The bounce higher in grain markets is also putting additional pressure in nearby and deferred feeder cattle trade.
LEAN HOGS:
Early support has quickly eroded through the morning with prices at midday holding 30 cents lower to 65 cents higher. The overall pressure that has developed through cattle trade and overall lack of commercial interest being rekindled midweek is helping to bring additional uncertainty back to the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is $0.13 lower at $36.92 per cwt with the range from $33.00 to $37.00 on 5,619 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $0.04 lower at $36.81 per cwt with the range from $33.00 to $37.00 on 2,159 head reported sold. The National Pork Plant Report posted 241 loads selling on the morning report. Pork carcass values fell $0.52 per cwt at $64.38 per cwt. Lean hog index for 8/27 is at $47.09 down 0.70 with a projected two-day index of $46.45, down 0.64.

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

GENERAL COMMENTS:
Cattle buyers and feedlot managers should start to give the cash market better definition. Opening bids should start out around $105 to $107 on a live basis with asking prices around $111. Live and feeder futures seem set to open on a mixed basis as traders cautiously anticipate the development of cash business.
Look for hog buyers to resume business at midweek with generally steady bids. Fundamentals seem to be stabilizing, at least for the moment. Processing remains very attractive, and yet weekly chain speed will be naturally slowed to some extent. Saturday kill plans are anticipated to total close to 108,000 head. Lean futures should also open on a mixed basis thanks to bear-spreading and profit-taking.
BULL SIDEBEAR SIDE
1)
Beef salesmen keep enjoying impressive longer-term demand for boxed product. Last week's comprehensive boxed beef report indicated that 1,560 loads were sold with delivery specs of 22 days or more (the largest weekly total since late June).
1)
Besides the existence of showlists, some larger than last week, cattle buyers are carrying smaller shopping lists given the reduced slaughter schedule waiting after Labor Day.
2)
Combined beef export sales outstanding and shipments have been aggressive enough that total commitments as of the thirty-third week of the year have exceeded the cumulative 2017 export total by 6.5%.
2)
Interest in beef end cuts is expected to emerge between the Labor Day holiday and emerging support on the middle meats, but price advances are expected to be modest at best, limited by larger competing meat supplies.
3)
???This was the last week for the majority of pork product pulls for the holiday preparations and a few items are now finding interest at these low levels. The interest comes as export markets are finding 20% to 30% discounts on many items and are willing to help clear some product at these levels.
3)
Excitement over the new trade agreement between Mexico and the U.S. didn't have much of a shelf-life in the lean hog futures market. Many hog contracts quickly reversed on Tuesday. Weakening cash hog prices and faltering wholesale pork product values continue to overshadow the market.
4)
Seaboard Triumph Foods has targeted mid-October as the full startup of a second shift at the Sioux City pork plant. Barring further delays, this addition in slaughter and processing (a full second shiftshould add another 10,000 to the plant's total capacity) will help manage the large production wave of 2018.
4)
Pork buyers are staying short bought, which requires the current fresh product to find immediate homes. Hogs were able to pull some weight off last week, but the cooler temperatures are already starting to set in at night, bringing the heat stress worries to a close. Hogs are expected to gain weight, week-over-week throughout September.
OTHER MARKET SENSITIVE NEWS
CATTLE: (Courthouse News) -- A company that sells plant-based meat products and a nonprofit that advocates for those culinary alternatives challenged a Missouri law Monday that restricts organizations like theirs from using the term "meat" to describe their products.
The lawsuit filed in federal court in Missouri on Monday by The Tofurky Company and the Good Food Institute alleges that a state statute violates their rights to due process and commercial free speech.
The 22-page complaint states that the statute "criminalizes truthful speech by prohibiting 'misrepresenting' a product as 'meat' if that product is 'not derived from harvested production livestock or poultry.'"
The penalty for violating the statute, which goes into effect Tuesday, is incarceration of up to one year as well as a fine of up to $1,000.
