Thursday Morning Livestock Market Summary - Hog Futures Set for Moderately Higher Recovery

GENERAL COMMENTS:

Look for cattle-buying interest to slowly take shape Thursday with starter bids around $117 to $118 in the South and $190 in the North. Asking prices should be floated around $121 to $122 in the South and $193 to $195 in the North. Needless to say, it will help country leverage if the board stays firm. Significant trade volume could easily be delayed until sometime Friday.

The cash hog trade continues on an unusual post-Thanksgiving roll. Opening bids are likely to begin steady to $1 higher. Look for a harvest level this week to exceed 2.5 million, with the potential to hit 2.6 million head. Lean futures should open moderately higher, supported by short-covering as well as strong cash and product sales.

	BULL SIDE		BEAR SIDE
1)	Cattle bulls continued to build board premiums Wednesday. The weakening basis should help stiffen the resolve of feedlot managers in terms of pricing ready steers and heifers.	1)	Beef cutouts dropped sharply lower at midweek. Furthermore, the description of box offerings as "heavy" suggests that more discounting may be necessary.
2)	Spot December live cattle tends to weaken in the early part of December and then move higher through the rest of the month.	2)	Continued large declines in open interest in December live cattle and a modest decline in February resulted in total open interest declining by 1,500 on Tuesday to 379,000 contracts.
3)	The pork carcass value exploded higher on Wednesday, powered by better demand for all primals except the rib and butt.	3)	For the week ending Nov. 25, U.S. hatcheries set 224 million eggs in incubators, up 2% from a year ago. At the same time, chicks placed totaled 175 million chicks; up slightly from 2016.
4)	Although lean hog futures closed moderately lower Wednesday, the pullback seemed little more than short-term profit-taking. Long- and short-term trends remain positive.	4)	For the week ending Nov. 25, Iowa barrows and gilts averaged 285.8 pounds, 1.3 lbs. bigger than the prior week and 5.3 lbs. greater than 2016.

OTHER MARKET SENSITIVE NEWS

CATTLE: (Nikkei) -- Japan's government is poised to maintain a provision that jacks up tariffs on frozen U.S. beef in the event of a sharp increase in imports -- a mechanism that initially riled the Trump administration when it was triggered in August.

The so-called safeguard measure was agreed on as part of the 1995 Uruguay Round of multilateral trade negotiations. In exchange for voluntarily lowering the beef tariff to 38.5%, Japan gained the right to raise it to 50% should import volumes exceed a predetermined limit. The Ministry of Finance wants to maintain this framework in the fiscal year starting April 2018.

This summer saw the safeguard put into use for the first time in 14 years. The ministry determined that imports of American beef exceeded the limit in the April-June quarter. The higher tariff will remain in place until the end of March 2018.

The U.S. beef industry and President Donald Trump's agriculture secretary called on Japan to immediately lower the tariff, to no avail. But during Trump's summit with Japanese Prime Minister Shinzo Abe here this month, the U.S. side exerted little pressure on Japan to open up its agricultural markets, and the Finance Ministry saw no particular American objections to maintaining the safeguard mechanism.

Given the rising Japanese demand for U.S. frozen beef, this may not be the last time the snapback provision is triggered.

HOGS: (foodmarket.com) -- The National Pork Board, the Iowa Pork Producers Association, Smithfield Foods, Inc. and PrairieFresh® Premium Pork joined forces to support the second annual #HamsAcrossAmerica campaign in Central Iowa. The organizations hosted a kickoff event, on Giving Tuesday, to serve clients of the Central Iowa Shelter and Services and provided a nearly 70,000-pound pork donation to the Food Bank of Iowa, courtesy of Smithfield Foods, Seaboard Foods, Triumph Foods and U.S. pig farmers.

"As pig farmers, giving back to our community always has been an integral part of who we are," said Bill Tentinger, a pig farmer from Le Mars, Iowa, who serves on both the National Pork Board and the Iowa Pork Producers Association board of directors. "Hams Across America and this kickoff event allow me and other farmers to live the We CareSM ethical principles and share our love of the product that we produce."

The annual #HamsAcrossAmerica campaign encourages farmers and those involved in the pork industry to show appreciation for friends, family and neighbors through the gift of ham and other pork products.

