DTN Early Word Opening Livestock

Meat Futures Geared to Open New Week with Moderate Gains

(DTN file photo)

Cattle: Steady-$2 HR Futures: 25-50 HR Live Equiv $136.46 + $1.72*

Hogs: Steady-$1 LR Futures: 25-50 HR Lean Equiv $87.30 + $1.66**

* based on formula estimating live cattle equivalent of gross packer revenue

** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Feedlot psychology is riding high this morning, juiced by the incredible surge in packers spending last week. Our preliminary guess is that new showlists will be priced at least $2-4 higher on a live basis. Yet don't look for much specific talk along those lines as traders typically focus on the distribution of the late month offering. Ready numbers are likely to be steady to somewhat smaller compared with last week. Live and feeder futures are staged to open moderately higher thanks to early-week short covering and constructive fundamentals.

Hog buyers are expected to resume procurement chore this morning with bids steady to $1 lower. The enormous spread between the cash index and spot April futures begs the question as to which leg has the most price movement potential. Will cash rally significant or will the board aggressively crash. Lean futures seems set to open some higher, supported by follow-through buying and the large cash market premium.

BULL SIDE BEAR SIDE
1) Late winter cattle market has jumped of the charts, both in terms of tighter than expected feedlot supplies and stronger than projected beef demand (especially exports). There are no signs that such bullish fundamentals will significantly fade anytime soon. 1) Noncommercials again pared their net-long position during the week ended Feb. 21, to 88,370 contracts, down 2,650 from a week earlier and more than 8,000 below the peak in early February.
2) There are no signs that such bullish fundamentals will significantly fade anytime soon. 2) For the week ending February 18, net beef export sales totaled 10,400 MT report, down 22 percent from the previous week and 41 percent from the prior 4-week average. At †he same time, actual exports totaled 13,300 MT, down 9 percent from the previous week and 6 percent from the prior 4-week average.
3)

January placement news released Friday may actually point to a glass more half-fill than half-empty. Not only was the total fully anticipated by private guessers (i.e., up 11 percent), extremely discounted deferred live futures seems to suggest than any negative price implication have already been dialed into the board, perhaps and then some.

3) A crack in pork demand surfaced last week in the belly complex as prices plunged into mid-week taking with it the cutout value and lean hog futures. The sharp break did shift the short term market trend in lean futures into a bearish pattern while the longer term trend is now neutral at best.
4) The pork carcass value scored a sharp rebound on Friday, led by appreciating fresh cuts and a $6.57 surge in the belly primal. The $9 plus premium of the cash hog index over spot April lean futures should either attract new board buying, limit board selling, or some of both. 4) During the week ending February 21, noncommercial traders rather aggressively reduced their long position in lean hog futures by 7,000 contracts,

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OTHER MARKET SENSITIVE NEWS

CATTLE: (tristateneighbor.com) -- Those selling cattle in Iowa will soon be paying another 50 cents a head to a beef checkoff program. Iowa producers voted last fall to re-instate a checkoff that generates funds for a state program. The 50-cent fee is in addition to the $1 per head national checkoff, but Iowa can use its state-collected funds more flexibly for projects such as promoting an Iowa beef brand and doing production research.

Starting March 1, the state checkoff will be collected on all cattle sold in Iowa. It applies to "state of origin" Iowa cattle, such as those marketed to packers in other states. Cattle raised in other states and sold in Iowa will be subject to the state checkoff as well. Chris Freland, executive director of the Iowa Beef Industry Council, said she hopes that even out-of-state producers will recognize how the checkoff can help them. "Hopefully, they can see the benefit in the demand for beef," she said. Freland called from the road in early February. She had been out visiting auction barns to help them prepare for collecting the new checkoff funds.

As part of the newly approved checkoff, producers have the option of asking for a refund of the state share that they paid by contacting the Iowa Beef Industry Council. Freland was unsure how many producers will request a refund, but she expressed hope that most will see the value in what the checkoff can do and decide to participate. "We want them to be investors," she said.

A 10-member committee of the Iowa Beef Industry Council board oversees the funds. Committee members will be taking suggestions for how the money should be put to use. The board has scheduled a strategic planning and listening session in June. They're hoping to hear what the beef industry truly needs, both short term and long term, Freland said. Those with ideas can submit a proposal to the board.

Once the board develops a direction, Freland said the plan is to visit with producers across the state to collect their input.

"We want to hear their ideas," Freland said. "We want to show a positive demand for beef and beef products."

HOGS: (University of Edinburgh) -- Scientists have produced pigs that may be protected from an infection that costs the swine industry billions each year.

The team have used advanced genetic techniques to produce pigs that are potentially resilient to Porcine Reproductive and Respiratory Syndrome (PRRS).

Early tests have revealed that cells from the pigs are completely resistant to infection with both major subtypes of the virus that causes the disease.

The animals are otherwise healthy and the change - introduced using gene-editing technology - should not affect their ability to fight off other infections, the researchers say.

PRRS causes severe breathing problems in young pigs and breeding failures in pregnant females.

Studies have shown that the PRRS virus targets immune cells called macrophages. A molecule on the surface of these cells called CD163 plays a key role in enabling the PRRS virus to establish an infection. The research team at the University of Edinburgh's Roslin Institute, in collaboration with Genus, used a gene-editing tool called CRISPR/Cas9 to cut out a small section of the CD163 gene in the pigs' DNA code.

Laboratory tests of cells from the pigs with the modified CD163 gene have confirmed that this change in the pig's DNA blocks the virus from being able to cause infection.

The next stage in the study will be to test whether the pigs are resistant to infection when exposed to the virus. Previous studies by another team have produced pigs that lack the entire CD163 molecule, and which do not become ill when exposed to the PRRS virus.

In the latest study, only the section of CD163 that interacts with the PRRS virus is removed and the molecule appears to retain its other functions.

PRRS is endemic in most pig producing countries worldwide. Vaccines have mostly failed to stop the spread of the virus, which continues to evolve rapidly. Consequently, it is one of the greatest challenges facing pig producers today. In Europe alone, the disease is estimated to cost the pig industry more than €1.5 billion each year. Lead researcher Professor Alan Archibald, of The Roslin Institute, said: "Genome-editing offers opportunities to boost food security by reducing waste and losses from infectious diseases, as well as improving animal welfare by reducing the burden of disease. Our results take us closer to realising these benefits and specifically address the most important infectious disease problem for the pig industry worldwide."

Jonathan Lightner, Chief Scientific Officer for Genus said: "This result furthers the case for the criticality of CD163 in PRRSv infection and demonstrates that a targeted removal of the viral interacting domain can confer resistance while the reminder of the protein is present. This, and other gene edits, will be evaluated as Genus advances the development of gene editing to confer PRRSv resistance. Genus is committed to pioneering the responsible application of technology to animal genetic improvement to enhance the well-being of animals, the livelihoods of farmers, and the sustainable approach to producing food for a growing global population."

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

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

(BAS)

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