Daily Market Highlights

Cattle futures closed higher Wednesday, recovering some ground lost in the previous session’s limit losses. Increased trade activity and higher outside markets provided support.

Live Cattle futures closed an average of $1.77 higher ($1.17 higher to $2.70 higher in spot Apr).

Feeder Cattle futures closed an average of $2.01 higher (40¢ to $2.80 higher).

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

Choice boxed beef cutout value was 81¢ higher Tuesday afternoon at $226.67/cwt. Select was $4.37 higher at $215.77.

Corn futures closed 3¢ to 5¢ lower through Dec ’20 and then mostly 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 7¢ lower through Jan ’21 and then mostly 4¢ lower.

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Major U.S. financial indices closed higher on Tuesday, with various data pointing to signs that coronavirus is stabilizing in this country.

The Dow Jones Industrial Average closed 558 points higher. The broader S&P 500 closed 84 points higher. The NASDAQ closed 323 points higher.

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“The red ink projected for cattle feeders, with few risk management opportunities ahead, is likely to significantly dampen placements in March and through summer,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “The fall-out of fed cattle prices are expected to result in negative margins, even though feed costs are expected to be lower. This pessimism in cattle feeding has led to reluctance in buying cattle to fill pens.  Coronavirus has also limited auctions, with some suspending auction sales or instituting more restrictions on day of sale.”

March auction receipts were 43% less than a year earlier, according to LMIC. Combined video auction and direct receipts were 47% less. Feeder cattle imports from Canada and Mexico were also fewer.

“March placements are expected to decrease significantly, flattening the seasonal increase. Placements through the rest of the summer are likely to be below a year ago as the trends above are unlikely to change without significant improvements on the public health front,” say LMIC analysts. “One of the key factors moving forward will be pasture and range conditions. Good forage conditions will allow cattle to gain weight outside the feedlot and buy time, which at this point looks like a pivotal hedge/risk management option. If drought becomes an issue, it will force placements into feedlots even if economic conditions for feeding animals is weak. Cattle feeding returns are expected to be negative until fall 2020. Producers selling feeder animals in a drought market will likely face prices sharply below a year ago.”

Cattle futures closed limit-lower amid light trade and declining open interest and pressured by mounting concerns about beef packing production amid COVID-19 (see below).

Live Cattle futures closed limit-down $3.00

Feeder Cattle futures closed limit-down $4.50.

Wholesale beef values were higher on good demand and moderate to heavy offerings, according to AMS.

Choice boxed beef cutout value was $1.93 higher Monday afternoon at $225.86/cwt. Select was $3.07 higher at $211.40.

Corn futures closed mostly fractionally lower.

Soybean futures closed 5¢ to 9¢ lower through Mar ’21 and then mostly 2¢ to 3¢ lower.

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Major U.S. financial indices closed mixed on Monday, amid another volatile day of trade. On the one hand, investors continued to show optimism concerning COVID-19 progress. On the other, there’s plenty of wariness as quarterly corporate earnings season ramps up.

The Dow Jones Industrial Average closed 328 points lower. The broader S&P 500 closed 28 points lower. The NASDAQ closed 38 points higher.

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JBS closed its Greeley, CO plant on Friday for a deep cleaning, and will be closed for two weeks, according to the Colorado governor’s office. With the information available at the time, Cattle Current reported yesterday JBS intended to be closed for two days this week.

According to a statement, “The Colorado Department of Public Health and Environment (CDPHE) and Weld County Public health are working with JBS to design an aggressive testing and containment strategy, so they can continue their critical work which ranchers and consumers rely on. Gov. Polis has prioritized the Colorado National Guard to provide logistical support for testing so the plant can safely start up again.”

“The U.S. meat industry faces unprecedented threats as COVID-19 sweeps through labor forces at meat processing facilities nationwide,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Production of beef, pork and poultry are simultaneously threatened as COVID-19 infections affect labor availability and processing capacity in multiple facilities across all meat industries. Reduced processing capacity could cause backups in live animal supplies if animals cannot be processed in a timely fashion. The severity of impacts will depend on specific situations and locations but could include costly delays in holding animals until slaughter, backlogs in production facilities, or even disposal of animals.”

