Daily Market Highlights

Negotiated cash fed cattle trade developed in the Southern Plains on Thursday, with live sales at $110/cwt. That was $1 higher in Kansas and $2 higher in the Texas Panhandle. Although too few to trend, there were also some early dressed sales in the North at $174-$175, which was $1 higher than the low end of last week’s range.

Cattle futures softened a touch. Part of the pressure might have been defense ahead of Friday’s USDA monthly Cattle on Feed report. 

Except for 22¢ higher in spot Oct, Live Cattle futures closed an average of 33¢ lower.

Except for 20¢ higher in spot Oct, Feeder Cattle futures closed an average of 64¢ lower.

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

Choice boxed beef cutout value was $2.34 higher Thursday afternoon at $225.62/cwt. Select was 15¢ higher at $199.09.

Although increasing seasonally, dressed fed cattle carcass weights continue to be lighter year over year, according to USDA’s weekly Actual Slaughter Under Federal Inspection report. The average dressed steer weight of 901 lbs. for the week ending Oct. 12 was 2 lbs. heavier than the previous week but 2 lbs. lighter than the same week last year. The average dressed heifer weight of 828 lbs. was 4 lbs. heavier than the prior week but 3 lbs. lighter than a year earlier.

Corn futures closed mostly 1¢ lower.

Soybean futures closed fractionally lower to 1¢ lower in the front three contracts and then fractionally higher to 5¢ higher.

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Major U.S. financial indices closed narrowly mixed Thursday. Although corporate quarterly earnings reports continue mostly positive, investors remain uncertain about economic growth.

The Dow Jones Industrial Average closed 28 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 66 points.

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The closely watched Rural Mainstreet Index (RMI) from Creighton University rose above growth neutral this month, but rural bankers’ economic expectations fell to the lowest level in two years.

Specifically, the RMI increased to 51.4 in October from 50.1 in September. Although still weak, it was the highest level since June and marked the third time in the past four months that the overall index rose above growth neutral.

“Federal agriculture crop support payments and somewhat higher grain prices boosted the Rural Mainstreet Index slightly,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. Even so, he adds that 73% of bank CEOs reported continuing negative impacts from the trade war.

Bank CEO expectations for the economy six months out, slumped to 36.5 from September’s 42.9, and continues to indicate a very negative economic outlook among bankers, according to the associated confidence index.

“This is the lowest economic confidence we have recorded in two years,” says Goss. “The trade war with China and the lack of passage of the USMCA (NAFTA’s replacement) are driving confidence and growth lower for most areas of the region.”

The RMI is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, but early trades hinted at steady to higher money.

Although too few to trend, early live sales were reported at $109/cwt. in the Southern Plains and Nebraska. That was $1 higher in the south and steady with the lower end of last week’s range in Nebraska.

Likewise, one lot (131 head) of heifers in Texas sold for a weighted average price of $109, for delivery at 1-9 days, in the weekly Fed Cattle Exchange auction. There was only one other lot in the sale, which was passed on at $105.

Choice 2-4 steers (308 head) and averaging 1,414 lbs. sold for an average of $112.83 at the fat auction in Tama, IA. That was $1 higher than the top of last week’s country trade.

Cattle futures took a step higher Wednesday, supported by the seasonal surge in wholesale beef values and the previous day’s Cold Storage report.

Except for 32¢ higher in spot Oct, Live Cattle futures closed an average of $1.09 higher.

Feeder Cattle futures closed an average of $1.35 higher.

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

Choice boxed beef cutout value was $2.35 higher Wednesday afternoon at $223.28/cwt. Select was 86¢ higher at $198.94.

Corn futures closed unchanged to fractionally lower.

Soybean futures closed mostly fractionally lower. 

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Major U.S. financial indices closed higher Wednesday on mostly positive quarterly earnings reports.

The Dow Jones Industrial Average closed 45 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 15 points.

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Cow-calf profitability may begin turning the corner next year, according to analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. Currently, LMIC projects typical returns over cash costs, plus pasture rent (basis, the Southern Plains) at $70-$85/cow in 2020 and 2021.

Heading into cyclically higher returns, however, estimated returns continue to represent a loss.

“Overall, this year’s estimated cow-calf returns over cash costs plus pasture rent for the Southern Plains is projected to be negative and the worst since 1996 (unadjusted for inflation),” say LMIC analysts. “Three out of the last four years have been in the red.”

