DTN Early Word Opening Livestock
Live and Feeder Futures Set to Open Week With Decent Buying Interest
GENERAL COMMENTS:
Cattle: Steady-$2 HR Futures: 50-100 HR Live Equiv $148.19 +2.11*
Hogs: Steady-$1 LR Futures: Mixed Lean Equiv $ 87.31 +0.17**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
While there could be plenty of feedlot bulls waving flags Monday, the cash cattle trade should start out typically slow with packers limiting initial efforts to the collection of showlists. The new offering is expected to be steady to somewhat larger. Our guess is that asking prices will start out around $128 in the South and $205 plus in the North. The official index roll is scheduled to end on Tuesday. It's possible that frond-end buying interest will improve after that. Live and feeder futures should be staged to open with a firm undertone, boosted by residual buying interest, signs of impressive beef demand and tall cash premiums.
Hog buyers are likely to resume procurement chores near mid-month with bids steady to $1 lower. If weekly slaughter holds around 2.3 million for the next month or so, price stability (or lack of) will probably turn on the strength of product demand. Lean futures seem set to open on a mixed basis with a slow combination of short-covering and long liquidation.
| BULL SIDE | BEAR SIDE | ||
| 1) | Although live cattle inventory proved a bit more expensive for packers last week, the surge in the beef carcass value (i.e., from Fridayto Friday, the choice and select cutouts gained $11.76 and $6.94, respectively) more than offset the difference. Gross packer margins are starting the week at the highest level seen since last November. | 1) | Despite an orgy of bullish fundamental news seen in recent weeks, the live cattle futures remain locked in a narrowly and heavily discounted trading range. With spot April languishing at a $7 to $8 discount to cash, feeder's resolve to resist lower bids could be set to erode. Prospects for larger fed cattle supplies later in the spring and the risk long liquidation whenever the fed market falters continue to corral the potential of front-end futures under $118 to $120. |
| 2) | Employers added 235,000 workers in February, more than generally expected. Furthermore, the jobless rate fell slightly to 4.7% (4.8% in January) and the average hourly earnings grew by 0.2%. This is promising news for future consumer meat spending. | 2) | During the week ending March 7, noncommercial traders were net sellers, reducing their net-long position in lean hog futures to 30,400 contracts, down 6,600 from week prior. |
| 3) | Weekly hog kills are likely to remain about steady for the next four to six weeks while demand starts to improve for some pork products on a seasonal basis. | 3) | With jobless claims near a 44-year low, the stock market surging, and consumer spending growing, interest rate hikes in the months ahead now seem a slam-dunk. Good news for a stronger dollar, but potentially bad news for meat exports. |
| 4) | Not only did monthly trade data confirm excellent foreign demand for U.S. pork in January (i.e., 20% greater than 2016), weekly sales and shipments suggests that exports have remained strong during February and early March as well. | 4) | The price ceiling on the corn market got a few new bearish beams this week, including larger estimates of South American yields and larger world stocks. Cheap feed almost always leads to larger carcass weights. |
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CATTLE: (AP) -- The governors of Oklahoma, Texas, Kansas and New Mexico are seeking temporary suspension of grazing restrictions for farmers and ranchers because of wildfires.
The fires have burned more than 2,300 square miles in the four states, forcing farmers and ranchers to move their livestock.
The letter from the governors to acting Secretary of Agriculture Mike Young asks that the restrictions in the Conservation Reserve Program be lifted to provide more land for grazing.
The program is a voluntary land conservation program of the Farm Service Agency of the U.S. Department of Agriculture to help agricultural producers protect environmentally sensitive land.
According to the agency, emergency grazing of CRP land is authorized under certain conditions to provide relief to livestock producers due to some natural disasters.
(dallasnews.com) -- Gov. Greg Abbott has declared six Texas Panhandle counties disaster areas after deadly wildfires there.
Abbott issued the proclamation Saturday to help clear the way for government assistance in Gray, Hemphill, Lipscomb, Ochiltree, Roberts and Wheeler counties.
A statement from Abbott says Texas officials have asked the U.S. Department of Agriculture for a disaster designation to activate the agency's emergency loan program. The funds would be used to help eligible farmers and ranchers rebuild and recover from losses sustained by the wildfires.
Officials say wildfires burned an estimated 750 square miles in Texas, displacing about 10,000 cattle and horses.
Four people have died in the wildfires, including three ranch hands — Cody Crockett, Sloan Everett and Sydney Wallace — who were trying to save cattle from the approaching flames Monday.
Abbott on Thursday suspended some permit requirements and transportation restrictions so hay for livestock could more quickly reach ranches.
Ranchers and state agriculture officials are working to provide feed and other supplies for approximately 10,000 horses and cattle that fled the fires.
The Texas A&M AgriLife Extension, which is helping organize donations of supplies, said that about 4,200 bales of hay would be needed during the next two weeks as ranchers recover from the fires.
HOGS: (foodmarket.com) -- Wildfires devastated a Smithfield Foods Inc hog farm in Laverne, Oklahoma, killing an uncertain but potentially huge number of pigs, company and local officials said on Friday.
"Several thousands were lost," said Luke Kanclerz, spokesman for the Oklahoma Forestry Services. "Such a large area was impacted by these fires, it's taking time to collect information ... there are no accurate numbers yet."
Firefighters on Friday were still working to contain some of the grass fires that grew rapidly on Monday due to dry weather and parched prairie land in Texas, north and western Oklahoma and southern Kansas, burning nearly 2 million acres, killing six people and hundreds of cattle.
The Smithfield farm housed about 45,000 sows, according to the company website.
"While we are deeply thankful that no employees were harmed in the fire, we lament the unnecessary loss of animals and the devastation to the surrounding community," Smithfield spokeswoman Kathleen Kirkham said in a statement.
Kirkham did not respond to a request for an estimate on how many sows at the farm had died.
Smithfield, the world's largest pork producer, says it produces about 16 million hogs per year. The company is a subsidiary of WH Group Ltd.
John Harrington can be reached at feelofthemarket@yahoo.com
Follow John Harrington on Twitter @feelofthemarket
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