DTN Early Word Opening Livestock

Cattle Futures Staged for Firm Opening

(DTN file photo)
   

Cattle: Steady to $2 LR Futures: 10-30 HR Live Equiv $138.21 - 0.60*
Hogs: Steady Futures: mixed Lean Equiv $ 91.31 - 0.10**

* 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 buying interest should begin to improve in the morning, though significant trade volume could easily be delayed until Friday. Asking prices have obviously been rising along with the recovering board. Some asking prices are around $128 to $129 on a live basis. CME officials announced 35 deliveries on Wednesday (7 new, all steers, 3 at Columbus, 4 at Syracuse; 13 retendered at $1, all steers at Dodge City; 15 retendered at Worthing, 4 heifers, 11 steers). Cattle futures should open moderately higher thanks to follow-through buying and further short-covering.

Hog buyers are likely to resume work today with basically steady bids. Both the cost of live inventory and the wholesale carcass values have demonstrated great stability through the first half of the week. This is a happy combination for packers and producers alike (though especially the former). Lean futures are likely to begin on a mixed basis with light trade volume.

BULL SIDE BEAR SIDE
1) Live and feeder contracts closed sharply higher Wednesday for the second consecutive session, increasing the likelihood that a significant "V" bottom is being formed. 1) August beef exports totaled 84,167 MT, down 18% from a year ago. Beef export value was down 24% to $498 million, the lowest in 18 months.
2) Even with live cattle futures moving sharply higher at midday, October delivery interest remains quite modest with only seven new loads posted yesterday (28 loads were retendered, 13 at $1, 15 at $2). 2) The wholesale beef trade continues to struggle for footing, closing significantly lower again at midweek with box supplies described as "heavy."
3) So far market hog numbers are building slowly or not at all. Most believe this week's kill will be slightly below last week. 3) For U.S. pork, August exports totaled 160,719 metric tons, down 1% from a year ago, while export value fell 19% to $429.8 million -- the lowest monthly value in more than four years.
4) As December lean hogs prepare to assume the spot position next week, specs should be reluctant to press the late-year discount even more, especially as cash and product continue to enjoy a firm undertone. 4) For the week ending October 3, Iowa barrows and gilts averaged 280.3 pounds, 0.6 pounds heavier than the previous week (though still 4.5 pounds lighter than 2004).

OTHER MARKET SENSITIVE NEWS

CATTLE: (San Francisco Chronicle) -- Meat lovers, rejoice — or at least eat with a little less guilt.

Federal officials said Tuesday they will not consider the much-debated environmental impact of raising and consuming beef when they finalize the nation's dietary guidelines this year.

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The departments of Agriculture and Health and Human Services had been wrestling with whether to embrace a finding from a group of federally-appointed nutrition advisers that beef is not only problematic for humans but bad for the environment.

The panel, which helps the federal government update its dietary guidelines every five years, advised that "animal-based food," particularly beef, uses a disproportionate share of land, water and energy in its production, and should be recommended in limited portions. Beef production also produces harmful greenhouse gases, the group noted.

But in a joint statement, Secretary of Agriculture Tom Vilsack and Secretary of Health and Human Services Sylvia Burwell said they would base their suggestions about what the public should eat — and should not eat — on nutrition, not sustainability.

"The final 2015 guidelines are still being drafted, but because this is a matter of scope, we do not believe that the 2015 Dietary Guidelines for Americans are the appropriate vehicle for this important policy conversation about sustainability," the Cabinet members wrote.

The federal dietary advice helps shape meals at schools and military bases as well as the consumer-oriented food pyramid, now redesigned as a plate. Millions of dollars of spending is at stake.

The federal government faced heavy pressure from the meat industry, as well as members of Congress, to ignore the advisory panel's findings on beef's environmental footprint.

While sustainability issues have been brought up before, the panel's recommendations released in February went much further in indicting meat as a waste of resources and contributor to climate change.

Several environmental groups pushed for the federal government to follow through on the advice of the nutrition panel. On Tuesday, these organizations were critical of the verdict.

"It's frustrating to see the Obama administration again allow politics to trump science," said Stephanie Feldstein, population and sustainability director at the Center for Biological Diversity, in an e-mail to The Chronicle. "The decision to treat sustainability and dietary health as separate issues only benefits industry profits while putting our health, our environment and the future of our food system at risk."

HOGS: (brownfieldagnews.com) -- The Obama Administration faces a big challenge in convincing Congress to ratify the Trans Pacific Partnership (TPP) trade agreement, according to Iowa Senator Chuck Grassley.

"I think it's going to be very, very difficult to get it through, based upon opposition that was expressed during the month of June when we had this up here," Grassley says, "and I think it will be particularly difficult in the House of Representatives, more so than in the Senate."

Much of the opposition to TPP is expected to come from the President's own party. But some Republicans are also expressing concerns.

The Washington Post reports that Republican Senator Orrin Hatch of Utah, who chairs the Senate Finance Committee, is upset over concessions made by U.S. negotiators on pharmaceutical patents. U.S. law allows 12 years of patent-style protections, but the final agreement is reportedly closer to the five years allowed under Australian law.

Grassley, who is also a Republican, says he shares Hatch's concerns.

"To get a drug to market, it costs about a billion dollars," Grassley says, "and the extent to which there's a lessening of protection for intellectual property, the less money that's coming in, the less money that's going to be available for research."

But Grassley says he will look at the whole agreement before deciding how he will vote.

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

(CZ)

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