"Smithfield is proud to participate in Giving Tuesday with the National Pork Board and support the positive impact it provides for so many of our neighbors in need," said Dennis Pittman, senior director of hunger relief for Smithfield Foods. "As a global food company with Iowa-based facilities, Hams Across America aligns with Smithfield's commitment to resolve hunger across the country and to cater to the communities we call home."

"On behalf of all those in our connected food system at Seaboard Foods and Triumph Foods who raise and care for our pigs and produce pork for the PrairieFresh® brand, we understand the importance of supporting our communities whether that be someone next door in Iowa or a world apart," said Terry Holton, Seaboard Foods president and CEO. "With Hams Across America, we're honored to share our products so others might enjoy delicious, wholesome meals this holiday season."

Pig farmers and those involved in the pork industry are encouraged to extend Giving Tuesday through Dec. 23 with Hams Across America. Individuals can participate by purchasing a gift of ham and paying it forward to loved ones and those in need. Participants are encouraged to share their pay-it-forward stories on social media using #RealPigFarming and #HamsAcrossAmerica.

Wednesday Closing Livestock Market Summary - Cattle Futures Regain Support in Late Day Trade

GENERAL COMMENTS

Cash cattle trade remains undeveloped midweek in feedlot country with a few bids developing through the morning at $117-to-$118 live basis and $188 dressed. Asking prices are becoming more defined through the week with cattle priced at $121 and higher live and $192-to-$195 dressed. The Fed Cattle Exchange Auction report Wednesday listed a total of 967 head, with 0 actually sold, 750 head listed as unsold, and 217 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 223 total head, with 0 head sold, 118 head unsold, 105 head listed as PO ($118.00); NE 507 total head, with 0 head sold, 507 head unsold, and 0 head listed as PO; TX 237 total head, with 0 head sold, 125 head unsold, and 112 head listed as PO ($117.00); CO -- no cattle reported; IA -- no cattle reported; other states -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 865 head total, 0 head sold; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery 102 head total, 0 head sold. According to the closing report, the national hog base is $0.73 higher compared with the Prior Day settlement ($52.00-$60.00) weighted average $58.81. The corn futures moved higher in light activity. December futures were 2 3/4 cents higher Wednesday. The Dow Jones Index is 103 points higher with the Nasdaq down 88 points.

LIVE CATTLE

Firm gains redeveloped late in the session Wednesday following a market shift, which sparked selling pressure through most of the morning ($0.07-to-$0.92 Higher). The ability for moderate-to-strong buyer activity to hold in nearby contracts pushed December futures above $120 per cwt for the first time in nearly two weeks. This could spark some additional end of the month buyer activity and may stimulate additional support through early December. Beef cut-outs: lower, $1.36 lower (select, $185.84) and down $2.08 (choice, $206.55) with light demand and moderate offerings (112 loads of choice cuts, 44 loads of select cuts, 14 loads of trimmings, 24 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $2 Higher. Cash cattle markets remain generally undeveloped with packers showing a little interest midweek as a few scattered bids have slowly developed. Bids were seen at $117-to-$118 live and $188 dressed. This is expected to be where bids early Thursday morning will pick up, but may not gain the attention of feedlot managers until late Thursday or sometime Friday.

FEEDER CATTLE:

Strong gains developed late in the session despite moderate pressure seen during the session, allowing for higher trade Wednesday ($0.15-to-$1.07 Higher). Choppy moves in live cattle trade during the middle of the trading session pulled initial buyer support back from the complex. But the inability to maintain this selling pressure has created some late day support as traders quickly focused on stepping back into the complex through the end of the session. CME cash feeder index for 11/28 is $156.81, up $0.06.

LEAN HOGS:

Early support in lean hog futures Wednesday morning was quickly disrupted by moderate pressure that swept through the complex. This was not able to draw buyer interest back into the complex in nearby futures through the second half of the session. Light gains developed in deferred futures. Contracts remain mixed at closing bell ($0.67 lower to $0.22 Higher). Carcass values posted triple-digit gains following aggressive support in Loin, Picnic and belly markets. This move higher helped to draw additional attention to the entire complex. Pork cut-out: $83.45 up $1.22. CME cash lean index for 11/27 $62.89, down $0.19. DTN Projected lean index for 11/28 $62.96 up $0.07.

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. Despite the spending activity seen early Wednesday, packers still seem to be focused on the overall availability of hogs in the market. With the end of the month looming Thursday, there may be some market shifts as packers try to adjust inventory levels. Thursday's slaughter is expected at 465,000 head with an expected Saturday run at 238,000 head.

