Cattle: Steady-$1 HR Futures: Mixed Live Equiv: $138.96 -0.16*
Hogs: Steady-$1 LR Futures: 50-100 HR Lean Equiv: $ 72.74 - .86**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
After trading a few thousand cattle earlier in the week, packers and feedlots each went into shutdown mode, setting the stage for yet another do-or-die late-week cash market. Cash traders will no doubt quickly reclaim previous bids and asking prices (e.g., $108 bids; $112 to $114 asking prices) and then sit back for several hours, perhaps hoping the boardwill swing one way or the other, hoping something will make the other side blink. Live and feeder futures should open on a mixed basis, thanks to a light combination of pre-cash long liquidation and short-covering.
Hog buyers are expected to complete their procurement chores for the week with opening bids of steady to $1 lower Friday. While most accounts appear to have aggressive Saturday kill needs (now estimated to be 153,000 head) fully funded as the week ends, some do not. Given Thursday's strong closes (e.g., the first three issues locked limit up), it's a good bet that lean futures will open at least moderately higher. On the other hand, the ongoing struggle in the wholesale pork trade will discourage many buyers from giving chase.
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Net beef export sales last week surged to 21,500 metric tons (MT), up 48% from the previous week and 76% from the prior four-week average.
Actual beef export shipments fell last week to 16,900 MT, down 8% from the previous week and 9% from the prior four-week average. The primary destinations were Japan (5,700 MT), South Korea (5,100 MT), Mexico (1,700 MT), Taiwan (1,500 MT) and Hong Kong (1,200 MT).
China and the U.S. will hold a fresh round of trade talks later in August, giving investors hope that the two world's largest economies can solve an ongoing trade spat.
For the week ending Aug. 4, cattle carcass jumped higher: all cattle averaged 817 pounds, 6 pounds above the prior week and 1 pound more than 2017; steers averaged 880 pounds, 6 pounds heavier than the previous week and unchanged from last year; heifers averaged 809 pounds, up 5 poundsfrom the week before and 8 pounds more than the prior year.
Net pork export sales last week totaled 26,700 MT, up 7% from the previous week and 5% from the prior four-week average. At the same time, actual pork exports increased to 19,500 MT, up 43% from the previous week and 9% from the prior four-week average.
The pork carcass value continued to struggle on Thursday, pressured by softer demand for ribs, picnics, loins and bellies.
China found its second case of African swine fever (i.e., about 30 hogs) on Thursday at a slaughterhouse owned by WH Group Ltd's Chinese unit, stirring concerns about the spread of the deadly infection across the world's largest pig herd.
Thursday's lean hog futures were powered a great deal by blue sky considerations and possibilities (e.g., NAFTA progress; renewed negotiations with China later this month). If none of this materializes, trading in the next few days could take the front four contracts back down to the lower portions of these trading ranges rather quickly.
CATTLE: (KFDA) -- A large local beef processor is planning on getting bigger.
Caviness Beef Packers President Trevor Caviness said the company is adding a second processing shift at its Hereford plant.
The second shift could add 600 jobs by late summer of 2019.
The plant already processes 1,800 head of cattle per day, and that will grow to 2,600.
Construction of more freezers and coolers to handle the increased supply should begin in October with operations starting about a year later.
The company also has a ground beef plant in Amarillo
HOGS:(Dow Jones) -- Hormel Foods Corp. (HRL) on Thursday said it agreed to sell its Fremont, Neb., pork-processing plant to WholeStone Farms LLC for an undisclosed amount.
The Austin, Minn., food maker said the sale, which it expects to complete in December, "reflects the long-term, changing dynamics in the pork industry, and most importantly, is aligned with our vision as a global branded food company."
The deal includes a multiyear agreement for WholeStone to supply pork raw materials to Hormel, the company said.
Hormel acquired the Fremont plant, which employs about 1,500 people, in 1947, according to its website.
WholeStone is owned by 220 independent producers and farmers in the upper Midwest.
John Harrington can be reached at firstname.lastname@example.org
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