DTN Early Word Opening Livestock
Cattle Futures Should Open Moderately Higher
GENERAL COMMENTS:
Cattle: Steady-$2 LR Futures: 50-100 HR Live Equiv $152.19 - $2.32*
Hogs: Steady-$1 HR Futures: Mixed Lean Equiv $ 109.07 + $1.23**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Light to moderate trade surfaced in the northern tier of cattle feeding country. Dressed sales were mostly married at $190 to $191, $3 to $5 lower than last week. Once futures bounced higher off last week's lows, country selling interest seemed to dry up. Asking prices Thursday should start out around $122 to $123 in the South and $193 plus in the North. Live and feeder futures were moderately higher thanks to residual buying interest and short-covering.
The cash hog trade seems staged to open with bids steady to $1 higher. Look for the June 1 Hogs & Pigs report to be released Thursday afternoon. Average trade guesses call for all hogs to be 3% to 5% larger with the sow herd up by 2% to 3%. Lean futures should open on a mixed basis as the board positions ahead of the new quarterly inventory.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live and feeder futures staged impressive reversals Wednesday with all contracts settling 150 to 350 plus above session lows. The action was all the more impressive given defensive signs from the wholesale trade. | 1) | Though Wednesday's cash cattle trade was not widely tested, dressed sales in the North were as much as $4 to $5 lower than last week. This crack seems wide enough to poison the well of the greater cash trade set †o surface Thursday and/or Friday. |
| 2) | Wednesday's major divergence between lower beef cutouts on one hand and higher futures on the other may be a sign of increasing bottom-picking activity. | 2) | Beef cutouts continued to dive bomb on Wednesday with the choice box losing more than $4 for the second consecutive session. Box supplies were described as "moderate to heavy." |
| 3) | The pork carcass kept on its bullish roll at midweek and made new highs. The rally was powered mostly by stronger demand for ribs, picnics and bellies. | 3) | For the week ending June 24, U.S. hatcheries set 224 million eggs in incubators, up 2% from a year ago. At the same time, chicks placed totaled 183 million chicks; up 2% from 2016. |
| 4) | Nearby lean hog futures closed with impressive progress on Wednesday with spot July set a new contract high. Also, for the week ending June 24, Iowa barrows and gilts average 276.9 pounds, .6 lbs lighter than the week before and .9 lbs below 2016. | 4) | Long liquidation and commercial selling in lean futures prior to Thursday's release of the June 1 Hogs & Pigs report seems to be the most prudent behavior among traders. |
CATTLE: (Business Insider) -- ABC News and Beef Products Inc. reached a settlement in a $5.7 billion lawsuit that claimed a story ABC ran in 2012 misled viewers and caused hundreds of layoffs.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
On Wednesday, ABC announced it had reached an "amicable resolution" with BPI. The terms of the settlement are confidential, the Sioux City Journal reported.
BPI's attorney, Dan Webb, said that the settlement "vindicates" the company and its production of "lean finely textured beef," the product that ABC dubbed "pink slime" in its 2012 reports, Sioux City Journal's Nick Hytrek reported.
"Although we have concluded that continued litigation of this case is not in the Company's interests, we remain committed to the vigorous pursuit of truth and the consumer's right to know about the products they purchase," ABC said in a statement.
The news comes less than a month after lawyers made their opening statements in a trial that could have resulted in a verdict of as much as $5.7 billion if BPI had won.
In the suit, BPI alleged that ABC misled viewers by calling "lean finely textured beef" (LFTB) "pink slime." LFTB is a commonly used ingredient in beef products and is safe to eat, which ABC noted in its report. However, even with assurances that the ingredient, which is made from the trimmings of a cow and treated with ammonia to kill bacteria, wasn't dangerous, the phrase "pink slime" allegedly turned off customers.
"They ignored the proper name," BPI's lawyer, Dan Webb, said in his opening argument, according to the Hollywood Reporter. "When you have a major news organization that is calling the product 'slime,' witnesses will say they can't imagine anything worse. It connotes something disgusting, inedible."
BPI said it had to close three plants and lay off 700 workers due to "pink slime" backlash.
Meanwhile, ABC's attorney argued that the "pink slime" reports brought light to the fact that BPI and other ground beef producers had been using an mostly-unknown beef product that most shoppers and customers were unaware they were eating.
HOGS: (Wallaces Farmer) -- The new $300 million pork processing plant being built at Sioux City is set to open in September, giving hog farmers in northwest Iowa and bordering states a new market. Officials of Seaboard Triumph Foods outlined their plans at a press conference at the recent World Pork Expo in Des Moines.
"We're still on schedule and getting close to opening," says Mark Porter, CEO of Seaboard Triumph. "We are planning to begin operations no later than the first week of September." The Sioux City plant is an equal partnership between Seaboard Foods and Triumph Foods.
Company officials say the Sioux City location gives them good access to a supply of market-ready hogs. The plant has access to transportation, an experienced workforce and a pro-business environment. "We're very happy to be in Sioux City," says Terry Holton, president of Seaboard Foods.
The facility is initially set to process about 10,000 hogs per day in a single shift. Seaboard Triumph officials say they plan to expand to a second shift next year, raising daily processing capacity to 21,000 hogs.
Seaboard and Triumph will each supply one-third of the hogs for the packing plant from producers who already contract to sell to each company. The remaining one-third of the hogs will be purchased from independent producers. The companies have been actively seeking production contracts with local farmers in recent months, preparing for the plant's opening.
"One of the questions we get is what impact will the plant have on hog prices?" says Holton. "It will probably raise them, because we have new capacity and it will add to the demand for hogs. That's how the market works."
Seaboard Triumph plans to slowly ramp up production this fall as it trains new employees. The plant will create 1,100 new jobs, accounting for $48 million in payroll initially. The starting wage for production workers is expected to be $15. Holton says the majority of the jobs will be filled by local residents, adding to wages in a region that already has a relatively low unemployment rate. Sioux City's unemployment rate has been running slightly below Iowa's 3.1% unemployment rate.
Seaboard Triumph is also working with city and state leaders to assist immigrant refugees who are in need of jobs to fill some positions, says Porter. While the plant will initially employ 1,100 workers, officials expect to add an additional 1,000 workers by next summer, when it begins operating a second shift. Filling the 2,100 Iowa jobs may be tough, considering there are competing livestock and poultry processing plants in the area.
In addition to recruiting workers regionally, Seaboard Triumph is working with the state of Iowa to make Sioux City a primary refugee resettlement location. The company has also talked with government agencies about supplying workers through a federal visa program.
"If we create the right working environment for people and offer fair benefits and wages, we believe we can attract the workers we need," says Holton.
Another pork processing plant is under construction in northern Iowa. Prestage Foods, headquartered in North Carolina, is building a $240 million pork processing plant that's expected to open in 2019. This plant, in Wright County in north-central Iowa, is expected to initially employ 920 workers.
John Harrington can be reached at feelofthemarket@yahoo.com
Follow John Harrington on Twitter @feelofthemarket
(BAS)
Copyright 2017 DTN/The Progressive Farmer. All rights reserved.