Peel points to last week’s estimated cattle slaughter as an indication that production was already beginning to slow. USDA estimated slaughter for the week ending Apr. 11 at 536,000 head, which was more than 14% less than the previous week and almost 16% less than the same week last year, according to Peel. Fed cattle slaughter was down, as was cow and bull slaughter.

“This predicament could result in a situation not previously seen in the beef industry,” Peel says. “It may simply not be possible to slaughter animals in a timely manner. Last summer, the loss of a single packing plant in Kansas resulted in relatively little decrease in overall cattle slaughter as production was shifted to other plants; increased Saturday slaughter largely offset the loss of the fire-damaged plant. In the current situation, closure or reduced chain speeds across multiple plants may make it impossible to keep up with slaughter.”

Negotiated cash fed cattle prices ended up $7 lower on a live basis last week at $105/cwt. in the Southern Plains, according to the Agricultural Marketing Service. Dressed trade in Nebraska and the western Corn Belt was $7-$12 lower at $168. A light test was noted in all regions. At least part of the pressure likely stems from slowing packing plant production, due to COVID-19 (see below).

Futures and equities markets were closed in observance of Good Friday.

Week to week on Thursday, Live Cattle futures closed an average of $6.33 higher, from $1.17 higher in spot Apr to $8.82 higher.

Week to week on Thursday, Feeder Cattle futures closed an average of $9.98 higher, from $8.85 to $11.75 higher.

Wholesale beef values were higher on moderate to fairly good demand and light offerings on Friday, according to AMS.

Choice boxed beef cutout value was $1.26 higher Friday afternoon at $223.93/cwt. Select was 76¢ higher at $208.33. Week to week, Choice was $6.51 lower and Select was $7.51 lower.

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Major U.S. financial indices were closed in observance of Good Friday.

Week to week on Thursday, the Dow Jones Industrial Average was 2,305 points higher, the broader S&P 500 was 262 points higher and the NASDAQ was up 666 points.

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Supply chain disruptions, due to COVID-19, are mounting in the packing sector.

Smithfield Foods, Inc. announced Sunday that its Sioux Falls, SD facility will remain closed until further notice. The plant is one of the largest pork processing facilities in the U.S., representing 4-5% of U.S. pork production. It employs 3,700 people. More than 550 independent family farmers supply the plant.

“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply. It is impossible to keep our grocery stores stocked if our plants are not running. These facility closures will also have severe, perhaps disastrous, repercussions for many in the supply chain, first and foremost our nation’s livestock farmers. These farmers have nowhere to send their animals,” said Kenneth M. Sullivan, president and chief executive officer, for Smithfield.

Likewise, Noel White, Tyson Foods, Inc. CEO explained last week, “Our meat and poultry plants are experiencing varying levels of production impact, due to the planned implementation of additional worker safety precautions and worker absenteeism.

“For example, out of an abundance of caution, we have suspended operations at our Columbus Junction, Iowa, pork plant due to more than two dozen cases of COVID-19 involving team members at the facility. In an effort to minimize the impact on our overall production, we’re diverting the livestock supply originally scheduled for delivery to Columbus Junction to some of our other pork plants in the region.”

According to various news sources, JBS is closing its beef packing plant in Greeley, CO through Tuesday of this week, for deep cleaning facilities and screening new workers. Reportedly, 36 JBS workers tested positive for COVID-19 infections through the end of last week.

“Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune,” Sullivan explained. “Numerous plants across the country have COVID-19 positive employees. We have continued to run our facilities for one reason: to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19.”

Cattle futures closed mixed to lower Thursday with pressure from Lean Hogs, as well as likely profit taking and position squaring heading into the long weekend; futures and equities markets are closed in observance of Good Friday.