The language of the law was originally proposed by the Missouri Cattlemen's Association and presented to state Sen. Sandy Crawford for introduction. The intention is to prohibit plant-based meat and clean meat companies from marketing their products as "meat" analogues or using the term "meat" in the advertising, labeling or packaging of their products.
After being championed by three lawmakers whom the complaint claims have strong ties to the animal agriculture industry, the language of the statute was eventually folded into an omnibus agriculture bill sponsored by state Sen. Brian Munzlinger, a member of the Missouri Cattlemen's Association.
The plaintiffs said they feel that the legislation is aimed at commercially harming the plant-based meat and clean meat industries and seeks to restrict their speech in order to protect the conventional meat industry from competition.
"Americans don't like censorship, and they don't like the government picking winners and losers in the marketplace," said Bruce Friedrich, executive director of the Good Food Institute, in an emailed statement. "We're confident that the court will overturn this anti-competitive and unconstitutional law."
Plant-based meats like the types Tofurky produces and advocates approximate the texture, flavor and appearance of conventional meats from slaughtered animals. These meat alternatives are typically made from soy, tempeh, wheat, jackfruit, textured vegetable protein or other vegan ingredients. One can find many of them in almost any grocery store, as well as in restaurants and other retailers.
In a news release Monday, Animal Legal Defense Fund Executive Director Stephen Wells stated that "As more and more consumers are making the conscious choice to remove animals from their plates, Missouri is putting its thumb on the scale to unfairly benefit the meat industry and silence alternative producers."
In the complaint, the plaintiffs argue that consumers are not going to be bamboozled by their products' packaging and will not mistake them for conventional meat.
"The marketing and packaging of plant-based products reveals that plant-based food producers do not mislead consumers but instead distinguish their products from conventional meat products while also describing how these plant-based meat products can fulfill the same roles conventional meat has traditionally played in consumers' meals," the complaint states.
The plaintiffs point out that there are already state and federal regulations prohibiting misrepresentations in the marketing of food products. One such example is a Missouri law that prohibits "false or misleading statement[s]" in the promotion of goods for sale.
A law prohibiting such common-sense terminology, the plaintiffs said, will severely disadvantage their products in the marketplace. The complaint affirms that the plaintiffs "cannot accurately and effectively describe their products without comparison to the conventional meat products they are designed to replace."
The lawsuit names Mark Richardson, the Cole County prosecuting attorney as a defendant. Representatives from the Cole County prosecutor's office could not be reached Monday evening after business hours for comment.
HOGS:(Pig Progress) -- African Swine Fever (ASF) has been confirmed on Romania's largest pig breeding farm where 140,000 animals are being culled.
The virus was confirmed on the farm, which consists of 3 adjacent properties in the southern county of Braila, after water samples were sent to the authorities.
Romania's national veterinary authority ANSVSA's office in the affected region confirmed the outbreak on the farm owned by the Romanian company Tebu Consult.
Gicu Dragan, from the Bucharest Diagnostic and Animal Health Institute, said: "The Bucharest Diagnostic and Animal Health Institute confirmed the existence of the ASF Fever virus at Tebu Consult, the 2nd largest farm in Europe."
He continued to say, "I sent the samples to the national reference laboratory on Friday morning and the results confirmed the existence of the virus, and on Monday we will go to the euthanasia of the pigs on this farm."
Mr Dragan said the farms had been using water sourced from the nearby River Danube in the pig houses. The official added that reports suggest some smallholders had been dumping dead pigs into the Danube which may have caused the ASF to be spread by river water.
He added: "We've been focusing on mainland and the virus might have emerged from the waters."
Around 100,000 pigs have, so far, been culled in Romania with hundreds of cases confirmed in backyards, smallholdings and several larger farms in the south of Romania.

