Daily Market Highlights

Negotiated cash fed cattle trade sputtered back to life Wednesday, following last week’s Tyson fire. Live trade in the Southern Plains was at $105/cwt. on light to moderate trade and light demand, according to the Agricultural Marketing Service (AMS). That was $5 less than last week. Although too few to trend, there were also some early sales in the western Corn Belt at $105.00-$106.50 live and at $170-$172 in the beef.

Cattle futures surged higher, especially Feeder Cattle, as buyers took advantage of the oversold conditions created by massive selling the previous two sessions.

Other than an average of 55¢ lower in the front two contracts, Live Cattle futures closed an average of $1.61 higher.

Feeder Cattle futures closed an average of $5.18 higher, almost retracing what was lost in the previous day.

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

Choice boxed beef cutout value was $5.98 higher Wednesday afternoon at $232.34/cwt. Select was $5.34 higher at $205.92. Packers continue to benefit from the price bounce tied to the recent supply disruption.

Corn futures closed 5¢ to 7¢ lower through May ’21, and then mostly 1¢ to 2¢ lower.

Soybean futures closed 10¢ to 11¢ lower across the board.

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Major U.S. financial indices plunged steep and fast Wednesday, fueled by a brief inversion of the yield curve. That’s when the yield on the 10-year Treasury note drops below the 2-year rate. Based on history, many believe that’s the harbinger of economic recession within 18 months or so.

The Dow Jones Industrial Average closed 800 points lower. The S&P 500 closed 85 points lower. The NASDAQ was down 242 points.

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Burgers are often thought of as being more affordable than other menu items, but as prices continue to rise at a faster rate than the average entree, this view may start shifting, according to Technomic’s 2019 Burger Consumer Trend Report.

“Price increases are offering operators a form of relief as they struggle with rising labor and delivery costs, as well as limited growth through traffic,” explains Charles Winship, manager of consumer insights at Technomic. “But continued price increases for burgers could ultimately cut into perceptions around their affordability and push consumers toward other options.”

Key takeaways from the report include:

42% of consumers who eat burgers strongly agree that they have a preferred restaurant they almost always go to for burgers.

46% of consumers who eat burgers strongly agree that they’ve noticed price increases for burgers at restaurants over the past year.

44% of millennials who eat burgers expect restaurants to offer at least one plant-based burger option.

Cash cattle markets never stop completely, but plenty of folks continued to take cover Tuesday as Cattle futures sank further—limit and near-limit down in some contracts, with expanded limits—in response to fed cattle harvest disruptions caused by the fire at Tyson’s plant in Holcombe, KS.

As reported in Cattle Current yesterday, estimates suggest lost fed harvest capacity amounts to approximately 30,000 to 35,000 head per week. With industry-wide beef packing capacity utilization already running historically high before the fire, by most accounts, both cattle feeders and packers are scrambling to find solutions.

Live Cattle futures closed an average of $4.34 lower.

Feeder Cattle futures closed an average of $5.60 lower.

Wholesale beef values continued to climb Tuesday, with the shortage in immediate supplies fostered by the Tyson fire. Prices were sharply higher on good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $7.74 higher Tuesday afternoon at $226.36/cwt. Select was $2.79 higher at $200.58.

USDA acreage numbers continued to weigh on corn Tuesday. Corn futures closed 8¢ to 19¢ lower through Jul ’20, then mostly fractionally mixed.

Soybean futures gained, though, after ignoring the previous day’s positive acreage news. Soybean futures closed 8¢ to 10¢ higher through Jul ‘20, and then mostly 4¢ to 5¢ higher.

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Major U.S. financial indices closed sharply higher Tuesday. Stocks rebounded after the U.S. Trade Representative (USTR) announced removing some items from the list of Chinese imports that are subject to an additional 10% tariff beginning Sept. 1.

“Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles,” according to a USTR statement. “Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”

All told, the news buoyed investor hopes that the U.S. and China can resolve their trade differences.

The Dow Jones Industrial Average closed 372 points higher. The S&P 500 closed 42 points higher. The NASDAQ was up 152 points.

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Analysts with USDA’s Economic Research Service (ERS) increased the anticipated average fed steer price for this year by $1 to $116.50/cwt., in the most recent monthly World Agricultural Supply and Demand Estimates. That was based on recent price strength, before the Tyson fire. Average price for the third quarter is forecast to be $110 and then $112 in the fourth quarter.

Estimated beef production for this year was reduced by 86 million lbs. to 27.04 billion lbs., compared to the previous month’s forecast. That’s based on the expected slower pace of cattle slaughter in the third quarter and lighter expected carcass weights through the remainder of this year.

