Daily Market Highlights

Cattle feeders and packers continued their standoff through late Friday afternoon, with negotiated cash fed cattle trade undeveloped, according to USDA reports. However, according to AMS, there was a smattering of dressed sales in the Northern Plains at $197/cwt., which was $2 more than the previous week. 

Adverse pen conditions and another winter storm over the weekend point to continued erosion in feedlot performance and more price leverage for cattle feeders.

Cattle futures closed near steady Friday, maintaining week-to-week gains as traders waited cash direction.

Except for 17¢ lower in June, Live Cattle futures closed an average of 15¢ higher. 

Except for 7¢ and 12¢ higher in April and May, Feeder Cattle futures closed an average of 33¢ lower.

Corn futures closed mostly 2¢ higher.

Soybean futures closed 3¢ to 4¢ higher.

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

Choice boxed beef cutout value was $1.50 lower Friday afternoon at $212.46/cwt. Select was $1.50 lower at $206.27.

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Major U.S. financial indices edged slightly lower Friday amid persistent concerns about the partial government shutdown and the lack of trade resolution with China.

The Dow Jones Industrial Average closed 5 points lower. The S&P 500 closed fractionally lower. The NASDAQ was down 14 points.

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Impacts from muddy feedlot pens and winter weather continue to cut both ways in the market.

“Heavy rain and snow has most of the trade area in very muddy conditions and these conditions are discouraging calf buyers from buying at this time,” according to the Agricultural Marketing Service (AMS) reporter on hand for Monday’s auction at Oklahoma National Stockyards.

Between demand pressure and heavy post-holiday volume, steers and heifers sold from $4/cwt. lower to $1 higher last week, according to the Agricultural Marketing service (AMS).

Heading into the weekend, a wide swath of the nation was gearing up for Winter Storm Gia

“Feedyards that were already wet will see more moisture fall from the sky, dashing any hopes that they will dry out anytime soon. Said AMS analysts on Friday. “Muddy feedyards in Kansas, Nebraska and Iowa want to get cattle moved out of the poor pen conditions, as cattle performance has been seriously impeded due to above average moisture recently.”  

Lost pounds to weather are supporting Cattle futures and the uptick in cash fed cattle prices. On the other hand, costs are increasing.

Feeder Cattle futures closed an average of $1.60 higher week to week on Friday. Live Cattle futures closed an average of $1.70 higher.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon. Current indications continue to suggest steady to higher prices when it does occur.  Wet, muddy condition in major cattle feeding areas continue to hinder cattle performance and add support to the market.

Cattle futures traded mainly sideways.

Except for 25¢ lower in the back contract, Live Cattle futures closed an average of 11¢ higher. 

Feeder Cattle futures closed 10¢ lower to 20¢ higher.

Grains closed lower on the day, presumably on a less bearish outlook than traders expected to see for soybeans in South America. Chatter also picked up a notch regarding the growing dearth of publicly available market data, due to the ongoing partial government shutdown.

Corn futures closed 4¢ to 5¢ lower through Jul ’20 and then mostly 2¢ lower.

Soybean futures closed 11¢ to 17¢ lower.

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 12¢ higher Thursday afternoon at $213.96/cwt. Select was $1.30 higher at $207.77.

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Major U.S. financial indices edged higher again on Thursday, with follow-through support regarding the potential pause for interest rate increases, along with lingering hopes of a trade resolution with China. Pressure on retail stocks helped cap gains.

The Dow Jones Industrial Average closed 122 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 28 points.

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Despite the fact that there are fewer farms and ranches today, and a growing generational gap between the general population and agriculture, the children of Baby Boomers are more likely than their parents to know much about agriculture. That’s according to the latest Feed4Thought survey from Cargill.

Specifically, Cargill found that twice as many Generation Y respondents (ages 18–34) in the U.S. and China reported knowing a livestock or seafood farmer, compared to those over 55 years old. Trends were similar in Mexico and France. While 81% of 18-to-34-year-old Chinese participants said they have visited a livestock or seafood farm during their lifetime, only 50% of their older compatriots had. Young respondents in every country surveyed were more likely to have visited a farm than those over 55.

