The cash hog trade continues to bleed lower,
steadily drained by a combination of record pork production and
insufficient product demand. Assuming Saturday's kill comes close to
250,000 head, the weekly total should easily exceed 2.6 million. Lean
futures seem geared to open moderately lower, checked by residual
selling and disappointing fundamentals.
Cattle traders have reached another Friday with
little business on the books. That lack of business will have to change
sometime between late morning and midafternoon. Look for some kind of
compromise between bids of $180 in the North and $112 in the South, and
asking prices of $182 to $185 in the North and $118 in the South, to
ultimately trigger light to moderate trade volume. Live and feeder
futures should open with uneven price action as traders jockey ahead of
cash news.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Beef production is reduced from the previous month on a slower expected marketing pace for fed cattle in the fourth quarter.
|
1) |
The wholesale beef market continues
to struggle, losing another round of triple-digits on Thursday. Box
supplies were described as "moderate to heavy."
|
| 2) |
The pork production forecast is reduced on lower-than-expected fourth-quarter hog slaughter and lighter carcass weights.
|
2) |
December live cattle futures is
about $1 below the 40-day moving average, with overhead resistance in
the $117.50 to $118 area, and then again near $119. The contract high at
the beginning of October was at $119.75. February will run into
overhead technical resistance near $122, where the 40-day moving average
is currently situated.
|
| 3) |
For 2019, the total red meat and
poultry forecast is reduced from the previous month on lower expected
beef, pork, and turkey production. Beef production is reduced on
lower-than-expected steer and heifer slaughter in the first half of
2019. Pork production is reduced on lower-than-expected first quarter
hog slaughter and slightly lighter carcass weights.
|
3) |
The pork carcass also took it on the
chin Thursday with eroding demand for fresh cuts, ribs and bellies
stripping away at the aggregate wholesale value.
|
| 4) |
Beef import forecasts for 2018 and
2019 are reduced from the previous month on decreased shipments of
processing beef from Australia. Beef export forecasts for 2018 and 2019
are raised from the previous month on continued firm global demand for
U.S. beef.
|
4) |
The large discount in December lean
hogs compared to the cash market is reflective of trader's expectations
of lower cash markets as the industry works through the large hog
supplies late this year.
|
OTHER MARKET SENSITIVE NEWS
CATTLE: (Beefmagazine) -- Throughout the years, I
think in both human medicine and veterinary medicine, we've assumed
that we can continue to use antibiotics as we always have and that they
will always be there and always be effective for us," says Bob Smith,
longtime beef veterinarian, professor and speaker.
Not so. Rather, he says, the future of effective
antibiotics isn't certain for humans nor animals. Doctors and
veterinarians are seeing resistance issues surface with increasing
frequency. He began noticing a concerning trend beginning in the late
2000s.
"We started seeing more and more cases where the
bacteria were resistant to the antibiotics that we have available. So
that then brings us to where we are Friday," Smith notes. "We are now
trying to learn more about antibiotic resistance, how it develops and
also what we can do to use fewer antibiotics, and to use our antibiotics
more wisely so we can sustain the life of the antibiotics we have
available."
Smith's practice oversees health care for
feedyards in nine states, with more than 1 million head of cattle.
Antibiotics are an important management tool in fighting infection, he
says-- and preserving them is everyone's responsibility. It begins with
management.
What we need to be doing is looking for
management systems that will allow us to produce beef, in our case, with
less disease and less need for antibiotics," Smith says. "The
responsibility really goes to our producers, our farmers and ranchers,
to our veterinarians, to our educators, to our Extension people and our
researchers, so we can better understand how we can reduce disease and,
therefore, reduce the need for antibiotics and have animals that are
healthier and happier at the same time."
For beef cattle, those management systems could
include fence-line weaning, which creates less stress for calves and,
therefore, less disease in the post-weaning period. Smith says proper
nutrition and preconditioning are also key steps to disease prevention.