Except for $1.17 higher in spot Apr and 20¢ lower in the back contract, Live Cattle futures closed an average of $1.42 lower.

Feeder Cattle futures closed mixed, from an average of 33¢ lower in four contracts to an average of 77¢ higher.

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

Choice boxed beef cutout value was 33¢ higher Thursday afternoon at $222.67/cwt. Select was $4.20 lower at $207.57.

The average dressed steer weight for the week ending Mar. 28 was 891 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 7 lbs. lighter than the previous week, but 26 lbs. heavier than a year earlier. The average dressed heifer weight was 825 lbs., which was 11 lbs. lighter than the previous week, but 19 lbs. heavier than the prior year.

Corn futures closed 1¢ to 3¢ higher.

Soybean futures closed mostly 7¢ to 9¢ higher.

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Major U.S. financial indices closed higher Thursday with the Federal Reserve announcing it will provide up to $2.3 trillion in loans to support the economy.

“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” explained Federal Reserve Board Chair Jerome H. Powell. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”

According to the Fed, funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.

The Dow Jones Industrial Average closed 285 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 62 points.

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USDA reduced expected commercial beef production for this year to 27.4 billion lbs., in the latest monthly World Agricultural Supply and Demand Estimates (WASDE).That was 255 million lbs. less than the previous month’s estimate but would be 294 million lbs. more than the prior year.

“The beef production forecast is reduced as lower expected steer and heifer slaughter more than offsets higher cow slaughter. However, beef production declines are partially offset by heavier carcass weights,” say analysts with USDA’s Economic Research Service (ERS). “Total red meat and poultry production for 2020 is reduced from last month as sectors at all levels adjust to COVID-19 and economic uncertainty.”

Total red meat and poultry production for this year is estimated at 108.3 billion lbs., which is 1.1 billion lbs. less than the prior month’s projection, but would be 3.0 billion lbs. more than last year.

USDA reduced the estimated annual fed steer price by $3.50 to $111/cwt. It was $116.78 last year. The average fed steer price is projected to be $105 in the second quarter, $109 in the third quarter and $112 in the fourth quarter.

Cattle feeders offered 7,561 head in the weekly Fed Cattle Exchange Auction Wednesday and sold 1,443 head for a weighted average price of $105/cwt.–746 head for delivery at 1-9 days and 697 head for delivery at 1-17 days. Except for one lot from Iowa, sales were from the Southern Plains, where last week’s negotiated price was mostly $112. Country trade in the region so far this week is also at $105.

Even so, Cattle futures continued higher in active trade, following outside markets, despite growing concerns about the potential of COVID-19 to reduce harvest capacity utilization. If that happens to any degree, then logic and last summer’s packing plant fire suggest higher beef prices and lower fed cattle prices.

Live Cattle futures closed an average of $2.21 higher, (40¢ higher in the back contract to $4.50 higher in spot Apr).

Feeder Cattle futures closed an average of $4.72 higher, ($1.22 higher at the back to $6.55 higher).

Wholesale beef values were sharply lower on light demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $5.54 lower Wednesday afternoon at $222.34/cwt. Select was $5.98 lower at $211.77.

Corn futures closed fractionally lower to 1¢ lower.

After fractionally higher to 4¢ higher through May ’21, Soybean futures closed mostly 6¢ to 7¢ higher.

The monthly World Agricultural Supply and Demand Estimates are scheduled to be released Thursday.

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Major U.S. financial indices closed sharply higher Wednesday. Support included increasing optimism that COVID-19 may be near a positive turning point, as well as announcement that Bernie Sanders dropped out of the 2020 race for the U.S. presidency. Minutes from the most recent meeting of the Federal Open Markets Committee (FOMC) also indicated intentions to maintain interest rates at current levels for the foreseeable future.

“With regard to monetary policy beyond this meeting, these participants judged that it would be appropriate to maintain the target range for the federal funds rate at 0.0% to 0.25% until policymakers were confident that the economy had weathered recent events and was on track to achieve the Committee’s maximum employment and price stability goals,” according to the FOMC minutes.