Generation Y (born between the early 1980s and about 2000) is also acting on what they learn about farming practices, according to the survey. Almost three times as many Gen Y participants (52%) said they had changed their eating habits for sustainability reasons in the past year versus older U.S. respondents (19%). Mexico, France and China showed a similar age correlation, with 80% of young Chinese reporting changes. Having kids at home made participants in all four sample countries more likely to make values-based changes.

“We know people increasingly care about animal welfare, the healthfulness of foods and sustainability,” says Marina Crocker, head of Cargill Animal Nutrition market insights. “By pairing Cargill’s understanding of what our customers need with state-of-the-art analytics about what people want, we can anticipate and serve emerging consumer expectations in the solutions we provide our customers.”

More than 80% of survey respondents said the way an animal is raised is important, and almost half of them were willing to pay more as a result. Chinese survey participants (59%) were the most open to paying a premium based on factors such as animal feed and housing; Americans (31%) the least.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon. There were only 571 head offered in the weekly Fed Cattle Exchange auction, with none sold.

Cattle futures softened some, likely on profit taking and awaiting the week’s cash direction.

Live Cattle futures closed an average of 26¢ lower through the front six contracts and then an average of 27¢ higher.

Except for 10¢ higher in the back contract, Feeder Cattle futures closed an average of 58¢ lower.

Corn futures closed mostly unchanged to 1¢ higher.

Soybean futures closed 5¢ higher across the board. 

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

Choice boxed beef cutout value was 14¢ lower Wednesday afternoon at $213.84/cwt. Select was 79¢ lower at $206.47.

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Major U.S. financial indices closed higher for the fourth session in a row, buoyed by confirmation the FOMC plans to be patient with future interest rate increases.

According to the FOMC minutes, “… many participants expressed the view that, especially in an environment of muted inflation pressures, the Committee could afford to be patient about further policy firming. A number of participants noted that, before making further changes to the stance of policy, it was important for the Committee to assess factors such as how the risks that had become more pronounced in recent months might unfold and to what extent they would affect economic activity, and the effects of past actions to remove policy accommodation, which were likely still working their way through the economy.”

Crude oil prices continued to climb as well, with West Texas Intermediate Crude on the CME closing $2.36 to $2.58 higher for the next 12 months.

The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 60 points.

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Lots went right and little went wrong for cattle markets last year or the year before, according to Stephen Koontz, agricultural economist at Colorado State University. He notes strong wholesale margins, efficient movement of increased production through the supply chain and exceptional U.S. beef export levels, particularly to Japan and Korea.

“But forecasts for 2019 suggest a further 1.8% increase in beef production, a further 2.4% increase in pork production, a 1.3% increase in broiler production, and 0.5% increase in milk production,” Koontz explains, in the most recent issue of In the Cattle Markets.  “There will be plenty of protein and fats. While the stock market has been volatile, the underlying indicators of the macro economy have largely remained strong. That is not the case for the rest of the world. There are clear weaknesses in the world economy. There is plenty of protein. And, there appears to be plenty of downside price risk.”

Negotiated fed cattle trade was undeveloped through Tuesday afternoon, but Cattle futures suggest steady to higher prices for the week. They closed sharply higher, especially Feeder Cattle, buoyed by increasing open interest and trade activity.

Live Cattle futures closed an average of 84¢ higher (40¢ higher to $2.10 higher in spot Feb), with the most active trade since September.

Feeder Cattle futures closed an average of $1.30 higher, with the most active trade since October.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 3¢ to 6¢ lower through Jan ’20 and then mostly 1¢ lower.

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

Choice boxed beef cutout value was 30¢ lower Tuesday afternoon at $213.98/cwt. Select was 95¢ lower at $207.26.

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Major U.S. financial indices close higher for the third consecutive day as investors seemed to grow more optimistic that ongoing trade talks with China may bear fruit. Resurgent tech stocks added support, as did the recent rebound in oil prices. Crude Oil futures (CME-WTI) are about $3 higher since last Wednesday.

The Dow Jones Industrial Average closed 256 points higher. The S&P 500 closed 24 points higher. The NASDAQ was up 73 points.