On the cost side of the equation, LMIC projects that Southern Plains cash costs plus pasture rent at more than $850 per cow.

On the revenue side, LMIC projects prices for steer calves (600 lbs.) sold August-November to be 5.5% to 6.0% less than the same time a year earlier; about $9/cwt. less. That’s based on information from USDA’s Agricultural Marketing Service through mid-October.

“That will be the lowest since 2016,” say LMIC analysts. “So far this year, cull cow prices averaged over $10/cwt. below 2018’s, and for the full year, are expected to be the lowest since 2009.”

Keep in mind, LMIC estimates are not survey-based. LMIC analysts emphasize calculations only include cash costs of production and pasture rent; owner management, labor, etc., are not included. The calculations are based on a typical fulltime spring-calving, fall-weaning Southern Plains operation.

“The returns are useful only in a general context,” say LMIC analysts. “The LMIC uses those estimates because producer return is a key factor influencing national herd growth/contraction.”

Cattle futures were mixed on Tuesday, with Lean Hogs helping pressure Live Cattle.

Live Cattle futures closed mixed, from an average of 26¢ lower across most of the board (12¢ lower to $1.07 lower in spot Oct) to an average of 9¢ higher in three contracts.

Feeder Cattle futures closed an average of 45¢ higher.

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

Choice boxed beef cutout value was 80¢ higher Tuesday afternoon at $220.93/cwt. Select was $3.64 higher at $198.08.

Corn futures closed mostly unchanged to fractionally higher.

Soybean futures closed 1¢ to 2¢ higher. 

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Major U.S. financial indices closed lower Tuesday on mixed quarterly earnings reports.

The Dow Jones Industrial Average closed 39 points lower. The S&P 500 closed 10 points lower. The NASDAQ was down 58 points.

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Winter wheat planting and development made strong progress last week, according to the most recent weekly USDA Crop Progress report for the week ending Oct. 20.

77% of winter wheat was planted, which was 6% more than the previous year and 2% more than the average. 53% had emerged, compared to 52% last year and 53% for average.

86% of corn was mature, compared to 99% a year earlier and 97% for the five-year average. 30% was harvested, which was 18% less than last year and 17% less than average. 56% was in Good (45%) or Excellent (11%) condition, which was 1% more than the previous week and 12% less than last year. 14% was in Poor (10%) or Very Poor condition (4%), which was 1% less than a week earlier and 2% more than a year earlier.

94% of soybeans were dropping leaves, which was 4% less than the previous year and 3% less than the average. 46% were harvested, which was 5% less than a year earlier and 18% less than average. 54% were rated in Good (45%) or Excellent (9%) condition, the same as a week earlier and 12% less than a year ago. 14% were in Poor (10%) or Very Poor (4%) condition, which the same as a week earlier and 3% more than a year earlier.

92% of sorghum was mature, which was 4% more than last year and 3% more than average. 49% was harvested, which was 4% more than last year but 4% less than the average. 64% was in Good (50%) or Excellent (14%) condition, which was 11% more than a year earlier. 8% was rated as Poor (7%) or Very Poor (1%), compared to 18% last year.

43% of the nation’s pasture and range was rated in Good (36%) or Excellent (7%) condition, which was the same as a week earlier and 7% less than a year earlier. 27% was rated as Poor (18%) or Very Poor (9%), which was 1% less than the previous week and 7% more than a year earlier.

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Beef in freezers continues to suggest strong demand. As of Sept. 30, total pounds of beef in freezers were 1% less than the previous month and 8% less than the same time last year, according to the monthly USDA Cold Storage report released Tuesday.

Frozen pork supplies were down 1% from the previous month but up 2% from last year.

Total red meat supplies in freezers were down 2% from the previous month and down 4% from last year.

Total frozen poultry supplies were 1% less than the previous month and 5% less than a year ago.

When all was said and done last week, negotiated cash fed cattle trade was mainly higher in the North and steady to lower in the South. Live sales were steady in Nebraska at $109-$111/cwt., steady to $3 higher in the western Corn Belt at $110-$111 and steady to $1 lower in the Southern Plains at $108. Dressed trade was mainly $1-$3 higher at $173-$175.

