GENERAL COMMENTS:
Cattle markets moved higher again on Tuesday, continuing the strength started earlier this week. Feeder cattle were up $2 or more while live cattle futures climbed as much as $3 by the close. In addition to the proposed grazing rule change, the USDA also announced that it is ready to begin the hiring process for the nation's largest facility to combat New World Screwworm, meaning they are one step closer to opening at the expected April 2027 date. USDA also released the November WASDE report Tuesday morning. Beef production for 2026 was reduced 40 million pounds from the October report, coming in at 24,830 million pounds. Imports increased 89 million pounds, while exports increased 1 million pounds. Total use was 28.928 billion pounds, up 57 million from last month's projections. Ending stocks were reduced by a net of 10 million pounds. Production was lower in this month's report, with 2027 expectations at 24,588 million pounds. An expected reduction of 242 million pounds from this year to next. With that, there is also a reduction in total use, bringing ending stocks to 575 million pounds.
The WASDE report increased expected pork production by 35 million pounds to 27,672 million pounds for 2026. Imports were 15 million lower, while exports were reduced to 6,979 million pounds, a reduction of 81 million in foreign sales. Total use was increased this month for 2026 by 92 million pounds, yet the net ending stocks were unchanged for this year. 2027 saw slightly lower imports and exports but higher total use, indicating expect domestic use to grow from 2026 to 2027. Lean hog futures were mixed Tuesday, with nearby futures months trading lower while spring and beyond traded higher.
| BULL SIDE | BEAR SIDE | ||
| 1) | New grazing rule change proposed could bring more buyers to the cattle market with opportunities to graze more land. | 1) | A new screwworm facility brings confidence that the United States can combat future threats of screwworm, allowing more Mexican cattle ports to open on schedule. |
| 2) | The WASDE report is expecting lower beef production for the remainder of the year. | 2) | Cash prices for fed cattle will continue to be pressured while northern supply is backlogged. |
| 3) | Low prices typically cure low prices; with consumers buying affordable protein sources, pork is a bargain buy. | 3) | Pork cutouts cannot find any traction. A couple small increases are quickly taken away by a single day of decline. |
| 4) | The WASDE projected domestic demand to increase for pork in 2027. | 4) | Expected pork exports were lowered in the WASDE report, showing lower international demand. |
No comments:
Post a Comment