DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv $129.69 - .39*
Hogs: Steady-$1 HR Futures: Mixed Lean Equiv $ 90.44 + .41**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Activity in feedlot country will be limited Monday morning to the distribution of new showlists. We suspect the new offering will be somewhat larger than last week thanks to carryover numbers from last week. Preliminary asking prices should start out around $122 in the South and $192 in the North. Live and feeder futures should open on a mixed basis thanks to follow-through selling and short-covering on the other.

Hog buyers are expected to resume procurement chores with bids steady to $1 higher. Lean futures seem set to begin with uneven price action linked to a combination of light bull-spreading and profit-taking. Spot February is scheduled to expire Monday at high noon.

	BULL SIDE		BEAR SIDE
1)	Given smaller trade volume totals generated last week, cattle buyers are expected to start the week relatively short-bought and needing live inventory.	1)	This week's showlists are likely to show more ready cattle thanks to last week's slower movement with unsold steers and heifers carried over, Furthermore, the strong basis and wider spreads will encourage feeder's to "pull" cattle forward, which may augment near-term supplies.
2)	The attractiveness of lower wholesale prices and last week's reduced production should work to promote greater stability in beef cutouts this week.	2)	After breaching the uptrend off the October lows and failing to close the gap in actively-traded April, Friday's sharp decline and lower settlement in live cattle future (the lowest since early December) adds to the decidedly bearish price picture.
3)	The February lean hog contract consistently set new life-of-contract highs pretty much through all of last week. April lean hog futures nearly matched its life of contract highs on Friday. The market continues to be supported by strong demand with carcass value finding excellent support in the mid-$80 area.	3)	During the week ending Feb. 7, noncommercial traders in the noncommercial classification saw their net-long position in lean hog futures actually decline by 1,900 contracts as an increase in long positions was more than offset by a larger short.
4)	Processing pork demand remain very strong, encouraging packers to keep pouring the coals to chain speed, supporting the tightening country trade in the process.	4)	The seasonal index for April lean hog futures points lower upon expiration of the February contract.

OTHER MARKET SENSITIVE NEWS

CATTLE:(manitobacooperator.ca) -- An atmosphere of uncertainty hangs over the Canadian cattle industry as it awaits a possible trade war with the U.S.

The newly minted U.S. President Donald Trump has repeatedly signalled his intention to either scrap or renegotiate NAFTA, which has helped make the U.S. Canada's largest market for beef and cattle exports.

A more immediate concern is whether Trump intends to reinstate the former U.S. country-of-origin food labelling law, which seriously hurt the Canadian beef and pork sectors.

Congress repealed the controversial rule after the World Trade Organization found it illegal and authorized Canada to retaliate by imposing punitive tariffs on selected U.S. imports.

The Trump administration hasn't said if it will bring back the rule, although that was mentioned during the U.S. presidential election campaign.

But concern over a possible return to COOL was an undercurrent at the Manitoba Beef Producers annual meeting last week.

"To coin a phrase, all bets are off and we're just going to have to watch," said Rob McNabb, general manager of the Canadian Cattlemen's Association.

"It's pretty early. There certainly have been no initial signals."

Trump rode to power partly on his promise to rip up international trade deals or change them to benefit American workers.

The president has already signed an executive order pulling the U.S. out of the Trans-Pacific Partnership, a massive 12-nation trade agreement covering 40 per cent of the world's economy. The TPP is considered as good as dead without the U.S. in it.

Now Trump has turned his sights on NAFTA, signalling a desire last week to speed up its renegotiation. That could involve either minor changes to the agreement, a complete overhaul, or splitting it into separate deals with Canada and Mexico.

It's uncertain what that would mean for Canada's beef sector. But McNabb said reopening NAFTA could open a Pandora's box of key issues, such as animal health, phytosanitary conditions, transportation and supply value chains.

The uncertainty worries beef producers, who have fought hard over the years to establish open trade with the U.S., which receives the vast majority of Canada's cattle and beef exports.

The reinstitution of protectionist trade measures such as COOL would be a serious blow to Canada's agricultural industry, which exports over half of its production. Beef and pork are especially vulnerable. CCA calculates COOL cost cattle producers $639 million a year in lost sales and depressed markets while in effect. Annual losses to the pork sector were pegged at $500 million.

Although Congress ultimately repealed COOL, the fight to scrap it took seven years and cost CCA nearly $4 million in legal fees.

People attending the MBP meeting tried to remain hopeful their industry will be unaffected.

"We think it's not going to happen but we also thought Trump wasn't going to get elected," said Heinz Reimer, MBP's outgoing president.

Agricultural Minister Ralph Eichler said Trump always cites China and Mexico as his biggest trade enemies and never mentions Canada.

