DTN Early Word Opening Livestock

Livestock Futures Staged for Mixed Opening with Cattle Lower and Hogs Higher

(DTN file photo)

Cattle: Steady-$2 LR Futures: 50-100 LR Live Equiv: $150.21 + .54*

Hogs: Steady-$1 HR Futures: 50-100 HR Lean Equiv: $ 78.63 + .08**

* 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-market psychology is in a state of flux, scrambled between sharply lower futures and further appreciation in carcass value. Such early-week confusion should result in poorly defined bids and asking prices, possibly delaying significant trade volume until the second half of the week. It's possible that some business could develop earlier if there are attractive basis opportunities. Live and feeder futures seem set to open moderately lower, checked by follow-through selling and ideas that cash sales are set to slide down the back side of the seasonal top.

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The cash hog market picked up on Monday pretty much where it left off on Friday. In short, bids kept rolling higher as supplies tightened and pork demand increased. We look for such momentum to continue Tuesday with opening cash bids firm to $1 higher. Lean futures are expected to begin moderately higher thanks to residual buying interest, bull spreading and positive fundamentals.

BULL SIDE BEAR SIDE
1) Beef cutouts on Monday still seemed to reflect decent springtime demand for steaks and hamburgers. The choice box jumped more than a buck higher and early-week demand was described as "fairly good." 1) Cattle futures imploded on Monday to their lowest levels since early April. Many specs and commercial continue to believe that cash depreciation will significantly accelerate over the next 30 to 45 days.
2) Early-bird guesses on April placement activity are suggesting a much smaller total than the early spring of 2017, possibly 10% to 15% smaller. 2) Out-front boxed beef sales (i.e., deliverable in 22 days or more) last week dropped to only 756 loads, the smallest total since the first week of January. Retailers and food mangers may have their beef needs covered well into June.
3) Judging by their triple-digit advances Monday, it would appear that summer lean hog contracts have finally caught the bullish seasonal wind. June through August all jump back above four-day moving averages. 3) While cash hogs have increased in value over the last several weeks, the jury is still out on the potential magnitude of the extended late spring/early summer rally as the cutout has a long way to go before packers are willing to bid up the price of hogs too aggressively.
4) U.S.-China relations may be improving thanks to Trump's stated intentions to help the massive Chinese phone company, ZTE, find a way to get back into business. Whatever this means, if it represents away from a serious trade way between the two countries it could be better news for U.S. pork exports. 4) Early guesses anticipate a Saturday hog kill near 80,000 head, possibly pushing the weekly kill to total 50,000 to 60,000 more than last week.

OTHER MARKET SENSITIVE NEWS

CATTLE: (The Yomiuri Shimbun) -- The government plans to partially lift a ban on fresh Argentine beef imports as early as this year, it has been learned. The move is based on the grounds that its safety can be ensured following extra measures in Argentina against foot-and-mouth disease, which was prevalent in South America in the 2000s.

Agriculture, Forestry and Fisheries Minister Ken Saito is scheduled to deliver the plan to his Argentine counterpart in talks in Japan on Monday.  

The move will be the first time ever for the government to allow imports of fresh Argentine beef, even before the outbreak of foot-and-mouth disease in South America. Currently, Tokyo only allows imports of processed Argentine beef.

In the latest plan, the Japanese government is expected to allow imports of fresh beef from Patagonia in southern Argentina — an area of the country where there have never been cattle with the disease.

Patagonia has been certified by an international organization as a region with extremely low cases of malignant infectious diseases.

The ban is poised to stay in place for other regions of Argentina, but the agriculture ministry will continue looking into the safety of Argentine beef with a view to totally lifting the ban in the future.

Argentina-- the world's sixth-largest beef producer-- exports high-quality beef to Europe. With high lean-meat content, the country's beef has a reputation for being particularly good for such dishes as steaks and barbecues.

About 90 percent of Japan's beef imports come from the United States and Australia, in terms of value. Speech

HOGS: (National Pork Board) -- Meat, such as pork, can be an important source of much-needed protein in an infant's diet during the transition to solid foods, according to new research from the University of Colorado published in the American Journal of Clinical Nutrition. The first six to 12 months of life is a period of rapid growth when nutrition plays a pivotal role and, for many moms, meat may not be the first choice for an infant's complementary feeding. Yet this new research suggests meat-fed infants (complementary to formula or breastfeeding) could have an advantage when it comes to early length growth.

"Meat, such as pork, provides important micronutrients, is an excellent source of protein and can be an important complementary food for infants who are ready for solid foods," said lead study author Minghua Tang, Assistant Professor of Pediatrics at the University of Colorado. "Our research suggests introducing higher amounts of protein and introducing meat, such as pork, into the diet at five months could be potentially beneficial for linear growth (length gain)."

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

Follow John Harrington on Twitter @feelofthemarket

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