Wednesday Midday Livestock Market Update - Livestock Futures Maintain Mixed Price Shifts Midweek

GENERAL COMMENTS: 

Mixed trade is seen through the market Wednesday morning. The inability to hold early gains has put some moderate pressure through the complex. This may limit additional support through the entire complex. Corn prices are higher in light trade. December corn futures are 2 cents per bushel higher. Stock markets are mixed in light trade. The Dow Jones is 75 points higher while Nasdaq is down 84 points.

LIVE CATTLE:

Buyers stepped into the live cattle futures complex early in the session Wednesday, but pressure in deferred contracts has quickly limited follow through during the morning. Even though nearby contracts are holding firm gains of 40 to 55 cents per cwt, there continues to be additional uncertainty in deferred contracts. This could limit additional market activity through the rest of the session. Cash cattle interest is slowly improving although the overall tone of the market remains sluggish. A few token bids have started to develop through the morning at $117 to $118 live and $188 dressed. Asking prices are showing more definition during the morning with live cattle listed at $121 and higher while dressed asking prices are seen from $192 to $195 through morning activity. The Fed Cattle Exchange Auction report today listed a total of 967 head, with 0 actually sold, 750 head listed as unsold, and 217 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 223 total head, with 0 head sold, 118 head unsold, 105 head listed as PO ($118.00); NE 507 total head, with 0 head sold, 507 head unsold, and 0 head listed as PO; TX 237 total head, with 0 head sold, 125 head unsold, and 112 head listed as PO ($117.00); CO -- no cattle reported; IA -- no cattle reported; other states -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 865 head total, 0 head sold; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery 102 head total, 0 head sold. Beef cut-outs at midday are lower, $0.17 lower (select) and down $1.66 per cwt (choice) with activity movement of 108 total loads reported (67 loads of choice cuts, 18 loads of select cuts, 9 loads of trimmings, 15 loads of ground beef).

FEEDER CATTLE:

Strong support has redeveloped in nearby feeder cattle futures with front month January prices holding a 70 cent per cwt gain. This underlying support has redeveloped following mixed trade activity through the morning. Very little long term direction is seen through the last couple of trading sessions with many traders trying to search for increased buyer activity, especially in nearby contracts.

LEAN HOGS:

Mixed trade activity is seen midday Wednesday following moderate to stronger buyer support early in the session. Very little has changed technically or fundamentally across the complex, although early buyer activity quickly backed away from the market Wednesday morning. This has left prices mixed in a moderate range from 50 cents lower to 40 cents higher as traders continue to search for increased market support. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $0.34 at $58.42 per cwt with the range from $52.00 to $60.00 on 2,946 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.62 at $59.03 per cwt with the range from $52.00 to $60.00 on 1,186 head reported sold. The National Pork Plant Report posted 164 loads selling with carcass values gaining $1.32 per cwt. Lean hog index for 11/27 is at $62.89 down $0.19 with a projected two-day index of $62.96, up $0.07.

Wednesday Morning Livestock Market Summary - Hog Paper Staged to Open With Firm Undertone

GENERAL COMMENTS:

Cattle-buying interest could begin to show life Tuesday. Perhaps action on the FCE will spark greater thoughts of business in the country. Feedlot managers will also be watching the board before getting too excited about pricing ready steers and heifers. Our guess is that asking prices will start out around $121 to $122 in the South and $192 to $195 in the North. Significant trade volume may not surface until Thursday or Friday. Look for live and feeder futures to open some higher, girded by residual short-covering and ideas of cash market stability.

Hog buyers should resume work at midday with firm bids, building on the more aggressive spending pattern displayed on Tuesday. It sounds like packers are planning another large Saturday kill, perhaps as large as 245,000 head. Bullish action on the board Wednesday was quite impressive without 2018 issues setting new contract highs. Lean futures should open solidly higher Tuesday, supported by follow-through buying and surprisingly friendly late-year fundamentals.

