DTN Early Word Opening Livestock

 
Cattle: $1-3 HR Futures: 10-30 HR Live Equiv $123.42 +1.16* 
Hogs: Steady Futures: 25-50 HR Lean Equiv $ 78.47 + .50**
* 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 a few preliminary bids could surface at midweek, we don't expect to see meaningful trade volume develop before Thursday and Friday. As long as the board and cutouts avoid significant reversals, feedlot managers are likely to stick with significantly higher asking prices (e.g., $105 plus basis Kansas and Texas). Live and feeder futures seem staged to open moderately higher, boosted by both short-covering and new spec buying (open interest does seem to be growing).

The cash hog trade should resume Wednesday with basically steady bids. To say that packers like their work will be a considerable understatement. There is more than a $20 spread between the carcass value and the cash index. This suggests that packers are receiving a $40 to $55/head margin. Lean futures are geared to open moderately higher, boosted by follow-through buying and product appreciation.

	BULL SIDE		BEAR SIDE
1)	The rebound in the beef market was extended Tuesday with the choice and select cutouts quoted sharply higher. Box movement was once again described as "moderate to fairly good."	1)	Several beef packers continue to insist that they essentially have slaughter needs already covered for the next two weeks.
2)	According to the DTN placement model, big lots now have approximately 1.76 million cattle scheduled to finish in January, 2% less than the prior year and 8% less than the five-year average.	2)	The modest premiums in the late fall and winter live cattle contracts still convey little optimism in the way of seasonal price strength.
3)	The wholesale pork market continued to firm on Tuesday in the face of unrelentingly aggressive chain speed. All primals contributed to overall carcass appreciation.	3)	Total beef, pork and poultry supplies in refrigerated warehouses at the end of September were estimated at 2.443 billion pounds, 1.6% larger than the previous month and 11% higher than the five-year average.
4)	Hog futures seem to be looking for a market low. Action last week perhaps confirms that lows have been reached, especially given what has occurred so far this week. Furthermore, the recent lift in spot December suggests that specs and commercials are getting new respect for the cash index premium.	4)	Although pork demand this fall has held up relatively well, some fear that consumers are close to a tipping point when adequate consumption through the balance of the fourth quarter will heavily depend on much lower wholesale and retail prices.

OTHER MARKET SENSITIVE NEWS

CATTLE: (timescolonist.com) -- From a chart on his computer screen at GrowSafe Systems Ltd., co-CEO Camiel Huisma can describe not only how much a certain cow ate today but how quickly it ate and how much it weighs.

The animal he's describing is in Brazil, one in a herd of dozens of nearly identical beef cattle on a ranch more than 9,000 kilometres south of his company's rural headquarters just north of Calgary.

"You see this animal ... just takes tiny little bites, very gently," the founder of GrowSafe says, pointing to a yellow dot on the chart representing a single cow. Indicating a purple dot, he adds: "This purple animal takes massive bites."

"After a while, it's almost like a digital fingerprint or signature. We can recognize these animals on their feeding behaviour and those sometimes correlate to feed efficiency or disease," he says.

The agricultural technology company which has grown slowly over the past 26 years is on a hiring and growth binge after winning an investment last month from U.K.-based Wheatsheaf Group, a company created in 2012 to invest in sustainable food and energy initiatives.

Neither GrowSafe nor Wheatsheaf would give a dollar value of the deal but co-CEO Alison Sunstrum says she and Huisma, spouses as well as business partners, will continue to control the company with 50 per cent ownership.

Sunstrum says the company's plan is to increase its employee count from 22 to 29 by year-end while moving to a larger headquarters with more office and manufacturing space, plus access to pasture to test new equipment. Most of its staff are engineers, computer programmers or animal health experts.

The ranch in Brazil uses a GrowSafe system that picks up radio-frequency identification (RFID) chips in the animals' ear tags, then matches each with data from weight sensors in their feed and water supply stations and wirelessly transmits the data via the Internet.

Similar information flows into GrowSafe computers from the United States, Australia, South Africa, Mexico and elsewhere. GrowSafe designs its own feeding stations, hardware and software but outsources manufacturing to third parties.

Huisma traces GrowSafe's origins to an ostrich-breeding craze that swept through farming communities in North America in the early 1990s.

At its height, a breeding pair of ostriches could fetch $60,000 from a farmer interested in raising such exotic livestock, he says.

The problem was that chicks hatched in Canada and the United States had very high mortality rates. A neighbour who had lost several generations of young birds challenged Huisma to come up with a solution.

Huisma attached RFID chips to the young ostriches' legs and invented a mat to detect the chips and flow the data into a computer. He found that healthy birds were going to the feeding station hundreds of times each day but unhealthy birds were only going dozens of times.

