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LIVESTOCK HIGHLIGHTS: Top Stories of the Day

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03/02/2020 | 05:21pm EDT

TOP STORIES

 

Meat Stockpiles Surge as Coronavirus Epidemic Curbs Exports

The coronavirus epidemic is exacerbating a meat glut in the U.S., filling cold-storage facilities with pork, chicken and beef intended for export to markets hit by the outbreak.

Rising quantities of breasts, thigh meat and drumsticks lifted the amount of chicken in U.S. cold storage facilities by 12% over the first month of the year to 957.5 million pounds, the highest level on record for the month of January, according to the U.S. Department of Agriculture. The amount of pork in storage climbed 11% versus January 2019. Meat industry executives say those stockpiles have likely since grown.

 

Coronavirus Complicates Meat Outlook -- Market Talk

11:24 ET - African swine fever is expected to continue to squeeze pig availability in southern Asia, but now coronavirus could hurt the demand-side of the equation, says the agricultural research arm of multinational bank Rabobank. The bank says that it sees China's pork meat output dropping by 15%-20% in 2020, while sagging demand should rebound in 2Q. "Our base case is for the disease to be largely brought under control in Q1," says Rabobank. "As a result we see short-term impacts on consumption, distribution, production and trade, with a strong rebound in Q2." Hog futures rise 0.3% on CME. (kirk.maltais@wsj.com; @kirkmaltais)

 

STORIES OF INTEREST

 

Campbell Soup, Kellogg Could See Virus-Related Sales Bump -- Market Talk

0841 ET - Food makers may see higher demand as consumers refill pantries and refrigerators with canned soups, peanut butter, frozen food and other items amid the spread of the coronavirus in the US, according to analysts at Piper Sandler. "We believe US consumers are preparing to be able to stay at home for extended periods," the analysts say. Campbell Soup, Kellogg, General Mills and Mondelez International are among the companies best positioned to gain 3% to 7% in US retail sales for the current quarter, they say. One question is whether coronavirus-related sales are just pulled forward from future periods. If the virus or fears of the virus get worse, "packaged food may take share from restaurants . . . which may hurt foodservice sales," the Piper Sandler analysts say. (micah.maidenberg@wsj.com; @MicahMaidenberg)

 

Grain Traders Begin WASDE Positioning -- Market Talk

10:32 ET - With the next WASDE report from the USDA just over a week away, some traders are pivoting away from worrying about coronavirus and starting to guess what the USDA may say in its next report. "The big question heading into this will be if any changes are made to Chinese demand as that country continues to recover from the Coronavirus," says Karl Setzer of AgriVisor. Traders will also be looking at the report to see how close its data lines up with the data released by the USDA Agricultural Outlook Forum in Washington last month. (kirk.maltais@wsj.com, @kirkmaltais)

 

FUTURES MARKETS

 

Live Cattle Finishes Day Perked Up -- Market Talk

15:56 ET - Live cattle futures on the CME finish 2.4% higher, closing at $1.1015 per pound. While it is a reversal from last week's 9% drop, how long the change in momentum will last is unclear. "The complex that may see the longest lasting reactions to the Coronavirus is the livestock, mainly beef," says Karl Setzer of AgriVisor, who says that because of the timing of coronavirus' outbreak in China, beef export demand continues to be weak. Meanwhile, lean hog futures rise 0.8% to 62.8 cents per pound. (kirk.maltais@wsj.com; @kirkmaltais)

 

CASH MARKETS

 
Estimated U.S. Pork Packer Margin Index - Mar 2 
 
Source: USDA, based on Wall Street Journal calculations 
All figures are on a per-head basis. 
 
Date     Standard Margin       Estimated margin 
         Operating Index         at vertically - 
                             integrated operations 
 
Mar  2       +$ 28.77            +$  8.39 
Feb 28       +$ 22.47            +$  2.91 
Feb 27       +$ 22.98            +$  3.02 
 
* Based on Iowa State University's latest estimated cost of production. 
A positive number indicates a processing margin above the cost of 
production of the animals. 
 
Beef-O-Meter 
This report compares the USDA's latest beef carcass composite 
values as a percentage of their respective year-ago prices. 
 
                                 Beef 
          For Today             Choice   93.3 
      (Percent of Year-Ago)     Select   92.8 
 
USDA Boxed Beef, Pork Reports 

Wholesale choice-grade beef prices Monday rose $1.23 per hundred pounds, to $206.53, according to the USDA. Select-grade prices rose $2.25 per hundred pounds, to $201.16. The total load count was 79. Wholesale pork prices rose $2.55, to $65.64 a hundred pounds, based on Omaha, Neb., price quotes.

Stocks mentioned in the article
ChangeLast1st jan.
BASE CO., LTD. -1.25% 4355 End-of-day quote.61.10%
BASE, INC. 11.16% 5430 End-of-day quote.209.40%
BEST INC. 3.42% 4.53 Delayed Quote.-18.53%
BYD COMPANY LIMITED 13.55% 67.9 End-of-day quote.74.77%
CAMPBELL SOUP COMPANY 0.02% 49.32 Delayed Quote.-0.20%
CHANGE INC. 2.30% 7570 End-of-day quote.160.32%
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 0.76% 135.9 End-of-day quote.-8.43%
GENERAL MILLS, INC. 1.74% 61.48 Delayed Quote.12.83%
LEAN HOGS (HE) - CMG (ELECTRONIC)/C1 0.00% 44.725 End-of-day quote.-37.38%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 0.65% 100.05 End-of-day quote.-20.29%
MONDELEZ INTERNATIONAL, INC 0.80% 51.49 Delayed Quote.-6.52%
RISE, INC. 6.90% 31 End-of-day quote.3.33%
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