Cash fed cattle trade took on a decidedly bearish tone Wednesday.
Slaughter steers and heifers sold $17-$20 lower at Sioux Falls Regional in South Dakota. Choice 2-3 steers weighing an average of 1,411 lbs. brought an average price of $100.45/cwt. Country trade in the western Corn Belt last week was at mostly $120.
Cattle feeders offered 4,696 head in the weekly Fed Cattle Exchange auction Wednesday. Just 832 head sold: 662 head at a weighted average price of $113/cwt. for delivery at 1-9 days; 170 head at a weighted average of $112.06 for delivery at 1-17 days. Most of the sales were from the Sothern Plains where last week’s negotiated cash price was $118-$120.
Cattle future fell hard Wednesday, limit down across the board, except one Live Cattle contract. Pressure included the softer cash outlook and diving wholesale beef values, as well as lower outside markets. News that a significant number of workers at JBS facilities in Greeley, CO stayed home Tuesday, due to confirmed cases of COVID-19, also weighed.
Except for 85¢ lower in the back contract, Live Cattle futures closed an average of $4.50 lower.
Feeder Cattle futures closed limit-down $4.50.
Wholesale beef values were sharply lower on light demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $7.98 lower Wednesday afternoon at $235.17/cwt. Select was $3.83 lower at $225.13. Over the last two days, Choice was down $15.80 and Select was $13.01 lower. Also, drop value sank to a new multi-year low of $7.92/cwt.
Corn futures closed mostly 7¢ to 9¢ lower.
Soybean futures closed 10¢ to 23¢ lower through Mar ’21 and then mostly 4¢ to 7¢ lower.
Major U.S. financial indices extended losses Wednesday, as investors grew more pessimistic about how quickly the U.S. can get back to business. Specific negative news included quantification of decreased U.S. manufacturing last month.
Economic activity in the manufacturing sector was 1% less in March than the previous month, with the Institute for Supply Management® (ISM) Purchasing Managers Index® (PMI) at 49.1.
“The coronavirus pandemic and shocks in global energy markets have impacted all manufacturing sectors,” says Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Comments from the panel were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and energy market volatility. The PMI returned to contraction territory, and with a negative trajectory.”
The Dow Jones Industrial Average closed 973 points lower. The S&P 500 closed 114 points lower. The NASDAQ was down 339 points.
Tough markets for the leather industry will likely continue this year, according to the Leather and Hide Council of America (LHCA).
Part of the challenge has to do with plentiful supply, on the heels of U.S. cowherd expansion. Part has to do with trade issues before COVID-19. More important in the eyes of many U.S. hides and skins suppliers, though, is the global leather demand situation, and the rise of synthetic products as alternatives to leather.
Plastic synthetic alternatives that look like leather have taken significant market share away from leather in consumer product areas such as footwear and automobile upholstery, according to the LHCA. In fact, organization representatives say the situation is so dire that some lower-quality hides and skins are being composted and destroyed rather than processed into leather, a trend that will continue this year.
Based on USDA data, the United States exported more than $1.17 billion worth of cattle hides, pig skins and semi-processed leather products last year. That was $450 million less than the previous year.
China was the largest buyer of salted cattle hides, with imports valued at more than $400 million last year, according to the LHCA. Italy was the single largest destination for wet blue cattle hides, with imports valued at more than $122 million. Other large export markets included South Korea, Mexico, Thailand and Vietnam.
On a positive note, U.S. hide exports continue to move overseas, despite COVID-19, although that could change if ports are forced to shut down, or if container availability challenges and congestion issues accelerate.
“It is difficult to predict the exact economic impact of the virus, but it is likely to be significant, considering labor shortages recorded at ports and in manufacturing facilities abroad, compounded by an observed decline in retail traffic both globally and in the U.S.,” according to the LCHA.