WLI

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.  

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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.

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“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.”

Though still lower than the previous week, negotiated cash prices paid for fed cattle Friday were $1-$2 more than earlier in the week at $107-$108/cwt. in the Texas Panhandle and $107.50 in Nebraska.

Heading into Friday, plenty of folks figured negotiated cash fed cattle trade was pretty much done for the week, at mainly $105-$106/cwt. on a live basis and $170 in the beef.

Stronger cash trade helped Cattle futures surge higher Friday, presumably supported by technical buying, as well as short covering and profit taking for the end of the month and quarter.

The surge came despite an announcement during trading hours that Canada will assess surtaxes on $16.6 billion worth of U.S. imports—including beef products—in retaliation for U.S. tariffs on Canadian steel and aluminum imports (see below).

Except for $1.20 lower in expiring Jun, Live Cattle futures closed an average of $2.15 higher ($1.65 higher to limit up $3.00 in near Aug and Oct—the highest close since March).

Feeder Cattle futures closed an average of $2.92 higher ($1.55 higher to limit up $4.50 in spot Aug, the highest since March).

Boxed beef cutout values were lower on light demand and heavy to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.28 lowerFriday afternoon at $211.96/cwt. Select was $2.09 lower at $198.57. 

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Major U.S. financial indices gained some ground on Friday, but not as much was had earlier in the session, with continued angst over trade issues.

The Dow Jones Industrial Average closed 55 points higher. The S&P 500 closed 2 points higher. The NASDAQ closed 6 points higher.

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On Friday, the Canadian government announced, “…in direct, measured and proportional response to U.S. tariffs on Canadian steel and aluminum, reciprocal surtaxes on $16.6 billion of imports of steel, aluminum and other products from the United States will come into effect July 1, 2018.”

That’s in retaliation for new tariffs imposed by the U.S. on steel and aluminum imported from Canada.

The “other” products include U.S. beef products, according to the National Cattlemen’s Beef Association (NCBA).

“For the past few weeks Canada has threatened to retaliate against the United States by slapping a tariff on $170 million worth of U.S. beef products in direct response to the steel and aluminum tariffs,” explained Kent Bacus, NCBA Director of International Trade and Market Access on Friday. “Today, they made good on that threat. These retaliatory tariffs were and still are clearly avoidable, and the unfortunate casualties will be Canadian consumers and America’s cattlemen and cattlewomen. We may not know the extent of the damage these tariffs may have on our producers, but we believe that cooperation is a better path forward than escalation.”

Negotiated cash fed cattle trade continued the week’s trend in the western Corn Belt Thursday at $105-$106/cwt. on a live basis. So far this week, live prices there and in Kansas and Nebraska are mostly $2-$3 lower at mainly $106. Dressed trade is $2-$3 lower at mostly $170.

Even so, Cattle futures edged higher, amid light trade and little conviction one way or the other.

Live Cattle futures closed an average of 58¢ higher (25¢ higher to $1.17 higher in expiring spot June).

Except for 12¢ and 20¢ lower in the back two contracts, Feeder Cattle futures closed an average of 66¢ higher (10¢ higher to $1.05 higher in spot Aug).

Boxed beef cutout values were sharply lower for Choice and steady for Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.06 lower Thursday afternoon at $213.24/cwt. Select was 22¢ lower at $200.66.

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Although trade uncertainty lingers, bank and tech stocks, along with higher oil prices, helped lift major U.S. financial indices Thursday.

The Dow Jones Industrial Average closed 98 points higher. The S&P 500 closed 16 points higher. The NASDAQ closed 58 points higher.

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Here’s another compelling reason to hope the U.S. irons out trade wrinkles sooner rather than later: the most hogs and pigs June 1 since the data series began in 1964.

There were 73.5 million hogs and pigs June 1, according to USDA’s Hogs and Pigs report issued Thursday. That’s 3% more than a year earlier and 1% more than Mar. 1. 

Likewise, the 67.1 million market hogs on inventory June 1 was 3% more than the previous year and the most since the data series began in 1964.

The March to May pig crop of 33.2 million head was 4% more than last year and the most since estimates began in 1970.

Production came from a breeding herd of 6.32 million head, which was 3% more than last year and 2% more than the previous quarter. About half of the breeding herd (3.12 million head) farrowed in the March to May period. The average pigs saved per litter was a record high 10.63, compared to 10.55 last year.

U.S. hog producers intend to farrow 3.17 million sows between June and August this year, and 3.18 million sows between September and November.

In the latest World Agricultural Supply and Demand Estimates (WASDE) analysts with USDA’s Economic Research Service (ERS) peg pork production 4% more year over year for the April-June quarter; almost 6% more in the fourth quarter. Pork production this year is estimated at 26.72 billion lbs. with expectations of 3.3% more in 2019.

Only 306 head (two lots, one from Kansas and one from Nebraska) were offered in the weekly Fed Cattle Exchange Auction. All sold for a weighted average price of $106/cwt., which was $2-$3 less than country trade in those regions last week.

That $106 also matched country prices in those regions on Wednesday. There were a few early dressed sales in Nebraska at $169-$170, which was also $2-$3 less than the previous week.

Despite that and technical pressure, Cattle futures mostly paddled in place, on an average basis.

After $1.10 higher in spot June, Live Cattle futures closed narrowly mixed, from an average of 18¢ higher to an average of 12¢ lower.

Feeder Cattle futures closed an average of 38¢ lower (12¢ to 85¢ lower).

Boxed beef cutout values were weak to lower on light demand and light to moderate offerings through Wednesday afternoon, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.53 lower at $215.30/cwt. Select was 69¢ lower at $200.88.

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After surging sharply higher early in the session, major U.S. financial indices closed sharply lower Wednesday. Support included another day of strengthening oil prices. Drag came with ongoing trade tensions, a stronger U.S. Dollar and renewed fears of rising interest rates. 

The Dow Jones Industrial Average closed 165 points lower. The S&P 500 closed 23 points lower. The NASDAQ closed 116 points lower.

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For cow-calf producers with access to cost-effective forage and feed, the current value of gain provides incentive to retain calves and add some pounds, says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

In his neck of the woods, projecting the forward price of steers purchased last week at 525 lbs. and carried to 600-800 lbs., Griffith says, the value of gain was 95¢ to $1.10/lb.

“The value of gain on the heifers appears to be slightly higher than the steers, which is largely due to less of a discount relative to steers as heifers add weight,” Griffith says.