DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv $123.67 - .09 * 
Hogs: Steady-$1 LR Futures: 25-50 LR Lean Equiv $ 79.22 - .52 **
 
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

We could start to see a few bids in cattle country Wednesday. Packers didn't gather all that many numbers last week and should soon need to turn more serious in terms of procurement (even with a holiday-shortened slaughter week ahead). Yet if board premiums continue tomove higher, asking prices around $107 to $108 in the South and $166 to $168 plus the North, significant trade volume will probably be delayed until Thursday or Friday. Live and feeder futures seems set to open on a mixed basis thanks to a slow combination of residual buying and long liquidation.

Expect the cash hog trade to remain in the same defensive groove at midweek. In short, the dominant market narrative continues to be one of record live supplies. Accordingly, bids should resurface Wednesday steady to $1 lower than last week. The preliminary estimate of the Saturday kill schedule is around 315,000 head. Lean futures are staged to open moderately lower, pressured by follow-through selling and negative fundamentals.

	BULL SIDE		BEAR SIDE
1)	Though spot December live cattle consistently seems to run out of gas over $106, the fact that bulls stubbornly keep knocking on the door suggests that the trade is gearing up for a serious challenge of the 100-day moving average at $107.75.	1)	Once again, spot December live cattle failed Tuesday in an attempt to take out tough overhead resistance at $106. Each time bulls get shoved lower, technical potentials look more and more limited.
2)	If the board stays firm and given last week's five-area steer averaged of $103.70, the implication of a soft basis should work to fortify feedlot resolve and increase the chance of higher cash sales.	2)	Beef cutouts on Tuesday closed no better than mixed with box supplies described as "heavy." Predictably, pre-Thanksgiving beef demand is really struggling.
3)	The feeder pig market (i.e., both isoweans and 40 pounders) has been on fire in recent weeks, surging nearly $10 since November began. Tighter numbers promise more manageable finishing floors by late winter/early spring.	3)	The pork carcass value closed moderately lower on Tuesday, pressured by softer demand for loin, picnic and rib cuts.
4)	The next major swing in hog slaughter will be lower with the current market probably within two to three weeks of the seasonal crest in numbers. Indeed, weekly kills next month could suddenly pull back given colder weather and the assumption that producers have been aggressively pulling marketing forward throughout the fall.	4)	The hog market structure is negative with spot December lean futures trading at a discount to the cash index, and February futures are trading at a larger-than-normal premium to the December issue.

OTHER MARKET SENSITIVE NEWS

CATTLE:(nrn.com) -- McDonald's Corp. has started testing a Sriracha Big Mac at locations in Columbus, Ohio, making it the chain's first attempt at a changed recipe of its iconic, signature sandwich.

The Sriracha Big Mac, which featured Big Mac sauce flavored with spicy Sriracha, will be tested at 128 locations in Central Ohio through the end of the year, the same locations that tested different size Big Macs earlier this year.

McDonald's introduced a Sriracha-spiked version of its signature Special Sauce this summer at locations in Seattle and southern California.

"Offering the addition of Sriracha to our Big Mac Special Sauce was a fun way for our culinary innovations team to think outside the box and continue to answer the call of our customers who are always looking for the next great innovation in food experience and taste," Scott Nickell, Central Ohio Co-op president, said in a statement.

The Ohio test will be used to decide whether to introduce the spicier version of the Big Mac nationwide.

In addition to the Sriracha Big Mac, McDonald's in the Columbus area will offer the Sriracha Big Mac sauce a la carte as a dipping sauce for its Chicken McNuggets and French Fries. Customers will be able to customize any item on the menu with the sriracha through the end of the year.

The test is the latest indication that McDonald's is thinking differently in its efforts to bring customers lost in recent years to competitors in the growing burger category. McDonald's primary quick-service restaurant competitors have been joined by a large generation of fast-casual burger chains like Five Guys, Smashburger and Shake Shack Inc.

Same-store sales in the third quarter ended Sept. 30 increased 1.3 percent, a slowdown from earlier in the year when the chain generated sales with its All-Day Breakfast promotion.

Yet traffic remains weak, and the company is concerned that many younger consumers aren't allured to its premium burgers, given the competition. Only one in five have tried the Big Mac, according to an internal memo cited recently by the Wall Street Journal.

By offering a spicier version of the Big Mac, McDonald's hopes to get some of those younger customers to give it a shot.

Numerous chains, notably McDonald's rival Burger King, have offered different versions of their own iconic sandwiches for years. McDonald's has frequently done so with its Quarter Pounder line, but this is the first time the chain has tried a different recipe with the Big Mac, which a franchisee created back in 1967.

"We're always trying new creations and we wanted to innovate with an on-trend flavor like Sriracha to give our customers in Columbus a new and exciting taste," Mike Haracz, McDonald's chef, said in a statement.

HOGS: (National Pork Board) -- American pig farmers have a long history of doing what's best for their animals, their customers and their communities. This commitment matches nicely with the goals of the U.S. Centers for Disease Control and Prevention's (CDC) annual celebration, Get Smart About Antibiotics Week (Nov. 14-20), and demonstrates why it's so critical to use antibiotics wisely to safeguard the health and well-being of people, animals and the environment.

"The Get Smart About Antibiotics Week is a good time to reflect on our long history of accomplishments in the antibiotics area, such as using these medications responsibly and embracing the updated Pork Quality AssuranceSM Plus certification program," said National Pork Board President Jan Archer, a pig farmer from North Carolina. "As pig farmers, we are aware of the challenge of antibiotic resistance and are dedicated to working hard to preserve the effectiveness of antibiotics, both on the farm and in human medicine."

