DTN Early Word Opening Livestock

 
Cattle: Generally LR Futures: 25-50 HR Live Equiv $160.59 +1.35* 
Hogs: $1-2 HR Futures: 25-50 HR Lean Equiv $ 86.39 + .10
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

The level of cattle-buying activity Thursday will depend on several factors. First of all, we need to get a better handle on the exact size of trade volume that actually developed in Kansas and Texas on Wednesday. Mandatory totals will be important to check later Thursday. There's a chance that Southern business is actually done for the week. Second, it will be critical to see how further bold action impacts either the willingness of Northern packers to raise bids or the readiness of regional feedlot managers to lower asking prices. Our guess is that asking prices will start out around $140 plus on a live basis and $228 plus on a dressed basis. It's certainly possible if both sides dig in that significant trade volume in the North could be delayed until sometime Friday. Live and feeder should open moderately higher, supported by short-covering and the premium status of recent cash sales.

Hog buyers should remain in spending mode this week. Look for opening bids to range from $1 to $2 higher. The spring basis is slowly converging, with the cash index doing most of the work in that regard. The Saturday kill continues to be estimated around 89,000 head. Lean futures are set to open moderately higher thanks to ongoing cash gains and light bull-spreading interest.

	BULL SIDE		BEAR SIDE
1)	Cattle futures may be cooling off, but the wholesale beef trade remains on an impressive roll. Cutouts closed sharply higher at midweek with box demand described as "moderate to fairly good."	1)	Sensing the development of greater packer leverage, feedlot managers in Kansas and Texas quickly threw in the cash towel on Wednesday, selling significant numbers of ready steers and heifers at $138, nearly $7 below last week.
2)	Judging by new the supply and demand tables released Wednesday, total red meat and poultry production for 2017 is reduced from the previous month on lower beef, pork and broiler production. Beef and pork production is reduced on lighter expected cattle and hog carcass weights. Broiler production is lowered on lower forecast second-quarter production.	2)	The persistence of the historically strong basis and still-wide discounts on August and October live, plus mounting front-end fed cattle supplies and slowing beef movement, may continue to inspire more willing feedlot sellers.
3)	For the week ending May 6, Iowa barrows and gilts averaged 283 pounds, 1.5 lbs. lighter than the prior week and .2 lbs. smaller than 2016.	3)	For the week ending May 6, U.S. hatcheries 224 million broiler eggs in incubators, up 3% from a year ago. At the same time, chicks placed numbered 174 million chicks, up 2%.
4)	The cash hog index is coming on like gangbusters. If such aggressive appreciation continues, and with spot May expiring on Friday, June could soon feel a fire under its feet.	4)	According to the World Board, widespread meat expansion will cause per capita supplies in 2018 to jump as much as 3 lbs. (i.e., from 216.7 lbs. to 219.8 lbs.).

OTHER MARKET SENSITIVE NEWS

CATTLE: (foodmarket.com) -- Wendy's Co reported higher-than-expected quarterly same-restaurant sales and profit, driven by the popularity of its value meals such as "4 for $4" and lower costs.

The company's shares were up 5.2 percent at $15.89 in light premarket trading on Wednesday.

Wendy's in January added the Double Stack cheeseburger, which includes a burger, chicken nuggets, a small serving of fries and a drink, to its "4 for $4" value meals.

The meal and other promotions have helped the burger chain attract diners amid a drop in grocery prices in recent months, which is encouraging more people to cook at home.

Sales at restaurants open at least a year rose 1.6 percent, above the 1.1 percent growth expected by analysts polled by research firm Consensus Metrix.

Net income fell to $22.3 million from $25.4 million in the first quarter ended April 2, the company said.

On a per share basis, the company's profit remained unchanged at 9 cents per share due to fewer outstanding shares from a year earlier.

Revenue fell 24.5 percent to $285.8 million from a year earlier, mainly because the company sold more restaurants to franchisees.

HOGS: (thepigsite.com) -- The number of sows in Denmark is increasing again, according to data from the 1 April pig survey, writes Leo Colby, AHDB Consultant. This follows 1 January pig count which recorded little change on the previous year as well as falling numbers during the course of 2016.

The upturn is being helped by much better profitability as the finished pig market has moved up steadily since last spring.

The upturn in the breeding herd is confirmed by the fall in sow disposals, namely slaughterings and live exports, which were down by 9 per cent in the first three months of 2017.

The 1 January survey also indicated an increase of 6 per cent in maiden gilt numbers, which will have contributed to the 2 per cent increase in in-pig gilts in April.

Total pig numbers though were still marginally down in April as more continue to be finished in other member states, despite the Danish industry encouraging more domestic finishing.

Reflecting the increased sow herd, piglet numbers in April were up by 2 per cent although young pigs, less than 50 kg, were largely unchanged.

The number of slaughter pigs over 50kg on 1 April was down by 8 per cent, the same reduction as in January.

Exports of weaners especially to Poland continue to increase. However, there is evidence of some slowdown in the growth of this trade as data published by Landbrug & Fødevarer, the Danish agriculture and food board, indicates only a 1 per cent increase in weaner exports in the first quarter of 2017 compared with an 11 per cent rise in 2016 as a whole.

However, this is continuing to reduce slaughterings of clean pigs in Denmark which were down 5 per cent in the first quarter of 2017 and in line with the fall in 2016 as a whole.

As a result, Danish pig meat production and hence export availability remains in decline which in turn could have implications in trade with the United Kingdom, the second largest pork market for Danish exporters.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

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