DTN Early Word Opening Livestock

Meat Futures Set for Mixed Opening With Nearby Gaining on Deferreds

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

Cattle: Steady Futures: Mixed Live Equiv: $135.51 - .32*

Hogs: Steady-$1 LR Futures: Mixed Lean Equiv: $ 88.55 - .45**

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

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


Look for a typically quiet day in feedlot country with both bids and asking prices poorly defined. We don't expect to see many hints of cash potential before midweek. Live and feeder futures should open on a mixed basis with nearby issues better supported than deferreds.

Look for cash hog buyers to open with bids weak to $1 lower. Monday's cash softness was a bit surprising, but country movement seems no more than moderate. We think it's somewhat early for packers to own such bearish clout, but clearly they will exploit the cash as soon as possible if market numbers permit it. Lean futures also seem to be ready to open on a mixed basis with new spot August gaining on deferreds.


Live cattle futures moved sharply higher on Monday. Spot August led the way, advancing by 237 points, followed by October up 127 points and December rising by 130 points. These live contracts have moved above their respective 100-day moving averages.


The wholesale beef trade continues to struggle with cutouts closing moderately lower on Monday with box supplies described as "moderate to heavy."


For the week ended July 10, there was a modest increase from the long side and a sharp drop on the short side for noncommercials relative tolive cattle futures, resulting in net-long positions increasing by 18,000 to 41,400 in total. This was one of the largest increases in the last two years.


The July 1 cattle inventory set to be released on Friday may show a slower pace of heifer retention, but the herd count will nonetheless remain in expansion gear.


New spot August lean hogs starts out Tuesday more than $11 below the most recent cash index. Such an extreme reality should start to lend nearby contracts at least modest support.


The pork carcass value finished moderately Wednesday, pressured by softer demand for bellies and loins.


For the week ending June 30, federally inspected hog dressed weights for the week ending June 30 averaged 208 pounds, one-pound less than the previous week and one year ago.


Even though lean hog futures traded in a choppy pattern last week, the short-term trend remains bearish and the long-term trend remains solidly bearish as well.


CATTLE: (Ag Web) -- Cattle Empire, LLC announced the sale of two of its feedyard locations with a combined one-time capacity of 139,000 head in Haskell County, Kan., to Amarillo, Texas-based Friona Industries, L.P.

The addition of the two Cattle Empire yards boosts Friona Industries to the nation's second-largest cattle feeding entity, with a one-time capacity of 577,000 head in eight yards in Texas and Kansas. Two years ago Friona purchased two Texas feedyards from Cargill with a total one-time capacity of approximately 140,000 head.

Cattle Empire sold its Yard 1 and Yard 2 locations, retaining its Yard 3 and Yard 3 North locations with a one-time capacity of 51,500 head. The company will now focus on expanding its customer cattle feeding segment, according to a statement from Cattle Empire. Cattle Empire will continue to be 100% family-owned and -operated with the third generation of the Brown family, Trista and Rebecca, now joining the ownership group.

"By retaining Yard 3, which has long been our main facility for customer cattle, we will be able to focus our efforts on improving and expanding that business," said Roy Brown, CEO. "We will continue to use new technologies and progressive strategies to offer our customers marketing advantages and innovations to help their cattle and businesses thrive. We will use our 40 years of cattle feeding experience as one of the largest cattle feeders in the nation to provide customers with the strategy and efficiency of a large operation combined with the specialization and individual care of a small family feeder."

"We are very excited for the future of Cattle Empire. This is an important time to be in agriculture and in the beef industry," said Rebecca Brown. "We look forward to continuing to do what we've always done best, and that is feed cattle to provide the world with a delicious and wholesome beef product. Our family has been doing this for 40 years, and I still think we're getting better at it every day."

"Our family and business have been part of the Haskell County community for generations," said Trista Brown Priest. "We look forward to continued involvement and partnership in making our community a great place to live and work. We also welcome Friona Industries to this area, and we know they will be a wonderful addition to our thriving community."

The Cattle Empire corporate office will be moved to the Yard 3 location at 2425 Road DD, Satanta, Kan., 67870.

HOGS: (NPPC) -- NPPC this week called for the U.S. Department of Agriculture to assert its proper oversight over laboratory-produced cultured protein and gene editing in livestock production. The request comes as the U.S. Food and Drug Administration this week held a public hearing to address regulatory oversight of cultured products that are engineered in a laboratory to look, smell and taste like real meat.

NPPC is urging the Trump administration to establish a level playing field by establishing regulatory authority over laboratory-produced cultured protein products with the USDA's Food Safety and Inspection Service, where they will be required to comply with the same regulatory standards, including continuous inspection, process controls, antemortem and postmortem inspection of source animals and other requirements, as conventionally produced red meat and poultry products. In addition, NPPC is asking the Trump administration to move regulatory oversight of gene editing in animals from the FDA to the USDA's Animal and Plant Health Inspection Service. APHIS, which already regulates gene editing in plants, can ensure a proper, risk-based regulatory review under the Animal Health Protection Act.

FDA oversight will treat any gene edited animal as a living animal drug -- and every farm raising them as a drug manufacturing facility-- undermining U.S. agricultural competitiveness relative to other countries with more progressive gene editing regulatory policies.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket


John Harrington