"He has bigger fish to fry. I really don't think he has a passion to destroy trade with Canada at all," Eichler said during a break in the meeting.

Eichler said he was heartened by the appointment of Sonny Perdue, the former governor of Georgia and an avowed free trade advocate, as Trump's secretary of agriculture.

Canada does have an ace up its sleeve should the U.S. decide to reinstitute COOL. The $1.1 billion in retaliatory tariffs, approved by the WTO but never applied, still remain and could be implemented quickly.

"We have not withdrawn those tariffs. They are still there if we decide we want to act," Eichler said.

"It would be a difficult situation for us to have to get into but we certainly have not withdrawn those sections at all. They're still on the table."

HOGS:

(thepigsite.com) -- The Coronaviridae is a large and complex family of enveloped, single-stranded, positive-sense RNA viruses that cause enteric and respiratory disease in humans and animals, write Luis Gabriel Giménez-Lirola et al, College of Veterinary Medicine, Iowa State University, US.

Recently-emerged coronaviruses include the severe acute respiratory syndrome (SARS) virus that caused outbreaks of respiratory disease in humans in 2002--2003 and the Middle East respiratory syndrome (MERS) virus identified in 2012. Contemporary work suggests that bat and bird species are the natural reservoirs of coronaviruses.

Five coronaviruses are recognized in swine: three alphacoronaviruses (transmissible gastroenteritis virus (TGEV), porcine respiratory coronavirus (PRCV), and porcine epidemic diarrhea virus (PEDV)), one betacoronavirus (porcine hemagglutinating encephalomyelitis virus (PHEV)), and one species of porcine deltacoronavirus (PDCoV). PEDV, TGEV and PDCoV primarily cause enteric infections in pigs. PRCV is the result of deletion and mutation of the spike gene of TGEV. This virus has a predilection for the respiratory tract, but also has the capacity to produce enteric disease. In contrast, PHEV infection ("vomiting and wasting disease") produces encephalomyelitis, rather than enteritis, and thus is not often considered when differentiating enteric infections.

Among the porcine coronaviruses, PEDV has received considerable attention because recently emerged highly virulent strains have caused significant morbidity and mortality in neonatal pigs. Catastrophic outbreaks of PEDV were reported in Korea (1997), China (2005), and Thailand (2007). Following its detection in the U.S. in April 2013, PEDV is estimated to have caused the deaths of 8 million piglets and economic losses of $481 to $929 million (USD) in 2014. The primary site of PEDV replication is the cytoplasm of villous enterocytes throughout the small intestine. Infection causes epithelial cell degeneration and villous atrophy, which leads to diarrhea, dehydration, and prolonged shedding of PEDV in feces. PEDV viremia has also been reported during the acute stage of infection in young pigs. The most common clinical consequence of PEDV infection is diarrhea, i.e. watery and flocculent feces, often accompanied by vomiting. Morbidity and mortality is highly age-dependent, with neonatal pigs the most severely affected. Thus, an outbreak in a naïve swine population may result in 90% mortality in piglets ≤ 2 weeks of age and ≤ 40% mortality in 2- to 4-week-old pigs. This age-dependent variation in mortality is likely the result of slower villus-epithelial repopulation and less developed immune systems in neonatal pigs. Experimentally-infected 3-week-old pigs showed a significant reduction in average daily gain during the first week post-inoculation and no compensatory weight gain in the following 4 weeks. In the field, Olanratmanee et al. (2010) reported that PEDV infection in pregnant gilts and sows may also have contributed to reduced reproductive performance, including a 12.6% decrease in farrowing rate, a 5.7% increase in the return rate, a 1.3% increase in the abortion rate, and a 2.0% increase in the number of mummified fetuses per litter.

It is generally accepted that lactogenic immunity, i.e., anti-PEDV secretory IgA in milk, is central to limiting the replication of PEDV in the intestinal tract and protecting piglets against clinical disease.

This concept is primarily derived from research showing that sows with higher anti-TGEV SIgA levels in milk were better able to protect their piglets against clinical TGE. These observations are the foundation upon which successful TGEV prevention and control strategies have been based for over 50 years. However, dissimilarities between immunity to PEDV versus immunity to TGEV have not been closely examined and deserve investigation. The question addressed in this project was the effect of colostral (passive) antibody on the protection of neonates against PEDV. Specifically, the objective of this experiment was to quantify the impact of circulating anti-PEDV antibody on the course of PEDV replication and clinical disease in the neonatal pig using a passive transfer model.

John Harrington can be contacted at john.harrington@dtn.com

For more from John Harrington, see www.feelofthemarket.com

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