DTN Early Word Opening Livestock

 
Cattle: Steady Futures: mixed Live Equiv $139.30 - 0.29*
Hogs:   Steady-$1 LR Futures: mixed Lean Equiv $109.51 - 0.67**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

It's been quite a while since we've waled into Friday with so much of the cash cattle trade undecided. Opening bids are likely to start out around $118 live and $188 dressed. Asking prices should be restated around $120-122 in the South and $190-192 in the North. Light to moderate trade volume could be delayed until later this afternoon.

Producers and analysts will have a bumper harvest of new stats to pour over this afternoon as the gov releases the July 1 on feed report and the midyear cattle inventory. On feed guesses look like this: on feed, up 3 percent; place in June, up 6-7 percent; marketed in June, ups 4-5 percent. Most expected total cattle herd numbers to be 2-3 percent larger than last year. Live and feeder futures should open on a mixed basis thanks to a cautious combination of folio-through selling and short covering.

Hog buyers are expected to wrap-up weekly procurement chores this morning with bids ranging from steady to $1 lower. Packers have been successful in improving margins this week by lowering the cost of live inventory and limiting losses in the wholesale pork trade. Saturday slaughter plans are expected to total close to 50,000 head, probably pushing the weekly total close to 2.2 million. Lean futures are also likely to open mixed with nearby probably losing more ground on deferred.

	BULL SIDE		BEAR SIDE
1)	Though the cash market remained at a standstill in Thursday, packer inquiry seemed excellent last in the day will nearly all buyers bidding deep at $118. Most feedlot sales may be some lower than last week when everything is said and done, but probably not by much.	1)	The paint wasn't dry on Wednesday's rally before live and feeder futures started to implode on Thursday. Triple-digit losses were pervasive on the close, once again underscoring the significance of overhead resistance.
2)	Last week, actual beef exports totaled 14,800 MT, up 26 percent from the previous week and 7 percent from the prior 4-week average.	2)	For the week ending July 8, cattle carcass weights jumped higher: all cattle averaged 811 pounds, 7 pounds above the prior week and 9 pounds lighter than 2016; steers averaged 866 pounds, 7 pounds heavier than the week before and 9 pounds below last year; heifers averaged 790 pounds, 4 pounds larger than the previous week and 8 pounds lighter than the prior year.
3)	At the same time, actual pork exports totaled 18,100 MT, up 22 percent from the previous week and 1 percent from the prior 4-week average.	3)	The pork carcass value on Thursday closed lower, pressured by softer demand for ribs, butts, picnic, and hams.
4)	The discount from August lean hog futures to October is wider than typical, reflecting the trading community's expectation of a greater than seasonal decline in hog prices from now into late the summer and fall. Yet the ability of the country to satisfy the extra hunger of new slaughter plans remains a wildcard with no one absolutely sure there will be sufficient numbers of ready barrows and gilts to go around.	4)	Wednesday's brief suggestion that spot August lean was finally ready to race toward the cash hog trade was quickly dashed yesterday when front-end futures broke sharply lower.

OTHER MARKET SENSITIVE NEWS

CATTLE: (USDA) -- On Thursday, Agriculture Secretary Sonny Perdue announced that the U.S. Department of Agriculture (USDA) is authorizing the use of additional Conservation Reserve Program (CRP) lands for emergency grazing and haying in and around portions of Montana, North Dakota and South Dakota affected by severe drought. USDA is adding the ability for farmers and ranchers in these areas to hay and graze CRP wetland and buffer practices.

"We are working to immediately address the dire straits facing drought-stricken farmers and ranchers," said Perdue. "USDA is fully considering and authorizing any federal programs or related provisions we have available to meet the immediate needs of impacted producers."

For CRP practices previously announced, including those authorized today, Secretary Perdue is allowing this emergency action during and after the primary nesting season, where local drought conditions warrant in parts of Montana, North Dakota and South Dakota that have reached D2, or "severe", drought level or greater according to the U.S. Drought Monitor. This includes counties with any part of their border located within 150 miles of authorized counties within the three states, and may extend into Idaho, Iowa, Nebraska, Minnesota and Wyoming. All emergency grazing must end Sept. 30, 2017 and emergency haying must end Aug. 31, 2017.

