DTN Early Word Opening Livestock
Look for Meat Futures to Open Week With Mixed Price Action
GENERAL COMMENTS:
Cattle: Steady-$2 LR Futures: Mixed Live Equiv $144.15 - 1.43 *
Hogs: Steady-$1 LR Futures: Mixed Lean Equiv $ 80.78 + .22 **
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Activity in cattle-feeding country Monday will be typically limited to the distribution of new showlists. We expect the new offering to be somewhat larger than last year based on late-year placement and smaller trade volume totals generated last week. On the other hand, there's reason to believe packers are starting out April relatively short bought. Gross processing margins have narrowed some but still reflect decent profit potential. Our guess is that initial asking prices will be around $130 plus in the South and $210 plus in the North. Live and feeder futures seem geared to open mixed linked to both short-covering and residual selling interest.
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The cash hog trade is likely to resume business Monday with bids steady to $1 lower. Market-ready numbers remain plentiful and we see nothing in the new weight breakdown to change that reality anytime soon. We expect another weekly kill between 2.25 and 2.3 million head. Lean futures are staged to open narrowly mixed tied to light profit-taking, bear spreading and long liquidation.
| BULL SIDE | BEAR SIDE | ||
| 1) | Last week's combination of light trade volume totals and relatively aggressive chain speed (i.e., smaller than the previous week but 54,000 head than 2016) should mean that cattle buyers once again start out short bought and needing live inventory. | 1) | Beef cutouts closed sharply lower on Friday, ending a very defensive week, suggesting that seasonal demand may have peaked extremely early this year. |
| 2) | First of the month paychecks and budding evidence of spring fever should have been positive in terms of weekend meat counter clearance. | 2) | Whether it's closer to fact or standard bearish bluster, but several major beef processors are claiming that they already have most of their April slaughter needs already in hand. |
| 3) | Though the winter pig crop turned about to be as large as most expected, the continuation of decent domestic and foreign pork demand could still support a rally in summer lean futures into the upper $70's. | 3) | Prior to the hog inventory confirmed by the March 1 Hogs & Pigs report, many worried that the industry had enough supply to satisfy bulk of needs of new plants coming on stream through the year. Few are worried now. |
| 4) | Though the pork cutouts tend to soften through mid-April, the next major shift in trend should be higher (i.e., from late April through midsummer). | 4) | During the week ending March 28, noncommercial traders were net sellers in the lean hog futures market, reducing their net-long position by 5,700 contracts to the 28,500 contract level. |
CATTLE: (wnax.com) -- Senators Mike Lee of Utah and Cory Booker of New Jersey have reintroduced a pair of measures to reform commodity check off programs and make them voluntary. Companion measures are being prepared to be introduced in the House. National Cattlemen's Beef Association Vice President of Government Affairs Colin Woodall says the Senators don't understand how well the Beef Check Off program is working and that their measures aren't needed.
He says NCBA is operating the Beef Check Off properly and recent government audits have shown that.
Woodall says the majority of cattle producers are against changing the Beef Check off to a voluntary program. He says that wouldn't work or be fair.
Woodall says it's important to keep the Beef Check Off under producer control and out of the hands of Congress. He says NCBA will try to convince lawmakers to vote against the reform bills.
HOGS: (Farm Journal) -- Prestage Foods of Iowa, LLC has officially broken ground to begin construction of its new fresh pork processing plant, though no ceremony was held.
"With the initial engineering complete, we are excited to be moving into the construction phase of this project," says Jere Null, COO of Prestage Foods of Iowa. "At the peak of construction, we expect over 600 people to be working daily at the site. After construction, we will permanently employ approximately 1000 people We are proud to be investing and creating opportunities for the people of Wright County, the region and the State of Iowa."
Prestage Farms currently raises pigs in over 30 Iowa counties. The new facility will support these operation and will use state-of-the-art systems to clean the air, reduce water and energy needs, provide a safe work environment, and will utilize the latest innovations in processing and automation technology to help ensure that it si a world leader in food, employee and environmental safety. With construction beginning, the new plant is set for first operations in the fall of 2018.
"We are confident that we will be able to translate and apply the same commitment to quality in processing that we have to our live animal production business," says Ron Prestage, DVM, on behalf of the Prestage family. "This is an exciting time in our industry, and an exciting time for our family business!"
John Harrington can be reached at feelofthemarket@yahoo.com
Follow John Harrington on Twitter @feelofthemarket
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