DTN Early Word Opening Livestock

Meat Futures Likely to Open with Mixed Prices

John Harrington
By  John Harrington , DTN Livestock Analyst
Connect with John:
(DTN file photo)

Cattle: Steady w/midweek Futures: mixed Live Equiv $140.57 - 0.32*

Hogs: Steady-$1 LR Futures: mixed Lean Equiv $ 86.52 + 0.65**

* based on formula estimating live cattle equivalent of gross packer revenue

** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Assuming that the cash cattle trade was essentially put to be by Wednesday, late week activity this morning should be extremely limited. We could be a few clean-up deals here and there, but don't expect see much. Whatever steers and heifers remain on show lists are probably priced around $125-plus in the South and $195-plus in the North. Live and feeder futures are staged to open on a mixed basis in slow trade volume.

Look for the cash hog market to open with bids ranging from steady to $1 lower. Saturday kill potential has expanded through the week, and that's probably a function of improving processing margins. Our guess is that the weekend slaughter will total close to 190,000 head. Lean issues should also begin on a mixed basis linked to follow-through selling and short covering.

BULL SIDE BEAR SIDE
1) While the jury remains out, spot December seems to be trying to stabilize above the bullish gap created in late October. 1) For the week ending October 28, cattle carcass weights for the most part continues to enlarge: all cattle averaged 830 pounds, 4 pounds heavier than the prior week and 13 pounds lighter than 2016; steers averaged 901 pounds, 2 pounds bigger than the week before and 16 pounds below last year; heifers averaged 829 pounds, unchanged from the prior week and 11 pounds smaller than the previous year.
2) Net beef export sales last week totaled 16,773 MT, up 1 percent from the previous week and 12 percent from the prior four-week average. 2) The World Board raised its estimate of 2018 beef production to 27.687 billion pounds (i.e., 315 million above the October guess) is raised from last month as higher expected placements in the latter part of 2017 and first-half 2018 are expected to support higher marketings and fed cattle slaughter in 2018.
3) Although actual pork exports last week to 23,200 MT, down 2 percent from the previous week, shipments remained 4 percent above the prior four-week average. 3) Net pork export sales last week slumped to 7,800 MT (a marketing year low), down 70 percent from the previous week and 56 percent from the prior four-week average.
4) The pork carcass value closed solidly higher yesterday, supported by better demand for bellies, loins, and picnics 4) The World Board also hiked 2018 pork production (i.e., 26.941 billion bushels, up 70 million from the October estimate) on higher expected first-quarter slaughter and slightly heavier carcass weights.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
OTHER MARKET SENSITIVE NEWS

CATTLE: (foodmarket.com) -- While beef still holds the top spot among protein ads with 25.5% of features, the seasonal dispersion is underway as turkey claims its 15 minutes of fame. Turkey ads account for over 7% of protein features this week, up from 4% the previous week. Chicken feature volume slides back to accommodate, at 17% this week over 21% last week. Pork claims 21% of ad real estate, while seafood is nearly 24%.

Frozen whole turkey features, unsurprisingly, account for 44.3% of turkey features, up from 15.5% a week ago.

While turkeys take the table for Thanksgiving, the weeks leading up are all about cold weather comforts, as well as convenience. As shoppers are preoccupied with filling the pantry with staple needs for visiting friends and family, easy meals for after school are popular options. In addition, as the weather gets increasingly colder, roasts pull ahead in purchase frequency.

The beef roast category averages $4.36 per lb., down 3% from a year ago. Pork roasts average $2.87 per lb. this week, up 23% from a year ago.

Frozen staples along with the prepared food segment have opportunity to excel during the hectic holiday craze. The breakfast category also benefits from cooler temps and holiday hosting of guests.

As for the rest of the protein category, boneless skinless chicken breasts are on feature for $3.25 per lb. on average, down roughly 10 cents per lb. from year ago levels. Leg quarter average $1.15 per lb., up from 70 cents per lb. a year ago. Ground beef features show an average price of $3.77 per lb. for 80% lean varieties, slightly higher than year ago.

Ham features are seeing an uptick, currently averaging $1.76 per lb., down 19% from a year ago in time for the holiday push.

HOGS: (Requests for new building permits for hog confinements have jumped since construction began on the new Prestage hog processing plant south of Eagle Grove. Nearly 20 applications have popped up in area counties in recent weeks, including two in Wright County, one in Franklin County, and four in Hamilton County.

Iowa Citizens from Community Improvement has been trying to stop or at least slow the growth of what it calls "factory farms."

Monday morning, the Franklin County Board of Supervisors in Hampton recommended denial of a 5,000-head proposal by Iowa Select Farms near Hansell based on incorrect separation distances.

"We have to tell our supervisors to recommend denial of these applications, but we also have to think outside the box," said Shannon Walker of Clarion. "We know that the DNR and state legislators don't have our back."

Rita Vanderheiden of Woolstock spoke to Wright County Supervisors Monday morning. Iowa Select Farms has put in two applications for hog confinements in Wright County. Those weren't scheduled to be approved by the board this week, but Vanderheiden is concerned about their possible approval next Monday.

"I'm not anti-agriculture, but I care about what's going to happen to our earth and air and water," she said. Vanderheiden is concerned that even though Iowa Select has likely earned enough points to pass the master matrix formula, relatively few points were put into environmental measures.

Wright County Supervisor Rick Rasmussen pointed out that approval of a matrix only indicates that the applicant scored enough points, not that board members personally approve of a building.

Wright County Auditor Betty Ellis noted that the board of supervisors approves a matrix based simply on whether the applicant fills the criteria. The supervisors can make a recommendation against a plan that is separate from basic approval.

"I would ask that you do that," Vanderheiden said.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

John Harrington

John Harrington
Connect with John: