WLI

Cash fed cattle trade remained undeveloped through Thursday afternoon.

Cattle futures drifted higher amid sluggish trade, higher outside markets and help from Lean Hogs at the end of the session.

Live Cattle futures closed an average of 45¢ higher, except for 15¢ lower in the back two contracts. 

Feeder Cattle futures closed an average of 48¢ higher.

Wholesale beef values were firm on Choice and weak on Select with moderate demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 39¢ higher Thursday afternoon at $216.88/cwt. Select was 34¢ lower at $192.37.

Grain futures were higher, especially soybeans, buoyed by dry weather forecast in the Corn Belt and likely positioning ahead of Monday’s government reports that will provide updates to planted acres.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed 12¢ to 16¢ higher.

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Major U.S. financial indices closed sharply higher Thursday, led by tech stocks and supported by stronger than expected Chinese exports.

The Dow Jones Industrial Average closed 371 points higher. The S&P 500 closed 54 points higher. The NASDAQ was up 176 points.

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An extra dollar invested in Cattlemen’s Beef Promotion and Research Board (CBB) activities returned $11.91 to beef industry profit for 2014-2018, according to independent research conducted by Harry M. Kaiser, a Gellert Family Professor of Applied Economics and Management at Cornell University.

Specifically, the $11.91 is what’s termed the marginal beef-cost ratio (BCR).

Key objectives of the study—An Economic Analysis of the Cattlemen’s Beef Promotion and Research Board Demand-Enhancing Programs—were to:

Measure the impact of CBB demand-enhancing activities on beef demand in the U.S. and in foreign markets.

Compare benefits to costs of CBB activities for producers’ and importers’ investments in the national checkoff program.

Among the conclusions:

Had there not been any domestic CBB demand enhancing activities over the latest 5-year period, (2014-18) total domestic beef demand would have been 14.3% lower than it actually was. CBB’s promotion and research activities increased total domestic beef demand by 12.8 billion lbs. in total, during that time, or 2.6 billion lbs. per year.

Had there not been any CBB export promotion, U.S beef exports would have been 5.5% lower than it was in 2014-18. The study considered eight international markets: Mexico, Japan, South Korea, Taiwan, Hong Kong, China, European Union, and Russia and surrounding regions.

Cash fed cattle trade was yet to develop to any degree through Wednesday afternoon. Fat auctions in the western Corn Belt provided divergent signals.

At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold $5-$7/cwt. lower than the previous week. For instance, Choice 2-3 steers (857 head) weighing an average of 1,420 lbs. brought $111.94. That’s $3-$4 lower than last week’s country trade in the region.

On the other hand, with a significantly narrower offering, Choice steers and heifers brought $118.00 to $120.75 at Tama, IA.

Although closing well off of session highs, Cattle futures firmed Wednesday, helped along by the latest rebound in Lean Hogs.

Live Cattle futures closed an average of 41¢ higher. 

Feeder Cattle futures closed an average of 22¢ higher, except for 42¢ lower in spot Aug and 7¢ lower in Sep.

Wholesale beef values were steady to firm on moderate to fairly good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 71¢ higher Wednesday afternoon at $216.49/cwt. Select was 6¢ higher at $192.71.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed fractionally higher to 1¢ higher.

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Major U.S. financial indices closed little changed Wednesday after a volatile session in which the Dow was down almost 600 points. Continued angst over the trade impasse with China seemed to be the most prevalent driver.

West Texas Intermediate crude oil futures on the CME closed $2.49 to $2.58 lower through the front six contracts. Week to week, those contracts closed an average of $7.59 lower.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 2 points higher. The NASDAQ was up 29 points.

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U.S. pasture value averaged $1,400/acre this year, according to the latest Land Values Summary released this week by USDA’s National Agricultural Statistics Service (NASS). That’s up $30 (+2.2%)  from last year.

Regionally, pasture value was highest in the Southeast with a combined average of $4,180 per acre for Alabama, Florida, Georgia and South Carolina. It was lowest in the Mountain States at an average of $683/acre, followed by a combined average of $1,090/acre for the Northern Plains states of Kansas, Nebraska, North Dakota and South Dakota.

Pasture value increased each year since 2014, when the average value was $1,290/acre, according to Agricultural Land Values Final Estimates 2014-2018 from NASS.

By way of reference, U.S. cropland value this year averaged $4,100/acre, which was $50/acre more (+1.2%) than last year. Between 2014 and this year, average cropland value ranged from $4,030/acre in 2017 to $4,100 this year and in 2015.

Cash fed cattle trade remained undeveloped through Tuesday afternoon.

Cattle futures sagged lower toward the end of the session, following the reprieve from negative trade news and wild gyrations the previous day.

Live Cattle futures closed an average of 93¢ lower. 

Other than 5¢ and 22¢ higher in Sep and Oct, Feeder Cattle futures closed an average of 63¢ lower.

Wholesale beef values were higher on moderate to good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.08 higher Tuesday afternoon at $215.78/cwt. Select was 98¢ higher at $192.65.

Corn futures closed 1¢ to 6¢ lower.

Soybean futures closed mostly 2¢ to 3¢ lower.

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Major U.S. financial indices rebounded from the previous day’s massive selloff.

Apparently, primary support came from reports that China intends to maintain its currency at higher levels than appeared Monday, when that nation allowed its currency to slide to decade-low values, in retaliation for the recently announced additional tariffs on Chinese imports.

The Dow Jones Industrial Average closed 311 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 107 points.

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Improved expectations for current economic conditions helped drive producer sentiment sharply higher in July, according to the Purdue University/CME Group Ag Economy Barometer.

The overall Barometer reading of 153 in July was 27 points higher than the previous month and 52 points higher than in May. Results are based on a survey of 400 agricultural producers across the U.S (surveyed July 15-19).

Improving crop conditions after an extraordinarily wet planting season, combined with a late spring/early summer crop price rally, boosted farmer sentiment.

“The Corn Belt is continuing to see better crop conditions and that has farmers, at least momentarily, breathing a sigh of relief,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “However, the agricultural economy is still in flux. The impact of prevented planting on 2019 corn and soybean acreage and prices along with the outcome of trade talks with China remain unknown.” 

The Index of Current Conditions, a sub-index of the ag barometer, increased 44 points in July to a reading of 141, marking the largest one-month improvement since data collection began in October of 2015. The barometer’s other sub-index, the Index of Future Expectations, increased 18 points from June, to a reading of 159 in July.

Mintert notes that improvement in producer sentiment occurred despite the fact that many producers were in the midst of filing prevented planting crop insurance claims and wondering about the size of the USDA’s 2019 Market Facilitation Payments (MFP).

Given the late planting season, USDA re-surveyed corn and soybean growers in July to better estimate actual planted acreage of both crops. In the meantime, the Ag Economy Survey asked corn and soybean participants whether they were taking a prevented planting payment on any of the corn or soybean acreage they intended to plant this year.

Of those planting corn, 25% said they were filing a prevented planting claim on some of their intended acreage: 61% said their prevented planting totaled 15% or more of their intended acreage; 42% said that they did not plant 25% or more of their intended acreage

For those with soybeans, 24% said they were filing a prevented planting claim on some of their intended acreage: 39% said their prevented planting totaled 15-25% of their intended acreage; 2% said they were unable to plant 25% or more of their intended acreage.

Despite collapsing equities tied to China’s trade retaliation (more later), and despite the steep selloff on Friday, Feeder Cattle futures closed higher Monday, as did Live Cattle, for the most part; Lean Hogs, too.

Support likely stemmed from generally oversold conditions, position squaring from the previous session’s liquidation, as well as funds fleeing equities and parking money on the commodity side of the fence. The latest data for U.S. beef and pork exports is also encouraging (see below).

Except for 42¢ lower in near Oct, Live Cattle futures closed an average of 48¢ higher (12¢ to 67¢ higher).

Feeder Cattle futures closed an average of 86¢ higher (45¢ to $1.22 higher), with the heaviest volume since last September.  

Wholesale beef values were steady on Choice and higher on Select with moderate to fairly good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 3¢ lower Monday afternoon at $214.70/cwt. Select was $1.04 higher at $191.67.

Corn futures closed mostly 3¢ to 5¢ higher, extending the previous session’s gains.

Soybean futures closed fractionally mixed.

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Major U.S. financial indices blasted lower Monday as China responded to the latest intended U.S. tariffs by allowing its currency to slide to decade-low values—making their exports significantly, artificially cheaper—and with reports that China ordered state-owned companies to suspend purchases of U.S. agricultural goods.

The Dow Jones Industrial Average closed 767 points lower. The S&P 500 closed 87 points lower. The NASDAQ was down 278 points.

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U.S. beef exports in June were up 3% year-over-year for volume (118,677 mt) and were 1% higher for value at $724.8 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was the fourth most on record for any month.

For January-June, beef exports were 2% less in volume (648,765 mt), compared to the same period last year, but value was steady with last year’s record value pace at $4.03 billion.

Beef export value per head of fed slaughter in June averaged $325.10, up 4% from a year ago, while export value for the first six months of the year averaged $312.06 per head, down 2%.

Korea and Taiwan paced beef export growth.

Last year South Korea surpassed Mexico as the second-largest destination for U.S. beef exports, and in 2019 it continues to close the gap on leading market Japan.

Exports to Korea remained on a record pace in June, increasing 2% from a year ago to 25,118 mt (a post-BSE high), while value climbed 15% to a record $178.3 million. Beef exports to Korea for January-June were 12% more than last year for volume (126,879 mt) and 15% higher in value at $921.8 million. U.S. beef now accounts for 61% of Korea’s chilled beef imports, up from 57% in the first half of last year, with chilled volume increasing 7% to 26,537 mt.

As for Taiwan, beef exports in June reached a new monthly high of 6,654 mt, up 40% from a year ago, valued at $58 million, which was 46% higher and the second highest on record. First-half exports to Taiwan were 16% above last year’s record pace in volume (31,132 mt) and 11% higher in value ($276.2 million).

“It is very gratifying to see U.S. beef posting such remarkable gains in Korea and Taiwan, and the $2 billion milestone could even be in play this year for Korea,” says Dan Halstrom, USMEF president and CEO. “Exports to Japan can definitely achieve a similar trajectory if the U.S. can get back on a level playing field with our competitors, so we are encouraged by the progress in the U.S.-Japan trade negotiations.”

U.S. beef faces a significant tariff rate disadvantage in leading market Japan, where June exports totaled 29,794 mt, down 4% year-over-year, while value was down 7% to $179 million. For the first half of the year, exports to Japan were 1% below last year’s pace in both volume (157,839 mt) and value (just over $1 billion).

All of U.S. pork and beef’s major competitors gained tariff relief in Japan this year through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the economic partnership agreement between Japan and the European Union, making red meat trade a major focus of the U.S.-Japan trade agreement negotiations that continued last week.

Through late Friday afternoon, the week’s negotiated cash fed cattle trade was $1 lower in the Southern Plains at $111/cwt. Dressed sales in Nebraska were $2 higher than the bulk of the previous week’s trade at mostly $185. In the western Corn Belt, prices were steady: $115-$116 on a live basis and at mostly $185 in the beef.

Even so, newly announced tariffs on an additional $300 billion worth of Chinese imports—scheduled to go into effect Sept. 1—higher grain futures prices and increased uncertainty weighed on Cattle futures Friday.

Live Cattle futures closed an average of $1.01 lower (22¢ lower in spot Aug to $1.27 lower).

Feeder Cattle futures closed an average of $2.61 lower ($1.60 to $3.55 lower).  

Wholesale beef values were firm on Choice and higher on Select with moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 49¢ higher Friday afternoon at $214.73/cwt. Select was $1.29 higher at $190.63.

Grain futures rebounded some Friday, but still closed lower week to week.

Corn futures closed 6¢ to 7¢ higher through Jul ’20 and then mostly 1¢ to 4¢ higher.

Soybean futures closed 2¢ to 3¢ higher through Sep ’20 and then fractionally higher to 1¢ higher.

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Major U.S. financial indices closed sharply lower again Friday with continued pressure from the previous day’s news that the U.S. will impose a 10% tariff on an additional $300 billion worth of Chinese imports, beginning Sept. 1.

Indices closed off of session lows, though, helped along by a monthly employment report that was in line with expectations.

Total nonfarm payroll employment increased by 164,000 in July, compared to the previous month, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. The unemployment rate was unchanged at 3.7%. Average hourly earnings for all employees on private nonfarm payrolls

rose by 8¢ to $27.98. Over the past 12 months, average hourly earnings have increased by 3.2%.

The Dow Jones Industrial Average closed 98 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 107 points.

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Some positive news for U.S. beef trade.

The Unites States reach a new agreement with the EU on Friday that establishes a duty-free tariff rate quota (TRQ) exclusively for the United States. Under the agreement, American ranchers will have an initial TRQ of 18,500 metric tons annually, valued at approximately $220 million, according to the United States Trade Representative (USTR). Over seven years, the TRQ will grow to 35,000 metric tons annually, valued at approximately $420 million.

Under the current agreement, U.S. duty-free beef exports to the EU are only approximately 13,000 metric tons annually, valued at approximately $150 million, and risked declines going forward. The new agreement will go into effect following the European Parliament’s approval, which is expected this fall.

Negotiations for the new agreement stemmed from the National Cattlemen’s Beef Association, U.S. Meat Export Federation (USMEF), and the North American Meat Institute requesting (in 2016) the USTR to take tariff action under Section 301 of the Trade Act of 1974 to enforce the World Trade Organization dispute finding in favor of the United States against the EU’s ban on the use of hormones in cattle production. As a part of the new agreement, the U.S. will conclude those proceedings.

“This agreement provides more reliable and consistent access to the EU market and will be a tremendous boost for the U.S. beef industry,” says Dan Halstrom, USMEF president and CEO. “The agreement sends a very positive signal to customers in Europe who see a bright future for U.S. beef and to producers who are interested in expanding their non-hormone treated cattle (NHTC) business but have grown frustrated as they struggled to recover the additional production costs. USMEF greatly appreciates the tireless efforts of USTR and USDA to secure better access to this very high-value beef market.”