DTN Early Word Opening Livestock

Cattle: Steady-$2 LR Futures: 50-100 LR Live Equiv $137.49 - .55* 
Hogs: Steady-$1 LR Futures: 50-100 HR Lean Equiv $103.11 +1.79**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Tuesdays are usually slow in feedlot country, but it's possible that short-bought packers could kick trade off to an early start. That may not be the way to bet, but trade volume totals last week seem to be on the short side. Furthermore, packer margins remain decent, good enough to encourage fairly aggressive chain speed. Opening bids should start out around $115 in the South and $185 to $186 in the North. We anticipate initial asking prices to be around $120 to $121 in the South and $190 to $192 in the North. Live and feeder futures are likely to open moderately lower, pressured by follow-through selling and long liquidation.

Look for cash hog buyer to resume work Tuesday with bids steady to $1 lower. The early-week strength in the wholesale pork trade was frankly a bit surprising, and it will be interesting to see if such demand can be sustained through the week. Many believe the cutout will lower nearly every consecutive week for the remainder of the calendar year, possibly losing as much a third from current levels. Lean futures seem staged to begin moderately higher thanks to spillover buying and short-covering.

	BULL SIDE		BEAR SIDE
1)	While the cash cattle market typically remained at a standstill on Monday, we did note some early bird bids at $115 in parts of the South, Colorado and western Nebraska. Though lower than last week, such early efforts (particularly in the face of sharply lower futures) could be a sign that well-margined packers will start out quite short bought.	1)	New showlists distributed in cattle-feeding country on Monday were generally larger than last week, especially in Texas.
2)	June beef exports were the largest of 2017, reaching 109,554 metric tons -- up 11% year-over-year and the largest June total since 2011.	2)	Ignoring the recent firmness of feedlot sales, live and feeder futures broke hard Monday thanks to yet another round of aggressive long liquidation and fears of mounting beef production as we move deeper into the third quarter.
3)	Pork exports totaled 200,229 MT in June, up 6% year-over-year and the largest June volume on record, valued at $527.1 million, up 4%.	3)	Despite a slow start to the kill week, most analysts believe the pace of hog slaughter will continue to build this week, probably totaling close to 2.28 million head, 1% to 1.5% more than last week and 1.5% to 2% above 2016.
4)	The pork carcass value jumped sharply on Monday with all major primals reflecting better demand (especially the belly and loin).	4)	While the corrective bounce in lean hog futures over the last several sessions has been of some psychological relief, few will argue that much has changed regarding the supply challenges ahead. Furthermore, the long-term market trend remains negative as is the market structure, with the October contract trading at a huge discount to the cash market.

OTHER MARKET SENSITIVE NEWS

CATTLE: (MarketWatch) -- Tyson Foods Inc. said rising exports helped lift its top line in the latest quarter, as the meat-production giant benefited from higher prices on beef, pork and chicken.

Tyson, which also benefited from the summer grilling season and new products, said the average price increase across its segments was 4.2% in its fiscal third quarter. The rise in global demand helped the company deal with higher operating costs.

"We expect strong global demand for protein," said Chief Executive Tom Hayes, which he expects will support continued growth in operating income from its meat segments.

The company on Monday also narrowed its full-year forecast for adjusted earnings to $4.95-$5.05 a share from $4.90-$5.05 a share.

The Springdale, Ark.-based company completed the $4.2-billion acquisition including debt of AdvancePierre Foods in June, bulking up its prepared foods and chicken segments.

Over all, Tyson reported a profit of $447 million, or $1.21 a share, down from $484 million, or $1.25, a year earlier. Excluding items such as the purchase of AdvancePierre, earnings rose to $1.28 a share, compared with $1.21 a share. Revenue rose 4.8% to $9.85 billion.

Analysts polled by Thomson Reuters had forecast earnings of $1.18 a share on $9.48 billion in revenue.

The company said last week that it will restructure its higher ranks, dedicating a president to each of its segments -- beef, pork, chicken and prepared foods -- that will report directly to Mr. Hayes.

Tyson shares, down 14% from a year ago, rose 3% at $65.19 in premarket trading.

HOGS: (china.org.cn) -- After being kept in quarantine for 45 days, 980 out of 1,012 breeding hogs imported from the United States were allowed to leave the isolation field in central China's Hunan Province for farms across China.

They included durocs, landraces and large whites - breeds that grow faster and are superior to China's domestic breeds in many aspects.

The pigs departed from Chicago and arrived in Hunan on a chartered plane in June. They were isolated in a farm with precise temperature control, purified water and 24-hour watch. Professional animal nurses, treatment and massage were also provided.

The 980 that passed health test will be distributed to six farms in provinces of Hunan, Guangdong and Henan as well as Tianjin Municipality.

In 2012, Hunan imported more than 1,000 boars from the U.S. for the first time. Importing boars improved the quality of local breeding swine for Hunan, one of the major pig raising provinces in the country.

The United States is China's largest breeding swine exporter, accounting for 30 to 60 percent of China's total import over the past decade. Due to the outbreak of porcine epizootic diarrhea virus (PEDV) in the U.S. in 2013, the imports gradually fell to zero as of 2016.

But the trade picked up soon this year. In addition to Hunan, southwest China's Yunnan Province also imported 1,057 boars from the United States in June. Pork is the staple meat for Chinese.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

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