The Dow Jones Industrial Average closed 779 points higher. The S&P 500 closed 90 points higher. The NASDAQ was up 203 points.

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Quick service restaurant transactions were 40% less year over year for the week ending Mar. 29, according to the NPD Group (NPD). Transactions at full service restaurants were 79% less. Total restaurant customer transactions were down 42%.

“The transaction declines partially reflect the struggle of on-premise restaurants to pivot to off-premise models,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Many restaurants that are attempting to make the move are doing so with limited menu offerings and without the benefit of drive-thru lanes. Anecdotally, some operators are giving up the cause and closing altogether.” 

About 97% of U.S. restaurants are now under some level of restrictions, with most prohibiting dine-in service, according to NPD’s restaurant census, ReCount®. Prior to the COVID-19 outbreak, on-premise dining represented 52% of restaurant industry dollars, and off-premise, like carryout, drive thru, and delivery, represented 48% of dollars. Carryout represented the largest dollar share at 53% of off-premise modes, drive-thru 38%, and delivery 9% of dollars. As of year ending February 2020, digital orders represented 13% of all off-premise dollars.

“Wholesale and retail beef markets have endured enormous upheaval since mid-March,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Starting Mar. 16, the surge in retail grocery buying put huge demands on retail supply chains resulting in dramatic and immediate spikes in wholesale beef prices. The overall cutout price jumped by nearly 19% in a matter of three days. Wholesale prices continued to push higher until Mar. 23, peaking at $257.32 cwt., up 23.6% from Mar. 13 levels. Since then, the cutout dropped over 10% to $230.44/cwt. on Apr. 3. It is not clear exactly where the boxed beef cutout will settle out in the coming days.”

All of that shifting also impacts demand for various wholesale beef cuts.

From the beginning of March to the early part of April, Peel says prices for most steak items declined: down 29% for the tenderloin, for example and down 7.7% for the ribeye.

“Prices for loin strips, a popular summer grilling steak that is normally increasing seasonally at this time, is up over 22%. Top sirloin, a multi-purpose steak used in both restaurants and at retail grocery is priced nearly 13% higher,” Peel explains. 

“At the same time, end meat prices, which are typically declining into the summer, are higher, driven by grocery demand for value cuts and ground beef.” 

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon. USDA’s Agricultural Marketing Service did report a few early trades in Kansas at $105/cwt., but too few to trend. Prices in the region last week were at $112.

Live Cattle and Feeder Cattle futures were limit-up across the board Tuesday, building on what was mostly modest to strong gains in the previous session. Higher outside markets (for most of the session), tied to hopefulness about peak coronavirus infections coming sooner rather than later, provided support. However, declining wholesale beef values, iffy demand patterns going forward, relative to supplies, and early indications of lower cash fed cattle prices this week make it hard to square the move with anything fundamental.

Live Cattle futures closed expanded limit-up $4.50 higher, in light trade.

Feeder Cattle futures closed limit-up $4.50 higher, also amid light trade.

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

Choice boxed beef cutout value was $2.17 lower Tuesday afternoon at $227.88/cwt. Select was $2.72 higher at $217.75.

Corn futures closed 2¢ to 3¢ higher.

After fractionally mixed to 2¢ higher through Jan ’21, Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial indices gyrated wildly Tuesday: sharply higher for much of the session amid continued positive signs that the spread of COVID-19 is slowing; selling off toward the end as investors took money back off the table.

The Dow Jones Industrial Average closed 26 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 25 points.

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Concerns about the impact of the global coronavirus pandemic on the agricultural economy drove the Purdue University/CME Group Ag Economy Barometer 47 points lower to 121 in March–the steepest month-to-month decline since the barometer began.

The Ag Economy Barometer is based on a midmonth survey of 400 U.S. agricultural producers and was conducted March 16-20, as the coronavirus crisis escalated in the U.S. and around the world.

