TSN Tyson Foods

By Ilan Brat

TOP STORIES

 
Cargill Looks to Steer Past Beef Pressures -- Market Talk 

Struggles in the beef business bruised Cargill's animal-protein profit in its first-quarter, but there may be hope among the hamburgers. JPMorgan noted last week that beef-packing margins had surged and were at the highest seasonal levels in a decade despite still-tight supply. The bank boosted its expectations for beef at Tyson (TSN), which could hold hold promise for Cargill, among the largest U.S. beef processors.

Monsanto to Cut 2,600 Jobs in Restructuring 

Monsanto Co., buffeted by a slumping global farm economy, outlined plans to slash 12% of its workforce and restructure its business as it reported a larger-than-expected quarterly loss. The biotech-seed maker said it planned to cut 2,600 jobs while "streamlining and reprioritizing" commercial and research efforts as it grapples with declining crop prices that have pinched incomes for farmers, its main customers. Monsanto projected earnings in its fiscal 2016 that fell below analysts' expectations. The St. Louis company also Wednesday unveiled a new stock-buyback program totaling $3 billion, which it plans to complete within the next six months. Monsanto shares were down 0.48% at $87.12 in midday trading. The stock has declined 26% this year. "When you narrow the lens to the next 12 months, the industry continues to face a challenging macro environment and we've moderated our outlook, " said Hugh Grant, Monsanto's chief executive, said on a post-earnings conference call.

STORIES OF INTEREST

 
TPP Opens Canada Door Slightly to U.S. Dairy -- Market Talk 

It's a marvel that the Trans-Pacific Partnership trade agreement managed to open Canada's highly protected dairy industry to more U.S. dairy imports, even if slightly, says Cornell University professor Andrew Novakovic. The deal, which apparently will allow in U.S. dairy-product imports equal to 3.25% of the Canadian milk supply, will give the U.S. industry the opportunity to build relationships with Canadian companies and trust with Canadian consumers, he says. "As a beginning, it is assuredly modest, but what is terribly important is that it is a beginning," he says.

S&P Downgrades DuPont as Challenges Mount -- Market Talk 

S&P drops DuPont (DD) a notch to A minus and the ratings outlook remains negative, meaning further downgrade isn't out of the question, as the clouds around the agriculture and chemical conglomerate don't look to clear up soon. S&P notes DuPont has been "unable to mitigate" persistent weakness in agricultural markets like Brazil and the dollar's gains, which has dented the company's sizable overseas sales. "We now believe the impact of these variables is more severe and sustained than our earlier assumptions," in reassessing DuPont's prospects following the abrupt exit announcement for CEO Ellen Kullman.

FUTURES MARKETS

 
U.S. Live Cattle Futures Climb on Profit-Taking, Bargain-Buying; Hogs Mixed 

CHICAGO--U.S. live-cattle futures closed sharply higher for a second consecutive session on Wednesday, bolstered by bargain-buying and investors unwinding bets that prices would fall. October cattle futures hit their daily upper limit of a 4.5 cent rise before losing some ground and finishing up 4.23 cents, or 3.4%, at $1.294 a pound at the Chicago Mercantile Exchange. Most-active December cattle futures advanced 2.93 cents to $1.362 a pound. Feeder-cattle futures for October rose 2.425 cents to $1.8495 a pound. Concerns that demand for beef would slacken amid record pork and poultry production have dragged the cattle market sharply lower in recent weeks, to a level some investors suspect is beginning to attract bargain-buying. On Wednesday, traders unwound so-called short bets that prices would fall, which tends to support prices, and the move was further supported by investors coming in to buy what they consider relatively cheap futures contracts, said Tim Hackbarth, a senior market strategist at Chicago brokerage Zaner Group. Still, he said supply fundamentals are likely to continue to weigh on the market. Cattle weights are particularly heavy, and supplies of available cattle are expected to grow in the months ahead, which has compounded worries about a market that has suffered weakened demand due to the surge to record-high prices last year and a stronger dollar that hampers exports. He added that cattle prices have fallen as a percentage far less than hog prices this year, auguring a further decrease for cattle futures prices. Hog futures were mixed, with strength in cash markets bolstering the short-dated contract even as concerns about the growth of hog supplies this fall weighs on longer-dated contracts.

CASH MARKETS

 
Zumbrota, Minn., Hog Market $1.00 higher at $48 - Oct. 7 

Barrow and gilt prices at the Zumbrota, Minn., livestock market today were $1.00 higher at $48.00 per hundredweight. Sow prices steady. Sows weighing under 450 pounds were at $41.00 to $43.00; 400 to 450 pounds were at $41.00 to $43.00; 450 to 500 pounds were at $41.00 to $43.00; and those over 500 pounds were at $45.00 to $47.00.

The day's total run was estimated at 225 head.

 
  Estimated U.S. Pork Packer Margin Index - Oct. 7 
 
 
Date        Standard         Estimated margin 
             Op Mgn          at vertically 
             Index        integrated operations* 
 
 
 
Oct 7       +$25.80             +$ 36.04 
 
Oct 6       +$25.80             +$ 35.01 
 
Oct 5       +$27.05             +$ 35.87 
 
 
 

* 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 and pork carcass composite values with their respective year-ago prices. The figures are in percentages of the same-day, year-ago price quotes.

                                    Beef 
         For Today              Choice  82.6 
                                Select  84.3 
 
USDA Boxed Beef, Pork Reports 

Wholesale choice-grade beef prices on Wednesday fell 59 cents per hundred pounds to $203.58, according to the USDA. Select-grade prices shed $1.17 per hundred pounds to $197.70. The total load count was 281. Wholesale pork prices advanced 48 cents to $86.50 a hundred pounds, based on Omaha, Neb., price quotes.

Write to Ilan Brat at ilan.brat@wsj.com

(END) Dow Jones Newswires

October 07, 2015 17:47 ET (21:47 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.