DTN Early Word Opening Livestock

Look For Cattle and Hog Futures to Open Mixed as Traders Await Cash News

(DTN file photo)

Cattle: Steady-$1 LR Futures: Mixed Live Equiv: $139.55 - .77*

Hogs: Steady-$1 LR Futures: Mixed Lean Equiv: $ 69.02 -1.67**

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

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

GENERAL COMMENTS:

Pre-Thanksgiving business in the red meat world always tends to be a tricky affair. Cattle slaughter in the last full week before the turkey blast tends to be a large one, followed by more manageable numbers next week. Our guess is that asking prices will be around $178 to $180 in the North and $110 to $112 in the South. Significant trade volume may not surface until Friday. Live and feeder futures should open in slow gear and with mixed prices as both buyers and sellers try to anticipate post-fundamentals.

Hog buyers are expected to resume procurement chores with bids steady to $1 lower. While bearish fundamentals are tough to ignore, the discounted board already has a ton of bad news built in. Lean futures should also open with uneven prices thanks to follow-through selling and short-covering.

BULL SIDE BEAR SIDE
1)

Beef cutout values should turn higher from mid-December into the new year as retailers shift their merchandising focus from holiday items at the end of the year toward more ground beef and end-meat roasts going into January.

1)

Despite the typical reputation of Wednesday for decent beef movement, cutouts closed significantly lower at midweek with box movement described as no better than "light."

2)

For the week ending Nov. 10, U.S. hatcheries set 222 million eggs in incubators, down slightly from a year ago. At the same time, broiler growers in placed 172 million chicks for meat production, down 2% from a year ago.

2)

With the "official" index roll now past, February live cattle futures are likely to soon become the most actively traded contract, while liquidation of December live will continue into the delivery period. The bottom end of the respective trading ranges that had been in place from the mid-September upsurge until the large declines of last week, now become significant overhead resistance points.

3)

The seasonal trend is for December lean hog futures to work mostly higher through the balance of November.

3)

The pork carcass value continued to seriously struggle for buying support on Wednesday, denied significant support by all primals except the butt.

4)

Believe it or not, production pressure on the live hog and wholesale markets could be worse. Hog harvest levels are actually falling slightly shy of levels suggested by the latest government survey numbers. Either hogs are not available or not available yet.

4)

For the week ending Nov. 10, Iowa barrows and gilts averaged 284 pounds, .5 lb heavier than the previous week and .4 lb bigger in 2017.

OTHER MARKET SENSITIVE NEWS

CATTLE:(The Japanese Times) -- The government's food safety commission is moving closer to removing import restrictions on U.S. beef imposed as a measure against mad cow disease, commission officials said Wednesday. Japan has been facing U.S. pressure, which grew stronger under the administration of President Donald Trump, to scrap the current restrictions allowing only U.S. beef from cattle aged 30 months or younger, due to concerns over bovine spongiform encephalopathy, also known as mad cow disease.

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The Food Safety Commission of Japan plans to convene a meeting of its research unit Thursday to seek approval over the plan on lifting the restrictions. The commission will later report the plan to the Health, Labor and Welfare Ministry.

The commission's research panel began discussing from April potential effects on people's health in case the restrictions are scrapped, based on the ministry's request.

Japan banned all imports of U.S. beef in 2003 following the discovery of BSE in a U.S. cattle herd. But in 2005, it resumed imports of U.S. beef from cattle no more than 20 months of age.

Japan has since eased import restrictions in steps on the grounds the United States has been internationally recognized as having the lowest risk for the disease.

The issue of import restrictions has been brought up in bilateral economic talks and other occasions, with the United States strongly requesting their early elimination in the hope of reducing the trade deficit with Japan.

Removal of the restrictions may help the United States cut costs that have been necessary to meet Japanese regulations and enable it to maintain the competitiveness of its beef products against rival Australia, even after the Trans-Pacific Partnership free trade pact enters into force without the United States on Dec. 30.

Both Japan and Australia are members of the revised TPP pact, which covers 13 percent of the global economy.

HOGS: (National Pork Board) -- The National Pork Board, the U.S. Meat Export Federation (USMEF) and the U.S. Department of Agriculture (USDA) announced Thursday that they will engage in a foresight-based marketing study called Pork 2040. The study will investigate changing consumer attitudes and trends in developed and emerging U.S. pork export markets in 17 defined countries.

"Previous international marketing studies centered only on quantitative statistics to define demand, production and market access," said Bill Luckey, chair of the Checkoff's International Marketing committee and a pork producer from Columbus, Nebraska. "This unique effort will be more comprehensive, investigating the relevant qualitative factors that shape consumer opinion and hence markets. The study will focus on forecasting the pork and pork-product demand landscape over the next several decades so help determine where best to invest our limited Checkoff resources."

In addition to analyzing linear consumer trends, the Pork 2040 research will assess trends in the development of new production and marketing technologies, as well as in growing environmental concerns and in emerging legal, trade and regulatory regimes around the globe.

"Comprehensive research is vital to our international marketing planning and forecasting in order to stay ahead of the curve," Luckey said. "We must take proactive steps to market products in both current and emerging markets well into the future."

China, which has a growing and increasingly urban population base, will be the first country studied through the Pork 2040 lens. A research platform will be developed to enable the U.S. pork industry to design and implement a long-term strategy for U.S. pork consumption in China and to add context to one of the most critical export markets.

"By forecasting where pork and pork product demand is heading in China, the Pork Checkoff and its partners can return value to U.S. pig farmers through a defined and united focus on growing export demand," said Craig Morris, vice president of international marketing for the Pork Checkoff.

The Emerging Markets Program will provide initial funding for the project. This funding will enable teams of experts to assess consumer trends, attitudes and behaviors that influence China's food system needs and the subsequent ability to increase U.S. exports into the region.

"Pork 2040 will help decision-makers in business, government and non-profit organizations understand and accommodate the myriad challenges facing our pork industry stakeholders," Morris said. "Challenges routinely surface from ever-evolving factors that affect the global food system, and we need to be better informed about circumstances potentially within our control and influence." Contractors interested in submitting proposals for this market should visit pork.to/2040rfp to download the request for proposals and submit their bid.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

(BAS)

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