Cattle: $1-3 LR Futures: 50-100 LR Live Equiv $138.74 - .92*
Hogs: Steady-$1 LR Futures: 50-100 LR Lean Equiv $ 87.00 + .42**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Though generally quiet, the cash cattle trade on Tuesday did report a few lower deals in parts of Nebraska (e.g., $119 live, $3 to $4 lower than last week's weighted average). Such isolated bits of business may have been tied to basis opportunities. It remains to be seen if feedlot managers can successfully dig in somewhat close to last week's market. But until the board shows greater stability, bids and asking prices may be slow to surface. Live and feeder futures are expected to open at least moderately lower, pressured by spillover selling, further long liquidation, and cash uncertainty.
Hog buyers should set to work Wednesday with bids steady to $1 lower. With the country market continuing to steadily erode, the cash drift has been much slower than what we've seen on the board. How much longer can such a disparity in pace continue? Spot December lean expires in just a month's time. Is the board too cheap, or will cash hog value soon start dropping like a bowling ball. Lean futures took quite a hit on Tuesday, and Wednesday action should still show the sting by opening moderately plus lower.
|BULL SIDE||BEAR SIDE|
While the premium in February live futures has narrowed somewhat, it is still more than $5.50 over spot December, a wider-than-average premium. April is at its widest premium to December at a little over $6.50. Such a premium structure speaks well of the longer-term health of bullish psychology.
|1)||Cattle futures continued to be hammered by formidable forces of long liquidation and technical selling. Indeed, damage caused by the latter could trigger more of the former given how much live grew from mid-October through early November.|
Seasonally, the December live cattle contract tends to weaken in early November, and then move higher through the rest of the month.
|2)||The choice beef cutout really took it on the chin Tuesday, losing more than $2 with overall box movement described as no better than "light to moderate."|
The pork carcass value closed moderately higher Tuesday as lower loin and hams sales were overshadowed by sharply higher belly and rib business.
|3)||Spot December lean hogs ended Tuesday's session 230 plus points lower at $59.98, a 670-point discount to the cash index as of Nov. 13. Right or wrong, the current board seems fearless in leading late-year cash lower and lower.|
|4)||Although October's hog market party is clearly having trouble maintaining the fun through the first half of November, the long-term market trend in lean hog futures is positive as is the structure of the market.||4)|| |
Although both domestic and foreign pork demand proved quite strong though the late summer and early fall periods, the relentlessly tall wall of production and tonnage may be finally starting to wear buyers down, especially since few expect the U.S. offering in ease up anytime soon.
CATTLE: (foodmarket.com) -- Global Agriculture Company (GAC) has just exported six containers of U.S. whole cut beef to China. This is the largest single shipment of whole cut beef sent to China from the U.S. in 14 years. This single shipment is near 22% of the year-to-date quantity exported to China. Thanks to unparalleled sales distribution partners in China, GAC is able to purchase and sell the whole carcass.
GAC has an exclusive partnership with many buyers including the largest state-owned food producer in East China's six provinces, Bright Food Group. They are responsible for feeding over 400 million people, including a luxury global hotel chain and China's largest food e-commerce company. They are very excited about importing containers of U.S. beef and are anxious to purchase more.
GAC's President, Tim Johnson, states, "This first shipment will build market confidence in China. This shipment of beef is just the beginning of a sustainable U.S. beef supply to China. China imports 800,000 tons (1.7 billion pounds) of beef annually, primarily from Brazil, Australia and Argentina. We are only scratching the surface of what we can export to China."
Global Agriculture Company is an Iowa-domiciled Trade and Service company that works exclusively with China. They also have an office in Shanghai. Not only do they trade beef with China, but also wine, soybeans, engineering services and other technologies. China is the fastest-growing economy in the world and they have a great desire to learn how to feed and service their own people. GAC has partnered with several China companies to assist them with their growing needs.
(Halcyon Business Publications) -- National Beef Packing Company, a company that processes high quality fresh beef, consumer ready products and beef by-products, will expand capacity to produce its consumer ready products at their production plant in Moultrie, Georgia.
The more than $30 million dollar project includes a facility expansion as well as new processing and packaging equipment. The company plans to hire approximately 100 additional employees to work at the facility. The expansion is scheduled to be completed in the fourth quarter of 2018.
"We are experiencing an increased demand for fresh consumer ready protein products. The expansion will allow us to deliver on this growing opportunity," said Dave Davidson, Vice President Case Ready Operations, National Beef.
"National Beef is committed to investing in projects that help us serve our customer requirements for high-quality products," Davidson said.
Headquartered in Kansas City, Missouri, National Beef Packing has operations in Liberal, Dodge City, and Kansas City, Kansas; Hummels Wharf, Pennsylvania; Moultrie, Georgia and St. Joseph, Missouri. The company employees approximately 8,300 people and distributes its products to customers throughout the U.S. and around the world. In fiscal year 2016, National Beef generated sales of $7.2 billion.
HOGS: (nationalhogfarmer.com) -- Canada walked out of the Trans-Pacific Partnership on the last day of negotiations over the weekend. According to a media outlet, the recent debate for the Asia-Pacific deal among the remaining 11 countries was dramatic. After Canada is a no-show for the signing ceremony, an official summed up the room's attitude by telling Australia's ABC News that "the Canadians screwed everybody."
So, basically, two of the three North America trade partners dared to take a stand. President Donald Trump warned he was going to walk away from TPP and he did. Canada Prime Minister Justin Trudeau says he was not going to be hurried into a trade deal for the sake of agreement.
"I wasn't going to be rushed into a deal that was not yet in the best interest of Canadians. That is what I've been saying at least for a week, and I've been saying it around TPP12 for years now, and that position continues to hold," Trudeau tells CBS Radio-Canada.
So, as it stands 10 countries-- Australia, Brunei Darussalam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam-- agreed on core elements of pact newly named "Comprehensive and Progressive Agreement for Trans-Pacific Partnership," or CPTPP, according to an official statement released Saturday.
The free trade deal will eliminate tariffs on products with a traded total more than $350 billion last year. The CPTPP will take effect 60 days after six of the 11 member countries ratify the deal. While the core elements of the original TPP are included, but shortlist of rules spanning 20 categories was suspended.
In announcing the CPTPP deal on Saturday, Japan's TPP minister Toshimitsu Motegi says the agreement "sends a very strong message to the United States and other countries in the Asia-Pacific region," reports media outlets.
Meanwhile, President Trump wraps up his trip to Asia and stands firm that the United States will not participate in large trade agreements that tie the country's hands. Under his leadership, the United States will continue to pursue bilateral free trade agreements.
Only time will tell if bilateral agreements are right for American agriculture and more importantly the meat industry. Yet, time is the exact thing that can stifle the U.S. pork exports and future growth, especially with Japan being the No. 1 pork customer in terms of value. Supply the world with its favorite animal protein-- pork-- is an aggressive game. While the record shows U.S. pork is a safe, consistent quality product, the lack of free trade agreements could just knock America's pig farmers out of the game.
Given that the European Union and Japan have already reached an agreement in principle on a trade pact, CPTTP had its official signing ceremony and NAFTA revamping is in shaky territory, the reality for the U.S. swine business is two large markets-- Japan and Mexico-- could turn to other countries for its pork. The clock is running down for U.S. pork. President Trump, now is the time for you to show the world the art of making a deal.
John Harrington can be reached at email@example.com
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