DTN Early Word Opening Livestock

 
Cattle: Steady Futures: 100-200 LR Live Equiv $134.01 + 0.40*
Hogs: Steady-$1 HR Futures: mixed Lean Equiv $ 80.68 + $1.24**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Expect a typically quiet Monday, limited to the distribution of new showlists. Our guess is that ready numbers will be about steady with last week. CME officials announced 32 deliveries against spot October live, 18 new and 14 retendered (reclaimed), all at West Point. $1 Live and feeder futures are likely to open sharply lower this morning, primarily checked by the bearish placement news disclosed on Friday.

Look for the cash hog market to reassert the same firm undertone its enjoyed for most of October. Opening bids this morning seem staged to be steady to $1 higher. Lean futures should open on a mixed basis with front contracts better supported than their back counterparts.

	BULL SIDE		BEAR SIDE
1)	Thanks to the combo of higher carcass value (i.e., from Friday to Friday, the choice and select cut-outs advanced by $1.64 and $1.09, respectively) and the unchanged cost of live inventory, beef packers are starting the week with better margins and decent incentive to support feedlot sales.	1)	Deferred live cattle futures should be pressured this morning given confirmation on Friday that September placement activity (i.e., 113 percent of 2016) turned out to be a good deal larger than expected.
2)	Noncommercials continue to grow their net long position in live cattle futures, increasing by 900 to 113,000 contracts in the week ending October 17.	2)	While the short-term trend in cattle futures has momentarily turned higher, the longer-term trend in the continuous chart continues to point downward.
3)	The pork carcass value surged significantly higher late last week with all major primals reflecting better demand except the butt. Note that last week's kill dropped 2.5 million head for the first time since mid September.	3)	Although the surprising bump in live hogs sales has been a sight for sore ideas, few believe such a unusual trend can be extended for much longer.
4)	For the week ending October 17, noncommercial traders increased their net long position in lean hog futures by 2,300 contracts to 44,300.	4)	The combination of mounting supplies through the balance of the fourth quarter and faltering domestic pork demand should soon return to pressure the cash trade pretty much through the balance of the year. The seasonal price tendency is for December lean hogs to chop about lower for the next couple of weeks.

OTHER MARKET SENSITIVE NEWS

CATTLE: (drovers.com) -- Early, mail-in voting continues in Oklahoma's secondary Beef Checkoff referendum, but efforts to stop the process may be in motion. That's the opinion of some members of the Oklahoma Cattlemen's Association (OCA), which issued a statement calling for "out-of-state activists" to stop "meddling in our state's referendum."

The statement, signed by 19 OCA members, including the current, future and three former association presidents, says out-of-state groups may "have either filed or are considering filing a lawsuit to stop the current refundable Oklahoma Beef Checkoff referendum." The statement notes that all regulations and state statutes were followed when conducting the petition and current checkoff vote.

Oklahoma is attempting to establish a producer-funded state-level promotion, marketing, research and education program for beef and beef products. To do so, producers are asked to vote on a state-wide assessment of $1 per head when an animal changes ownership, all of which is refundable on request. That $1 assessment would be in addition to the $1 national beef checkoff program already in place.

According to the statement from OCA, "earlier this month, one of the out-of-state groups sent out a memo casting a wide net searching for a state beef producer to file the suit. This follows the current misinformation campaign that Organization for Competitive Markets (OCM), Humane Society of the United States (HSUS) and R-Calf are leading in our state to discourage and deny beef producers the right to vote."

OCA said, "We are confident in our handling of this referendum and know our actions will withstand the scrutiny. We worked closely with the Oklahoma Department of Agriculture, Food and Forestry (ODAFF), and followed and abided by the state statute when conducting the petition and current checkoff vote. As for the voting process, we have even taken it upon ourselves to put extra measures in place to ensure the integrity of the vote.

"It's unfortunate out-of-state activist groups are meddling in our state's referendum and beef industry by working to keep Oklahoma beef producers from voting in an Oklahoma state beef checkoff. These petty process tactics by out-of-state activist groups have no place in the Oklahoma beef industry." HOGS: (producer.com) -- China's pig herd shrank last month at the fastest pace in almost two years, the Ministry of Agriculture said, the latest sign sweeping government steps to curb pollution have accelerated cuts in one of the nation's critical farm sectors.

The hog herd in the world's top pork consumer fell by 6.1 percent from a year earlier, the biggest percentage drop since January last year.

The sow herd was down five percent, the largest drop since March 2016. The government does not disclose the size of the herds.

Both sow and hog herds have registered a year-on-year drop each month since at least the start of 2016, but the pace of the decline has accelerated since July, as efforts to comply with new regulations gather pace.

In July, the pig herd fell by 4.8 percent and the sow herd by 4.2 percent, government records show.

Beijing has closed thousands of smallhold farms across the nation in a drive to impose tough new pollution standards by December, boosting hog prices and giving the country's leading pork producers an unexpected boost.

China's three-year campaign to clean up its farm sector requires each province to ban livestock production near water sources or major population areas. Farms in other areas must also meet high standards on treatment of animal waste.

China produces about 55 million tonnes of pork a year, or half the world's supply

Large farms are expanding rapidly to make up for the absence of smaller producers. Unlike small farms they rely on compound feed containing soymeal.

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John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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