TOP STORIES

Pandemic Slows Meat Industry Expansion -- Market Talk

12:55 ET - Covid-19 isn't just affecting the human population--it's also slowing the US meat industry's expansion of hog herds and poultry flocks. With ongoing restrictions on restaurant dining cutting into demand, pork and poultry producers have eased back on what had been a yearslong push to expand slaughtering plants and build new ones. Rising grain exports are boosting the cost of animal feed, Stephens analysts say, and federal hog-production estimates show farmers tempering plans to add more livestock. The firm says chicken producers are scaling back as well, likely translating to higher profitability in 2021 for the pandemic-hit US meat sector. (jacob.bunge@wsj.com; @jacobbunge)

China Takes Its Pigs to the Futures Market

China opened its own hog futures market, the culmination of a yearslong effort to create a transparent pricing mechanism for one of the country's most valuable agricultural products.

On Friday, traders, farmers and other market participants began buying and selling contracts for live pig deliveries in September 2021, December 2021 and March 2022. Prices for all three tumbled more than 7% from opening levels set by the exchange, with the front-month contract closing on Friday afternoon at 28,290 yuan a metric ton, which is equivalent to $4,367.98 a metric ton and works out to about $1.98 a pound.

Brazil Beef Exports Rose 8% in 2020 as China Sales Increased -- Market Talk

11:42 ET - Brazil's exports of beef increased 8% by volume to 2.02M metric tons in 2020 from the year earlier, boosted by an increase in sales to China, according to Brazilian trade group Abrafrigo. Sales rose 11%, to $8.4B, in terms of revenue, the group says. China and Hong Kong together accounted for 1.2M tons of exports, worth $5.1B, with Egypt coming in second at 127,953 tons and Chile third with 90,403 tons. Brazil is expected to come in as the world's biggest exporter of beef in 2020, and a Brazilian company, JBS SA, is already the world's biggest meatpacker. (jeffrey.lewis@wsj.com)

STORIES OF INTEREST

Grocers Step In to Speed Up Covid-19 Vaccine Rollout

Federal and state officials are tapping regional and supermarket-based pharmacies to help speed up administration of Covid-19 vaccines amid a slower-than-planned rollout.

Rite Aid Corp., Kroger Co., Stop & Shop Supermarket LLC and other retailers are being asked to step in and provide inoculations to front-line workers and other vulnerable people. While the timeline is weeks earlier than planned, companies say they hope to test and troubleshoot protocols before distributing vaccines to the masses.

TreeHouse Foods Misses Out On Pandemic Sales Lift -- Market Talk

15:45 ET - Store-branded food maker TreeHouse Foods hasn't benefited from the pandemic as much as big food brands, according to analysts at JPMorgan. The stock is off nearly 7% Friday after the investment bank downgraded the stock to neutral from overweight. The analysts say that--surprisingly to them--store brands have lost market share at grocery stores during the pandemic and TreeHouse hasn't benefited as much from more people eating at home as other food makers have. The coronavirus pandemic has caused grocery sales to skyrocket, with companies like Conagra Brands, General Mills and Campbell Soup recording higher sales growth than they have in decades. However, store brands have in some cases been unable to keep up production or otherwise lost out to name brands. (annie.gasparro@wsj.com)

AB Foods Set to Flag Lower Primark Sales in 1Q Update -- Market Talk

1656 GMT - Associated British Foods is likely to report lower Primark sales in a 1Q update Thursday, though strong demand in the group's food business should help to offset that, Numis Securities says. Numis expects ABF to say 1Q sales at Primark fell by about 26% due to a bigger hit from coronavirus-related shop closures, versus a 13% drop in 4Q. Still, ABF is unlikely to have to alter its guidance for higher Primark sales and profit in 2020/21 compared with the previous year, Numis says. "Partly offsetting weakness at Primark will be strength across ABF's food divisions, most notably at grocery," analyst Georgios Pilakoutas says. (philip.waller@wsj.com)

FUTURES MARKETS

Livestock Futures Close Lower -- Market Talk

15:04 ET - Livestock futures on the CME closed lower -- with live cattle futures finishing down 0.4% to $1.14475 per pound, and lean hog futures finishing down 0.6% to 68.7 cents per pound. Both cattle and hog futures are being affected by high grains prices, as they are making feed grain costs higher. Soymeal futures on the CBOT closed trading Friday up 1.7% to $439.60 per short ton, the highest close for them since September 2014. Soymeal is used primarily as animal feed, with corn also being often used. (kirk.maltais@wsj.com; @kirkmaltais)

CASH MARKETS 


 
Estimated U.S. Pork Packer Margin Index - Jan 8 
 
All figures are on a per-head basis. 
 
Date     Standard Margin       Estimated margin 
         Operating Index         at vertically - 
                             integrated operations 
 
Jan  8       +$ 50.10            +$ 40.56 
Jan  7       +$ 51.41            +$ 38.54 
Jan  6       +$ 44.96            +$ 32.33 
 
* 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   98.7 
      (Percent of Year-Ago)      Select   95.2 
 
USDA Boxed Beef, Pork Reports

Wholesale choice-grade beef prices Friday rose 99 cents per hundred pounds, to $206.80, according to the USDA. Select-grade prices rose 10 cents per hundred pounds, to $196.69. The total load count was 138. Wholesale pork prices rose 94 cents, to $79.27 a hundred pounds, based on Omaha, Neb., price quotes.

(END) Dow Jones Newswires

01-08-21 1727ET