“While originally it was thought that the coronavirus effect would be limited to trade with China, now it appears producers are bracing for challenging financial times leading into the 2020 planting season,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Both sub-indices of the Ag Economy Barometer also recorded their largest one-month declines since the data series began in 2015. The Index of Current Conditions fell 43 points to 111. The Index of Future Expectations dropped 49 points to 126. That’s the lowest since September 2019, when weak commodity prices and an unresolved trade dispute left many farmers concerned over their financial futures.

Among the highlights:

• 74% of respondents said they were either fairly worried (34%) or very worried (40%) about the impact of the virus on their farm’s profitability this year. That sentiment also spilled over into their perceptions of financial performance, with 40% of respondents expecting a worse year compared with 2019.
• 47% of respondents expected the soybean trade dispute with China to be resolved soon, down from a January peak of 69%.
• 68% of respondents expected the trade dispute with China to be resolved in a way that’s ultimately beneficial to U.S. agriculture. An average of 80% of respondents thought so in January and February.
• 62% of survey respondents anticipated USDA providing Market Facilitation Program payments to U.S. farmers for the 2020 crop year, compared to 45% in February.

The weekly five-area direct fed steer price last week was $8.23 less than the prior week on a live basis at $111.08/cwt. It was $11.95 less in the beef at $176.93.

Chatter to start the week included wonderment about reduced slaughter this week, given last week’s decline in volume, scheduled maintenance at packing plants and further indications that labor issues could intensify (see below).

Perhaps that was one reason behind the limit down move in spot Live Cattle futures (closing at $83.82), while buying interest picked up across most other contracts.

After $4.50 lower and 55¢ lower in the front two contracts, Live Cattle futures closed an average of $1.74 higher, (52¢ higher to $2.30 higher toward the back.

Feeder Cattle futures closed an average of $2.26 higher, ($1.20 to $2.90 higher).

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

Choice boxed beef cutout value was 39¢ lower Monday afternoon at $230.05/cwt. Select was 81¢ lower at $215.03.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed 3¢ to 4¢ higher.

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Major U.S. financial indices surged sharply higher Monday, with various data suggesting stable to slower spread of COVID-19 here and abroad. The bounce came despite renewed pressure on front-month Crude Oil futures (WTI-CME).

The Dow Jones Industrial Average closed 1,627 points higher. The S&P 500 closed 175 points higher. The NASDAQ was up 540 points.

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Potential for COVID-19 disrupting packing plant production—or any other key components of the supply chain—is a growing concern with reports of confirmed cases at specific plants, reduced production schedules, slower production and labor absenteeism.

Agricultural economists, Glynn Tonsor at Kansas State University and Lee Schulz at Iowa State University offer insight to potential impact on fed cattle prices.

Relative to the supply of slaughter cattle—the same number of cattle or increasing cattle numbers—cash fed cattle prices decline as beef packing plant capacity utilization increases, according to Assessing Impact of Packing Plant Utilization on Livestock Prices.

Said another way, cash prices decline as competition for hook space increases.

“It should be noted that packer capacity is not an average annual concept, it’s how close the industry is to capacity at peak harvest times. Peak fed cattle slaughter typically occurs in the summer,” say Tonsor and Schulz.

With their specific modeling, Tonsor and Shulz found that 1% more national beef packing plant utilization corresponded to a 1.32% reduction in cash fed cattle prices. Their report details the model development they utilized to estimate capacity utilization and price impacts.

“Accordingly, for demonstration purposes, if the industry operates at 20% lower capacity rates (increased capacity utilization), then we may anticipate fed cattle prices to decline by 26.49%. The extent to which these effects are already priced into the market are beyond the scope of this report, but regardless this clearly demonstrates the economic importance of packing plant utilization on cattle prices.”

Fed cattle price declines in the wake of last summer’s Tyson packing plant fire offers a real-world example of the concept.

As logic suggests, pork packing plant utilization impacts finished hog prices similarly.

