DTN Early Word Opening Livestock

 
Cattle: Steady w/Wed Futures: Mixed Live Equiv $148.01 + .27 
Hogs: Steady-$1 LR Futures: 50-100 LR Lean Equiv $ 82.49 -2.09**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Cattle psychology took it on the chin Wednesday as lower futures and cash fed on each other. Further action Thursday will depend on actual trade volume totals generated at midweek, and it will be important to check Mandatory summaries, which will be released later Thursday. It's possible that business is already done for the week in some regions. Our guess is that unsold steers and heifers are priced around $128 live and $205 dressed. Live and feeder futures should open on a mixed basis thanks to follow-through selling and short-covering.

The cash hog trade should open on the defensive Thursday with buyers mindful of both ample offerings and negative action in the wholesale trade. If pork revenue continues to falter, it stands to reason that packers will bear down hard on the cash trade in order to pressure processing margins. At this time, the Saturday kill is estimated around 132,000 head. Lean futures are expected to open under pressure, checked by follow-through selling and signs of softening product demand.

	BULL SIDE		BEAR SIDE
1)	Beef cutouts closed moderately higher at midweek, further boosting processing margins and theoretically tightening the safety net under the cash cattle trade.	1)	Fed steer and heifers sold as much as $2 lower Wednesday (i.e., $126), pressured by negative psychology, fear of larger offerings ahead and deepening board discounts.
2)	There seems to be some interest in the Trump Administration to find a way to rejoin the TPP trade agreement (see article below).	2)	During the week ending Feb. 24, U.S. hatcheries set 228 million broiler eggs in incubators, up 2% from a year ago. At the same time, broiler growers placed 181 million chicks, up 1% from 2017.
3)	The seasonal trend for April hogs is soft short term but then tends to strengthen into contract expiration.	3)	The pork carcass value imploded by more than $2 on Wednesday, hammered by struggling demand for bellies, loins and hams. The belly primal slumped as much as $8.94.
4)	While the short-term trend in lean hog futures is neutral/bearish currently, the long-term trend still remains bullish.	4)	For the week ending Feb. 24, Iowa barrows and gilts averaged 285.8 pounds (lbs), .7 lbs. heavier than the week before and 4.6 lbs. bigger than 2017.

OTHER MARKET SENSITIVE NEWS

CATTLE:(Bloomberg.com) -- U.S. Treasury Secretary Steven Mnuchin said Tuesday he had "begun to have very high-level conversations" on the Trans-Pacific Partnership, and rejoining the regional trade pact is an option for President Donald Trump.

Trump repeatedly attacked the TPP deal on the campaign trail and pulled the U.S. out of it soon after he took over early last year. However, last month he expressed openness to rejoining if the terms were improved. Mnuchin told the U.S. Chamber of Commerce in Washington that this was significant.

"He's willing to negotiate," Mnuchin said. "Whether we do multilaterals or we consider going back into TPP, again that's something that's on the table."

Japan has spearheaded a drive to keep the pact alive among the remaining 11 members, and the resulting agreement is set to be signed on March 8. Mnuchin said the U.S. would focus on bilateral deals first before reviewing its stance on the TPP.

"It's not a priority at the moment, but it is something the president will consider," he added.

President Trump says he'd go back in the TPP for a "much better deal."

Japan has repeatedly said it's not interested in renegotiation, and any such request would probably not be welcomed by other nations. The U.S. should rejoin the treaty as it is, President Michelle Bachelet of Chile told the Nikkei newspaper in an interview this week. Bachelet will host the signing ceremony for the treaty in March.

Still, Japan's former TPP Minister Akira Amari said in an interview Tuesday that it might be feasible to add new clauses on topics not currently covered if U.S. concerns cannot be addressed outside the TPP framework.

He warned that by spurning the agreement, the U.S. risks allowing China to make global rules on trade and investment.

"China is trying very hard to get its own rules recognized as the standard," Amari said. China's rules are "a bit different from what Japan, the U.S. and Europe see as fair," he added. "I don't think the U.S. can accept China's local rules becoming the global standard."

Meanwhile, a lawmaker in Thailand said the military government is debating whether to join the pact, whose current members account for about 13 percent of the global economy. Indonesia, the Philippines, South Korea, Taiwan and the U.K. have also expressed interest in joining. Current members include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

HOGS:(USMEF) -- Promoting the quality and flavor of U.S. pork and beef to one of the fastest growing foodservice sectors in Japan, the U.S. Meat Export Federation (USMEF) recently participated in the Yakiniku Business Fair. Held annually in Tokyo, this event is Japan's largest trade show for the yakiniku industry and one of the country's largest food trade shows. USMEF's promotional efforts at the Yakiniku Business Fair were funded by the Pork Checkoff, the Beef Checkoff Program, the Texas Beef Council and the USDA Market Access Program. In the audio report below, USMEF-Japan Director Takemichi Yamashoji notes that USMEF promoted a U.S. beef "pound steak" at the event. While steaks in Japan are typically 150 to 200 grams (one-third to one-half pound), larger and thicker cuts are gaining popularity. So this year USMEF's booth featured a 454-gram steak, which is the equivalent of a full pound. U.S. pork cheese teji karubi, a Korean-style barbecue dish, was also a featured menu item.

USMEF-Japan marketing manager Tatsuru Kasatani adds that because the Yakiniku Business Fair offers insights on such a wide range of products and services, it attracts leading meat buyers from the yakiniku industry -- making it a very attractive and effective event for promoting U.S. pork and beef.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

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