Tuesday, August 28, 2018

Tuesday Closing Livestock Market Summary - Livestock Futures Stage Partial Retreat From Monday's Rally

GENERAL COMMENTS
Feedlot country was generally quiet through the day with a few showlists in the South priced at $111. According to the closing report, the national hog base is .14 lower compared with the prior day settlement ($34.00 to $37.65, weighted average $37.03). For the most part, corn futures closed a nickel lower, checked by impressive late-summer ratings and signs of early harvest progress. The stock market closed higher with the Dow up 14 points and the Nasdaq better by 12.
LIVE CATTLE
Those hoping for bullish follow-through Tuesday were disappointed as live contracts quickly pulled in horns and settled 40 to 105 lower. Actually, disappointment was more severe around midsession when most contracts sagged hard with triple-digit losses. Yet a late round of short-covering minimized the damage, allowing spot August through February to settle nearly 100 points above session lows. Beef cut-outs: lower, off .44 (select: $204.41) to $1.10 (choice: $212.53) with light to moderate demand and offerings (56 loads of choice cuts, 20 loads of select cuts, 13 loads of trimmings, 122 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL:
Steady. Bids and asking prices through feedlot country should take on greater definition at midweek, but significant trade volume could be delayed until Thursday.
FEEDER CATTLE:
Like their live counterparts, feeder futures also failed to build on Monday's surprisingly sharp rally. But they also managed to curb the selling late in the session (perhaps helped in that regard by the struggling tone in the corn market). When the smoke cleared, feeder prices finished 65 to 115 points in the red. CME feeder index 08/27: 150.60, off .04.
LEAN HOGS:
While traders seemed to be doing somersaults following Monday's announcement of the new trade agreement between the U.S. and Mexico, the bullish celebration in that regard didn't seem to last for long. Monday's board rally was largely unwoven with most contracts closing 40 to 277 lower. The carcass value closed modestly lower as belly and rib weakness overshadowed strength in fresh cuts. Pork cut-out: $64.90, off .09. Cash lean index: 08/24: 47.79, off 1.14 (DTN Projected lean index for 08/27: 47.09, off .70).
WEDNESDAY'S CASH HOG CALL:
Steady. Expect hog buyers to resume work in the morning with basically steady bids.

Tuesday Midday Livestock Market Summary - Losses Sweep Through Livestock Complex

GENERAL COMMENTS: 
Strong losses have swept through livestock trade with triple-digit losses seen in most contracts. This is adding to the overall market uncertainty through the entire complex as traders are unable to maintain early week gains. Corn markets are lower in light trade activity. September corn futures are 2 1/2 cent lower. Stock markets are higher in light trade. The Dow Jones is 25 points higher while Nasdaq is up 4 points.
LIVE CATTLE:
Growing weakness is seen through the entire live cattle complex with traders hovering at $1 per cwt losses across the entire complex. The narrow trading range seen across the market is causing some traders to remain on the sidelines and morning losses seem to be generally contained by the recent market pressure. October live cattle futures are trading $1.10 per cwt lower as very limited movement has been seen due to the volatility Monday and generally no additional directional shifts seen across the entire complex. Prices continue to remain deeply entrenched in the wide sideways market trend that has captured the cattle complex through most of the summer. Cash cattle interest is still undeveloped with bids and asking prices still hard to pin down. It is likely that there will be more interest shown midweek, but this still not likely to spark aggressive interest at this point. The wide shifts in futures trade over the last couple of days, is causing most in cash markets to wait until a sense of direction or stability is seen. This could be late in the week before trade develops. Boxed Beef cut-outs at midday are higher, $1.27 higher (select) and up $0.31 per cwt (choice) with light movement of 50 total loads reported (27 loads of choice cuts, 10 loads of select cuts, 8 loads of trimmings, 5 loads of ground beef).
FEEDER CATTLE:
Triple-digit losses are holding in all contracts except front-month August futures, which are focusing on market expiration and trading 85 cents per cwt lower in limited trade. September contracts are holding at $1.92 per cwt losses while all other nearby contracts are holding losses above $2 per cwt. This is adding even more uncertainty to the entire complex as traders look for increased overall market moves to be seen across the complex and may limit additional support through the rest of the week.
LEAN HOGS:
Strong market pressure is quickly developing in all livestock markets Tuesday morning. The significant pullback from limit gains seen Monday is causing some traders to rethink the overall market support that some had hoped would continue through the rest of the week. October futures are holding $1.80 per cwt losses at midday. Although these prices have backed away from early-morning losses, the weaker tone in the complex could quickly change the direction of the market through the rest of the week. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.06 higher at $37.23 per cwt with the range from $34.00 to $37.65 on 4,420 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $0.10 lower at $36.78 per cwt with the range from $34.00 to $37.00 on 2,120 head reported sold. The National Pork Plant Report posted 113 loads selling on the morning report. Pork carcass values gained $3.40 per cwt at $67.57 per cwt. Lean hog index for 8/23 is at $48.93 down 0.57 with a projected two-day index of $47.79, down 1.14.

