Mil. lbs, carc Thousand Hd. 70

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1 Sponsored by One last reminder that CME Group will USE new se lement price computa on methods for Live Ca le, Feeder Ca le and Lean Hogs contracts TODAY. CME s Special Execu ve Report 7213 detailing the changes is again included as pages 3 through 5 of today s edi on. It was another tough week for ca le, hog, beef and pork prices as all saw week to week supply increases. The data for the week s markets appear, as usual, in our Produc on and Price Summary table on page 2. Some highlights and details of those numbers are: Ca le slaughter increased slightly (0.7%) for the week to 566,000 head but remained far smaller than one year ago. The 6.9% year on year decline is pre y indica ve of where ca le numbers have been rela ve to one year ago since May. Over that me period, only 3 weeks have seen FI ca le slaughter totals within 5% of 2013 levels. Six weeks of that me span, including the weeks ended November 28 and December 5 saw declines of 10% or more. Dressed weights grew slightly during the week and exceeded year ago levels by 3.1%, making up for just less than half of the reduc on in ca le numbers. Weights of every class of beef animal have exceeded year ago levels since last summer when slaughter steer and heifer weights finally increased on a year on year basis. Slaughter steer and heifer weights have run roughly 3% higher than last year over the last three weeks. The net of slaughter and weights leaves beef produc on s ll 3.9% smaller than last year. That year on year decline is the smallest since mid November and the third smallest weekly figure since supplies ghtened so drama cally back in May. Beef output is now down 6% YTD based on daily data and 5.5% based on weekly data. Beef prices declined pre y much across the board last week the Choice cutout losing $6.39/cwt. The weekly average value of $ is s ll nearly 24% higher than last year. All of the major cuts except 90% CL trimmings declined from the prior week but remain priced much higher than one year ago. Is demand finally waning a bit? It appears so at the wholesale level but the ul mate proof will come when we have complete disappearance and retail price informa on. Hog slaughter increase slightly from the prior week. That s a very normal occurrence for this me of year. Last week s million head is second only to the week of January 17 in this year s weekly rankings. The run was s ll 2.9% lower than one year ago. A key issue for the pork industry is what is going on with sow and gilt slaughter and how that will influence the size of the breeding herd. Sow slaughter has lagged year ago levels significantly for most of the year with nine weeks seeing more than 10% fewer sows going to slaughter and the year to date figure running 6% through September. The YTD change has fallen to 5.5% in recent weeks as sow slaughter has increased. The higher sow slaughter levels are not, in our opinion, related to Mil. lbs, carc. 550 The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find if valuable and would like to sustain it going forward, consider becoming a contributor. Just go to to contribute by credit card or send your check to The Daily Livestock Report, P.O. Box 2, Adel, IA Thank you for your support! Yr/Yr = -3.9% Yr/Yr = -6.9% 4 Wks. -6.7% 4 Wks. = -9.2% YTD = -5.5% YTD = -6.9% Vol. 12, No. 241 / December 15, 2014 FI BEEF PRODUCTION Avg. '09-' J F M A M J J A S O N D Source: USDA Agricultural Marketing Service Thousand Hd FI SOW SLAUGHTER Yr/Yr = -3.5% 4 Wks. = -2.2% YTD = -5.5% Avg. '09-'13 35 J F M A M J J A S O N D Source: USDA Agricultural Marketing Service profitability issues. Though lower than they were earlier this fall, profit expecta ons are s ll quite good for Higher slaughter is more likely due to producers selling aged sows that were retained during the worst of the PEDv outbreak. Immune sows s ll have value but they will last only so long before they must be replaced. In addi on, the sharply lower number of sow unit PEDv breaks since May likely means that more replacement gilts have become available in the past couple of months. That doesn t mean they are available to anyone as they were all spoken for but at least they can be placed into units to replace aging sows and thus allow them to be culled and enter the market flow. The chicken stampede (assuming they do such things!) is upon us. Broiler slaughter was up 8.2% from year ago levels the week ended December 5. And those birds were HUGE 4% bigger than one year ago pu ng broiler output up 12.6% yr/yr. And that BEFORE CHRISTMAS. The week s million pounds of output is the highest of the year at a me that usually marks the seasonal LOW point. The Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Adel, IA and Merrimack, NH. To subscribe, support or unsubscribe visit Copyright 2014 Steve Meyer and Len Steiner, Inc. All rights reserved. The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc. or its affiliates and CME Group Inc. and its affiliates disclaim any and all responsibility for the informa on contained herein. CME Group, CME and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc. Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an offer to sell or a solicita on to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance. Futures are a leveraged investment, and because only a percentage of a contract s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futures posi on. Therefore, traders should only use funds that they can afford to lose without affec ng their lifestyle. And only a por on of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade.

