LIVESTOCK HIGHLIGHTS: Top Stories of the Day

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05/19/2020 | 05:23 pm

TOP STORIES

 

Rising Beef Supply Limits Price Appreciation -- Market Talk

12:00 ET - One factor keeping a lid on live cattle futures on the CME is the recent uptrend in cattle slaughters. Cattle slaughters are up 14% in the past two weeks, but are still down 25% from the same time last year. Even so, the recent uptrend appears to go along with the decline in beef cutout prices seen in recent days. "Normally demand slows down a bit once Memorial Day needs have been covered and combined with the slow increase in slaughter this has helped bring down wholesale beef prices - but they are still historically high," Steiner Consulting says. June cattle futures are down 0.4%. (kirk.maltais@wsj.com; @kirkmaltais)

 

Beyond Meat Needs To Reach Out To Suburban Consumers -- Market Talk

10:03 ET - Beyond Meat, the maker of plant-based meat, needs to expand its consumer base, currently centered on "young, female customers in urban markets," BTIG says. "Price parity with traditional proteins needs to be achieved to broaden the base of customers," the investment firm says. Increasing competition from deep-pocketed giants like Nestle, Tyson Foods and Kellogg "will help increase awareness and grow the category." BTIG starts covering the stock with a buy rating and $173 price target. Beyond Meat rises 7.1%, to $139.25. (paulo.trevisani@wsj.com; @ptrevisani)

 

STORIES OF INTEREST

 

Workers Sue McDonald's Over Pandemic Response -- Market Talk

1407 ET - Five US McDonald's workers and four of their family members file suit against McDonald's over allegations the burger chain hasn't done enough to protect them from exposure to the coronavirus. The lawsuit, filed in conjunction with a union campaign to organize workers, alleges that employees didn't have adequate access to gloves and masks at two company-owned and two franchise-run locations. It states that managers at one location didn't inform plaintiff's co-workers that she had contracted the virus. Workers allege they weren't trained on how to protect themselves or customers, including in kitchens, the suit states. McDonald's says the allegations don't characterize its restaurant procedures, and that personal protection equipment is in ample supply across restaurants. "Masks, gloves and protective barriers are required at all restaurants," the company says. (heather.haddon@wsj.com; @heatherhaddon)

 

USDA Releases Details of $16B Aid Package for Farmers -- Market Talk

12:26 ET - The USDA has released details of how $16B in aid for farmers struggling from the fallout of the coronavirus pandemic will be apportioned, with the FSA accepting applications for aid from farmers beginning May 26. According to the USDA, producers of nonspecialty crops like corn and soybeans will be paid based on inventory subject to price risk held as of Jan. 15--50% of a producer's total production in 2019 or their inventory of old crop, whichever is smaller, multiplied by the commodity's applicable payment rates. "These payments will help keep farmers afloat while market demand returns as our nation reopens and recovers," Agriculture Secretary Sonny Perdue says. The program also covers livestock producers, dairy producers and farmers of specialty crops like almonds. (kirk.maltais@wsj.com; @kirkmaltais)

 

China Ramping Up Purchases of U.S. Farm Goods

China has significantly stepped up purchases of U.S. agriculture products in the past two months, according to U.S. officials, even as purchases in other sectors fall short of expectations under the first phase U.S.-China trade deal.

In the 10 weeks ended May 7, gross sales of U.S. corn and pork were up around eight times and cotton sales were three times higher than they were in the same period in 2017, before the start of the U.S.-China trade war. Soybean exports to China, the largest component of U.S. farm export receipts, rose roughly a third in the same period, according to the U.S. Department of Agriculture data.

 

FUTURES MARKETS

 

Livestock Finish Day Trending Down -- Market Talk

15:14 ET - Livestock futures on the CME finish trading lower, with lean hog futures falling 1.7% to 56.65 cents a pound and live-cattle futures paring gains to close just 0.1% higher at 98.775c. The drop in prices comes as cutout prices decline as packing plants try to make up for going offline due to Covid-19, although many cuts are still much higher in price than they were before the crisis hit. Longer term, cattle prices are trending higher, with the futures contract rising 14% since the start of the month. However, hog futures have fallen 5.8% in that same timeframe. (kirk.maltais@wsj.com; @kirkmaltais)

 

CASH MARKETS

 
Estimated U.S. Pork Packer Margin Index - May 19 
 
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 
 
May 19       +$117.45            +$ 75.34 
May 18       +$145.32            +$ 96.69 
May 15       +$151.15            +$103.08 
 
* 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  184.9 
      (Percent of Year-Ago)     Select  186.9 
 
USDA Boxed Beef, Pork Reports 

Wholesale choice-grade beef prices Tuesday fell $5.48 per hundred pounds, to $409.47, according to the USDA. Select-grade prices fell $6.00 per hundred pounds, to $388.97. The total load count was 120. Wholesale pork prices fell $9.93, to $96.78 a hundred pounds, based on Omaha, Neb., price quotes.

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