DTN Early Word Opening Livestock

Cattle: Steady w/Wed Futures: mixed Live Equiv $131.31 -0.01*
Hogs: $1-2 LR Futures: mixed Lean Equiv $88.93 -0.97**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Trade volume totals in cattle feeding country are moderate at best, and there would seem to be plenty of late week room for at least scattered clean-up business. Having said that, the week's price range has no doubt been established. Look for opening bids this morning around $104-105 live and $164 dressed. Asking prices on the balance of showlists should be around $106 plus in the South and $166 in the North. Live and feeder futures seem staged to open on a mixed basis thanks to a slow combinations of short covering and long liquidation.

Hog buyers have been taking an axe to the cash market all week long, and there's no reason to think they''ll suddenly turn less aggressive this morning. Indeed, look for opening bids around $1-2 lower. Assuming a kill of close to 108,000 head, the weekly total slaughter just a bit over 2.33 million head. Lean futures should begin narrowed mixed in slow volume.

	BULL SIDE		BEAR SIDE
1)	If new spot October live cattle opens generally steady (and a bit over feedlot cash), the late-week basis stands to be the weakest seen in months. Such a reality could work to promote better country leverage after the holiday.	1)	For the week ending August 19, cattle carcasses continued to grow with the season: all cattle averaged 820 lbs, 2 lbs larger than the previous week and 9 lbs lighter than 2016; steers averaged 884 lbs, 2 lbs bigger than the prior week and 9 lbs smaller than last year; heifers averaged 806 lbs, 1 lb heavier than the week before and 7 lbs lighter a year ago.
2)	Net pork export sales last week surged to 25,900 MT, up 29 percent from the previous week and 38 percent above the prior 4-week average.	2)	If nearby live futures shifted to an increasingly large premium over cash, country market could slow and feedlot currentness (and leverage) could suffer.
3)	At the same time, actual pork exports totaled 18,800 MT, up 4 percent from the previous week and 7 percent from the prior 4-week average.	3)	The pork carcass value has all the late summer buoyancy of a bowling ball. The cut-outs once again closed sharply lower on Thursday, deflated by softer demand for all primals.
4)	The gross domestic product, the broadest measure of economic health, grew at an annual rate of 3 percent in the April-June quarter, the Commerce Department reported Wednesday. It was the best showing since a 3.2 percent gain in the first quarter of 2015.	4)	The pork carcass closed moderately lower on Wednesday with all primal quoted lower except the ham.

OTHER MARKET SENSITIVE NEWS

CATTLE: (foodmarket.com) -- weekend, beef features account for 26% of total protein ad volume. Seafood claims the second spot with 24% of feature volume, followed by chicken and pork with roughly 21% each.

Average category prices in the beef complex are priced below year ago levels. 80% lean ground beef is featured at $3.77 per lb., 9% above year ago, but offset by a notable markdown in leaner varieties. London broil is on feature for an average $3.36 per lb., compared to $4.30 per lb. a year ago. Roasts, embarking on the Fall peak usage season, are currently featured at an average $4.52 per lb., down 12% year over year. Finally, average steak features range from $3.74 to $13.82 per lb. ahead of Labor Day weekend grilling.

Top seafood features include fillets, which on average are down 5% from a year ago. Cooked shrimp features are slightly lower than year ago, while raw shrimp prices are over a dollar higher from the same week last year.

Chicken features are higher than a year ago this week, with the parts complex averaging +19%. Boneless skinless chicken breasts are running $4.07 per lb. this week, up from $3.45 a year ago. Drumsticks, leg quarters and thighs remain comparatively low to other protein items, but are each featured above their respective year ago prices. Wings are nearly on par with this week last year, at $2.43 per lb.

Finally, looking at pork, we have the rib category almost dead even with year ago levels, at $2.71 per lb. on average. Pork chops are also in line with year ago features, averaging $3.08 per lb. Pork roasts average $2.75 per lb., up from $2.68 per lb. in 2016. Boneless loins are featured for $2.79 per lb., while shoulder roasts average $1.73 per lb.

HOGS: (Feedstuffs) -- Fiscal 2018 agricultural exports are projected at $139.0 billion, down $800 million from the revised fiscal 2017 forecast of $139.8 billion, largely due to reductions in corn and cotton export forecasts, according to the the U.S. Department of Agriculture's newly released "Outlook for U.S. Agricultural Trade."

USDA lowered the forecast for fiscal 2018 grain and feed exports to $28.4 billion, down $1.8 billion from the 2017 estimate, due mainly to lower corn exports. Corn exports are expected to decline by $1.6 billion to $8.0 billion due to lower volumes and unit values as well as strong competition from South America. The soybean export value, on the other hand, is projected to rise $300 million to $23.9 billion.

The fiscal 2018 forecast for oilseeds and products is projected at $33.0 billion, up $500 million, driven mainly by record soybean export volumes, USDA reported.

"U.S. soybean production is also forecasted at a record and is expected to pressure soybean prices lower, especially on the heels of a record 2017 South American harvest. This is expected to spur additional demand and will limit the impact of weaker prices," USDA said.

Soybean meal is projected to be up $200 million to $4.1 billion, while soybean oil is forecasted to fall slightly as lower volume offsets higher unit values. USDA said competition with South America and demand from China remain the main drivers in the forecast.

USDA raised exports of livestock, poultry and dairy products by $600 million to $29.5 billion, primarily due to increased dairy and pork exports.

"Continued economic growth will spur increased consumption of animal products. Lower prices will support higher sales volumes across all meats," USDA said.

Rising volumes will also more than offset the decline in prices, generating higher beef and pork export values of $6.1 billion and $5.4 billion, respectively. Poultry and poultry products are forecasted at $4.9 billion based on elevated prices and increased shipments to primary markets.

USDA said dairy product exports will get a $200 million boost to $5.7billion as a result of stronger world prices and improved demand for dairy products from major importers.

The competitiveness of U.S. exports will be helped by a weakening U.S. dollar, the value of which has declined substantially since the beginning of the year, losing roughly 7% of its agricultural export-weighted value since January, USDA said.

"The relatively weaker dollar primarily reflects improvements in the economic outlook of key U.S. trading partners, particularly Europe and Japan," the agency said.

The dollar is expected to generally trend weaker for the rest of 2017; however, it will remain strong relative to the period preceding the dramatic strengthening that began at the end of 2014, USDA noted.

World per capita gross domestic product (GDP) growth is expected to reach 1.8% in 2017 and 1.9% in 2018, which USDA said represents a broad-based pickup in growth across developed and developing countries relative to growth of 1.4% in 2016. In the key emerging markets of Brazil, Russia, India, Indonesia and China, per capita GDP growth is expected to accelerate, on average, to 4.4% in 2017 and 4.6% in 2018.

This growth will result in increased exports. USDA said agricultural exports to China are projected to be $22.6 billion, $300 million higher than in fiscal 2017, primarily due to increased soybean and dairy exports, which will more than offset reductions in cotton.

Exports to Canada and Mexico are forecasted to be $21.2 billion and $18.8 billion, respectively, which are also both up from 2017 levels.

USDA lowered the 2018 forecast for total agricultural imports by $700 million to $115.5 billion due to reduced imports of livestock and dairy products, oilseeds and products and sugar and tropical products. This is below 2017 total agricultural imports but is expected to be $2.5 billion above fiscal 2016 totals.

John Harrington can be reached at feelofthemarket@yahoo.com

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