Cattle futures were narrowly mixed on Monday, with steady to strong cash fed cattle prices supporting Live Cattle and extremely light trade allowing Feeder Cattle to drift.

Live Cattle futures closed an average of 19¢ higher.

Feeder Cattle futures closed unchanged to 35¢ lower, except for an average of 40¢ higher in the back three contracts.

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

Choice boxed beef cutout value was $2.09 higher Monday afternoon at $220.13/cwt. Select was $1.40 higher at $194.44.

Corn futures closed 1¢ to 3¢ lower through away Dec and then mostly fractionally lower.

Soybean futures closed fractionally lower in the front months and then mostly 1¢ to 2¢ higher.

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Major U.S. financial indices edged higher Monday, with support from positive quarterly earnings reports and deal-friendly chatter from China.

The Dow Jones Industrial Average closed 57 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 73 points.

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“Global production of beef, pork and poultry is projected to decline by 1.5% year over year in 2019 and decrease another 2.4% in 2020 as a result of decreased pork production due to African Swine Fever (ASF),” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “At the same time, global meat exports are expected to increase 6.9% in 2019 compared to 2018, and to grow another 6.1% in 2020. As a result, global meat exports are projected to expand from 11.2% of total production to 13.2% in just two years.”

Until ASF, China produced about half of the world’s pork supply.

“Pork production in China is projected to decrease 14.0% in 2019 from 2018 levels with another 25.3% drop year over year in 2020. That implies a 35.7% decrease in Chinese pork production in two years,” Peel says. “This contributes to a 15.7% decrease in global pork production from 2018 to 2020. The losses in China may well exceed these estimates.”

Spun another way, Peel explains pork consumption last year accounted for 74% of total Chinese beef, pork and poultry consumption. Total Chinese consumption of pork, poultry and beef is projected to decrease by 14.9% from 2018 to 2020; with pork dropping to a 59.8% share of total meat consumption. 

“Pork imports (to China) are projected to increase 66.6% in 2019 over 2018 and another 34.6% year over year in 2020,” Peel explains. “Global pork imports are expected to grow 13.5% year over year in 2019 and another 11.0% in 2020 as China’s share of global pork imports grows from 19.7% in 2018 to 35.1% in 2020. Global pork exports are expected to grow 11.3% year over year in 2019 and another 10.4% in 2020. The U.S. began to see direct impacts of this with a 479% jump in pork exports to China in July and August.”

As China works to mitigate lost pork production, Peel says Chinese beef imports to that nation are expected to increase 63.6% year over year in 2019 and another 20.8% next year. Chinese imports of poultry meat are projected to increase 82.7% year over year in 2019 and another 20% in 2020 leading to a two-year increase of 119.3%.

Based on USDA reports, negotiated cash fed cattle trade through Friday afternoon was looking most steady to mixed. Live prices in the Southern Plains were steady to $1 lower at $108/cwt. Dressed trade in the North was $1-$3 higher at mostly $173 in the western Corn Belt and at $173-$175 in Nebraska.

Higher Corn futures, follow-through softness in Lean Hog futures, and likely skittishness over the plant explosion at Cargill’s packing facility in Dodge City helped push Cattle futures lower Friday, but they closed off of session lows. Various reports suggest the Cargill plant will resume normal operations Monday.

Live Cattle futures closed an average of 76¢ lower (40¢ lower to $1.92 lower in spot Oct).

Feeder Cattle futures closed an average of $1.10 lower.

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

Choice boxed beef cutout value was 7¢ lower Friday afternoon at $218.04/cwt. Select was 44¢ higher at $193.04.

Corn futures closed mostly 2¢ to 3¢ lower through Jul ’20 and then mostly unchanged to fractionally lower.

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial indices closed lower Friday, on mixed news that included weak economic growth in China.

The Dow Jones Industrial Average closed 255 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 67 points.

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If recent forecasts from USDA are any indication, international beef demand next year will continue to help underpin domestic prices. Demand strength grows in importance with expectations of record large commercial beef production in 2020, along with record large total red meat and poultry production.

“Total exports (beef) in 2020 are forecast up 6% to a record 3.3 billion lbs., accounting for 12% of U.S. production,” say Analysts with USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. “The United States is poised to expand market share in top markets such as Japan, South Korea, and Taiwan as key competitor Australia struggles to maintain its market shares, given its reduced exportable supplies and its dominance in filling China demand.”

