DTN Early Word Opening Livestock

Cattle Paper Set to Open Moderately Lower

(DTN file photo)

Cattle: Steady-$2 HR Futures: 10-30 LR Live Equiv $137.74 + 0.31*

Hogs: Steady-$1 HR Futures: 10-30 HR Lean Equiv $ 78.37 + $1.50**





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

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

GENERAL COMMENTS:

The cash cattle trade will probably remain in low gear this morning with bids and asking prices remaining poorly defined. While nearly all agree that the early December basis is abnormally week and due for correction, there's much disagreement as to whether cash will move higher toward the board, or whether the board will fall toward cash. Some show lists are priced around $131-132 in the South and $200-plus in the North. Live and feeder futures should open moderately lower, pressured by spillover selling and uninspiring beef demand.

Hog buyers should resume work this morning with generally firm bids. Monday's cash moved higher without generating significant trade volume, This could be a reliable indication that we are moving past peak seasonal numbers. futures are staged to open higher, boosted by early-week readings of both higher wholesale pork sales and greater packer spending in the country.

BULL SIDE BEAR SIDE
1) Larger showlists represent only one side of the coin. The other side signals extremely short bought packers, some who still need line up late week kill needs. 1) New showlists distributed in feedlot country were generally larger, especially in Texas and Kansas.
2) Though November placement activity may have exceed 2014, national feeder receipts do not suggest a huge wave of cattle moving into feedlots during the late-week period. 2) Cattle futures closed sharply lower on Monday with spot Dec live slumping back below 130. If the board continues to falter, it will reflect further problems with cash confidence.
3) The pork carcass value returned from the holiday showing significant strength, jumping $1.50 on Monday, supported by better demand for all primals except the butt. 3) For the week ending November 24, noncommercial traders reduced their net position in lean hog futures by 2,800 contracts but are but are still carrying a net short position totaling 4,700 contracts.
4) New showlists distributed in feedlot country were generally larger, especially in Texas and Kansas. 4) It may be too early to assume that hog/pork fundamentals are turning on a dime, ready to consistently support recovering prices through the end of the year.

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Other Market News

CATTLE: (The Japan Times) -- The Abe administration and ruling camp plan to extend the safeguard import restriction system for beef and pork by one year until the end of March 2017.

The administration will include the extension in its fiscal 2016 tax system reform package, informed sources said Monday.

For beef, for example, Japan applies a special tariff rate of 38.5 percent, instead of the original rate of 50 percent. Under the safeguard system, the rate will be raised back to the original level when imports soar.

The Abe administration, along with the Liberal Democratic Party and Komeito, believe that the safeguard measures for protecting domestic livestock industries are necessary and should be extended, the sources said.

HOGS: (wnax.com) -- The World Trade Organization will soon set the amount of retaliation Canada and Mexico will be allowed to seek against the United States in the Country of Origin Labeling case. Canadian Cattlemen's Association's John Masswohl says those numbers will be released the second week of December. However, he's hoping the U.S. Congress will repeal the trade distorting COOL law and retaliation won't be needed.

He'd like to see the U.S. Senate just follow the House and repeal COOL verses trying to develop a voluntary labeling program.

Masswohl says imposing tariffs against U.S. imports is Canada's least desirable option.

Canada is seeking around $3 Billion in retaliatory damages while U.S officials say the number should be less than $100 million.

POULTRY: (Phys.org) -- The U.S. Department of Agriculture is creating a stockpile of avian influenza vaccines, but an expert suggests careful consideration of the strategy and cautions that the strain of the next outbreak is unknown.

Wild birds are typically the source of the introduction of the virus to backyard and commercial poultry flocks, which makes it very difficult to know the strain and understand the nature of the incoming virus until after the outbreak has occurred in poultry populations, said Suresh Mittal, a professor of comparative pathobiology in Purdue University's College of Veterinary Medicine.

In 2015, 15 U.S. states had bird flu outbreaks at poultry farms, which led to the loss of more than 48 million birds and $3 billion in revenue, as well as a pricier Thanksgiving dinner. The virus can infect chickens, turkeys, ducks, pheasants, quail, geese and guinea fowl, as well as wild birds, according to the USDA Animal and Plant Health Inspection Service and testimony at a special hearing of the Senate Committee on Agriculture, Nutrition and Forestry.

The U.S. Department of Agriculture issued a second request on Nov. 20 for proposals from manufacturers as it works to create an emergency stockpile of avian influenza vaccines.

Mittal said the USDA should carefully consider its vaccine selections and cautions that the virus can quickly change. While his research focuses on the creation of a vaccine that offers broad protection against multiple strains and mutations of the avian influenza virus, he is not working with a manufacturer or in a position to submit a proposal for the stockpile.

"Protecting poultry from avian influenza is complicated and there is much to consider as the USDA's Animal and Plant Health Inspection Service makes its decision about vaccine use," Mittal said. "What works against the viruses infecting birds today may not work against the virus we face tomorrow, as it rapidly mutates to avoid attack from the immune system. Luck - or a vaccine effective against a broad range of strains - is needed for an emergency stockpile to work when an outbreak hits."

Mittal and postdoctoral student Omar Amen performed a study of a 2010 avian influenza outbreak in vaccinated chickens at a large poultry farm in Egypt, where avian influenza is endemic and a vaccination policy is in place. They found the vaccine offered little protection. A paper detailing the study was published in the September issue of the journal Virus Research and is available online.

John Harrington can be reached at feelofthemarket@yahoo.com
Follow John Harrington on Twitter @feelofthemarket

(CZ)

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