DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv: $140.73 - .03* 
Hogs: Steady Futures: Mixed Lean Equiv: $ 73.12 + .05 **
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

While it's possible that the cash fed trade could take on some definition at midweek, our guess is that serious students of the market won't learn much until Thursday or Friday. A few preliminary bids in parts of the North could be seen around $180. Live and feeder futures seem geared to open on a mixed basis in slow volume.

Expect hog buyers to return to work Wednesday with near steady bids. Processing margins remain decent with most plants netting $20 per head or more. So it's no wonder that packers are cranking up chain speed whenever possible. At this time, most believe Saturday's hog kill should total close to 210,000 head. Lean futures should also open with uneven price action with nearbys possibly outperforming deferreds.

	BULL SIDE		BEAR SIDE
1)	This week's cattle harvest could bounce back up to 640,000 head or higher, and be similar for the first week of December. Weekly slaughter will trail off through December, especially in the two holiday weeks of Christmas and the New Year's holiday.	1)	The levels of late October are providing overhead resistance areas in many of the live cattle contracts, with most hovering in the lower end of the trading ranges that had been in place from mid-September until the end of October.
2)	Cattle carcass weights soon will be peaking and then start to head seasonally lower through the winter and into next spring.	2)	As bulls roll away from delivery potential, December live futures tend to decline in early December and then rally in mid-December, before dropping lower into the end of the year.
3)	Beef cutout values may find some pressure going into December but then regain strength from mid-December into the new year.	3)	The cash hog markets are expected to ease for the next few weeks as overall wholesale pork product values wane and available hog supplies remain at or near record levels.
4)	Holiday clearance appears to have been decent on spirals for Thanksgiving and with Mexico in final preparations to have product in place for the year-end holidays, ham prices are forecast to be firm the next two to two and a half weeks.	4)	Federally inspected barrow and gilt carcass weights for the week-ended Nov. 10 averaged roughly 210 pounds, unchanged from the week prior and the same as the year prior. Hog weights are expected to move seasonally heavier through the end of the year, averaging roughly the same as they were for the same period last year.

OTHER MARKET SENSITIVE NEWS

CATTLE: (North American Meat Institute) -- The North American Meat Institute (Meat Institute) outlined key meat and poultry industry negotiating objectives and priorities for a bilateral U.S.-Japan Trade Agreement in comments submitted Wednesday to the Office of the U.S. Trade Representative. The Trump Administration, in October, notified Congress of its intention to enter into trade negotiations with Japan, and subsequently requested public input.

"The U.S.-Japan Trade Agreement stands to be a boon for the U.S. meat, poultry and animal products industry and will be integral to future growth," wrote Bill Westman, Meat Institute senior vice president of International Affairs. "The agreement will provide economic benefits to the producers, processors and workers in the industry by making U.S. meat and poultry products more competitive in one of the most important markets in the Pacific region."

The Meat Institute said U.S. beef exports should at least receive the same tariff benefits that have been granted to competitors under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which enters into force on December 30, 2018. Under CPTPP, Japan's tariffs on beef imports will decline from 38.5 to nine percent in year 16 of the agreement.

In addition, trade negotiations should aim to phase out import tariffs on U.S. pork and return the U.S. to a level playing field upon implementation of the agreement. Similar to its position on U.S. beef exports, the Meat Institute urged that U.S. pork exports receive the same tariff benefits granted to competitors under CPTPP and the Japan-European Union Economic Partnership Agreement, or risk ceding significant market share in the U.S. pork industry's top value market.

Furthermore, the Meat Institute encouraged negotiators to increase market access for U.S. meat industry byproducts, including hides, skins and leather products, by reducing, and ultimately eliminating, tariffs on those export products. The Meat Institute also expressed support for inclusion in a bilateral agreement of a strong chapter on sanitary and phytosanitary (SPS) measures to prevent non-scientific and unduly burdensome SPS import regulations from limiting U.S. meat and poultry exports to Japan.

Japan is the largest export market for U.S. beef and largest value market for U.S. pork.

HOGS: (Dow Jones) -- African swine fever continues to have a global impact on pork production, says Rabobank, proving especially harmful in China as prices rise and supplies fall, requiring more imports. "Europe still faces an oversupply of pork, and this will become a particular issue if an ASF outbreak hits production and results in a drop off in export opportunities."

The firm adds that the severity of disease outbreaks are showing no signs of being curbed, especially in pork and poultry. As a result, biosecurity will become a higher business priority for livestock and fish producers in the year ahead, says Rabobank. "Major outbreaks are affecting global trade flows and consumer preferences, and as a result we expect to see a shift to beef and seafood consumption in some markets."

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.