DTN Early Word Opening Livestock

 
Cattle: Steady-$2 HR Futures: Mixed Live Equiv: $136.09 -.19* 
Hogs: Steady-$1 LR Futures: Mixed Lean Equiv: $ 87.87 +.34**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Well, here we are again. Despite last week's smaller trade volume total, no one apparently had problems holding their breath through the week, hoping that the other side would be forced to come up for air first. But there must be plenty of blue faces in the country at this point, forcing the development of at least moderate business sometime between late morning and late afternoon. Look for opening bids around $108 live and $170 to $173 dressed, well below asking prices of $114 to $115 live and $180 plus in the North.

The July 1 Cattle on Feed report will be released at 2 p.m. CT Friday. Generally speaking, analysts expect on feed to be up 4%, placed in June to be up 1% to 2%; marketed in June to be up 1%. At the same time, the midyear cattle inventory will be unveiled. Total cattle numbers should be larger than last summer, but by less than 1%. Beef cow totals are likely to be 1% larger, and the 2018 calves should total close to 36.5 million head, roughly 1.5% larger than the 2017 crop. Live and feeder futures seem staged to open on a mixed basis as traders position ahead of cash news and new USDA data.

Hog buyers have been swinging the hammer quite effectively through the week, consistently lowering the value of cash sales and moving acceptable numbers in the process. So it makes sense to expect further price pressure Friday. Processing margins have definitely improved through the week (just as finishing-floor margins have consistently deteriorated), and that explains in part why Saturday's kill is expected to be as large as 123,000 head. Lean futures will probably open with uneven price action thanks to both long liquidation and short-covering.

	BULL SIDE		BEAR SIDE
1)	Actual beef shipments exports totaled 19,600 metric tons (MT) (a marketing-year high), up 28% from the previous and 11% from the prior four-week average. The primary destinations were Japan (6,300 MT), South Korea (5,900 MT), Mexico (2,000 MT), Taiwan (1,600 MT), and Canada (1,300 MT)	1)	Net beef export sales last week totaled 13,500 MT, down 17% from the previous week and 16% from the prior four-week average.
2)	Net pork export sales last week jumped to 19,700 MT, up noticeably from the previous week and up 33% from the prior four-week average. At the same time, actual pork exports totaled 18,700 MT, up 1% from the previous week and 3% from the prior four-week average.	2)	For the week ending July 7, cattle carcass weights kept walking higher: all cattle averaged 810 pounds, 5 pounds bigger than the previous week and only 1 pound under 2017; steers averaged 867 pounds, up 2 pounds from the prior year and 1 pound greater than last year; heifers averaged 797 pounds, 5 pounds heftier than the previous week and 7 pounds larger 2017.
3)	The pork carcass value close moderately higher on Thursday with all primals gaining ground except the rib and the butt.	3)	The cash hog trade took another hit Thursday (i.e., the national dressed lost $1.32), further proof that market hog numbers are already beginning to be difficult to manage.
4)	The bellies firmed on Wednesday and Thursday, after trending flat for a few days, signaling the gains are not over yet for the summer, with another two weeks of support still likely.	4)	This week is still on pace for a 2.31-million-head harvest level, almost 5% larger than a year ago. Weekly hog harvest levels are forecast to increase into fall, averaging well above year-prior levels.

OTHER MARKET SENSITIVE NEWS

CATTLE: (The Cattle Site) -- Promoting US beef tri-tip as a new steak cut in the Taiwanese market and working to increase US beef sales for the country's foodservice operators, USMEF organized "2018 Steaklicious US Beef Steak Month".

The campaign, which involved more than 100 restaurants in Taipei City, New Taipei City and Taichung City, was funded by the Texas Beef Council and the Beef Checkoff Program.

"The goal was to reach a wider audience and deliver more tailored messages to them about US beef and, specifically, US beef steak," said Davis Wu, USMEF director in Taiwan.

"We cooperated with more than 40 foodservice brands classified into four categories separated by price range and brand type. Each category -- Steak For You, My Happiness Steak Time, Special Steak Menu and Secret Edition Steak -- had a specially-designed promotion throughout the month-long campaign."

According to Mr Wu, Taiwanese consumers have two primary associations when it comes to US beef: grain-fed deliciousness and versatility. US beef steak addresses both of those qualities.

"That's very important because steak has become highly popular among consumers in Taiwan," he said.

"We've had foodservice operators tell us they serve steak items in their restaurants merely because of the feedback from customers.

"Even though the price of a steak is usually higher than other meat dishes in most restaurants, it remains in high demand."

This affinity for steak led USMEF to develop "Steaklicious" as the name of its first steak-themed promotion in Taiwan. A press conference was held at a participating steakhouse prior to the launch, with journalists from 23 media outlets invited.