At the same time, ERS expects the U.S. to import less beef in 2020.

“U.S. imports will likely be limited by a combination of tighter supplies in Oceania and expected increased demand for beef in Asia due to African Swine Fever,” say ERS analysts.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, based on USDA reports.

Cattle futures softened.

Other than 5¢ and 50¢ higher in the front two contracts, Live Cattle futures closed an average of 34¢ lower. That was despite reports that Cargill suspended some operations at its Dodge City facility, in the wake of an explosion in a stand alone building.

Feeder Cattle futures closed an average of $1.15 lower (85¢ to $1.60 lower). Pressure likely included early spillover pressure from Live Cattle, as well as higher front-month Corn futures.

Wholesale beef values were steady on Choice and 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 17¢ lower Thursday afternoon at $218.11/cwt. Select was $1.23 higher at $192.60.

Corn futures closed mostly 2¢ to 3¢ higher.

Soybean futures closed 1¢ to 3¢ higher through Aug ‘20 and then mostly fractionally mixed to 1¢ lower.

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Major U.S. financial indices regained losses from the previous session Thursday, with renewed hopes over a Brexit deal and continued strong quarterly earnings reports.

The Dow Jones Industrial Average closed 23 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 32 points.

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“Warmer than expected weather patterns and improved supplies of forage may have extended cattle grazing periods, slowing the pace of placements in third-quarter 2019,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “However, some of these feeder cattle will likely need to be moved off grass and into the feedlots in fourth-quarter 2019, keeping feeder prices under pressure in the fourth quarter.”

ERS pegs prices for feeder steers (750-800 lbs., basis Oklahoma City) the week of Oct. 7 at $147.26/cwt., which was $12 higher than the recent trough of $134.80 the week of Sept. 9 and more than $6 higher than the week before the Tyson plant fire.

Based on recent price strength, ERS increased the average expected feeder steer price in the fourth quarter by $4 to $137. The annual price forecast for feeder steers next year was unchanged at $141.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports. There were a few early live sales in the western Corn Belt at $111/cwt.—$1 more than the top of the range for the region last week—but too few to trend.

There were 768 head offered in the weekly Fed Cattle Exchange Auction and no takers.

Cattle futures continued to edge higher, except for a strong bounce in spot Live Cattle, supported by recent cash strength and gains in wholesale beef values.

After $1.35 higher in spot Oct, Live Cattle futures closed an average of 17¢ higher.

Except for 15¢ lower in Nov, Feeder Cattle futures closed an average of 27¢ higher.

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

Choice boxed beef cutout value was 26¢ higher Wednesday afternoon at $218.28/cwt. Select was 11¢ lower at $191.37.

Corn futures closed mostly fractionally mixed

Soybean futures closed 3¢ to 6¢ lower through Sep ‘20 and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices softened Wednesday, despite continued positive quarterly corporate earnings reports. Pressure was mostly ascribed to the month-to-month decline in retail sales. The U.S. Commerce Department estimated U.S. retail and food service sales 0.3% less in September at $525.6 billion. However, sales were 4.1% more than last year.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 24 points.

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A couple of observations shared by Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments:

“Globally, the middle class is projected to expand from 2 billion to 4.9 billion people by 2030. China, alone, is projected to add 850 million new middle class consumers by 2030. It is well documented that meat consumption increases as growing incomes support better quality diets and increased protein consumption.

“It appears at this time, that swine and pork losses in China, Vietnam, North and South Korea, and the Philippines, along with other outbreaks of African Swine Fever in Europe and Africa are creating a protein deficit that cannot be currently filled by all proteins in the world.”

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon, based on USDA reports. Early expectations are for steady to higher prices.

Cattle futures ended up mostly narrowly higher amid two-sided action, awaiting direction from this week’s cash market.

Live Cattle futures closed an average of 31¢ higher, except for unchanged in near Dec.

Feeder Cattle futures closed mixed, unchanged to 55¢ lower in the front three contracts and then an average of 31¢ higher.

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

Choice boxed beef cutout value was 80¢ higher Tuesday afternoon at $218.02/cwt. Select was $2.15 higher at $191.48.

Corn futures closed 2¢ to 4¢ lower through May ’20 and then mostly fractionally lower.

