The weekly 5-area weighted average steer price last week was $1.87 lower on a live basis at $106.87/cwt. On a dressed basis the 5-area weighted average steer price was $3.31 lower at $169.90.
Firmer cash prices at the end of the week, along with follow-through support and sharply lower front-month Corn futures helped Feeder Cattle futures surge higher on Monday. Live Cattle mostly edged slightly higher.
Except for 17¢ lower in near Oct, Live Cattle futures closed an average of 39¢ higher (7¢ to 60¢ higher).
Other than 60¢ higher in spot Aug, Feeder Cattle futures closed an average of $1.98 higher ($1.17 to $3.15 higher). That’s an average of almost $5 higher over the last two sessions.
Boxed beef cutout values were steady on moderate demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 8¢ lower Monday afternoon at $211.88/cwt. Select was 20¢ higher at $198.77.
******************************
Major U.S. financial indices closed higher to start the week, but were capped by continued uncertainty about trade issues.
The Dow Jones Industrial Average closed 35 points higher. The S&P 500 closed 8 points higher. The NASDAQ closed 57 points higher.
******************************
“Despite beef production up nearly 4% so far this year, beef demand has been quite strong and has limited beef and cattle price pressure in the first half of the year,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Domestic beef demand has been buoyed by strong macroeconomic performance, including a declining unemployment rate. Foreign demand for U.S. beef has boosted total beef demand with a 13% year-to-date increase in beef exports through April. Strong year-to-date beef export increases have been led by South Korea, Mexico, Hong Kong, and Taiwan with number one Japan up slightly this year.”
Looking ahead to the second half of the year, though, the bevy of trade issues shadowing U.S. trade could pressure beef prices.
“In some cases tariffs include beef and will have a direct impact on beef markets. The bigger impacts are likely to be indirect in a range of impacts on other markets,” Peel explains. “Other meats, especially pork, are more directly impacted among the wide range of U.S. products subject to tariffs. Negative impacts on exports of other meats means that more total meat must be absorbed in the domestic market. Total U.S. red meat and poultry production is expected to increase nearly 3% year over year to a record level over 102 billion lbs. Any slowdown in meat exports will undoubtedly add pressure to domestic meat prices.”
Overall, Peel explains tariffs on U.S. exports will impact domestic GDP, slow macroeconomic growth and reduce domestic spending. Concurrently, tariffs applied by other nations to goods imported to the U.S. will increase prices of some domestic products.
“Tariffs on U.S. imports are largely paid by consumers as higher retail prices in the U.S.,” Peel explains. “All of this will negatively impact domestic spending and employment with likely negative consequences on domestic beef demand.”