DTN Early Word Opening Livestock

 
Cattle: Steady-$2 LR Futures: 10-30 HR Live Equiv $128.15 - .45* 
Hogs: Steady Futures: 10-30 LR Lean Equiv $ 86.93 - .02**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Can cattle futures extend the late-week rally, taking out significant overhead resistance? Will feedlot managers find a way to regain country leverage and stop the profuse bleeding of the last several weeks? As far as we can tell, these are simply two versions of the same question. It may take some time for a meaningful answer in any form to shake out. To be sure, activity Monday will be limited to the distribution of new showlists. Our guess is that a ready number should be about steady with last week. Understandably, beef producers will be reluctant to price ready cattle until they can get a decent sense of what the board wants to do. Live and feeder futures should open moderately higher, supported by follow-through buying and early-week short-covering.

Hog buyers are expected to resume work Monday with basically steady bids. Smithfield's Monmouth plant got back in the saddle on Friday, so we expect a full round of slaughter this week. That should mean a weekly kill no smaller than 2.25 million head. The pork carcass value is holding up quite well in the face of substantial seasonal tonnage. There are signs that suggest that improving export demand is a helpful factor in that regard. Lean futures seem staged to open moderately lower, pressured by spillover selling and fears of mounting production as the spring pig crop reaches maturity.

	BULL SIDE		BEAR SIDE
1)	Last week's combination of sharply lower feedlot sales and late rallying live cattle futures means that the basis has weakened considerably, a fact that could work to support better country leverage through the balance of the month.	1)	The continuing surge in new short positions during the week ended Sept. 6 again pared the noncommercials net-long position in live cattle futures to 15,500 contracts, down 4,600 from a week earlier. Further increase in open interest later in the week suggests more new shorts.
2)	The successful bounce by nearby live cattle futures off longer-term support in the $100 to $103 area late last week seemed encouraging. Although more work needs to be done (e.g., taking out overhead resistance at 105.85 basis October), confirmation of a near-term low could spur a flurry of short-covering and bull spreading.	2)	Net beef export sales last week slipped to 9,200 MT, down 20% from the previous week and 36% from the prior four-week average. At the same time, actual exports totaled no more than 8,066 MT (a marketing-year low), down 41% from the previous week and 43% from the prior four-week average.
3)	Net pork export sales for the week ending Sept. 3 totaled 24,300 metric ton, up 1% from the previous week and 16% from the prior four-week average. Exports of 19,500 MT were up 4% from the previous week and 8% from the prior four-week average.	3)	October lean hogs continue to trade below the lows of the market over the past five years as the fundamental situation in the pork complex is rather heavy.
4)	Pork processing margins are positive and continue to encourage healthy chain speed. No wonder Saturday's slaughter totaled 363,000 hogs, the fifth largest Saturday ever.	4)	For the week ending Sept. 6, noncommercial traders were net sellers of lean hog futures, reducing their net-long position to 15,700 contracts (off 3,100 from the prior week).

OTHER MARKET SENSITIVE NEWS
CATTLE:

CATTLE: (KBTX) -- Could brisket boost your "good cholesterol?" That is what one Texas A&M professor is working to prove.

Smoked brisket was stacked high on several customers' plates at C&J Barbecue Wednesday afternoon.

"I had a half-a-pound of brisket. As you can see, it is all gone now," said Nicholas Swanzy, College Station resident.

"As much as I can have and still drive back to Austin without taking a nap," said Rhett Frazier, Austin resident, about how much he'd be having.

But do they think brisket is healthy?

"It's not processed. It is just pure beef from a cow, so yeah, I don't see anything wrong with it," said Frazier.

Stephen Smith is a professor and researcher at Texas A&M Agrilife. He says while examining brisket, his research team discovered it could have health benefits.

"When you look at brisket fat, it had the same composition of our ground beef that was the best for you, that had high oleic acid," said Smith.

Smith says oleic acid helps your body regulate cholesterol levels by raising your "good cholesterol." Smith is hoping to take his research from the lab and start testing it on humans.

He says doctors often tell patients who have high cholesterol or are overweight to cut out red meat.

"We are pushing against that and saying perhaps they should continue to have beef in the diet, and especially beef with fat," said Smith.

Customers seemed pleased to find out about the study.

"That's a bonus," said Swanzy.

"I don't have to have an alibi to eat it every day," said Fraizer.

Science aside, one customer says he will not need more research to come back for more.

"I don't let studies influence my decision on what tastes good, and brisket is just delicious," said Swanzy.

Brisket is also nutrient-rich in iron and vitamin B.

HOGS: (agebb.missouri.edu) -- A fire Monday at the Smithfield plant in Monmouth, Il halted slaughter at that location for several days this week, but the plant was operating again late in the week.

Seaboard Foods has purchased the 25,000 sow Texas Farm hog operation from its Japanese parent company, Nippon Meat Packers, Inc.

U.S. pork exports totaled 403 million pounds during July. That is up 1.9% from a year ago, but the lowest for any month since March. The increase in exports was due to a big jump in exports to China and Hong Kong.

U.S. pork imports totaled 91 million pounds in July. That was up 6% from a year ago and the most since March. Shipments from Canada were down 9.7%, but there was a large increase in pork imports from Europe.

Hog imports totaled 415,545 head during July, which is down 11.7% from a year ago.

Slaughter hog prices were steady to lower last week. The national negotiated barrow and gilt price averaged $57.14/cwt on Friday morning report, up 4 cents from a week earlier, but down $7.34 from a year ago.

Friday morning's pork cutout value was $81.08/cwt FOB slaughter plants, up $3.89 from the week before. Loin, ham, belly and butt prices were all higher. Friday morning's national negotiated hog price is only 70.5% of the cutout value.

Hog slaughter this holiday-shortened week totaled 2.084 million head, down 7.5% from last week, but up 1.7% from the same week last year.

The average slaughter weight of barrows and gilts in Iowa-Minnesota for the week ending September 3 was 276.8 pounds. That is up 0.8 pound from the week before, but down 0.6 pound from the same week last year.

USDA's Crop Progress report says that 74% of corn acres were in good or excellent condition on September 4. That is down 1 point from a week earlier, but 6 points higher than on that date last year.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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