	BULL SIDE		BEAR SIDE
1)	Live and feeder contracts successfully shook off heavy selling late day, closing no worse than mixed, thanks to aggressive short-covering and ideas of cash stability/firmness.	1)	Wednesday's closing box report served up more disappointing evidence of post-Thanksgiving beef demand. Cutouts settled lower with the choice box losing nearly a buck. Furthermore, box supplies were described as "moderate to heavy."
2)	February and April are carrying larger than average premiums to December, which is positive to producer attitudes for late in the year and heading into the new year. A continuation of these large premiums could start encouraging producers to slow marketing rates in the coming weeks, in an effort to boost cash cattle prices and capture some of the premiums implied by the current market.	2)	The chief executive of Brazilian meatpacker Minerva said on Tuesday that the company, based on consultations with the country's agriculture ministry, expects Brazil to resume fresh beef exports to the U.S. in the first quarter of 2018.
3)	In a shocking display of late-fall strength, the national lean hog base surged $1.30 higher on Tuesday with apparently short-bought packers gathering as many as 21,565 head on a dressed basis.	3)	Successful Farmer's recent "Pork Powerhouses 2017" confirmed very aggressive expansion plans. When all 40 companies surveyed are summarized, there are almost a-quarter-million more sows Tuesday than there were one-year ago, the most expansion this annual survey has seen in 10 years.
4)	The late-year rally in lean hog futures really gathered steam on Tuesday with December through April surging by triple digits. There seems to be growing confidence in some circles that the worst of the fourth quarter supply fundamentals are behind us.	4)	Notwithstanding Wednesday's isolated cash jump, evidence of hog availability suggests packers can be patient in pulling hogs, as even more hogs are available right around the corner.

OTHER MARKET SENSITIVE NEWS

CATTLE: (moultrieobserver.com) -- Local and corporate dignitaries celebrated an expansion of National Beef Monday with a groundbreaking for a 40,000-square-foot addition to the meat processor's Moultrie plant.

"This expansion we're about to undertake will transform this facility into one of the premium consumer-ready facilities in the country," National Beef CEO and President Tim Klein said during the ceremony.

The expansion is expected to add 100 jobs to the 300 people already employed there, company officials said. The work force numbered 450 at its peak in 2013.

Klein mentioned "lean times" that started that year, when Wal-Mart did not renew its contract for meat from the company. "But you stayed with us," he gratefully told representatives of plant employees as well as leaders of the community.

Hiring is expected to begin in the third quarter of 2018, with the new part of the plant to come on-line in the fourth quarter.

This expansion will involve an investment of more than $30 million to include a physical plant expansion as well as new processing and packaging equipment, David Davidson, vice president of case ready operations, told The Observer when the expansion was announced two weeks ago.

Darrell Moore, president of the Moultrie-Colquitt County Development Authority, recounted the history of meat packing in Colquitt County. Moultrie Packing Company-- opened in 1914 and was bought by Swift and Co. in 1917-- is responsible for the mascot of the high school football team, the Colquitt County Packers, he said. Swift and Co. employed more than 700 people at its peak in the 1950s.

Swift and Co. was bought out by Premium Pork, which eventually closed the plant in 1996, and Moore said economic development officials immediately started trying to market the facility with little success.

He said they were trying to get a hamburger plant to expand there from out of town in 1999, but the company kept putting them off. When he asked them why, they told him they were watching a competitor that was considering a move to Middle Florida. They didn't want to act until they saw what the competitor was going to do. He asked who the competitor was, and they said, "Farmland-National Beef."

"Thirty minutes later I was on the phone with Farmland-National Beef," Moore said.

The facility opened in 2001, the first beneficiary of the state's One Georgia EDGE Grant, which continues to use proceeds from the tobacco settlement of the late 1990s to help create jobs throughout the state.

"Moultrie and Colquitt County definitely got the right company," Moore said. "… I know National Beef is committed to Moultrie. I know we're committed to National Beef. I only hope they're here for 82 years like the first one (Swift and Co.)."

HOGS: (wnax.com) -- The Trump administration's focus for trade has been achieving bilateral agreements. One potentially good deal and market for U.S. pork would be India. National Pork Producers Council Vice President and Counsel for Global Government Affairs Nick Giordano says while India may not be as big a market as Japan, it has promise for American pork exports just due to its large population base.

He says another advantage to doing business with India is there aren't any sensitive trade issues for negotiators to overcome.

Giordano says USDA Undersecretary for Trade and Foreign Affairs Ted McKinney was in India recently and that bodes well for future pork business.

McKinney says India could begin allowing U.S. pork into their country as early as next year.