“The model indicates that a 1% increase in national pork packing plant utilization corresponds with a 1.82% reduction in hog prices. Using the hypothetical scenario of pork slaughter operating at 20% lower capacity (increased capacity utilization), based on our model, we may anticipate hog prices to decline by 36.35%,” according to Tonsor and Shulz. “Again, the degree to which this may be already priced into the market is unknown.”

Moreover, Tonsor and Shulz emphasize their approach offers a broad context, considering aggregate effects at the national level.

“Regional effects on markets more closely aligned with any specific plants altering operation would likely differ,” they explain. “The impact of a particular plant closure would likely have a lot to do with its location and its size. For example, in 2018, cattle slaughter plants under federal inspection (FI), with 1 million head or more annual capacity slaughtered over 56% of the FI cattle slaughter. FI hog slaughter plants with 3 million head or more annual capacity slaughtered over 62% of the FI hog slaughter. This reflects the leveraged, aggregate economic impact that would occur from decreases in capacity of larger plants.”

Cattle futures closed mixed amid a volatile trading session, with fairly active trade in Live Cattle and the previous session’s increased open interest.

Live Cattle futures closed an average of $2.34 lower in the front three contract, (30¢ lower to $4.50 lower in spot Apr), but then an average of $1.04 higher (55¢ higher to $1.70 higher), except for unchanged in the back contract.

Except for 75¢ higher in the back contract, Feeder Cattle futures closed an average of $2.07 lower, (90¢ lower to $3.55 lower).

Wholesale beef values were lower to sharply lower on light demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.20 lower Friday afternoon at $230.44/cwt. Select was $6.28 lower at $215.84.

After 1¢ to 2¢ lower in the front two contracts, Corn futures closed mostly fractionally higher.

Soybean futures closed 2¢ to 4¢ lower.

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Major U.S. financial indices closed lower Friday, despite further gains in energy markets.

West Texas Intermediate Crude Oil futures on the CME closed $1.62 to $3.02 higher through the front six contracts. That was $3.10 to $8.03 higher over the last two sessions.

Although expected, the bearish monthly employment report weighed on markets. Total non-farm payroll employment fell by 701,000 month to month in March, according to the U.S. Bureau of Labor Statistics. The unemployment rate rose to 4.4%. Average hourly earnings for all employees on private non-farm payrolls increased by 11¢ to $28.62. Over the past 12 months, average hourly earnings increased 3.1%. 

The Dow Jones Industrial Average closed 360 points lower. The S&P 500 closed 38 points lower. The NASDAQ was down 114 points.

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Despite global challenges stemming from COVID-19, U.S. beef exports in February were 18% more year over year in volume at 112,021 metric tons (mt) and 17% more in value at $681 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef exports are on a record pace through the first two months of 2020, up 10% in volume and 11% in value at $1.35 billion.

Beef export value per head of fed slaughter was $343.03 in February, up 11% from a year earlier and the highest since December 2018. The January-February average was 7% higher at $321.86.

Export results confirmed that global demand for high-quality protein remains strong and resilient, according to Dan Halstrom, USMEF President and CEO.

“By February, COVID-19 had emerged as a major health concern in several key Asian markets and was certainly impacting consumer and business activity, so it is great to see U.S. pork and beef exports achieve such strong growth,” Halstrom says. “Obviously these are uncertain economic times and the road ahead remains very challenging, but these results are really a great testament to our international customer base. In the face of unprecedented obstacles, importers, retailers and restaurateurs are finding creative ways to meet consumer needs, and with record production the U.S. industry is well-positioned as a supplier. While we are in an unusual business climate that requires a lot of flexibility and innovation, there are excellent opportunities for red meat exports to continue to build momentum.”

U.S. pork exports are also off to a record pace this year. They were 46% higher for volume in February at 273,056 mt, the third largest on record for the month. U.S. pork export value was 59% more than a year earlier at $726.6 million. For the first two months of the year, pork exports exceeded last year’s pace by 41% in volume and 54% in value at $1.47 billion.