A chef commissioned by USMEF demonstrated US beef tri-tip steak and more than 40 media references to the event resulted.

Specific promotions for the campaign's four categories were as follows:

•Steak For You featured a scratch card campaign that allowed consumers to collect restaurant coupons while gaining knowledge of USDA's beef grading system.

•My Happiness Steak Time included an online interactive game in which consumers received customized recommendations on individual restaurants, along with coupons to the restaurant.

•Special Steak Menu took place at high-end steakhouses that provided steaks as the centerpiece of limited menus.

•Secret Edition Steak focused on US.beef tri-tip, a new cut introduced to the market in 2018. Two new tri-tip dishes and a promotional video helped with the launch.

USMEF built and managed an official "2018 Steaklicious! US Beef Steak Month" website to help publicize the campaign: www.usbeefsteak.com.tw. Event information was posted on the USMEF-Taiwan Facebook page. USMEF has worked diligently to take advantage of the food culture in Taiwan, launching several successful campaigns over the past few years, including Beef Bowl Month in 2015 and 2016, Barbecue Month in 2016 and 2017 and the Hot Pot Month in 2017.

Mr Wu confirmed that the Steaklicious campaign had similar success, noting that foodservice operators surveyed after the event overwhelmingly believed it strengthened the positive image of US beef.

It also won over Taiwan's steak lovers.

"The managers of the restaurants reported sales of steaks grew two to three times during the USMEF promotion," Mr Wu said. "They believe our event played an important role and helped influence customers to choose the US beef steak items on their menus."

HOGS: (Bloomberg.com) -- President Donald Trump said he may prioritize a bilateral trade deal with Mexico over Canada and that he's building a good rapport with Mexican President-elect Andres Manuel Lopez Obrador.

The U.S. and Mexico are "getting closer" to reaching a trade deal, and the administration may advance separate talks with Canada later, Trump told reporters at the start of a cabinet meeting in Washington on Wednesday. The president added that he and newly elected Lopez Obrador are "doing great."

"I just wanted to let you know that we have had very good session with Mexico, with the new president of Mexico -- who won overwhelmingly -- and we're doing very well on our trade agreement," Trump said. "So we'll see what happens. We may do one separately with the Mexico and we'll negotiate with Canada at a later time. But we're having very good discussions with Mexico."

The Mexican peso reversed earlier losses on Wednesday after Trump's comments.

Trump said earlier this year he may break up talks for a new North American Free Trade Agreement into separate tracks with Canada and Mexico. Officials from Mexico and Canada have expressed support for a three-country deal. The three countries have failed to nail down a deal to revamp the pact over almost a year of talks, with wide differences remaining over key issues such as auto-content rules and a sunset clause.

High-level negotiations were paused in mid-May to allow the Mexican election process to play out. The three countries are expected to make a push to advance the talks over the summer.

Mexican Economy Minister Ildefonso Guajardo said on Wednesday he'll travel to Washington next week for ministerial-level Nafta talks. U.S. Trade Representative Robert Lighthizer and Mexican officials are in constant contact, according to a USTR spokesperson who declined to be identified in an emailed response for a comment. The spokesperson didn't mention interactions with Canadian counterparts.

Top Trump administration officials visited Mexico City last week to meet the current and incoming administrations, providing the first chance for Lopez Obrador to set a tone for U.S.-Mexico ties after the July 1 election. The visitors included Secretary of State Michael Pompeo, Treasury Secretary Steven Mnuchin, Secretary of Homeland Security Kirstjen Nielsen and White House senior adviser Jared Kushner. Lopez Obrador takes office Dec. 1.

Members of Lopez Obrador's Nafta team are working with the Pena Nieto government as consultants for the talks until the new administration takes over, Guajardo said last week.

White House economic adviser Larry Kudlow on Wednesday said that there's been "good progress" in talks with Mexico, which are paving a "promising avenue." He declined to elaborate on specific issues. "We're having very productive talks with Mexico," Kudlow said at the CNBC Institutional Investor Delivering Alpha conference in New York.

Trump on Wednesday mentioned Canada as an example of a country that treats the U.S. unfairly on trade, particularly over agriculture.

"We're breaking down barriers so that our farmers can sell their goods to other countries like they sell their goods to us," Trump said. "We're doing it as rapidly as possible."

Agriculture Secretary Sonny Perdue, speaking at the same event as Trump, lauded the president's trade moves and said farmers understand the president and his goals.

"I think your farmers understand that you're the first one to attack this," Perdue said. "They're very anxiously awaiting the win and they hope that the deal with Mexico and then Canada can come along very quickly behind that. They're with you."

John Harrington can be reached at harringtonsfotm@gmail.com

Follow him on Twitter @feelofthemarket

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