DTN Early Word Opening Livestock

 
Cattle: Lower Futures: 100-200 LR Live Equiv $162.10 - .52* 
Hogs: $1-2 HR Futures: Mixed Lean Equiv $100.54 + .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:

This week's cash cattle trade has turned into a real mudslide. Although we didn't see a great deal of volume (a few large strings in Nebraska at $130), bids were significantly lower than the major price break evident on Tuesday. Feedlot managers will try hard to find the brakes Thursday and Friday, but that may be tough if the board can't pull out of its nosedive. Asking prices Thursday seem likely to start out around $132 in the South and $212 to $213 in the North. Live and feeder futures seem staged to open substantially lower again, pressed by long liquidation and technical selling.

Expect to see further strength in the cash hog market Thursday. Opening bids are likely to run $1 to $2 higher as well with packers positioning around tightening country supplies. The Saturday slaughter is expected to total somewhere around 50,000 head. Lean futures should start out on a mixed note with nearby gaining more ground on deferreds.

	BULL SIDE		BEAR SIDE
1)	The threat of panic in the cash cattle market should be somewhat checked by the real fact that the country is very current.	1)	Feedlot psychology continues to deteriorate as packers seem to lower bids around every corner. All of a sudden the imploding board seems to be leading the cash cattle trade lower.
2)	With the cost of live inventory dropping at a faster rate than beef cutouts, processing margins are quite attractive, a reality that should stimulate chain speed and help staunch the bleeding of feedlot leverage.	2)	Both June and August live closed down the daily 300-point limit on Wednesday, and the limit will be expanded to 450 points Thursday. Open interest remains large and the threat of extensive long liquidation could be widespread.
3)	For the week ending June 10, Iowa barrows and gilts averaged 279.4 pounds, 1.8 lbs. lighter than last week and 2.5 lbs. smaller than 2016.	3)	For the week ending June 10, U.S. hatcheries set 226 million eggs in incubators, up 3% from a year ago. At the same time, chicks placed totaled 183 million chicks; up 2% from 2016.
4)	The cash hogs remain on fire this week with the national base surging another $2 higher at midweek. It would appear that market hog numbers are significantly growing smaller.	4)	Lean hog futures will find it increasingly difficult to make new highs if cattle paper continues to tank and sliding beef futures make the pork carcass value look more and more expensive.

OTHER MARKET SENSITIVE NEWS

CATTLE: (foodmarket.com)-- Nebraska is sending its first shipment of beef to China under an agreement that allowed the U.S. to resume exports after a 14-year hiatus.

The first boxes from Greater Omaha Packing went out Wednesday. Gov. Pete Ricketts and Nebraska Department of Agriculture Director Greg Ibach helped load the first boxes.

China cut off exports in 2003 after mad cow disease affected some American herds. The U.S. Department of Agriculture announced Monday that it had finalized an agreement with China to restart exports.

Ricketts says Nebraska is the nation's top beef processor and exporter, and China is the world's second largest beef exporter. The governor had urged Chinese officials to lift their ban on previous trade missions.

HOGS: (National Hog Farmer) -- The size of the hog farm does not define the quality of pork produced. The strength of the pork industry is its diversity. Consumers' preferences worldwide are as varied as the individuals doing their part to place the world's No. 1 animal protein on the global table.

As the National Pork Board eloquently says "Pork is the most consumed animal protein in the world, with its great flavor translating into any language."

With 96% of the world's population living outside of the United States, the global marketplace offers the most potential to sell more pork, and it cannot be ignored. Profits are based on selling the whole hog. Over 90% of variety meats saved for human consumption are shipped overseas; items like snouts and feet that Americans will never purchase.

Stepping back, think how far America's pig farmers have come. In 1989, the United States was a net importer of pork and Thursday a net exporter. Since then, trade agreements have increased U.S. pork exports 1,550% in value and 1,300% in volume. Last year, U.S. pork was bought by consumers in more than 100 countries and exported to every continent except Antarctica.

Regardless if your pork remains domestically or enters the global marketplace, robust exports benefit all American pig farmers. In 2016, the United States exported nearly $6 billion worth of pork or 26% of U.S. pork and pork variety meat produced, adding $50 in value to the price of each hog marketed. For every $1 million of pork variety meat shipped abroad, the live value in U.S. hogs climbs by $0.20 per hundredweight. So, no matter the number of pigs passing through your barn, selling pork on the global market scene has added $50.20 to the market price of hogs.

With all the talk on the global pork trade, it may seem the smaller producer is forgotten. One-sizes-fits-all cuts of pork will not satisfy consumers at home or around the globe. Each market will demand something different. Some consumers want more tasty pounds of pork for their buck whereas others want a unique dining experience. Every producer individually needs to decide their fit in the pork sector, their market sweet spot and and seize the opportunity. It takes an entire pork tribe to fulfill the world's appetite for pork and keep U.S. pork at the center of the plate.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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