February Beef Export Highlights

Mainstay Asian markets Japan, South Korea and Taiwan fueled beef export growth in February, but shipments also increased to key destinations in the Western Hemisphere, Africa and the Middle East.

February beef exports to leading market Japan increased 24% in volume from a year ago to 27,099 mt and climbed 20% in value to $171.4 million. Through February, exports exceeded last year’s pace by 10% in volume and 7% in value at $329.5 million.

Demand for U.S. beef continued to build momentum in Korea, where February exports were 33% more than last year in volume at 23,532 mt and 32% more in value at $167.7 million. Volume through the first two months of the year is 16% ahead of last year’s record; 14% higher in value at $298.4 million.

U.S. beef exports in February to Mexico were 5% more last year for volume at 41,862 mt, and 10% more in value at $217 million. Mexico is the largest volume market for U.S. beef variety meat, and January-February variety meat exports climbed 16% from a year ago in both volume (18,182 mt) and value ($49.3 million).

February U.S. beef export to China were 12% more year over year at 1,408 mt. Value was 4% more at $10.4 million. USMEF expects momentum to build for U.S. beef in the world’s largest import market, due to expanded market access.

Negotiated cash fed cattle trade remained largely undeveloped through Thursday afternoon. However, according to the Agricultural Marketing Service (AMS), there was a light test of live sales in all regions Wednesday at mostly $112/cwt. and at $175-$180 in the beef. That was $6-$8 less than last week on a live basis and $10-$15 less dressed.

Cattle future tumbled further Thursday, pressured by beef demand uncertainty, declining wholesale beef values and softer cash prices.

Live Cattle futures closed an average of $4.28 lower, expanded limit-down in the front four contracts.

Feeder Cattle futures closed an average of $6.31 lower, expanded limit-down in the front five contracts.

Wholesale beef values were sharply lower on light demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.53 lower Thursday afternoon at $232.64/cwt. Select was $3.01 lower at $222.12.

The average dressed steer weight for the week ending Mar. 21 was 3 lbs. lighter than the previous week at 898 lbs., but 32 lbs. heavier than the same time a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 836 lbs., which was 1 lb. heavier than the prior week and 32 lbs. heavier than the previous year.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed 2¢ to 4¢ lower through Sep ‘20 and then mostly 2¢ to 4¢ higher.

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Major U.S. financial indices closed higher Thursday. Support included a surge in crude oil prices, tied to reports that Saudi Arabia and Russia agreed to end their price war.

West Texas Intermediate Crude Oil futures on the CME closed $1.48 to $5.01 higher through the front six contracts.

The Dow Jones Industrial Average closed 469 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 126 points.

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The AMS reporter on hand for this week’s sale at Green City Livestock Auction in Missouri aptly summed up the current market situation: “It’s really a different world since the last sale in early March as the economy as a whole and the beef sector in particular has absorbed hit after hit. Volatile doesn’t seem a strong enough word to describe the situation anymore, as daily limit up and down moves at the CME are almost expected; even harder to swallow is that it’s driven by funds and not fundamentals. Those big moves take all the confidence out of a cash market and make it difficult for producers to decide when to turn loose as well as for buyers to figure what one is worth. Locally, lots of cattlemen have already held their stock longer than they normally would, waiting for the market to stabilize.”

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U.S. beef exports are projected to be $100 million less than last year at $7.5 billion, according to the latest quarterly Outlook for U.S. Agricultural Trade from USDA’s Economic Research Service and Foreign Agricultural Service. At the same time, analysts with those agencies project total livestock, poultry and dairy exports to be $500 million more at $32.4 billion, led by gains in poultry. Expectations for pork exports remained unchanged.

Global GDP) for this year remained unchanged from the November forecast at 1.5%. Expected U.S. GDP was reduced 0.2% to 1.1% on diminished business prospects.

