DTN Early Word Opening Livestock

 
Cattle: Steady/Weak w/Wed Futures: 50-100 LR Live Equiv: $141.59 - .84* 
Hogs: Steady-$1 LR Futures: Mixed Lean Equiv: $ 92.98 + .25**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Moderate-to-active trading developed in parts of cattle-feeding country at midweek with most live sales marked at $106, $2 to $3 lower than last week. Dressed sales in the North were mostly tagged $170, $3 to $4 lower. More business seems likely in Texas and Colorado, but opening bids are not likely to be better than steady to $1 lower. Live and feeder futures should open moderately lower, checked by cash and product weakness.

The cash hog market seems ready to open with bids steady to $1 lower. The June 1 Hogs & Pigs report will be released Thursday afternoon at 2 p.m. (CT). Average guesses look like this: total hogs, up 3%; kept for breeding, up 1% to 2%; kept for market, up 3%. Lean futures are likely to open on a mixed basis as traders jockey ahead of the quarterly inventory.

	BULL SIDE		BEAR SIDE
1)	Although cattle futures closed no better than mixed, most contracts settled significantly above session lows. Such action could be an important piece in market-bottoming formation.	1)	Cash cattle prices broke $2 to $3 lower on a live basis Wednesday in parts of Nebraska and Kansas. Feedlot leverage seems to be melting in the face of discounted futures and bearish expectations regarding midsummer beef demand.
2)	Week-to-date cattle slaughter is running below last week. Couple this with reduced production next week around the holiday and reduced tonnage should stabilize/firm beef carcass value in early July.	2)	Beef cutouts closed significant lower at midweek with box demand (typically the strongest on Wednesday) described as "light."
3)	With October lean hog futures already trading $14 below the August contract, the board may already be bearish enough for whatever numbers the June report can dish out. Additionally, the management of fourth quarter tonnage will be helped by new additions to chain speed.	3)	For the week ending June 23, U.S. hatcheries set 231 million eggs in incubators, up 3% from a year ago. At the same time, broiler-grower chicks placed totaled 189 million, up 3% from 2017.
4)	For the week ending June 23, Iowa barrows and gilts averaged 278 pounds, .5 less than the prior week and 1.1 pounds more than 2017.	4)	The June 1 quarterly Hog & Pigs report to be released Thursday afternoon at 2 p.m. (CT) is expected to total just over 73 million hogs, nearly 3% larger than last year. It is likely to be a record large June 1 inventory for a June through August time frame and slightly lower than the all-time record inventory of last September 1 by half a million animals.

OTHER MARKET SENSITIVE NEWS:

CATTLE: (BBC) -- China has ended a two-decades-long ban on exports of beef from the UK, first introduced after the outbreak of BSE -- or "mad cow disease" -- in the 1990s.

The government said the development will be worth 250m pounds to British producers over the next five years.

It comes after years of site inspections and negotiations between UK and Chinese government officials.

It now allows official market access negotiations to begin, a process which usually takes around three years.

The announcement comes after Prime Minister Theresa May's trade mission to China earlier this year, during which President Xi Jinping signaled that a lifting of the beef ban would be happen soon.

Chancellor Philip Hammond, who is visiting China this week, tweeted: "This is great news for British farmers."

The UK currently sells more than £560m of food and drink from the farming sector a year to China, making it the eighth-biggest export market for such products.

"Thursday's milestone will help to unlock UK agriculture's full potential and is a major step to forging new trading relationships around the globe," said a Department for Environment statement.

The announcement comes two days after China signed a deal to lift a ban on French beef imposed more than a decade ago.

HOGS: (Quad-City Times) -- The same day a national political journal reported on Iowa Republicans' support for President Donald Trump, despite rising tensions and the threat of a trade war, members of the Iowa congressional delegation wrote the president expressing concern that retaliatory tariffs will harm Iowa's farmers.

"Mr. President, these tariffs have real consequences on states like Iowa, rural communities across the nation and on America's farms," the four House and two Senate members wrote to the president. "We encourage you to act expeditiously to save our rural economies." In pleading Iowa's case, the Iowa congressional delegation said farmers are experiencing a five-year, 52 percent downturn in the agricultural economy.

"These tariffs are taxes Iowa families cannot afford," they wrote.

The letter was sent to the White House the same day Politico reported that at Republican Party of Iowa's recent state convention, delegates were asked whether they supported the president.

"In an exuberant display of unity, more than 1,100 delegates sprang to their feet, whistling, cheering and offering prolonged applause," Politico reported.

Times Bureau columnist Erin Murphy had previously reported on the reaction at the convention in a column Sunday.

The letter follows an earlier warning to the president from Republican Reps. Rod Blum, David Young and Steve King, and Democratic Rep. Dave Loebsack, and GOP Sens. Chuck Grassley and Joni Ernst that agriculture would be the first industry hurt in a trade dispute.

Markets for soybeans, corn and pork are trading significantly lower than before the president started imposing tariffs.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

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