DTN Early Word Opening Livestock

Cattle Paper Set to Open Moderately Higher

John Harrington
By  John Harrington , DTN Livestock Analyst
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(DTN file photo)

Cattle: Steady w/Wed Futures: 50-100 HR Live Equiv $137.82 - .92*

Hogs: $1 LR Futures: 25-50 LR Lean Equiv $ 85.82 -1.18**

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

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

GENERAL COMMENTS:

Moderate trade volume surfaced in most areas of cattle-feeding country at midweek. Another light round of scattered clean-up deals is possible Thursday and/or Friday. Look for opening bids of around $119 to $120 live and $188 to $190 dressed. Live and feeder futures seem set to open moderately higher, supported by follow-through buying and short-covering ahead of Friday's Cattle on Feed report.

Look for hog buyers to return to work Thursday with bids .50 to $1 lower. Whilechain speedthrough the week looks plenty aggressive, packers are acting like they can't find enough numbers to build a larger Saturday kill. Lean futures seem geared to open some lower, curbed by long liquidation and struggling fundamentals.

BULL SIDE BEAR SIDE
1)

Live and feeder cattle futures staged an impressive rally late in Wednesday's session, reinforcing longer-term chart support and suggesting bottom-picking activity.

1) The cash cattle trade cracked a midweek with live sales in the South $119 marked $4 to $5 lower than last week; dressed deals in the North averaged close $3 lower.
2)

For the week ending Nov. 7, noncommercials continued to accelerate their net-long position in live cattle futures with a gain of 11,300 to 138,800.

2) Beef cutouts closed sharply lower again Wednesday (especially the select) with box offerings described.
3)

Finally saluting the premium of the cash index, spot December lean futures shot sharply higher Wednesday. We could see more of the same on Thursday and/or Friday.

3) The pork carcass tanked by more than a dollar, reassured by softer demand for all primals except the belly.
4) Despite very attractive pork processing margins, Saturday slaughter plans at this point should be no larger than 153,000 head. Late fall, market hog numbers may be more manageable than previously thought. 4)

For the week ending Nov. 11, U.S. hatcheries set 220 million eggs in incubators, up 1% from a year ago. At the same time, chicks placed in the United States totaled 175 million chicks; up 2% from a year ago.

OTHER MARKET SENSITIVE NEWS

CATTLE: (Capital Press) -- The 11 remaining countries in the Trans-Pacific Partnership this week announced they are moving ahead with the trade agreement after the U.S. abandoned it last winter.

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The development isn't a surprise, U.S. agricultural exporters say. The countries participating in the newly renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

"It's definitely not a surprise," said Joe Schuele, vice president of communications for the U.S. Meat Export Federation. "Japan has been particularly vocal about moving forward with the agreement. Several participants were fairly adamant that they wanted to move forward even after the United States withdrew."

President Donald Trump withdrew from TPP in January.

The new deal has the potential to put U.S. exporters at a disadvantage in key markets such as Japan and Vietnam, Schuele said.

Japan is the largest market in value for U.S. beef and pork. Australian beef already has a significant tariff advantage in Japan over any other supplier. If a modified TPP agreement proceeds, it would benefit Canadian, New Zealand and Mexican beef exporters in the Japanese market, he said.

Canada, Mexico and Chile are in the best position to supply pork to Japan, he said. Their existing economic agreements already give them some advantage in the market over U.S. exporters.

An agreement between Japan and the European Union reached over the summer is also a concern, Schuele said. The EU is the largest pork competitor for the U.S., he said.

"That agreement with the EU contains provisions similar to what were negotiated in the TPP," he said.

Schuele said an economic dialogue with Japan is continuing, headed by Vice President Mike Pence and Japan's Minister of Finance.

"Certainly there are a lot of calls for the U.S. to pursue a bilateral trade agreement with Japan, but that doesn't appear to be atop Japan's list of priorities right now," he said. "We feel we have a very well-established and loyal customer base in Japan, but to maintain that, you still need to be priced competitively. It becomes more difficult to be priced competitively if you're paying higher tariffs than everyone else."

The tariff on U.S. frozen beef exports to Japan will increase from 38.5 percent to 50 percent by next March.