“A slowdown across the Eurozone, declining growth rates in China and the recent damaging global impact of the Covid-19 outbreak is expected to dampen growth prospects worldwide,” say USDA and FAS analysts.

Cash fed cattle trade took on a decidedly bearish tone Wednesday.

Slaughter steers and heifers sold $17-$20 lower at Sioux Falls Regional in South Dakota. Choice 2-3 steers weighing an average of 1,411 lbs. brought an average price of $100.45/cwt. Country trade in the western Corn Belt last week was at mostly $120.

Cattle feeders offered 4,696 head in the weekly Fed Cattle Exchange auction Wednesday. Just 832 head sold: 662 head at a weighted average price of $113/cwt. for delivery at 1-9 days; 170 head at a weighted average of $112.06 for delivery at 1-17 days. Most of the sales were from the Sothern Plains where last week’s negotiated cash price was $118-$120.

Cattle future fell hard Wednesday, limit down across the board, except one Live Cattle contract. Pressure included the softer cash outlook and diving wholesale beef values, as well as lower outside markets. News that a significant number of workers at JBS facilities in Greeley, CO stayed home Tuesday, due to confirmed cases of COVID-19, also weighed.

Except for 85¢ lower in the back contract, Live Cattle futures closed an average of $4.50 lower.

Feeder Cattle futures closed limit-down $4.50.

Wholesale beef values were sharply lower on light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $7.98 lower Wednesday afternoon at $235.17/cwt. Select was $3.83 lower at $225.13. Over the last two days, Choice was down $15.80 and Select was $13.01 lower. Also, drop value sank to a new multi-year low of $7.92/cwt.

Corn futures closed mostly 7¢ to 9¢ lower.

Soybean futures closed 10¢ to 23¢ lower through Mar ’21 and then mostly 4¢ to 7¢ lower.

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Major U.S. financial indices extended losses Wednesday, as investors grew more pessimistic about how quickly the U.S. can get back to business. Specific negative news included quantification of decreased U.S. manufacturing last month.

Economic activity in the manufacturing sector was 1% less in March than the previous month, with the Institute for Supply Management® (ISM) Purchasing Managers Index® (PMI) at 49.1.

“The coronavirus pandemic and shocks in global energy markets have impacted all manufacturing sectors,” says Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Comments from the panel were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and energy market volatility. The PMI returned to contraction territory, and with a negative trajectory.”

The Dow Jones Industrial Average closed 973 points lower. The S&P 500 closed 114 points lower. The NASDAQ was down 339 points.

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Tough markets for the leather industry will likely continue this year, according to the Leather and Hide Council of America (LHCA).

Part of the challenge has to do with plentiful supply, on the heels of U.S. cowherd expansion. Part has to do with trade issues before COVID-19. More important in the eyes of many U.S. hides and skins suppliers, though, is the global leather demand situation, and the rise of synthetic products as alternatives to leather.

Plastic synthetic alternatives that look like leather have taken significant market share away from leather in consumer product areas such as footwear and automobile upholstery, according to the LHCA. In fact, organization representatives say the situation is so dire that some lower-quality hides and skins are being composted and destroyed rather than processed into leather, a trend that will continue this year.

Based on USDA data, the United States exported more than $1.17 billion worth of cattle hides, pig skins and semi-processed leather products last year. That was $450 million less than the previous year.      

China was the largest buyer of salted cattle hides, with imports valued at more than $400 million last year, according to the LHCA. Italy was the single largest destination for wet blue cattle hides, with imports valued at more than $122 million. Other large export markets included South Korea, Mexico, Thailand and Vietnam.

On a positive note, U.S. hide exports continue to move overseas, despite COVID-19, although that could change if ports are forced to shut down, or if container availability challenges and congestion issues accelerate.

“It is difficult to predict the exact economic impact of the virus, but it is likely to be significant, considering labor shortages recorded at ports and in manufacturing facilities abroad, compounded by an observed decline in retail traffic both globally and in the U.S.,” according to the LCHA.