Tuesday Morning Livestock Market Summary - Meat Futures Staged to Open Moderately Higher

GENERAL COMMENTS:
Cattle trading potential will remain in slow gear Tuesday with bids and asking prices poorly defined. Cash parameters should start to take meaningful shape by midweek. We assume both sides would like to wrap up marketing chores by Thursday in order to enjoy as long a weekend holiday as possible. Live and feeder futures should open moderately higher, girded by follow-through buying and pre-holiday short-covering.
Look for cash hog sales to be basically steady Tuesday. Packers could hold country bids near unchanged if necessary. The weekly slaughter total will probably be some smaller (i.e., say 2.44 million head) thanks to late week, pre-holiday slowing in chain speed. Lean futures are likely to open moderately higher tied to spillover buying and firming carcass value.
BULL SIDEBEAR SIDE
1)
Beef cutouts closed solidly higher on Monday with early-week demand described as "moderate to fairly good."
1)
Though new showlists vary from state to state, the overall offering of fed cattle looks somewhat larger than last week.
2)
The preliminary trade agreement between Mexico and the U.S. is very promising in terms of the strong growth of U.S. pork exports to Mexico, possibly by November.
2)
Open interest in spot August live cattle declined to 2,500 contracts on Friday while October had a minor gain to 123,900. This is down 8,000 from highs two weeks ago and down 28,000 from last year.
3)
???The pork carcass value jumped nearly a buck higher Monday thanks to improving demand for loins, ribs and bellies.
3)
Meat demand prior to a major holiday like Labor Day is slow and sluggish since retailers and food managers have their boats loaded,and significant appetites are on hold until early September.
4)
A major outbreak of African swine fever in China will have "a significant impact on China's food security and trade," the USDA says. It adds the second and third outbreaks of the disease are in provinces that represent 14% of China's pork production and are bordered by four provinces that account for nearly 20% more.
4)
Despite Monday's triple-digit jump forward, short-term and long-term trends in lean hog futures remain solidly bearish. Implied market volatility increased dramatically into the 61% to 62% area in the latest reporting week, well below the year prior and is at levels not experienced since late 2016.
OTHER MARKET SENSITIVE NEWS
CATTLE: (CNBC) -- The Mexico-U.S. discussions have focused on crafting new rules for the automotive industry, which U.S. President Donald Trump has put at the heart of his drive to rework the 24-year-old pact he says has been a "disaster" for American workers.
Canada has sat out the most recent phase of the year-long discussions, and once it rejoined the talks, the three sides would need to work for at least another week, Guajardo said.
Leaving the offices of U.S. Trade Representative (USTR) Robert Lighthizer late on Sunday, Mexican Foreign Minister Luis Videgaray said Canada would return once bilateral issues were resolved. "But we haven've finished this stage yet," he said.
The two sides have been gradually nearing agreement on autos, and one source close to the negotiations said at the weekend there was now "little" separating the two.
Industry sources say they are close to agreeing on raising the regional automotive content threshold for tariff-free access under NAFTA to around 75 percent from 62.5 percent.
Still, the Trump administration has been seeking to impose a cap on Mexican car and SUV exports to the United States that could be sent duty-free or at a 2.5 percent tariff, complicating the auto talks, three people with knowledge of the matter said.
Two automakers say the United States want Mexican exports of cars and SUVs to be capped at about 2 million units, up from some 1.77 million exported in 2017, excluding pickup trucks.
Including pickups, Mexico exported more than 2.3 million vehicles to the United States last year.
Mexico's economy ministry declined to comment. A USTR representative did not respond to a request for comment.
Trump said on Saturday that Washington could reach agreement with Mexico "soon" as the chief trade negotiator of Mexico's incoming president signaled possible solutions to energy rules and a contentious U.S. "sunset clause" demand.
Since Mexico's July 1 presidential election, the bilateral talks have been complicated by divisions between the incoming and outgoing Mexican administrations over energy policy.
Jesus Seade, the incoming Mexican government's chief NAFTA negotiator, said the issue had been "ironed out" at the NAFTA talks, without going into detail. He said this week it was not a "substantive" matter and that Lopez Obrador's team had wanted to check the terms were consistent with the Mexican constitution.