2 Sponsored by Vol. 12, No. 241 / December 15, 2014 PRODUCTION AND PRICE SUMMARY Week Ending 12/13/14 Item Units Current Week Last Week Change Last Year Change YTD Change Total Meat & Poultry Prod. Million lbs % % 83, % C FI Slaughter Thou. Head % % 28, % A FI Cow Slaughter Thou. Head % % 4, % T Avg. Live Weight Lbs % % 1, % T Avg. Dressed Weight Lbs % % % L Beef Production Million Lbs % % 22, % E Live Fed Steer $/cwt live wt % % Dressed Steer $/cwt carcass % % & OKC Feeder Steer Lbs % #N/A #N/A Beef Cutout Choice % % B Hide/Offal $/cwt live wt % % E Rib Choice % % E Round Choice % % F Chuck Choice % % Trimmings, 50% Fresh % % Trimmings, 90% Fresh % % H FI Slaughter Thou. Head % % 100, % O FI Sow Slaughter Thou. Head % % 2, % G Avg. Dressed Weight Lbs % % % S Pork Production Million Lbs % % 21, % Iowa-S. Minn. Direct Avg % % & Natl. Base Carcass Price Weighted Avg % % Natl. Net Carcass Price Weighted Avg % % P Pork Cutout 200 Lbs % % O Hams Primal Cutout % % R Loins Primal Cutout % % K Trimmings, 72% Lean Fresh % % Bellies Primal Cutout % % C Young Chicken Slaughter* Million Head % % 7, % H Avg. Weight Lbs., RTC % % % I Broiler Production Million Lbs., RTC % % 33, % C Eggs Set Million % % 9, % K Chicks Placed Million Head % % 8, % E National Composite Broiler Composite % % N Georgia Dock Broiler Lbs % % Northeast Breast Skinlss/Bonelss % % Northeast Leg Quarters % % T Young Turkey Slaughter* Million Head % % % U Avg. Weight Lbs % % % R Turkey Production Million Lbs % % 5, % K Eastern Region Hen 8-16 Lbs % % F Corn, Omaha $ per Bushel % % E DDGS, Minnesota $ per ton % % E Wheat, Kansas City $ per Bushel % % D Soybeans, S. Iowa $ per Bushel % % SB Meal, 48% Central Illinois $ per Ton % % * Chicken & turkey slaughter, production and prices are 1 week earlier than the date at the top of this table. Cow & sow slaughter are for 2 weeks earlier Source: USDA Agricultural Marketing Service, various reports

3 Modification to Daily Settlement Price Determinations in Certain CME To: Members, Member Firms and Market Users From: Market Regulation #SER-7213 Notice Date: 27 October 2014 Effective Date: 15 December 2014 Effective on trade date Monday, December 15, 2014, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (CME or Exchange) will modify the manner in which settlement prices are determined in CME Live Cattle futures, CME Feeder Cattle futures and CME Lean Hogs futures in an effort to incorporate all relevant bid, offer and trade prices in the calculation of the daily settlement price. Effective on December 15, 2014, daily settlement prices in those products will be determined pursuant to the following methodology: A VWAP of the outright trades executed in the pit for each contract month from 12:59:30 13:00:00 Central Time ( CT ) will be calculated. A VWAP of the outright trades executed on CME Globex for each contract month from 12:59:30 13:00:00 CT will be calculated. The two VWAPs will be combined to produce a single VWAP settlement price for each contract month, which will then be rounded to the nearest tradable tick. In the absence of any trade activity in a given contract month, the bid that is higher than the last sale or prior day s settlement price or the offer that is lower than the last sale or prior day s settlement price in either trading venue from 12:59:30 13:00:00 CT will determine the daily settlement price for that contract month. In the absence of any trade activity or bid/ask in a given contract month during the current trading day, the daily settlement price will be determined by applying the net change from the preceding contract month to the given contract month s prior daily settlement price. Notwithstanding the foregoing, in the event the aforementioned calculations cannot be made or if CME Group staff determines that anomalous activity yields a result that is not representative of the fair value of the contract, CME Group

4 Example staff may determine an alternative settlement price based upon other available market information. Front month Live Cattle February 2015 Globex: 31 contracts trade at a VWAP of Floor: 7 contracts trade at a VWAP of The February 2015 daily settlement is the combined VWAP rounded to , calculated as: ((31* ) + (7* ))/38 = Second month Live Cattle April 2015 Globex: No trades occurred. Floor: 5 contracts trade at a VWAP of The April 2015 daily settlement price is the floor VWAP of , calculated as: ((5* ) + (0*0))/5 = Third month Live Cattle June 2015 Globex: No trades occurred. Floor: No trades occurred. The prior day s settlement is There is an active offer on CME Globex of and an active offer in the pit of The June 2015 daily settlement price is the best available offer of Fourth month Live Cattle August 2015 Globex: No trades occurred and no active bids or offers on CME Globex. Floor: No trades occurred and no active bids or offers in the pit.

5 The prior day s settlement was The net change for the June 2015 contract (the immediately preceding contract month) is from the previous day s settlement price. The August 2015 daily settlement price is the prior day s settlement price minus the net change in the June 2015 contract, or , calculated as: = All remaining contract months will follow the same methodologies as described above. Questions regarding this Special Executive Report may be directed to the CME Globex Control Center at or in Europe at For media inquiries concerning this Special Executive Report, please contact CME Group Corporate Communications at or news@cmegroup.com.