DTN Early Word Opening Livestock

 
Cattle: Steady-$2 LR Futures: mixed Live Equiv $143.33 - 0.82*
Hogs: Steady-$1 LR Futures: mixed Lean Equiv $ 81.27 + 0.49**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

We expect the cash cattle market to remain completely grounded today with both bids and asking prices poorly defined. Our guess is that feedlot managers will start out pricing ready steers and heifers around $130 in the South and $210 plus in the North. Yet the likelihood of serious business should be delayed until at least Wednesday or Thursday. Live and feeder futures should open on a mixed note thanks to a slow combo of short covering and long liquidation.

As long as market hog numbers remain plentiful and wholesale pork prices less than robust, packers will stick with defensive country bids. Look for early business this morning to be steady to $1 lower. Processing margins are moderate, but plentiful numbers pretty much allow procurement efforts to coast. Lean futures seem staged to begin with mixed prices tied to light bear spending and profit taking.

	BULL SIDE		BEAR SIDE
1)	Monday's cattle kill totaled no more than 108,000 head, possibly a sign of how short-bought packers have started the new month. Processing margins are narrowing but still look relatively attractive.	1)	New showlists distributed in cattle feeding country on Monday were generally larger with only Colorado offering a few less ready steers and heifers.
2)	The widening of the choice/select spread (tied mostly to the select box falling out of bed) is probably a sign beef producers are aggressively pulling cattle forward, minimizing carcass weights, and extending relatively tight supplies into the spring.	2)	Beef cut-outs continue to reflect faltering early spring demand. The select box especially got clobbered on Monday, closing at the lowest level seen since February 27.
3)	The pork carcass value closed moderately higher yesterday thanks to better demand for everything except picnic and ham cuts.	3)	Lean hog futures closed significantly lower on Monday, strongly suggesting that producers and traders are not yet finished in shifting through the bearish implications of the March1 H&P report.
4)	It is not unusual for the pork complex to take a breather and lose a little money prior to the Easter holiday. It remains very plausible for solid domestic and foreign demand to kick back in later this month or early May (just as hog numbers start to seasonally tighten).	4)	Monday's hog slaughter got off to another aggressive start (i.e., 443.000 head, 2,000 more than the prior week and 9,000 greater than 2016). We could be in for another week where pork supplies overwhelms demand.

OTHER MARKET SENSITIVE NEWS

CATTLE: (CNBC) -- Wendy's is embroiled in a battle over fresh beef

patties after the fast food chain came after McDonald's on Twitter.

McDonald's announced in a tweet that it would use fresh beef in its

Quarter Pounder burgers in most of its restaurants by mid-2018.

Wendy's tweeted in response: "So you'll still use frozen beef in MOST

of your burgers in ALL of your restaurants? Asking for a friend."

Wendy's CEO Todd Penegor said Monday that the fast food chain is

being a "challenger with charm" and is simply defending its territory.

"If you think about our brand, right, we have been created on fresh

never frozen North American beef since 1969," Penegor said on CNBC's

"Power Lunch." "We have been serving fresh beef in all of our

restaurants in all of our hamburgers for almost 48 years."

Credit Suisse analysts Jason West and Jordy Winslow said the push

by McDonald's into the fresh beef territory could improve the

company's same-store sales. They said 15 percent of those gains could

be snatched from Wendy's, thus hurting the fast food chain's

same-store sales by 30 basis points.

Penegor said he is not worried. He said he sees his rival's

announcement as a chance to allow more customers to recognize them as

the originals in the fresh beef patty space.

"Today about 3 in 10 consumers really understand that Wendy's is

fresh never frozen," Penegor said. "We have a great opportunity to

amplify that message."

HOGS: (Taiwan News) -- Food safety and the rights of local farmers

are important considerations for determining whether to participate in

international trade deals, Taiwan's government stated Saturday in

response to a U.S. report urging the country to fully open its market

to U.S. beef and pork.

In the report by U.S. Trade Representative (USTR) released

yesterday, the United States said it will continue to urge Taiwan to

remove its ban on U.S. pork and beef products .

The 500-page report, which devoted eight pages to Taiwan, stated

the nation's agricultural policies as serious concerns, while noting

the U.S. sees it as a key priority to keep pushing Taiwan to open its

market fully to its beef and pork imports.

In response, Presidential Office spokesman Alex Huang said Saturday

that the government would consider taking part in international trade

deals under the premise that the nation's food safety and the rights

of the local farmers are protected.

The imports of U.S. beef and pork is a controversial issue in

Taiwan-U.S. relations, as Taiwan has been insistent on barring meat

products from the U.S. that contain traces of the leanness-enhancing

veterinary drug ractopamine on account of its potential health

hazards.

In terms of food management, the government will conduct risk

assessments based on scientific evidence and international

regulations, in order to ensure food safety in the country, said the

spokesman, adding that the nation is keen to proceed further with the

U.S. on bilateral trade cooperation.

The government will continue in its efforts to move toward

constructing a win-win situation for both nations, said Huang.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

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