Hogs: The CFO of Smithfield Foods, speaking at an investor conference, had some good things to say about Chinese pork purchases. A few weeks ago China told the United States that it would rescind its official ban on U.S. pork that was in place from last year’s swine flu concerns. Last week, that ban officially ended. The official noted they now have their first Chinese purchases in hand.
In the latest official export data we have, good for the month of March, exports to China were only 4% of last year in the same period. Buyers used Hong Kong as a back door for some that shortfall. Combining Hong Kong and mainland China shows exports were 75% of last year’s level. The resumption of trade to China is good news as this market has been looking for any hot button news for the summer. If China is back in business then the only wildcard here is Russia. In March, exports to Russia were virtually zero…Rich Nelson
Cattle: Cattle futures did a very respectable job in rebounding from early morning lows on Wednesday. It is likely this was due more to the drop in the U.S. dollar later in the day than any new beef related fundamentals. In fact, the midday beef report posted declines for both choice and select product.
Also, traders are still disappointed by this week’s $97 to $98 cash cattle action. On Wednesday morning, both major newswires released average guesses for Friday’s COF report. Bottom line here is a slight increase for placements will be seen impacting late year supplies but there will not be a wholesale jump of feeders into the feedlot.
Though calf and feeder sales at the local auction barn saw big increases in March and April, it appears many of those sales were to backgrounders taking advantage of great pasture conditions. It is surprising, but $100 per head closeouts in April has so far not caused big placements…Rich Nelson
Rich Nelson is Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.