DTN Early Word Opening Livestock

 
Cattle: Steady-$2 HR Futures: 50-100 HR Live Equiv $148.74 + .55 * 
Hogs: Steady-$1 HR Futures: 50-100 HR Lean Equiv $ 87.79 + .48 **
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Given the combination of last week's larger slaughter and smaller trade volume totals, cattle buying is getting started relatively early, butour guess is that doesn't mean Tuesday. We could see a few preliminary bids and asking prices surface, but significant trade volume is not likely to surface before Wednesday or Thursday.However, there's no reason for feedlot managers to turn shy in terms of cash expectations, not the way the winning cards have been falling. Look for cattle to eventually be priced around $128 plus in the South and $204 to $205 plus in the North. Live and feeder futures should open solidly higher, supported by follow-through buying and cash premiums.

The cash hog market is expected to open with bids steady to $1 lower. This week is expected to be somewhat lower than last, possibly around 2.28 million head. Seasonally, slaughter levels usually taper off slightly each week from nowthrough the first week of April. Lean futures should open with decent strength, supported by spillover buying and constructive early-week fundamentals.

	BULL SIDE		BEAR SIDE
1)	Don't look now, but feeder cattle futures are on a definite roll, breaking out of a lackluster trading range where prices were stuck in for most of the first quarter. Traditionally, feeders lead live contracts in a bull market.	1)	Once again, would-be cattle bulls at the CME were stopped dead in their tracks by tough overhead chart resistance between 119 and 120 basis April live. The best and brightest fundamentals just don't seem to matter in the face of the board's entrenched discounts.
2)	Beef cutouts apparently didn't lose any momentum over the weekend with price quoted solidly higher on Mondayand early-week box movement described no worse than "moderate."	2)	New showlists distributed on Monday looked generally larger than last week with only Kansas feedlots offering fewer ready steers and heifers.
3)	Lean hog futures blasted sharply higher on Monday with spot April closing over 70 for the first time since Feb. 21. Threatening to break above a lateral trading range, April through August closed above 40-day moving averages.	3)	The lean hog market structure has turned negative, as April futures are trading at nearly a $2 discount to the cash index, while the spread to the June contract is average at best.
4)	The pork carcass value moved moderately higher, helped by all primals except the rib. Particular strength was contributed by rib cuts and picnics.	4)	With the March 1 Hogs & Pigs report slowly rising on the horizon (i.e., scheduled for release on March 30) and many expecting to see further confirmation of herd expansion, it may be very difficult to build deferred lean premiums at this time.

OTHER MARKET SENSITIVE NEWS

CATTLE: (Agriland Media Ltd.) -- Spain has confirmed a case of BSE (Bovine Spongiform Encephalopathy), commonly known as mad cow disease, in the northwestern province of Castilla-y-Leon, according to the World Organisation for Animal Health (OIE).

Routine testing has reportedly shown a positive result for Atypical BSE type L disease, in tissue from an animal on a livestock holding near the town of Salamanca.

A spokesman at Spain's Ministry of Agriculture said the discovery would not lead to any restrictions on trade or affect consumers.

Classical mad cow disease was detected in Britain in the 1980s. It spread to other parts of Europe and ravaged herds for many years. It was linked to the Creutzfeldt-Jakob disease -- a brain-degenerative condition in humans.

Back in 2012, an Atypical case in Brazil -- one of the largest exporters of beef -- led to some importers withdrawing their trade.

Atypical BSE identified in cow in Ireland

Atypical cases have been detected occasionally during more recent years; here in Ireland a case was detected in January.

In that instance, the Department of Agriculture, Food and the Marine identified an Atypical case in an 18-year-old cow, through its surveillance of 'fallen' animals (died on farm) at knackeries.

It is understood that the case related to a cow in Co. Galway.

The animal tested positive on a screening test carried out at a Department approved, accredited private laboratory, and was then subject to follow up confirmatory tests at the Department's Central Veterinary Research Laboratory.

There were no associated public health risks with this event. A comprehensive set of public health controls were in place and the animal was excluded from the food chain and its carcase was incinerated, according to the Department.

There are two types of this disease:

Classical BSE: Classical BSE was the basis of the extensive incidence of BSE which commenced some in the 1980s, which was associated with the feeding of meat-and-bone meal. Scientific evidence indicates that it is acquired in the first year of life.