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Agricultural producer sentiment declined in December as farmers’ perception of both current and future economic conditions weakened, according to results from the Purdue University-CME Group Ag Economy Barometer. The December barometer reading of 127 was 7 points lower than November. The barometer is based on 400 survey responses from agricultural producers across the country.

Both of the barometer’s two sub-indices declined in December. The Index of Current Conditions fell 6 points to 109, which was 30 points less than a year earlier. The Index of Future Expectations fell 8 points in December to 135, but was 15 points higher than a year earlier.

“Over the course of the last year, producers’ impression of current economic conditions on their farms has declined markedly,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “But at the same time, their expectations for future economic conditions have held steady. As a result of this mixed view, farmers appear to be cautious about making large investments in their farming operations.”

Mintert points to December’s Large Farm Investment Index as an example. That index measures whether producers feel this is a good time to make large farm investments. It dropped 5 points month to month at 51 and was 29 points lower than a year earlier.

Similarly, 42% said now was a good time to bring a new generation of family into the business, versus about 50% during the past two years. Looking ahead five years, 65% expect conditions to be more favorable for bringing in a new generation.

There were a few early negotiated fed cattle sales in Nebraska Monday at $122.50/cwt., but too few to trend. Live sales there last week were at mostly $123.

Cattle futures closed higher, buoyed by firmer outside markets and oversold conditions. There’s also the most open interest in Live Cattle for at least nine months.

Live Cattle futures closed an average of 76¢ higher (37¢ higher at the back to $1.27 higher in spot Feb).

Feeder Cattle futures closed an average of 98¢ higher.

Corn futures closed fractionally mixed.

Soybean futures closed mostly 1¢ to 2¢ higher.

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 23¢ lower Monday afternoon at $214.28/cwt. Select was 55¢ higher at $208.21.

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Follow-through support helped major U.S. financial indices close higher Monday, maintaining robust gains from the previous session. Optimism included Friday’s employment report and hopes concerning trade talks with China.

The Dow Jones Industrial Average closed 98 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 84 points.

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“Evolving market dynamics make it easy to underestimate how the impacts and costs of trade issues will continue to grow in 2019,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

Direct impacts from tariffs are the most visible. In particular, Peel mentions the impact on U.S. pork and soybeans, resulting from reciprocal tariffs with China. There’s also the impact on U.S. pork and dairy products from tariffs imposed by some countries in retaliation for U.S. tariffs on steel and aluminum imports.

“Economic impacts of tariffs may be initially limited mostly to changes in margins if the disruptions are perceived to be short-lived,” Peel explains. “Later, the impacts will evolve from the initial market shock to larger and more permanent adjustments. With more time and ongoing uncertainty about trade issues, more and more of the cost of tariffs are passed on to buyers; alternative product flows develop; lost market shares become much more difficult to undo. The direct costs of tariffs are difficult to measure but certainly grow over time.”

Less visible is lost opportunity.

For instance Peel says, “The U.S. withdrew from the Trans-Pacific Partnership (TPP) two years ago. The remaining 11 countries continued and launched the revised TPP (CPTPP) in January 2019. Not only does the U.S. not have the benefit of tariff adjustments and increased market access with TPP; going forward the U.S. will be increasingly less competitive and likely lose ground relative to TPP participants. The stated U.S. intention to negotiate bilateral trade deals with Japan and others has so far not resulted in new agreements or even serious discussions.”

All of that is before considering the toll tariffs levy on the overall U.S. economy.

“It is nearly impossible to know how much trade and investment has been postponed or abandoned as a result of trade uncertainty the past two years,” Peel says. “The combined direct impacts, lost trade opportunities and ongoing uncertainty are reducing growth potential for U.S. and global economies, and those impacts are likely to grow in 2019, barring improvement in trade issues.”

Negotiated cash fed cattle trade for the week was generally steady in Nebraska and the Southern Plains at $123/cwt. ($122.00-$122.50 in Nebraska). Live sales were $1-$2 higher in the western Corn Belt at $121-$122. Dressed trade was steady in Nebraska at $195; steady to $4 higher in the western Corn Belt at $194-$195.

Higher grain prices helped pressure Feeder Cattle, while softer wholesale beef values and volatile outside markets weighed on Live Cattle.