With earlier detection of birds that needed care, veterinarians were able to intervene and survivability increased, Huisma says, adding that he sold several systems before the collapse of the ostrich market in the mid-90s. He then switched to courting the cattle industry.

Sunstrum, then a Winnipeg businesswoman, discovered GrowSafe in 1999 as an investor. She says she was so impressed with Huisma's data-collecting technology that she put $100,000 into the company — she jokes that she had to join to make sure that she got her money back.

The couple, both 59, worked from a garage for the first few years and hired their first employee in 2003.

Sunstrum says the company has grown revenue since 2000 at an average rate of 25 per cent per year and has always been profitable, though she wouldn't give revenue figures.

John Basarab, a beef research scientist at Alberta Agriculture and Forestry, is a big fan of GrowSafe, pointing out that he bought one of its first systems in 1998 for a research facility in Lacombe, Alta.

Basarab says GrowSafe products are now considered a "basic tool" for research into how efficiently individual animals can turn pounds of feed into pounds of steaks — critical to making choices about which animals to breed to produce superior calves.

"Fifty to 75 per cent of the cost of production for beef cattle is in feed," he says. "If you can reduce those feed costs, that will make you more profitable."

HOGS: (GLOBE NEWSWIRE) -- This fall, Smithfield launches seven new products to encourage consumers to explore the latest in cooking trends and flavor innovation. With the rise in slow cooker cooking, all bacon everything and holiday entertaining, the brand offers something for everyone while expanding their current product line to tap into consumers' love of unique flavor combinations.

• Smithfield Marinated Pork Roasts: Slow cooker cooking is on the rise as nearly 81% of homes already own a slow cooker with 18% of homes using a slow cooker in a typical two-week period. Smithfield is introducing two Marinated Pork Roasts perfect for slow cooker cooking that appeal to lovers of BBQ and the comforts of home. (32 oz., $7.99)

•Smithfield Sweet & Smoky Pork Roast satisfies consumers' ongoing love affair with all things barbecue, making for perfect pulled pork for sandwiches and sliders.

•Smithfield Homestyle Pork Roast appeals to consumers young and old who turn to slow cookers for classic comfort food.

• Smithfield Boneless Pork Shoulder Carnitas: From food trucks to fine dining, authentic Mexican and Latin-inspired cuisine is growing in popularity. Available in both non-seasoned and pre-seasoned varieties, Smithfield Boneless Pork Shoulder Carnitas can be braised or oven-roasted until slightly crisp to be used as a filling for tacos, burritos, tamales and tortas for an easy, flavorful at-home dinner solution the whole family will enjoy.

•Smithfield Boneless Pork Shoulder Seasoned Carnitas are conveniently seasoned with the traditional herbs of Mexico like garlic, onion, oregano and cumin to achieve a delicious balance of flavors. (32 oz., $7.99)

•Smithfield Boneless Pork Shoulder Non-Seasoned Carnitas are tender and juicy and allow consumers to add their own combination of seasonings to create a flavorful dish any day of the week. (2.5 - 3.5 lbs., $2.59 per pound)

• Smithfield Hardwood Smoked Bacon & Cracked Black Pepper Marinated Fresh Pork Tenderloin: Topped with real Smithfield Hardwood Smoked Bacon, this new flavor capitalizes on the ongoing bacon craze. Slow-marinated and perfectly seasoned 100% fresh pork cuts, Smithfield Marinated Fresh Pork Tenderloin makes for a hassle-free, delicious dinner ready in just 30 minutes or less any night of the week. (18.4 oz., $6.99)

• Smithfield Brown Sugar & Bourbon Bacon: With a touch of sweetness and a hint of smokiness, this limited time flavor appeals to both bacon lovers and imbibers alike. Along with offering a unique flavor combination, Smithfield Brown Sugar & Bourbon Bacon is thick cut and naturally hardwood smoked with a hand-rubbed seasoning. It comes in re-sealable 22 oz. stack packaging for added convenience. (22 oz., $8.49)

• Smithfield Salted Caramel Spiral Sliced Ham: This specialty ham can serve as the centerpiece to any table this holiday season. Smithfield Spiral hams are fully cooked, hickory-smoked, and expertly crafted. The new Salted Caramel Glaze will surprise and delight guests on the Smithfield Spiral ham they already know and love. (Size varies, $25 - $35)

"As consumers' tastes and lifestyles change, we at Smithfield want to provide products that meet their ever-changing needs," said Mike Merritt, senior director of brand marketing for Smithfield Foods. "We're excited to release these new products and help be a part of consumers' meal times all throughout the day."

"Whether consumers are looking for a delicious weeknight dinner in 30 minutes or less, a slow cooker roast for game day, or the perfect pulled pork, we're proud to have something for everyone," said Dedra Berg, senior director of fresh pork marketing for Smithfield Foods.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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