Atypical BSE: Atypical BSE, which is the case that has now been detected in Spain, has been identified more recently and is thought to occur spontaneously.

Atypical BSE occurs sporadically in older animals with a low incidence rate.

It was first recognised in the early 2000s in Europe, following the large scale testing of livestock that was put in place at that time.

HOGS: (Sioux City Journal) -- Seaboard Triumph Foods executives feel so confident about the Sioux City market that they're already planning an expansion of their mega pork plant under construction.

Ground was broken in fall 2015 on the company's slaughter and processing plant. Work is expected to wrap in May 2018, with production anticipated to start in July with a single shift and a workforce of about 1,100.

Last month, the company -- a joint venture between Guymon, Oklahoma-based Seaboard Foods and St. Joseph, Missouri-based Triumph Foods -- announced it would add a second shift in May 2018, growing total employment to around 2,000.

"The timing of the expansion for a second shift is a result of growing demand for the Seaboard Foods line of quality pork products as well as ongoing growth in the industry," STF chief operation officer Mark Porter said in a release. "The support demonstrated thus far by our customers, community, city and state agencies simply gives us great confidence to grow right here in Northwest Iowa."

Mayor Bob Scott praised the company for the additional investment, saying it "shows the confidence that Seaboard Triumph Foods has in our community."

"As one of the largest projects in Sioux City, this expansion will create the demand for further housing growth to accommodate new employees in the region," Scott said in a statement.

With a second shift, the plant will have the capacity to slaughter and process up to 20,000 to 24,000 hogs daily, or 6 million hogs per year, double the initial projections.

The new construction, which will begin this spring, will increase the total square footage from 850,000 to 950,000, and raise the total cost from around $264 million to excess of $300 million.

To help finance the larger investment, a state economic development board last month approved an additional $3.3 million in tax incentives. The action raises to $16.5 million the total state tax credits and sales and use tax refunds awarded to the blockbuster project since it was announced in May 2015.

The city also awarded an incentive package that included waiving $7.7 million in property taxes on the sprawling complex for the first five years, based on a scale that will gradually reduce the exemption.

The Sioux City plant, the first all-new pork slaughter facility in the U.S. in a decade, is being constructed on a 250-acre site in the city's Bridgeport West Business Park, bounded roughly by Interstate 29 to the east, the Missouri River to the west and Sioux Gateway Airport to the south.

Hundreds of temporary construction workers have been deployed to the site, creating a big economic boost to the region. Epstein is the managing contractor for the project. The Chicago-based firm has extensive experience building similar meat factories, including the Triumph Foods plant in St. Joseph, Missouri. The majority of the subcontractors are based in Siouxland. So too are most of the workers assigned to the project.

The state-of-the-art Sioux City plant, designed with technologies to mitigate odors, will mirror the St. Joseph plant, which opened in 2006, and Tuesday employs about 2,800. After the second shift begins, the Sioux City plant will have about 200 salaried positions and 1,800 hourly production positions. The company has hired a substantial number of the salaried posts and recently started job fairs and other hiring efforts for production jobs.

Hiring locally for full-time positions is a priority, said Irving Jensen III, STF director of community relations and government affairs. With local unemployment at a near-historic low, however, officials also are recruiting beyond the tri-state region.

The new factory's initial annual payroll in excess of $50 million, as well as spending on materials, supplies and services, is expected to ripple through the local economy, creating new sales for a host of ancillary businesses, from truck drivers to pallet makers to cold storage warehouses.

Triumph Foods is owned by five member-owned pork producers with operations in Iowa, Nebraska, Minnesota, Kansas, Illinois and Oklahoma. Seaboard Foods, a unit of Seaboard Corp., a large publicly-traded diversified company, owns hog farms in Oklahoma, Kansas, Colorado and Texas and processes more than 5 million hogs a year at its Guymon, Oklahoma, plant. That facility, which opened in 1996, employs about 5,000.

Seaboard Foods and Triumph Foods have cooperated on several ventures in the past year. Seaboard, for example, markets and sells pork produced by Triumph to domestic and international markets.

If the two firms were considered a single combined entity, they would rank as the second-largest hog producer, a top 5 U.S. pork processor, and one of the nation's leading exporters of pork, according to the company.

Under the joint partnership, Seaboard and Triumph each would be responsible for supplying a third of that number, leaving about 1 million hogs to be purchased on the open market, which industry experts say will be a boon to independent producers.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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