Live Cattle futures closed an average of 98¢ lower (67¢ to $1.40 lower).

Feeder Cattle futures closed an average of $1.40 lower.

Corn futures closed 2¢ to 3¢ higher through Sep ‘20 and then 1¢ to 2¢ higher.

Soybean futures closed 7¢ to 10¢ higher through Sep ’20 and then mostly 4¢ higher.

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

Choice boxed beef cutout value was $1.98 lower Friday afternoon at $214.51/cwt. Select was $1.72 lower at $207.66.

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Major U.S. financial indices rocketed higher Friday, buoyed by a monthly jobs report that shattered expectations to the upside, as well as comments from the Fed, suggesting they may be more patient in making further increases to interest rates.

Total non-farm payroll employment increased by 312,000 in December, according to the U.S. Bureau of Labor Statistics. That left the unemployment rate at 3.9%, which was 0.2% more than the previous month.

In December, average hourly earnings for all employees on private non-farm payrolls rose 11¢ to $27.48. Over the year, average hourly earnings increased by 84¢, or 3.2%.

The Dow Jones Industrial Average closed 746 points higher. The S&P 500 closed 84 points higher. The NASDAQ was up 275 points.

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With the partial government shutdown dragging into the third week, analysts with the Livestock Marketing Information Center (LMIC) note the absence of some market reports and the risk of delayed key pending reports are adding to uncertainty.

“Actual slaughter data has been among the most missed weekly market data. That data is compiled by the National Agricultural Statistics Service (NASS) but is released by the Agricultural Marketing Service. It provides valuable information on weights, production, and the number of head slaughtered,” LMIC analysts explain. “The next couple of weeks hold several vital reports that could affect the tone of the entire year. For example, the annual Cattle Inventory is scheduled to be published at the end of this month. That report provides one of only two point estimates in the size of the beef herd, and the number of replacement animals producers are holding. The monthly Cattle on Feed report also is at risk. Without that type of information, cattle markets will be flying blind.”

Other reports scheduled soon include November trade data from the Foreign Agricultural Service, as well as the monthly World Agricultural Supply and Demand Estimates from USDA’s Economic Research Service.

“The most extended government shutdown occurred in 1995 to 1996 and lasted three weeks,” say LMIC analysts. “In the past, some data has been recovered and released at a later date. However, in cases where the data is done by survey, as with many of the USDA NASS reports, that data is usually not recoverable because the survey was not sent or collected.”

Negotiated cash fed cattle trade was steady at $123/cwt. in the Southern Plains through Thursday afternoon, with moderate demand and slow trade in the Texas Panhandle; moderate trade and demand in Kansas. There were a few live sales in Nebraska at the same price and steady with the prior week, but too few to trend.

Sharply lower outside markets and higher grain prices pressured Feeder Cattle futures on Thursday. Live Cattle softened some, but received support from steady cash fed cattle and wholesale beef values.

Except for 5¢ higher in away Feb, Live Cattle futures closed an average of 25¢ lower.

Feeder Cattle futures closed an average of $1.24 lower.

Corn futures closed mostly 3¢ to 4¢ higher through Sep ‘20 and then fractionally higher to 1¢ higher.

Soybean futures closed mostly 3¢ to 6¢ higher.

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

Choice boxed beef cutout value was 15¢ lower Thursday afternoon at $216.49/cwt. Select was $1.53 lower at $209.38.

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Major U.S. financial indices plunged Thursday, fueled by increasing worries about slowing global economic growth. A letter from Apple to investors seemed to fuel the selloff. Apple sees its first-quarter revenue at $84 billion, significantly lower than previous estimates and about $7 billion short of analyst expectations, according to various reports.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” explained Apple CEO, Tim Cook, in the letter. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”

Domestically, investors also appeared rattled by a softer Purchasing Managers Index (PMI®) than expected. The December PMI was 54.1%, down 5.2% from the previous month, according to the latest Manufacturing ISM® Report On Business®.

The Dow Jones Industrial Average closed 660 points lower. The S&P 500 closed 62 points lower. The NASDAQ was down 202 points.

