DTN Early Word Opening Livestock

Cattle: Steady Futures: mixed Live Equiv: $149.85 - 0.20*
Hogs: Steady-$1 HR Futures: mixed Lean Equiv $ 77.04 + 0.74**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Trade volume could develop in cattle country today, but there are some signs that we are headed toward another Friday showdown. Look for packer bids to be renewed this morning at $190-192 in the North and $120 in the South. Siimilarly, asking prices should be restated around $195-plus in the North and $128-plus in the South. Live and feeder futures should open on a mixed basis thanks to a combination of residual selling and short covering.


Look for another round of cash strength in hog country today, Ready numbers of barrows and gilts are tightening, forcing buyers to work harder to cover slaughter plans. The Saturday kill is currently estimated at 43,000 head. Lean futures are expected to open with uneven prices tied to light bull spreading and profit taking.

	BULL SIDE		BEAR SIDE
1)	Four "golden" beef holidays still stretch ahead of us (Mother's Day; Memorial Day; Father's Day; July 4th). Such a promising demand highway means that cut-cuts should remain relatively strong for weeks to come.	1)	Live cattle futures slumped lower again on Wednesday, once again allowing an early rally to peter away, oblivious to large cash premiums.
2)	The fact that feedlot managers have not panicked in terms of asking prices this late in the week and in the face of such large board discounts suggests a certain level of country confidence, probably based on currentness and seasonal beef demand.	2)	Although Wednesdays typically catch a week's best beef movement, yesterday's box movement seemed relatively slow with choice product barely steady and select product significantly lower. Is the beef carcass value close to its seasonal top?
3)	Hog market fundamentals are definitely improving both in terms of tigtening live supplies and stronger pork demand,	3)	During the week ending May 5, U.S. hatcheries set 229 million eggs in incubators, up 3 percent from a year ago. At the same time, broiler growers placed 183 million chicks, up 2 percent from a year ago.
4)	For the week ending May 5, Iowa barrows and gilts averaged 285.1 pounds, 0.4 pounds lighter than the prior week and 2.1 pounds heavier than 2017.	4)	Although second-quarter fundamentals are set to push the cash hog trade higher, it's quite possible that the June lean contract's premium of $13 already reflects the full potential of the early summer cash market.

OTHER MARKET SENSITIVE NEWS

CATTLE: (GlobalMeatNews) -- Brazil's Ministry of Agriculture, Livestock and Food Supply has said it expects the US to reopen the market for Brazilian beef when the countries meet for talks this week.

Minister of agriculture Blairo Maggi revealed that he predicted the US would begin importing Brazilian raw beef by the end of the semester following the suspension in June last year.

The suspension was due to the alleged presence of nodules in beef and long-running concerns over corruption within the Brazilian meat market.

The US Department of Agriculture (USDA) revealed last year that a high percentage of beef shipments failed to pass safety checks and had "recurring concerns" following the investigation into Brazilian firms JBS and BRF.

Speaking last week, Maggi said he believed the technical mission to the US would be the last and they would be working towards the return of Brazilian beef to the country.

"My expectation is that we will return by the end of this semester to export meat to the United States," said Maggi. "It is our wish and we are working towards it."

Last week, the European Commission proposed stopping 20 Brazilian companies exporting meat into the EU following a unanimous vote at a committee meeting.

HOGS: (Food Marketing Institute) -- Withdrawing from the North American Free Trade Agreement would cost retailers and consumers up to $16 billion a year and lead to the loss of 128,000 retail-related jobs over the next three years, according to an AT Kearney study released today that was prepared for the National Retail Federation, the Retail Industry Leaders Association and the Food Marketing Institute.

"There's a lot at stake for American retailers, workers and consumers as the administration resumes NAFTA negotiations," NRF President and CEO Matthew Shay said. "It's clear NAFTA must be modernized, but we can't lose sight of the fact that this agreement helps ensure that American families have access to products they need at prices they can afford. As this report shows, withdrawing from NAFTA would jeopardize countless U.S. jobs and force consumers to pay more everyday products like groceries and blue jeans."

"This report confirms that leaving NAFTA puts American jobs, family budgets and the entire North American economy at risk," RILA President Sandra Kennedy said. "We encourage the administration to modernize and preserve NAFTA to support the millions of American jobs along the supply chain that rely upon free and fair trade."

"This report helps illustrate how -- thanks in part to our expanded trade with Mexico and Canada -- U.S. grocery shoppers can wander the produce section in January and take home groceries to allow them to eat like it's a June day," FMI President and CEO Leslie G. Sarasin said. "Customers are accustomed to this type of access to fresh products and increasingly demand it in their efforts to make healthy choices. The quality, consistency and affordability that stems from the interconnectedness of our three economies helps guarantee that Americans have the most abundant, safest, healthiest and most cost-effective food choices in the world."

In 2017, retailers imported $128 billion worth of merchandise from Mexico and $54 billion from Canada, according to the study. NAFTA has made most of those goods tariff-free since it took effect in 1994.

The study finds that withdrawing from NAFTA would subject retail imports to $5.3 billion in annual tariffs that would that would most likely be passed along to consumers in the form of higher prices. Food and beverages sold at grocery stores would see the biggest hit at $2.7 billion, followed by apparel and footwear at $501 million, electronics and appliances at $390 million, household goods at $498 million and auto parts at $240 million. The remainder would come from the "flow-through" costs of tariffs imposed on other industries that would drive up retailers' costs for services such as transportation.

Even with the tariffs passed on, retailers would see a $10.5 billion hit to their bottom lines, the report said. Retailers would likely leave 68,000 jobs unfilled over the next three years, and another 60,000 jobs supported by the retail industry would be lost.

John A. Harrington can be reached at john.harrington@dtn.com

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