The Secretary said that epic dry conditions, as high as D4 in some areas, coupled with an intense heatwave have left pastures in poor or very poor condition resulting in the need for ranchers to, at best, supplement grain and hay and at worst, sell their herds.

Landowners interested in emergency haying or grazing of CRP acres should contact the Farm Service Agency (FSA) office and meet with the local Natural Resources Conservation Service (NRCS) staff to obtain a modified conservation plan to include emergency haying/grazing. Individual conservation plans will take into consideration wildlife needs. CRP participants are reminded that a certain percentage of fields must be left unhayed or ungrazed.

Additional information about the counties approved for emergency haying and grazing and the eligible CRP practices in this area is available at www.fsa.usda.gov/emergency-hayandgraze.

For more information on CRP emergency grazing and haying, or other disaster assistance programs and loans, contact your local USDA Service Center, visit http://offices.usda.gov/…. HOGS: (foodmarket.com) -- In the fight for grill space, protein comparisons at the meat case often come down to price.

When we compare popular grilling cuts, we find a fairly wide range in price options for consumers to consider. From $2.00 pork chops to $9.00 salmon fillets, there's a price point in there to accommodate almost every grocery budget.

Boneless skinless chicken breasts average $4.23 per lb. this week, up 15% from a year ago. Comparatively high within the chicken parts category (chicken thighs are available for $1.41 per lb.) chicken breasts remain a middle-of-the-road protein option at retail.

Looking at beef, steaks overall average $8.06 per lb., towards the higher end of grilling cut options. However, a closer look shows top sirloin steak averaging $4.98 per lb., which can readily compete with other lower priced options at the meat case. In addition, top round London Broil can be picked up for $4.44 per lb. So while steak is often considered a premium grilling item, beef enthusiasts can still find competitively priced options on many cuts.

Pork is a tough product to beat this year at the meat case, with ribs priced at an average $2.97 and chops running at $2.80 per lb on average. However, while the rest of the retail pork complex offers competitively low prices, bacon costs have risen considerably in 2017—causing some sticker shock at the grocery store.

Brand label bacon is currently featured at an average $5.31, up from $4.81 a year ago for an increase of 10%. This year's high point was hit the week of June 12th at $5.60, just one cent behind the all-time high recorded in 2014. The average retail bacon feature price has trended above the 3-year average 24 out of 29 weeks so far in 2017.

Wholesale belly prices hit all time highs this year, fueled by solid demand and a record low volume available in cold storage. The climb in wholesale values didn't take long to translate to higher retail prices, but Americans love their bacon and a good portion of shoppers don't seem to mind paying more to get it.

An American staple, the burger can be found on grills throughout millions of households during the summer months. Easy to cook and serve to gatherings both small and large, the burger boasts a wide variety of styles that can accommodate many tastes. Toppings include anything from a fried egg to mac n' cheese, and complemented with condiments from barbeque sauce to avocado-lime-mayo.

Currently, 80% lean ground beef is featured at an average $3.59 per lb., up slightly from a year ago at $3.43 per lb. The range of feature prices, however, is currently much wider on average. Feature prices throughout various regions this week range from $2.19 to $4.62 per lb., a $2.43 range. Year ago feature prices ranged $3.11 to $3.82, just a $0.71 spread.

For those turkey burger grillers, ground turkey averages $4.07 per lb. at retail this week, up 13% from a year ago. This is a multi-year high for the period, and 25% higher than the 5-year average.domestic Mexican product and the majority of what the industry does is import those hams and picnics and then sells its products in the domestic market, " said Caram.

He explained that the differences in production costs lie in lower costs for grains used to feed hogs, in addition to the subsidies U.S. producers receive compared to those in Mexico. He further commented that it is a 23-year old problem that began with the North American Free Trade Agreement (NAFTA). However, Caram recognized that it is necessary to import pork because the national production (of 1,310,000 tons) cannot cover Mexico's current demand that is higher than 2 million tons.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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