For next year, though, ERS analysts say, “The beef production forecast is raised from the previous month on a higher expected pace of first-half marketings. However, the 2019 calf-crop estimated in the July 19 Cattle report implies lower-than-previously expected marketings in the latter part of 2020.”

Beef production for 2020 is forecast at 27.57 billion lbs. WASDE has next year’s average fed steer price at $119.

Forecast total red meat and poultry production was forecast 107 million lbs. higher for this year at 104.62 billion lbs., based on increased broiler and turkey production.

Total red meat and poultry production estimates were higher for next year, too, at 106.48 billion lbs., with increased beef and poultry production.

Cattle and grain markets were plumb ugly Monday.

The fire that partly destroyed the Tyson Foods beef plant in Holcomb, KS (near Garden City) on Friday took Cattle futures limit down as traders tried to assess what the lost packing capacity means to markets.

Live Cattle futures closed limit down $3.00, except for $2.67 lower in the back contract.

Feeder Cattle futures closed limit down $4.50.

According to the Kansas Livestock Association, in an assessment sent to its members Monday, “The Holcombe plant operated at about 6,000 head of fed cattle per day, leaving a shortfall in the national packing capacity of 30,000 head for a five-day work week. “According to CattleFax, the association says that amounts to 6% of total U.S. fed cattle packing capacity the rest of the processing industry will need to absorb.

In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University  explains, “The loss of 30,000-35,000 head of slaughter capacity per week will disrupt both boxed beef and fed cattle markets, at least initially and potentially longer, depending on the duration of the plant closure.” He adds that, “The disruptions will add costs for both fed cattle and boxed beef as additional logistics are needed to adjust flows of slaughter cattle and boxed beef. There are many unknowns for Tyson and the industry going forward, he says, including the possibility that this sets the stage for new investment in beef packing.

According to KLA, “Based on CattleFax analysis, shifting the supply to other plants in Kansas, Texas, Colorado, Nebraska and Iowa will mean capacity in those regions needs to run 8% to 8.5% higher, which will be difficult to make up based on current packing industry infrastructure.            

“Potential market impacts predicted by CattleFax include a possible loss of currentness in the cattle feeding segment, possibly some lost market leverage by cattle feeders and possibly more price risk for all classes of cattle.

Likewise, Stephen Koontz, agricultural economist at Colorado State University, says in the latest In the Cattle Markets, “The impact of this event on fed cattle markets will be substantial. The market is in the middle of the third quarter: supplies are heaviest, slaughter weights are ramping up, and competing meat supplies will begin their fall increase. This is the quarter with the highest volume of beef supplies and forecasts are for sustained supplies into the fourth quarter.”

Koontz expects the rest of this month will be difficult, as plenty of uncertainty will surround the largest annual fed cattle supplies being moved around temporally and spatially to make up for the capacity loss in the Southern Plains.

By all measures, though, beef packing capacity utilization has been running historically high as consumer beef demand and packer economics encourage timely harvest of record large fed cattle supplies.

“This disruption will maintain incentives for a packer to run as many hours as possible,” Koontz explains. “Market-ready inventories of cattle are strong but are being depleted through the summer and this will persist into the fall. Further, prices for fed cattle have been reasonable through the summer—after early summer collapses—and feeding costs have been declining. Also, margins for retailers have been very strong and some of the strongest in recent years.”

Tyson plans to rebuild the Holcombe plant at the same location, though it’s way too early to know when a revamped facility will be up and running.

In the meantime, Steve Stouffer, group president of Tyson Fresh Meats explains, “We’re taking steps to move production to alternative sites. Tyson Foods has built in some redundancy to handle situations like these and we will use other plants within our network to help keep our supply chain full.”

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The same uncertainty about supply disruptions that cratered cattle futures helped boost Wholesale beef values Monday, with good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.25 higher Monday afternoon at $218.62/cwt. Select was $3.98 higher at $197.79.

Negotiated cash fed cattle traded ended up $1 lower last week in the Southern Plains and Nebraska at $110/cwt. and $113, respectively. Live prices were steady to $2 lower in the western Corn Belt at $113-$115. Dressed sales were steady to $5 lower in Nebraska at $180-$185. Prices in the western Corn Belt were $4-$5 lower at $180-$181.

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Grain futures collapsed on Monday, too, beneath the weight of bearish USDA numbers the latest World Agricultural Supply and Demand Estimates and the August Crop Production report.