Soybean futures closed 3¢ to 6¢ lower through Aug ‘20 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed higher Tuesday on positive corporate earnings and optimism over a resolution to Brexit.

The Dow Jones Industrial Average closed 237 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 100 points.

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Pasture and range conditions continued to erode last week, compared to the same time last year, according to the most recent weekly USDA Crop Progress report for the week ending Oct. 13.

96% of the corn crop was dented, which was 4% less than last year and the average. 73% of corn was mature, compared to 96% a year earlier and 92% for the five-year average. 22% was harvested, which was 16% less than last year and 14% less than average. 55% was in Good (44%) or Excellent (11%) condition, which was 1% less than the previous week and 13% less than last year. 15% was in Poor (11%) or Very Poor condition (4%), which was the same as a week earlier and 3% more than a year earlier.

85% of soybeans were dropping leaves, which was 9% less than the previous year and 8% less than the average. 26% were harvested, which was 11% less than a year earlier and 23% less than average. 54% were rated in Good (45%) or Excellent (9%) condition, 1% more than a week earlier and 12% less than a year ago. 14% were in Poor (10%) or Very Poor (4%) condition, which was 1% less than a week earlier and 3% more than a year earlier.

81% of sorghum was mature, which was 1% more than last year but 1% less than average. 40% was harvested, which was 2% less than last year and 6% less than the average. 65% was in Good (51%) or Excellent (14%) condition, which was 10% more than a year earlier. 7% was rated as Poor (6%) or Very Poor (1%), compared to 17% last year.

65% of winter wheat was planted, which was 1% more than the previous year and on par with the average. 41% had emerged, compared to 42% last year and 40% for average.

43% of the nation’s pasture and range was rated in Good (35%) or Excellent (8%) condition, which was 2% less than a week earlier and 6% less than a year earlier. 28% was rated as Poor (18%) or Very Poor (10%), which was 1% more than the previous week and 7% more than a year earlier.

Negotiated cash fed cattle trade ended up higher last week. Live prices in the Southern Plains were $1-$3 higher at $109/cwt. in the Texas Panhandle and at $108-$109 in Kansas. Live trade in the Northern Plains ranged from steady to $4 higher in Nebraska at $109-$111, to $1 lower to $2 higher on a light test in Colorado at $108-$111. Dressed trade in Nebraska and the western Corn Belt was mainly $2 higher at mostly $172. Live sales in the western Corn Belt were $1 higher at $108-$110.

Stronger cash prices lifted Cattle futures.

Live Cattle futures closed an average of $1.09 higher (72¢ to $1.60 higher). 

Feeder Cattle futures closed an average of $1.54 higher.

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

Choice boxed beef cutout value was $1.56 higher Monday afternoon at $217.22/cwt. Select was 65¢ higher at $189.33.

Corn futures closed mostly unchanged to fractionally lower.

Soybean futures closed 3¢ to 4¢ higher through Jan ’21 and then mostly 2¢ lower to 2¢ higher.

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Major U.S. financial indices softened Monday as investors contemplated the potential breadth, depth and timing of the phased U.S.-China trade deal bandied about Friday.

The Dow Jones Industrial Average closed 29 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 8 points.

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“Relatively tight supplies of Prime and Choice beef are contributing to historically wide price spreads and high values for high quality-grade beef,” says David Anderson, Extension livestock economist at Texas A&M University.

In the latest issue of In the Cattle Markets, Anderson explains the Prime boxed beef cutout averaged $279.55/cwt. during the last month, which is a staggering $64.74 more than a year earlier. During the same period, the Choice cutout was $13.28 more at $215.76.

So, the Prime-Choice spread was $63.80/cwt., compared to $12.33 last year. The average Choice-Select spread was $25.76, compared to about $11 last year and for the five-year average.

“The Choice-Select spread tends to increase seasonally this time of the year and that seasonal trend is again occurring, but at a much higher price level this year,” Anderson says.

The spread is being magnified by less year-over-year fed beef production and a decline in carcasses grading Choice and higher.