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“Beef production in 2018 is projected to total nearly 27 billion lbs. of beef products resulting from the slaughter of 33 million head of cattle. The economic system that connects cattle production to beef consumption is remarkably complex and is a challenge for producers and consumers alike to understand and appreciate,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Peel points to the diverse markets for beef, geographic production diversity, the array of demand factors affecting individual beef items, let lone beef overall, as well as beef’s perishability. Plus, meeting fresh beef demand requires a continuous flow of slaughter-ready cattle, despite the fact that about 80% of the nation’s calves are born in the spring.

“As we wrap up 2018, it’s worth a moment to pause and consider the amazing day-to-day performance and accomplishments of the U.S. cattle and beef industry,” Peel says. “Cow-calf and stocker producers, feedlots, packers, further processors and a host of other workers in transportation, stocking, cooking, serving and countless other industry participants work every day to make sure that restaurant diners and grocery shoppers don’t have to think about where and how beef came to be available at that moment…or indeed that it would be there at all. It truly is a miracle.” 

Negotiated cash fed cattle prices end up sharply higher in late trade last week: $4 higher at $123/cwt. in the Southern Plains and Nebraska; $1-$3 higher in the western Corn Belt at $119-$121. Dressed sales were $5 higher in Nebraska at $195; steady to $5 higher in the western Corn Belt at $190-$195.

Recently higher cash fed cattle prices and continued firmness in wholesale beef values continue to support Cattle futures. They were pressured on Wednesday by likely profit taking; added pressure for Feeder Cattle early from stronger grain prices.

Live Cattle futures closed narrowly mixed (from an average of 29¢ lower to an average of 22¢ higher), with a sharp increase in open interest.

Feeder Cattle futures closed an average of 71¢ lower through the front four contracts, but well off of session lows, erasing Monday’s gains. They were 7¢ lower to 2¢ higher across the back half of the board.

Corn futures closed fractionally higher to 2¢ higher.

Soybean futures closed 10¢ to 12¢ higher through Sep ‘19 and then mostly 6¢ to 9¢ higher.

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

Choice boxed beef cutout value was $1.29 higher Wednesday afternoon at $216.64/cwt. Select was 25¢ higher at $210.91.

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Major U.S. financial edged higher after early pressure on Wednesday. Support included higher crude oil prices, stronger tech stocks and bank shares.

The Dow Jones Industrial Average closed 18 points higher. The S&P 500 closed 3 points higher. The NASDAQ was up 30 points.

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“The past few years have been a demand-driven environment where stronger than expected beef demand led to stronger than expected calf and yearling prices,” says Josh Maples, Extension livestock economist at Mississippi State University. “These have been important transition years that coped with the sharp supply increases. Looking ahead, slower herd growth numbers begin to paint a brighter price picture for 2019 and 2020 if domestic demand and exports continue to grow.”

In the most recent issue of In the Cattle Markets, Maples explains beef production, including about 2% expected growth this year, would be about 15% more in 2019 than it was in 2015.

“This would be the fastest four-year growth since 1973-1977,” Maples says. “With respect to the cattle cycle, recent cowherd trends suggest 2020 could potentially mark the end of the current U.S. cattle inventory build-up. But, it is worth noting that this is looking like a unique cattle cycle. History might suggest that after herd growth stops, herd declines will follow, but the ingredients for near-term herd declines are not obvious at this point. Prices have mostly remained at or above profitable levels for cow-calf producers, which does not provide much incentive for liquidation.” He expects herd growth to be flat this year.

On the other side of the ledger, Maples emphasizes the strong domestic economy and international demand continue to support beef and cattle prices, despite increasing supplies of beef, pork and chicken.

Negotiated cash fed cattle trade remained undeveloped through Friday afternoon. Though too few to trend, there were a few live sales reported in the western Corn Belt on Thursday at $119.00-$121.50/cwt., which was about $1 higher than the previous week.

Front-month Live Cattle set the tone for firm to higher futures prices, supported by expectations of steady to higher cash fed cattle prices.

Except for $1.15 higher in spot Dec and 22¢ lower in the back contract, Live Cattle futures closed an average of 27¢ higher.

Feeder Cattle futures closed narrowly mixed (10¢ lower to 22¢ higher).