Revised acreage estimate for corn of 90.01 million acres was above the top end of the range for pre-report estimates and only 1.84% less than the estimate in the June Acreage report. Estimated yield of 169.5 bu./acre was 3.5 bu. more than the previous estimate. Corn production of 13.9 billion bu. is 26 million bu. more than the July estimate and just 500 million bu. less than last year. The season average corn price received by producers was lowered 10¢ to $3.60/bu.

Corn futures closed mostly 25¢ limit-lower through Jul ’20, then 7¢ to 15¢ lower through Jul ’21; mostly 3¢ lower the rest of the way.

Even though acreage numbers were positive, Soybean futures closed 10¢ to 12¢ lower through May ‘20, and then mostly 4¢ to 9¢ lower.

U.S. soybean acres were estimated at 76.70 million acres, which was 3.3 million acres fewer than in the June Acreage report and below pre-report estimates. Estimated yield of 48.5 bu./acre would be 3.1 bu./acre less than last year. U.S. soybean production was forecast at 3.68 billion bu., which would be 165 million bu. less than the previous estimate and 860 million bu. less than the previous year. The U.S. soybean average price for 2019-20 was unchanged at $8.40/bu. Forecast prices for soybean meal and oil were also unchanged at $300/short ton and 29.5¢/lb., respectively.

Incidentally, Agricultural producers reported they were unable to plant crops on more than 19.4 million acres, according to the most recent USDA data. This marks the most prevented plant acres reported since USDA’s Farm Service Agency began releasing the report in 2007 and 17.49 million acres more than reported at this time last year.

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Major U.S. financial indices closed sharply lower Monday, driven by declining bond yields and rising geopolitical uncertainty with the protests in Hong Kong.

The Dow Jones Industrial Average closed 391 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 95 points.

Cattle feeders and beef packers appeared to remain mostly at a stalemate through late Friday afternoon, based on USDA reports.

“Negotiated cash trade followed a similar trend compared to recent weeks with early dressed purchases in the North ranging from $183 to $185/cwt. Dressed purchases late in the week traded mostly at $180,” said analysts with the Agricultural Marketing Service on Friday. “In the Western Corn Belt, early live purchases traded at $114-$115. Early live purchases in Nebraska were at $113.” They add that trade was slow to develop in the Southern Plains with producers passing on bids of $109.

Stronger corn prices early in the session and sluggish trade weighed on Feeder Cattle futures, while Live Cattle paddled in place. 

Other than 10¢ higher and unchanged in the front two contracts, Live Cattle futures closed an average of 19¢ lower.

Feeder Cattle futures closed an average of $1.16 lower.

Wholesale beef values were weak 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 51¢ lower Friday afternoon at $216.37/cwt. Select was $1.44 higher at $193.81.

“Grain traders spent most of the day repositioning themselves ahead of the highly anticipated Monday report,” say analysts with USDA’s Agricultural marketing Service (AMS). “There is a wide range of estimates for corn: 83.5 to 89.8 million acres planted, down from 91.7 million acres first reported for corn in June. Soybean estimates range from 78.0 to 83.5 million acres planted. The June report had soybean acres at 80 million. The WASDE report plus the re-survey of June acres report is set to be released at 11 a.m. CDT Monday.” 

Corn futures closed fractionally mixed.

Soybean futures closed 7¢ to 8¢ higher, up 19¢ to 24¢ in the last two sessions.

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Major U.S. financial indices closed lower Friday, but well off session lows, ending a wildly volatile week of trading, due mainly to the trade jabs between the U.S. and China.

The Dow Jones Industrial Average closed 90 points lower. The S&P 500 closed 19 points lower. The NASDAQ was down 80 points.

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“Restaurants, food service providers, and grocery stores are making final preparations for beef purchases to meet Labor Day weekend beef demand,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Labor Day weekend marks the unofficial end of summer and the end of the summer grilling season. This holiday provides the beef industry one last opportunity to push high-valued cuts out the door and on to consumers’ plates.”

Consumers can choose from lots of quality, too. Although the percentage of Choice-grading carcasses sagged below year-earlier levels in recent weeks, Griffith points out the level remains high, compared to recent years, dropping below 70% only two weeks this year.

In fact, for May through July, the percentage of fed cattle grading Choice ranged from 69.6% to 71.6%, according to USDA’s weekly National Steer and Heifer Estimated Grading Percent reports. For Choice and Prime combined, the range was 77.1% to 78.8%. During the same period, 30.1% to 31.9% of carcasses graded in the upper two-thirds of Choice.