If three-way talks run into September, final approval of the deal in Mexico will likely pass to Lopez Obrador, because under fast track authority, the U.S. Congress needs 90 days' notice to vote on a new NAFTA once the renegotiation is finished.
Lopez Obrador is due to take office on Dec. 1.
HOGS: (South China Morning Post) -- Analyst says reporting of outbreaks shows major gains from similar crisis more than a decade ago
Agricultural officers across China have been ordered to control the spread of African swine fever in the world's biggest pig-farming country amid fears that it could deal a heavy blow to the industry.
The Ministry of Agriculture and Rural Affairs has mobilised inspectors from Heilongjiang in the north to Guangdong in the south.
The virus, which does not affect humans but is lethal to pigs, has been detected in four provinces in China in the last month.
But one industry analyst said the detailed reporting of the spread signalled a marked improvement in disease control from an outbreak of another swine virus about a decade ago.
China confirmed the presence of African swine fever on August 3 after a number of pigs died in Shenyang, Liaoning province. It was the first time the virus, which had infected herds in Germany and Russia, had been found in China.
Three more cases of the virus were confirmed this month, with a report on Wednesday of 340 pigs killed and 430 others infected in Yueqing, Zhejiang province. Four days earlier, 88 pigs were reported killed and 615 infected with the virus in Lianyungang in neighbouring Jiangsu province.
In another case, a slaughterhouse controlled by Shuanghui Development, a subsidiary of the world's largest pork meat processor WH Group, suspended operations after the virus was detected in dead pigs from Jiamusi in Heilongjiang province.
China has sought to prevent the disease spreading by culling more than 25,000 pigs in the outbreak areas. While the culled number is minuscule compared with China's overall herd of 380 million pigs, there is unease that the virus could affect supplies of one of the country's staple foods.
The central government has also yet to publicly identify where the virus came from.
However, an analyst said the impact of the virus could be manageable thanks to better disease controls.
Feng Yonghui, chief analyst at online pig industry website Soozhu, said the relatively swift and detailed reporting of the outbreaks was not a sign for panic but cause for comfort, showing that farmers and disease control officials were on the same page.
"Pig farmers have no incentives to hide [an outbreak] because they know they can receive an 800 yuan (US$117.50) subsidy for every pig infected with the virus ... Local government officials know there's no benefits for them to cover up," Feng said. "It seems a mission impossible to check the physical condition of 400 million pigs, but it's actually feasible once everyone, especially the pig owners, are motivated to do so."
He said the situation was different from the outbreak of blue-ear disease in 2006, when there were few subsidies for affected pigs, breeders tried to under-report disease and local officials were unprepared to contain the virus.
When African swine fever was spotted in Liaoning in early August, the provincial authority started carrying out checks of all pigs in the province. By August 15, the province's animal health authority said it had inspected 355,400 pigs, taking 10,791 suspect samples for additional assessment. In all, 22 samples, all from Shenyang, tested positive for the virus, the authorities said.
In cities and provinces where no African swine fever was reported, animal health authorities are also on high alert. Guangdong held a three-day meeting and training course for 120 local officials, telling them how to prevent the virus.
At the same time, pork prices across the country have stayed relatively stable.
According to Zhujiage.com, a website tracking daily hog prices, the average hog price in China on Sunday was 13.76 yuan per kilogram, a rise of 0.02 yuan per kilogram from Saturday. On August 3 when the virus was firstly confirmed, the price was 12.85 yuan per kilogram.
A number of Chinese listed companies involved in pig farming, including Chuying Agro-Pastoral Group, Ningbo Tech-bank Food, Muyuan Foods, Guangdong Wens Foodstuff Group and Jiangxi Zhenbang Technology, have issued corporate filings in the last two weeks, saying their pig farms were not affected by the swine fever.
On Friday, state radio quoted Zhu Zengyong, a researcher with the Chinese Academy of Agricultural Sciences, a think tank affiliated with the agriculture ministry, as saying the fever would have only a limited impact on China's overall pork supply and demand.
The virus is inactive in processed meat when its heated to at least 70 degrees Celsius for 30 minutes.