Corn futures closed 1¢ higher.

Soybean futures closed 10¢ to 13¢ higher through March ’20 and then 8¢ to 9¢ higher.

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

Choice boxed beef cutout value was 89¢ lower Friday afternoon at $214.41/cwt. Select was 30¢ higher at $207.52.

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Major U.S. financial indices closed mainly lower Friday, amid another day of volatile trade.

The Dow Jones Industrial Average closed 76 points lower. The S&P 500 closed 3 points lower. The NASDAQ was up 5 points.

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Most auctions were closed for the holiday last week, so there were no price trends for calves and feeder cattle. When sales start in the new year, they should receive support from recently stronger cash fed cattle and futures prices. Snugger front-end supplies and harsh winter weather in some cattle-feeding areas suggest that support should continue for a while.

Near-term wildcards continue to include volatile equity markets, tied to worries about rising interest rates and slowing global economic growth, as well as the government shutdown.

Depending on your abacus, cattle prices this past year were unsurprising and mostly on par with the previous year. As long as weather and demand hold up, it’s hard to argue that prices will be much different in 2019.

The Livestock Marketing Information Center (LMIC) projected calf prices for the first quarter of 2019 at $168-$172/cwt., according to Glynn Tonsor, agricultural economist at Kansas State University, in December. Yearling prices were projected at $147-$150 and fed prices at $118-$121.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, but Live Cattle futures bounced higher, pulling Feeder Cattle along. Apparently, traders expect solid consumer demand heading into the new year. That’s hard to argue against, given snugger front-month fed cattle supplies and wholesale beef values holding their ground.

After an average of $1.39 higher in the front two contracts, Live Cattle futures closed an average of 45¢ higher (an average of 69¢ higher overall).

Feeder Cattle futures closed an average of 52¢ higher (12¢ higher at the back of the board to 90¢ higher in spot Jan).

Corn futures closed 1¢ lower to 1¢ higher.

Soybean futures closed fractionally mixed to 1¢ higher.

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

Choice boxed beef cutout value was 39¢ lower Thursday afternoon at $215.30/cwt. Select was 38¢ lower at $207.22. Both remained higher week to week.

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Major U.S. financial indices closed higher Thursday after a sharp drop early, following the previous session’s steep gains. Given fundamentals, apparently raw emotion and the vagaries of electronic trading are firmly in charge.

The Dow Jones Industrial Average closed 260 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 25 points.

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Since 2015, one in every five bushels of added feed demand for corn is due to beef and pork exports, according to a recently updated study—The Intersection of U.S. Meat Exports and Domestic Corn Use—conducted by World Perspectives, Inc. (WPI), on behalf of the U.S. Meat Export Federation.

The original study concluded that in 2015 exports of U.S. red meat accounted for 11.7 million tons of combined corn and Dried Distillers Grains with Solubles (DDGS) use. In the update, WPI analysts say that 2018 beef and pork exports will use a combined total of 14.9 million tons of corn and DDGS, which equates to an additional 459.7 million bu. of corn produced, an increase of 29% over the 2015 projections.

“While the original study utilized 2015 export numbers, combined U.S. beef and pork exports this year should be about 26% above the 2015 totals,” explains Dave Juday, WPI senior analyst. “If you look forward, we’re projecting that the baseline over the next 10 years will grow about 10% more than USDA had projected back in 2016.”

Beef and pork exports also have a direct impact on the utilization and value of DDGS, according to the updated study. Overall, the value of DDGS sold for feed to livestock represents about 23% percent of the value of ethanol per bushel of corn.

“Over the baseline period of 2018-2027, the combined value of beef and pork exports to corn and DDGS is projected to reach $22.2 billion—$19 billion for corn and $3.2 billion for DDGS. This cumulative 10-year total is almost 19% more than the $18.7 billion projected in 2016 using USDA’s 2016-2025 long term baseline meat export forecast,” Juday says.

Among other study highlights:

• About 11% of the price of corn this year will be derived from red meat exports.
• Red meat exports’ impact on corn price is 39¢/bu. (based on annual average price of $3.53/bu.).
• There would be a loss of $5.7 billion in corn value without red meat exports.