According to the CDC, the 2016 Get Smart About Antibiotics Week marks an important year because Congress has allocated $160 million in new funding for the agency to implement its activities listed in the National Action Plan for Combating Antibiotic-Resistant Bacteria (CARB). The CDC is using this funding to accelerate outbreak detection and prevention, to support innovative research and to inform providers and the general public about antibiotic resistance and appropriate antibiotic use.

"The single most important action to slow the development and spread of antibiotic-resistant infections is for every one of us to improve the way antibiotics are prescribed and used," said Dr. Lauri Hicks, director for the CDC's Office of Antibiotic Stewardship. "If we don't take better care of the antibiotics we have Wednesday -- if we aren't better stewards of them -- we may lose these antibiotics and the next ones that come along."

The National Pork Board's three-point antibiotic stewardship plan, announced in mid-2015, focuses on promoting research, increasing pig farmer education and communicating with consumers in 2016 and beyond. The Antibiotic Resource Center, found at pork.org/antibiotics, is an example of efforts to assist farmers and others who want to learn more about responsible on-farm antibiotic use.

In another demonstration of its commitment to the complex issue of antibiotic resistance, the National Pork Board hosted a national dialogue earlier this year called Resistance: The Antibiotic Challenge. The Washington, D.C., event brought together key opinion leaders from human health, animal health, government, pharmaceutical, retail and consumer segments to discuss the challenge of responsible antibiotic use in the 21st century. Another joint dialog occurred earlier this month in Denver when the National Pork Board and the American Public Health Association discussed the shared responsibility of reducing the need for antibiotics.

"We are always seeking ways to do what's right for our animals, our consumers and the environment," Archer said. "We are looking for new ways to reduce the overall need for antibiotics, but we need to retain them as essential tools for veterinarians who work hand-in-hand with farmers to raise healthy livestock and produce safe food."

Financially, the farmer-led board has invested more than $6 million in Pork Checkoff funds in antibiotic-related research since 2000, with $750,000 spent this year alone in five research priority areas specifically aimed at reducing antibiotic resistance and finding antibiotic alternatives.

"Real change is underway on pig farms across America, with farmers and their veterinarians shaping the discussion around responsible antibiotic use," Archer said. "As the FDA prepares to implement the new, more stringent rules, such as the upcoming ban on using medically important antibiotics for growth promotion in food animals, we'll be ready."

(National Hog Farmer) -- Following implementation of the U.S.-Colombia Trade Promotion Agreement in 2012, Colombia quickly emerged as the leading destination for U.S. pork in the Central-South America region. Exports of pork and pork variety meat finished 2012 at 19,755 metric tons, up 73% from 2011. Export value was $54.1 million, up 87%.

Export growth to Colombia was also robust in 2013 and again in 2014, when exports peaked at 47,441 mt valued at $134.1 million. Exports slowed last year and endured a difficult first half of 2016, hampered by the recent rebound in Colombia's domestic pork supplies and persistent weakness in the Colombian peso, which bottomed in February of this year at more than 3,400 pesos per dollar. By comparison, in mid-2014, the peso was trading at about 1,850 pesos per dollar.

According to USDA estimates, Colombia's pork production increased 3% in 2015 to 300,000 mt (carcass weight equivalent), following a sharp decline in 2014. Production is projected to be steady year-over-year in 2016.

The United States remains Colombia's largest pork supplier, as imports from other countries have also fallen over the past two years. Through August, Colombia's 2016 imports of Chilean pork were 3,853 mt — down 34% from their 2014 pace. Imports of Canadian pork were down 55% to 2,865 mt.

September export results released by USDA and compiled by the U.S. Meat Export Federation show signs of a potential rebound for U.S. exports to Colombia. September pork/pork variety meat volume was 3,456 mt — the largest since November 2015. Export value was the highest since October 2015 at $8.2 million. This coincided with a modest recovery for the Colombian peso, which traded mostly in the 2,900 to 2,950 pesos per dollar range in September — up about 15% from its February low.

In order to help regain momentum for U.S. pork in Colombia, the USMEF is looking to expand the mix of products exported and appeal to a wider range of buyers.

"To date, our market share in Colombia has been built mostly on cuts utilized by the further processing industry," says Jessica Julca, USMEF representative in South America. "And while U.S. pork does have an excellent reputation in Colombia as high-quality raw material for processing, the foodservice sector has not been a large importer of our product."

To expand its outreach to foodservice representatives, the USMEF recently showcased a range of U.S. pork items — including brisket, chops, boneless loins and bacon — at Alimentec 2016, a biennial food show held in Bogota. This promotional effort was funded by the Pork Checkoff and supported by two of the region's leading importers, Calypso Del Caribe and Atlantic. Cecilia Alfaro, a culinary instructor at San Ignacio de Loyola gastronomy school in Peru, conducted three cooking demonstrations per day using various cuts of U.S. pork.

This was the USMEF's first appearance at Alimentec, and Julca was pleased with the crowd it attracted.

"We were able to reach both types of audiences: those looking for a high-quality, center-of-the-plate ingredient that works in their restaurants, and those looking for a consistent, affordable protein to include in their menu plans," she says. "That was the message that Chef Alfaro spread throughout the show — that U.S. pork is not only a high-quality alternative but also an affordable protein that can be used in hundreds of ways to prepare a healthy and delicious meal."

John Harrington can be reached at feelofthemarket@yahoo.com
Follow John Harrington on Twitter @feelofthemarket

(BAS)

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