As expected, weekly cash fed cattle trade was slow out of box through Wednesday afternoon.
None of the cattle sold out of the 2,456 head offered in the weekly Fed Cattle Exchange auction Wednesday. There was one lot of Kansas heifers (89 head) passed on at $122.25/cwt.
Likewise, there was too little country trade to trend.
That lack of cash direction helped quash early follow through support for Cattle futures, which closed lower but in the long-term, narrow range.
Live Cattle futures closed an average of 49¢ lower (30¢ to $1.10 lower).
Feeder Cattle futures closed an average of 61¢ lower (42¢ to $1.02 lower).
Choice boxed beef cutout value was 3¢ higher Tuesday afternoon at $230.96/cwt. Select was 98¢ lower at $208.95.
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Cash bids were higher for soybeans on Wednesday, but lower for grains, according to the Daily National Grain Market Summary.
“Much of the day’s trading may have been focused on getting positions set ahead of USDA’s World Supply and Demand Estimates,” said analysts with the Daily National Grain Market Summary. That report comes out Thursday.
Soybean bids were mostly 4½¢ higher. Wheat bids were mostly 1¢ to 4¢ lower. Corn bids were mostly ½¢ lower.
Corn futures closed mostly unchanged to fractionally lower.
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Major U.S. financial indices closed sharply higher on Wednesday with support from energy stocks, boosted by rallying oil prices, following the announcement that the U.S. is withdrawing from the Iran nuclear pact.
The Dow Jones Industrial Average closed 182 points higher. The S&P 500 closed 25 points higher. The NASDAQ closed 73 point higher.
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As trade talks continue between the U.S. and China, consider this data provided by the North American Meat Institute (NAMI). China is the second largest export destination for U.S. agricultural products. U.S. exports of beef, pork and poultry products to China/Hong Kong exceeded $2.5 billion last year, 13% more than in 2016. Last year, China also imported more than $1 billion worth of U.S. cattle hides, pig skins and semi-processed leather products. Part of the increasing demand is tied to Chinese consumers’ desire for food safety.
“With China’s domestic production constraints and increasing demand from consumers for high quality, safe food products, the resulting import demand offers significant opportunities for U.S. agricultural exporters,” explained, Bill Westman, NAMI senior vice president of International affairs. “The U.S. is in an excellent position to compete in the Chinese market if it can avoid unnecessary, unjustified barriers to agricultural trade.” He was testifying a couple of weeks ago at a U.S.-China Economic and Security Review Commission hearing focused on China’s agricultural policies.
In his testimony, Westman detailed how China uses means, such as high tariffs and sanitary and phytosanitary measures, to restrict market access for U.S. agricultural products. He also identified several trade barriers and regulations—laboratory protocols, maximum residue limit tolerance restrictions and re-inspection processes, among other policies—that China could address or eliminate to bolster U.S. meat imports.
At the same hearing, David Ortega, assistant professor of Agricultural, Food, and Resource Economics at Michigan State University explained, in his statement, “China’s food safety situation poses a significant risk to its domestic economy, threatens the safety of the U.S. food supply and at the same time presents an opportunity for high quality U.S. agricultural exports.”
Ortega conducted one of the pioneer studies that assessed demand for food safety in China; he’s made about 10 research trips to the country.
“Over the past 10 years, I have found that Chinese consumers are very concerned about the safety of the food products they purchase. Furthermore, they are willing to pay significant premiums to ensure the safety of their food,” Ortega said. “The high level of concern regarding food safety (in China) can be linked to incidents involving pork and dairy products, most notably the clenbuterol-contaminated pork and melamine-tainted dairy and infant formula incidents. These, however, are not isolated events. Reports of contaminated foods and incidents of food fraud have been frequently reported since China joined the World Trade Organization in 2001.”