DTN Early Word Opening Livestock

Cattle Futures Staged for Follow-Through Buying on Opening

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

Cattle: Steady-$2 HR Futures: 50-100 HR Live Equiv $135.33 + $1.89*

Hogs: Steady Futures: mixed Lean Equiv $81.76 - 0.75**

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

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


Packer inquiry in feedlot country is expected to limited this morning with significant trade volume probably delayed until Thursday and Friday. Beef producers will probably be slow to price cattle thanks to the explosive nature of early-week futures. Live and feeder futures should open at least moderately higher supported by residual buying and signs of technical encouragement.

The cash hog market at midweek should resume this morning with generally steady bids. Expect softness in the cut-out this week, but there seems to be significant support above $75. Lean contracts seem set to open on a mixed basis with spot Feb suuported better than deferreds.

1) Cattle futures roared back from the Christmas break with triple-digit gains, underscoring the significance of pre-Christmas bottom-building and working to weaken the cash basis (i.e., lending feedlot managers greater leverage). 1) According to the DTN placement model, big lots now have 5 percent more steers and heifers scheduled to be marketed through the first quarter of 2018.
2) Beef cut-outs surged sharply higher on Tuesday with early-week movement described as "moderate to good." 2) For the week ending December 19, noncommercials continued to liqidated their net-long position in live cattle futures (declining by 7,300 to a total of 103,500 contracts).
3) Bitter cold temperaturs through the tai end of 2017 and into the first few weeks of January means that Old Man Winter has slammed brakes on optimal livestock weight gain and meat production. 3) The pork carcass values stumbled into the holiday-shortened week yesterday with softer demand noted for loins, bellies, and hams.
4) Nearby lean hog futures have embraced recent news of the expanding swine herd with alacrity. With spot Feb now nearly $10 over the cash index, the board is clearly fearless in leading the country trade higher over the next several weeks. 4) Deferred lean hog futured closed no better than mixed, reflecting a nervousnes tied to the larger than expected farrowing intentions suggested by the Dec 1 released last Friday.


CATTLE: (North Texas e-News) -- A patriotic color scheme used in a cattle production system study aims to make cow-calf production more efficient and ultimately produce more pounds of beef with fewer acres, according to researchers.

The project is part of a broader scope of research studies led by Texas A&M AgriLife's Sustainable Solutions for Beef Production Systems.

On a recent visit at the McGregor Research Center, Dr. Jason Sawyer, superintendent, and Barton Johnson, research associate, were working with three sets of cows with one quarter Bos Indicus influence. The cattle donned red, white or blue ear tags to help identify which time of the year they calved or will calve.

"The goal of this project is to develop a system that can achieve a 35 percent improvement in pounds of calf weaned per acre," Sawyer said.

The color tag scheme greatly enhances the ability to track in the field how far along the cows are during the breeding system or if they have failed on the first try to get bred, he said.

The cows with red ear tags calve in January, while the white-tagged group is targeted to calve in May. The blue tag group is expected to calve in September.

"This gives us three calving seasons across the three groups, each 120 days apart," Sawyer said. "We also have the opportunity to manage cows very intensively between weaning and calving, helping to achieve both feed and land use efficiencies."

Visually, the ear color tagging system helps researchers keep track of which cows are expected to calve during the year, Sawyer said. But the tagging system goes one step further.

"If a cow in the red group fails to breed, at the time we determine that failure, she is switched to the white group," Sawyer said. "If she fails there, she has an opportunity to move to the blue group and try again. Every time she fails, she gets a strike. So a red cow that gets a strike becomes a white cow with one X on her tag, so that in the field we can tell at a glance which cow has originated where, their current production status and their status in the system."

Sawyer said this system is designed to allow producers to spread their risk throughout the year, "but more importantly it cuts down on replacement costs by giving her another chance to be productive within four months of her original failure, rather than an entire year, which would be the standard in a normal production system."

He said it also allows them to easily identify cows that failed to catch on the first try, "so that while she remains productive, we will not keep replacement females from those cows."

HOGS: (kticradio.com) -- A Politico report shows just how worried some lawmakers are about the potential failure of the North American Free Trade Agreement negotiations. Officials began talking on Tuesday about putting together a potential bailout of sorts for farmers.

During a conference call Tuesday morning, Iowa Republican Senator Chuck Grassley said he was going to ask U.S. Trade Representative Robert Lighthizer about the rumors in Washington of money being put together and set aside to help farmers in case the NAFTA negotiations fall apart. Grassley says, "I've heard rumors that people in the bureaucracy are trying to anticipate what we are going to do to protect small farmers from drops in prices should the U.S. pull out of NAFTA.

There's some talk going around about potentially putting together a pot of money we could use to support prices in case of a collapse resulting from a NAFTA withdrawal." Grassley says government assistance is the last thing the agriculture industry wants. "Farmers don't want more money from the federal treasury," he adds, "they want their money to come from the marketplace."

John Harrington can be reached at harringtonsfotm@gmail.com

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John Harrington