Monday, August 27, 2018

Monday Closing Livestock Market Summary - Meat Futures Launch Last Week of August With Bullish Surge

GENERAL COMMENTS
The cash cattle trade was typically restricted to the distribution of new showlists. Ready numbers appear to be larger in the South (especially Texas), smaller in Nebraska and about steady in Colorado. Overall, the pre-holiday offering appears to be somewhat larger than the previous week. According to the closing report, the national hog base is $0.18 higher compared with the Prior Day settlement ($33-$37.65, weighted average $37.22). Despite the announcement of a preliminary trade deal between Mexico and the U.S., corn futures only managed to close modestly higher. Apparently, bears focused more on the growing likelihood of a bumper corn harvest. The stock market closed significantly higher with the Dow up 259 points and the Nasdaq settled 71 higher.
LIVE CATTLE
Originally pressured by the negative on-feed report and follow-through selling, live contracts opened some lower. But such logic didn't last long. The live board soon turned higher on news that a new trade agreement with Mexico would soon be released. Buying enthusiasm per se was further fed by spillover enthusiasm from lean hog futures. And once the recovery ball got rolling, the technical trigger began to fire. The December contract managed to swing from below its 100-day moving average (i.e., Friday's close) to settle above its 40-day moving average. When the smoke cleared, live issues had closed 95 to 260 higher. Beef cut-outs: higher, up $0.31 (choice: $213.63) to $1.03 (select: $204.85) with moderate-to-good demand and light-to-moderate offerings (43 loads of choice cuts, 22 loads of select cuts, 31 loads of trimmings, 18 loads of ground beef).
TUESDAY'S CASH CATTLE CALL:
Steady. Activity on Tuesday should be typically quiet with bids and asking prices poorly defined. That said, preliminary discussion could start somewhat earlier this week if you assume that cash players would like to have biz wrapped up by Thursday in order to enjoy a long Labor Day weekend.
FEEDER CATTLE:
Feeder futures followed the same early-weakness-late-strength seen in the live trade. Issues ultimately settled 102 to 360 higher. On an estimated run of 5,400 head (up from 4,144 last week and 4,911 in 2017), Oklahoma City sold 600- to 800-pound feeder steers unevenly steady, but steers scaling over 800 pounds were marked $2-$4 lower. Feeder heifers sold $1-$3 lower. CME feeder index 08/24: $150.64, off $0.19.
LEAN HOGS:
Lean futures raced sharply higher Monday, settling 67 to 300 points in the green. Mexico represents a huge export market for U.S. producers, so it was hardly a surprise when bullish traders embraced the new replacement for NAFTA, at least a new trading vehicle between Mexico and the U.S. built to enhance red meat demand (no one seems to know at this point where Canada will land). The carcass value closed solidly higher, supported by better demand for loins, ribs and bellies. Pork cut-out: $64.99, up $0.81. Cash lean index: 08/23: $48.93, off $0.57 (DTN Projected lean index for 08/24: $47.79, off $1.14).
TUESDAY'S CASH HOG CALL:
Steady. Look for the cash trade in the morning to open with generally steady bids.

