Negotiated cash fed cattle trade ended last week generally steady with the previous week, with live sales at mostly $107/cwt. and dressed sales at $170.
Cattle futures closed higher, led by Feeder Cattle. There was some chatter about part of the support coming from traders expecting African Swine Fever in China to support the hog market and beef by extension (see below).
Live Cattle futures closed an average of 53¢ higher (15¢ to $1.05 higher in spot Oct).
Other than unchanged and 17¢ higher at the back of the board, Feeder Cattle futures closed an average of $1.06 higher.
Wholesale beef values were sharply lower on Choice and weak on Select, with light to moderate demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.19 lower Friday afternoon at $206.56/cwt. Select was 74¢ lower at $197.09.
*******************************
Major U.S. financial indices closed lower Friday. Pressure included reports the White House could levy tariffs on another $267 billion worth of Chinese imports. Reportedly, investors were also concerned about tighter monetary policy ahead, given last month’s wage growth.
According to the monthly employment report from the U.S. Bureau of Labor Statistics, non-farm payroll employment increased by 201,000 in August, leaving the nation’s unemployment rate unchanged at 3.9%. Through the year, average hourly wage earnings are 2.9% higher at $27.16.
The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed 6 points lower. The NASDAQ was down 20 points.
*******************************
“Beef trade has been supportive of beef prices. The bigger trade concern for cattle is the indirect effects from decreased trade opportunities for pork,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets.
Although U.S. beef exports remain at a heady pace this year, analysts with USDA’s Economic Research Service (ERS), lowered the expected value next year based on lower values as volume increases. According to USDA’s quarterly Outlook for U.S. Agricultural Trade, next year’s estimate of $7.1 billion worth of beef and veal exports is $100 million less than this year’s projection.
Based on expectations for weaker demand and retaliatory tariffs pressuring prices lower, the estimated value from pork exports next year was reduced by $300 million to $5.1 billion.
Boetel notes export markets so far this year absorbed large amounts of increased beef and pork production.
“Increasing or decreasing market export opportunities is similar to increasing or decreasing the size of the cattle herd,” Boetel explains. “It takes a long time to increase the number, but we can lose our markets very quickly.”
Consequently, there is urgency for the U.S. to resolve outstanding trade issues preventing or reducing export trade.
“The short-term excitement over the U.S.—Mexico agreement has worn off as people realize the agreement isn’t finalized or ratified,” Boetel explains. “Getting NAFTA finalized would free up trade negotiators for more discussions with China. Beginning those negotiations with China now may possibly have fortuitous timing as China will start needing U.S. soybeans in the next few months, as well as U.S. pork. The Chinese demand for U.S. soybeans and pork will depend on trade as well as impacts felt from the African Swine Fever.”