"We can vaccinate those calves while they are
still on the cow to reduce the likelihood that they will get sick as
they go through that stressful process of weaning and shipping and
commingling. Research shows that time and time again, if we go through
many of those steps then there is less chance that the calf will get
sick once it leaves the farm of origin. If they don't get sick, we don't
need to use the antibiotics."
In the future, Smith sees feedyards demanding
more preconditioned calves that are less likely to become sick. And,
with imminent pressures from consumers and national beef chains, he
suggests producers may see more change in how they're able to administer
antibiotics.
"Currently, we have antibiotics that are
classified as over-the-counter and those classified as prescription. I
would not be surprised to see regulations in the future where if you
want to go down and buy a bottle of penicillin or tetracycline, that
will be a prescription product rather than over the counter," Smith
suggests. Antibiotic resistance is a real issue that concerns all
livestock producers, he says. "We have the responsibility of judicious
antibiotic usage but also we have a responsibility to treat animals when
they are sick just as physicians have a responsibility to treat
children and the adults when they become sick with a bacterial
infection," Smith says.
"If resistance continues to develop to these
antibiotics, then we could have not only costly losses in companion
animals, costly losses in livestock but also we could have loss of life
on the human side if we have nothing left to treat them with."
HOGS:(AgNews) -- China's exports surged anew
last month on the back of resilient demand, defying many economists'
expectations for a slowdown from the trade fight with the U.S.
Demand for Chinese goods grew in developed and
developing markets, from the U.S. to India, according to customs data
released Thursday.
"It's not just the U.S., wherever you look,
especially the emerging markets, demand is solid," said Liu Yaxin, an
economist at China Merchants Securities.
The performance, economists said, suggested
China is getting a boost from surprisingly healthy global demand and
perhaps from a weaker yuan. Many economists attributed the export boom
of recent months to businesses frontloading shipments before tariffs
take effect, and they had expected that trend to fade.
China's total exports rose 15.6% from a year
earlier, the customs administration said, which tops the 14.5%
year-over-year increase in September. Economists expected 11% growth.
Exports to India, Hong Kong and Brazil all grew
by more than 20% last month from year ago, according to calculations by
The Wall Street Journal based on customs data. Exports to the U.S. and
the European Union also held up, rising 13% and 15% respectively.
Meanwhile, China's appetite grew for global
commodities, boosting imports 21.4% in October from a year earlier,
compared with a 14.3% increase the previous month. Imports of crude oil
jumped 89% on year.
Imports from the U.S., however, dropped 1.8% in
October from a year earlier, following a 1.2% decline in September. The
trade gap with the U.S. narrowed to $31.8 billion last month from
September's record monthly high of $34.1 billion.
Still, by Chinese figures, the near $260 billion
surplus for the first 10 months this year is up 15% from a year earlier
and puts China on track to post another record surplus with the U.S.
Last year, China reported the largest-ever annual surplus of some $275.8
billion. The U.S. estimates the gap was even larger, at $375.2 billion.
The imbalance has been a sore point with the
U.S. and is cited by the Trump administration as a reason for imposing
tariffs. Punitive levies imposed by the U.S. and China now cover about
60% of their trade in goods. The Trump administration has said it would
hike the rate on some of those goods and is considering expanding
tariffs to more products. The latest round of U.S. tariffs, covering
$200 billion in Chinese products, took effect in late September, making
October the first full month hit by all the Trump administration's
levies.
Several economists said some frontloading of export orders is still taking place.
Betty Wang, an economist at ANZ, pointed to
continued strength in the exports of electrical and mechanical products
as evidence of rushed shipments. These products, which account for about
60% of China's total exports and are the nation's biggest export items
to the U.S., increased 15.3% globally in October, she said. Ms. Wang
expects to see continued frontloading in the coming months before it
tapers off.
China Merchants' Ms. Liu expects rising labor
costs are also going to make exports less attractive. "It's hard to
imagine that such double-digit growth in exports can last long," she
said.
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| #completecalfcare |
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