Monday Midday Livestock Market Summary - Limit Gains Develop in Hog Futures

GENERAL COMMENTS: 
Renewed buyer support quickly moved into livestock futures early Monday morning. Traders have posted triple-digit gains in all nearby contracts, with December lean hog futures locked in limit gains. The overall support in the complex continues to add volatility into the market with the potential of follow-through buying activity through the rest of the week. Corn markets are lower in light trade activity. September corn futures are 1 1/2 cents lower. Stock markets are higher in light trade. The Dow Jones is 225 points higher while Nasdaq is up 74 points.
LIVE CATTLE:
Triple-digit gains have quickly moved into the live cattle complex Monday morning despite the sluggish mixed trade seen early in the session. August lie cattle futures are holding a $1 per cwt gain, while other nearby contracts are posting gains near $2 per cwt midday. The strong support above $3 per cwt in feeder cattle futures as well as spill over support from lean hog trade is helping to rekindle the buyer support, which quickly eroded last week. The potential to bring additional volume to the market remains uncertain as trade interest is expected to fade as the week continues to end of the week positioning and the upcoming holiday break. Cash cattle markets are quiet with bids and asking prices undeveloped. It is likely that active bids and asking prices will not be seen until Tuesday or Wednesday, with trade likely to be pushed to the second half of the week. The upcoming holiday weekend will cause both sides to attempt business before late Friday, but given the support in futures trade, feedlot managers are expected to start moderately bullish. Boxed Beef cut-outs at midday are higher, $2.33 higher (select) and up $1.60 per cwt (choice) with light movement of 46 total loads reported (17 loads of choice cuts, 10 loads of select cuts, 10 loads of trimmings, 8 loads of ground beef).
FEEDER CATTLE:
Despite larger than expected feeder cattle placements through the month of July, buyers have shaken off early morning uncertainty and pushed prices sharply higher. September and October contracts have posted gains between $3 and $3.50 per cwt as aggressive underlying support is moving into what traders expect is an oversold market. Concerns of strong placement numbers developed well before the report, as traders tried to adjust prices to the potential that increased placements would be seen. An early-week correction is not out of line, but could add some volatility to the market through the rest of the week. Although traders are focusing on the ability to adjust positions at the end of the month and before the holiday weekend. Trade volume is expected to remain sluggish as the week continues.
LEAN HOGS:
Limit gains have quickly redeveloped at midday in December lean hog futures. The move higher in all livestock trade and underlying support in the lean hog complex following the aggressive run off of contract lows during the last two weeks has sparked underlying buyer activity to move to the market. Nearby contracts are trading $2 to $3 per cwt higher, while firm, but less aggressive gains are seen in the lightly traded deferred contracts. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.24 higher at $37.28 per cwt with the range from $34.00 to $37.65 on 4,668 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $0.45 lower at $36.43 per cwt with the range from $34.00 to $36.50 on 1,380 head reported sold. The National Pork Plant Report posted 113 loads selling on the morning report. Pork carcass values gained $3.40 per cwt at $67.57 per cwt. Lean hog index for 8/23 is at $48.93 down 0.57 with a projected two-day index of $47.79, down 1.14.