“The market continues to demand higher quality beef and cattle producers continue to find ways to improve quality grade in cattle,” Griffith says. “The consumer trend to higher quality beef is likely to continue.”

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.”

Negotiated cash fed cattle sales were mostly inactive on light to moderate demand through Thursday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service. So far this week, live sales are $1 lower in the Southern Plains at $111/cwt. Dressed trade in the North is steady at $185. Live sales in the western Corn Belt are steady at $115-$116.

Live Cattle futures closed higher Thursday, despite continued hard pressure on Lean Hogs.

Except for 20¢ lower in the back two contracts, Live Cattle futures closed an average of 52¢ higher (7¢ higher to $1.07 higher).

Feeder Cattle futures continued to sink lower, though, closing an average of 62¢ lower.

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

Choice boxed beef cutout value was 70¢ higher Thursday afternoon at $214.24/cwt. Select was 35¢ lower at $189.34.

Grain futures continued under pressure on Thursday with the continued stalemate between the U.S. and China, favorable crop weather and reports of bumper production in parts of Europe and South America.

Corn futures closed 5¢ to 7¢ lower through Jul ’20 and then fractionally mixed to 3¢ lower.

Soybean futures closed 15¢ to 17¢ lower through Sep ’20 and then 9¢ to 12¢ lower.

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Major U.S. financial indices closed sharply lower again Thursday on tweets from President Trump that the U.S. will impose a 10% tariff on an additional $300 billion worth of Chinese imports, beginning Sept. 1. Until then, markets rebounded sharply higher after the previous session’s steep decline.

West Texas Intermediate Crude oil futures on the CME tumbled $4.55 to $4.63 for the remaining 2019 contracts.

The Dow Jones Industrial Average closed 280 points lower. The S&P 500 closed 26 points lower. The NASDAQ was down 64 points.

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Participating in Beef Quality Assurance (BQA) programs yields a variety of benefits, everything from records that enable improved decision making to proven animal health practices and monitoring that help ensure animal well being. Never mind the verification of quality, safe production it provides consumers.

Recent research also indicates buyers are willing to pay more for calves and feeders at video auction if those cattle come from BQA-certified producers.

Bottom line, buyers paid an average premium of $16.80 per head for cattle in lots with BQA included in the lot description. That’s based on 8,815 video lot records of steers and heifers sold in nine western states through Western Video Market from 2010 to 2017.

The study—Effect of Mentioning BQA in Lot Descriptions of Beef Calves and Feeder Cattle Sold Through Video-based Auctions on Sale Price—was conducted by Colorado State University’s departments of Animal Sciences and Agricultural and Resource Economics.

“This study was a first of its kind opportunity to utilize advanced data analysis methods to discover if there was a true monetary value to participate in BQA,” says Chase DeCoite, director of Beef Quality Assurance. “Study results clearly show that participation in BQA and BQA certification can provide real value to beef producers. It means that the initiatives within the industry are rewarding cattlemen and women who take action to improve their operations and our industry.”

CSU’s statistical analysis determined a $2.71/cwt. premium when BQA was mentioned in the lot description. That premium is relative to the average weight of cattle in the study, which is how researchers arrived at the premium of $16.80 per head. If you figure the per-head premium is constant, it implies higher weight-based premiums at lighter weights and vice versa, according to researchers. For instance, $3.73/cwt. at 450 lbs. versus $2.24 at 750 lbs.

“In addition to the BQA mention, our study controlled for other factors–such as lot characteristics, cattle attributes, and value-added practices like age/source verification and natural certification–that also influenced beef calf and feeder cattle sale prices. Importantly, the BQA premium existed even after accounting for these influential variables,” says Daniel Mooney, CSU assistant professor of agricultural and resource economics.

Mooney adds that results of the study emphasize the importance of transferring information from sellers to buyers, as well as the importance of collecting BQA certification information during the auction process.

“The value of a seller being BQA Certified can really only be captured when information is shared between seller and buyer, which is consistently done via the sale of cattle by video auction companies,” explains Jason Ahola, CSU professor of animal sciences. “By sharing the BQA status of the owner or manager of a set of cattle, the buyer can access information that is generally otherwise difficult to find in traditional marketing channels. This was a big reason for us to conduct the study, as it became clear that data on sellers’ BQA status were available on a large number of cattle sold through video auctions as well as other traits associated with the cattle. This information affected the ultimate selling price of the cattle.”

Even without documentation of a premium in the past, the results also suggest that over time many producers have proactively chosen to highlight and emphasize their participation in BQA when marketing their cattle.