DTN Early Word Opening Livestock

 
Cattle: Steady-$2 HR  Futures: 50-100 HR  Live Equiv $132.40 - 0.31*
Hogs:   $1-2 HR      Futures: 50-100 HR  Lean Equiv $ 79.00 - 0.93**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Cattle buyers should slowly renew bids floated at midweek (i.e., $109-110 live; $172 dressed) If feedlot managers hang tough with higher asking prices of $112-113 in the South and $178 plus in the North, significant trade volume could be delayed until Friday. CME officials announced 13 loads retendered at $1, all at Tulia. Live and feeder futures should open moderately higher, supported by residual buying and pre-cash short covering.

Given the way cash hog sales on a daily basis, you might think it was midsummer instead of mid fall. The country is on a definite roll this week, and you can probably expected another round of aggressive packer spending this morning. The Saturday kill is currently estimated at 195,000 head. Lean futures seem staged to open moderately higher thanks to spillover buying interest and impressive cash strength.

	BULL SIDE		BEAR SIDE
1)	Although pressured early in the session, live cattle futures reversed to close 150-200 above session low. The recovering board and weaker basis should help feedlot manager dig in their heels in terms of asking prices.	1)	Though the cash cattle trade was only lightly tested at midweek, the initial, small crack in feedlot resolve looks somewhat negative (e.g., $110 in parts of the South, $1 lower).
2)	Brazilian meat packing giant JBS SA said Wednesday it stopped the purchase and slaughter of cattle at seven abattoirs in the state of MatoGrosso do Sul after a local court froze about 730 million reais ($230 million) of assets belonging to it and its holding company (see article below). This could shorten Brazilian beef exports in the short term.	2)	For the week ending October 14, U.S. hatcheries set 218 million eggs in incubators; up 4 percent from a year ago. At the same time, chicks placed totaled 179 million chicks, up 2 percent from 2016.
3)	In the face of yet another round of sharply higher cash bids, lean hog futures quickly turned around from Tuesday sell-off and now seems recommitted to lead the country trade higher.	3)	The pork carcass lost nearly a buck on Wednesday with all major primal quoted significantly lower except the ham.
4)	For the week ending October 14, Iowa barrows and gilts averaged 282 pounds, 0.1 pounds lighter than the prior week and 0.6 pounds heavier than 2016.	4)	Despite the recent rally in the cash trade, many traders remain nervous whether the large hog supplies coming down the pike resulting in record large pork supplies will be able to clear both domestic and export channels.

OTHER MARKET SENSITIVE NEWS

CATTLE: (feedstuffs.com) — A Brazilian court has ordered a freeze on a combined 730 million reais ($230.64 million) worth of assets, causing JBS S.A.to temporarily suspend its beef operations in Mato Grosso do Sul, Brazil. The court's action was in response to a tax dispute between the state and JBS S.A. and its holding company J&F Investimentos.

"Given a recent legal action taken against the company in Mato Grosso do Sul, Brazil, JBS has temporarily suspended beef operations in that state," a company spokesman told Feedstuffs.

The spokesman said that while the company does not believe the legal action is warranted, the temporary suspension of operations is "the most prudent course of action to protect the interest of shareholders and suppliers until the matter is settled."

"No other JBS operations are impacted," the spokesman added.

JBS told Reuters that it while it is working to restore the operations and maintain 15,000 direct and 60,000 indirect jobs within the state, it will continue paying employees normally.

Earlier this week, the company announced that it was putting plans on hold to register JBS Foods International B.V. as a U.S. initial public offering (IPO) on the New York Stock Exchange. However, the company told Feedstuffs that the withdrawal did not "preclude the company or any of its affiliates from seeking a listing in the U.S. at a later date."

"The company remains of the view that a listing in the U.S. is the right path forward to maximize value for all stakeholders," a spokesman for the company said.

(USAgNet) -- When negotiators for the United States, Canada and Mexico wrapped up the latest round of trade talks in Washington on Tuesday, they left the table in frustration. As a result, the groups have agreed to delay their next meeting until Nov. 17 in Mexico City after originally planning to meet later this month.

President Trump's top trade official, Robert Lighthizer, appeared at a dour press conference at the end of the week-long talks, standing along side his counterparts from Canada and Mexico. He said the terms of the pact must change because "it must be fair."

But Canadian Foreign Minister Chrystia Freeland said the United States is trying to "turn back the clock" on trade relations with a "winner-takes-all" approach. She called U.S. demands "troubling."

The U.S. backs a proposal that would allow NAFTA to expire every five years unless all three countries agree to renew it. Canadian and Mexican officials, along with the U.S. Chamber of Commerce, say such a "sunset" provision would create tremendous uncertainty and discourage investment.

HOGS: (wnax.com) -- Some farm groups and lawmakers are opposing the withdrawal of the GIPSA Farmer Fair Practice rules by the U.S. Department of Agriculture this week. Iowa Senator Chuck Grassley says those rules include important and needed protections for producers. Speaking with farm broadcasters Tuesday about the development, Grassley expressed his disappointment with USDA's action.

He says the USDA should implement the GIPSA rules the way they were written and protect producers rather than big business interests.

Grassley says even though the rules were released by the Obama administration the original regulations were written with a Republican administration in office.

Grassley's view on the withdrawal of the GIPSA rules differs from the National Pork Producers Council which issued a statement backing the decision.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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