“Over the last four weeks, total beef production is more than 0.5% below the same period a year ago,” Anderson says. “Over this period, fed steer and heifer slaughter is down 1.7%, while cow slaughter is up 4.2%. Digging in a little deeper, fed steer slaughter is down 6.5% while fed heifer slaughter is up 6.7%. Dressed weights continue to be down about 2 lbs. per head over the last month for steers, heifers, and cows. Combining weekly slaughter and dressed weights leaves fed beef production about 2.2% lower than a year ago, while cow beef is up 3.8%.”

Also for the last month, Anderson says Prime is running about 1.6% less than same period a year earlier and Choice is about 2.6% less. Approximately 7.7% more carcasses graded Select.

“Combining the percentage of carcasses by grade and pounds of fed steer and heifer beef produced indicates that over the last month Prime beef production has been almost 4% below a year ago. Choice beef production is almost 5% lower than a year ago, while Select production is about 5% higher,” Anderson says.

Except for some early sales in the North, negotiated cash fed cattle trade remained undeveloped through Friday afternoon, based on USDA reports.

Early dressed sales in Nebraska were $2 higher than the previous week at $172/cwt. Early dressed sales also were trading for $172 in the western Corn Belt, but too few to trend. Live sales in the western Corn Belt were steady to $2 higher than the previous week at $109. Live sales were at $109-$110 in Nebraska, but too few to trend.

Feeder Cattle futures closed mostly narrowly lower, while Live Cattle moved higher, helped along by stronger cash prices, the uptick in wholesale beef values and outside market support.

Live Cattle futures closed an average of 70¢ higher.

Except for 12¢ and 5¢ higher toward the front of the board, Feeder Cattle futures closed an average of 12¢ lower.

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

Choice boxed beef cutout value was 3¢ higher Friday afternoon at $215.66/cwt. Select was $2.02 higher at $188.68.

Corn futures closed 14¢ to 17¢ higher through Jul ’20 and then mostly 1¢ to 4¢ higher.

Soybean futures closed 7¢ to 12¢ higher through Aug ’20 and then mostly 1¢ to 2¢ higher.

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Major U.S. financial indices closed sharply higher Friday with various reports indicating the U.S. and China agreed to a phased trade deal that suspends tariff increases originally scheduled to begin next week.

The Dow Jones Industrial Average closed 319 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 106 points.

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By all accounts, it’s going to take a long while for China to rebuild its pork supply in the wake of African Swine Fever (ASF). It likely will also take plenty of time to rebuild Chinese pork demand which faltered first due to fears of the disease— though it has no consequence for human health—and then from the high prices related to limited supplies.

“In Beijing, industry contacts observed a roughly 15% decline in consumption during the first half of the year,” explains agricultural economist, Lindsay Kuberka, in the recent Livestock and Poultry: World Markets and Trade, from USDA’s Foreign Agricultural Service (FAS). “They attributed much of the decline to voluntary shifts from pork to other proteins out of disease concern. In addition, food service operators sought to minimize exposure to pork price inflation by substituting other proteins like poultry meat.”

Preventive herd culling and lessened demand bolstered supplies and kept price increases at bay for the first half of this year. By the first week of October, though, Kuberka says pork prices in China were 84% higher than a year earlier.

For perspective, FAS estimates Chinese pork production 14% less this year than in 2018 and 25% less next year. China’s total swine herd is forecast to decline to 275 million head by the end of 2020, down nearly 40% since the beginning of 2018, before the crisis began.

“Consumers have reacted to high pork prices by cutting back purchases and pork prices are expected to reach record levels through the peak demand season—autumn holidays and Chinese New Year,” Kuberka says. “Supplies are expected to be released from the national pork reserve during this period to offset prices. In some areas, retail subsidies may also cushion the impact for consumers. Initiatives to lower pork prices will help some consumers but are expected to have limited impact overall.”

Moreover, Kuberka says high pork prices will encourage Chinese consumers and food service operators to purchase alternative proteins, such as beef, poultry, lamb and seafood.

“Retail prices for competing proteins are rising as a result, with chicken meat up 24% and beef up 20% year over year during the first week of October,” Kuberka explains. “Chicken meat is expected to benefit from the biggest boost in demand, given prices remain well below the cost of pork. Substitution to beef and lamb will be more limited as prices are close to double that of pork.”

Even so, China is projected to import 2.4 million metric tons (mt) of beef this year, which would be 63.6% more than last year and 146.4% more than in 2017. Forecasts see China’s beef imports increasing to 2.9 million mt next year, another 20.1% than this year.