U.S. wheat exporters weren't surprised by the 11-nation trade effort, either. "We are unable to go on record commenting about a possible TPP-11 right now other than to say the possibility is an inevitable result of U.S. withdrawal from the agreement," said Steve Mercer, vice president of communications for U.S. Wheat Associates.

In the past, U.S. Wheat has suggested the development of new free trade agreements rather than withdrawing from or renegotiating agreements.

HOGS: (National Pork Board) -- America's 60,000 pig farmers continue to make progress in their quest for superior antibiotic stewardship to help protect people, pigs and the planet. On their behalf, the National Pork Board is pleased again to celebrate U.S. Antibiotic Awareness Week and World Antibiotic Awareness Week with organizations such as the U.S. Centers for Disease Control and Prevention (CDC).

"This week of antibiotic awareness is a good time for those of us in the pork industry to reflect on our long history of accomplishments with antibiotics, such as using these medications responsibly and embracing the updated Pork Quality Assurance® Plus (PQA Plus®) certification program," said National Pork Board President Terry O'Neel, a pig farmer from Friend, Nebraska. "As pig farmers, we are aware of issues such as antibiotic resistance, and we are dedicated to working hard to preserve the effectiveness of antibiotics, both on the farm and in human medicine."

This year, the CDC changed the name of its educational outreach to Be Antibiotics Aware. The national effort focuses on how everyone can help fight antibiotic resistance and improve antibiotic prescribing and use. The agency says while antibiotics save lives, they can cause side effects and lead to antibiotic resistance. The CDC estimates at least 80 million antibiotic prescriptions each year are unnecessary for human patients, which makes improving antibiotic prescribing and use a national priority.

"Antibiotic resistance is a public health issue with numerous contributors across human, animal and environmental health," said Heather Fowler, D.V.M., director of producer and public health with the National Pork Board. "Because of this, pig farmers understand the key role they and their herd veterinarians play as part of the overall One Health, multi-disciplinary approach to antibiotic stewardship."

Fowler believes ongoing collaboration with academia, governmental agencies and non-governmental organizations is the best way to move forward in solving the complex global issue of antibiotic resistance. As examples, she points to yet another revision to long-time programs such as PQA Plus to focus even more on antibiotic stewardship. She also noted the Pork Board approving a Checkoff investment of more than $6 million for antibiotic-related studies since 2000, which includes novel work on antibiotic usage standards and metrics.

At the national level, the Pork Checkoff has been very active in its ongoing mission of education and outreach to all audiences about how America's pig farmers are progressing on antibiotic stewardship. During 2017, the National Pork Board hosted a live webcast that brought together experts in farming, veterinarian medicine and the retail and foodservice industries. This event drew more than 60,000 online viewers, with 400 pork producers in the studio audience. A replay of the broadcast can be viewed online at RealChangeOnFarms.org. The Checkoff also participated in a panel discussion at the annual Global Ag Investing conference in New York City to address the shared responsibility of antibiotic use in both animal and human health. Closer to home, the National Pork Board hosted an Iowa farm tour with 20 National Press Foundation journalist fellows.

From a producer perspective, O'Neel said 2017 has been another milestone in antibiotic stewardship, with farmers taking even more proactive steps in pig management and biosecurity. He pointed out that these efforts have helped increase the health of pigs and reduce the need for antibiotics. "Last January, the implementation of Guidance 209 and 213 that expanded the Veterinary Feed Directive and eliminated the growth-promotion use of medically important antibiotics took effect," O'Neel said. "While some of our detractors may have been expecting chaos on our farms, we proved them wrong. America's pig farmers simply did what we always have done. We stepped up and demonstrated our competency to practice good antibiotic stewardship and our ongoing dedication to doing what's right for people, pigs and the planet."

The National Pork Board has responsibility for Checkoff-funded research, promotion and consumer information projects and for communicating with pork producers and the public. Through a legislative national Pork Checkoff, pork producers invest $0.40 for each $100 value of hogs sold. Importers of pork products contribute a like amount, based on a formula. The Pork Checkoff funds national and state programs in advertising, consumer information, retail and foodservice marketing, export market promotion, production improvement, science and technology, swine health, pork safety and sustainability and environmental management. For information on Checkoff-funded programs, pork producers can call the Pork Checkoff Service Center at (800) 456-7675 or check the Internet at www.pork.org.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

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John Harrington

John Harrington
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