Negotiated cash fed cattle trade ended up $1 higher in the Southern Plains last week at $106/cwt. Live prices were also $1 higher in Nebraska at $107-$108 and steady to $3.50 higher in the western Corn Belt at mostly $110. Dressed trade was $6-$10 higher in Nebraska at $175-$178, in a light test. In the western Corn Belt, dressed prices were $4-$6 higher at $174-$178.
Week to week (ending Aug. 25), the average 5-area direct steer price was 44¢ more on a live basis at $107.12, according to USDA. The average dressed steer price was $4.39 more at $175.34.
That was with 55,786 head of fed cattle slaughter, which were 10,874 more than the previous week. Estimated total cattle slaughter for the week was 654,000 head, according to USDA’s Weekly Livestock, Poultry and Grain Highlights. That was 3,000 head more than the previous week’s estimated slaughter. Total estimated cattle slaughter the week of the Tyson fire was 645,000 head.
Cattle futures made strong gains to start the week, buoyed by Friday’s friendlier than expected Cattle on Feed report, the weekend announcement of a new trade pact with Japan (see below), as well as reports that China is willing to renew trade talks with the U.S.
Live Cattle futures closed an average of $1.29 higher, recapturing most of Friday’s decline.
Feeder Cattle futures closed an average of $1.80 higher, recovering about three-quarters of what was lost in the previous session.
Wholesale beef values were firm on Choice and lower on Select with light to moderate demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 54¢ higher Monday afternoon at $238.06/cwt. Select was $1.05 lower at $211.66.
Corn futures closed mostly fractionally higher.
Soybean futures closed 6¢ to 10¢ higher.
Major U.S. financial indices closed higher Monday with the aforementioned reports that China wants to return to the trade negotiation table with the U.S.
The Dow Jones Industrial Average closed 269 points higher. The S&P 500 closed 31 points higher. The NASDAQ was up 101 points.
Positive news for U.S. beef exports came over the weekend with the announcement that the U.S. and Japan reached agreement, in principal, on a bilateral trade pact. In terms of value, Japan continues to be the leading customer for U.S. beef.
According to U.S. Trade Representative Robert Lighthizer, the agreement focuses on agriculture, industrial tariffs and digital trade.
“In the agriculture area, it will be a major benefit for beef, pork, wheat, dairy products, wine, ethanol, and a variety of other products,” Lighthizer explained during a Sunday press conference. “It will lead to substantial reductions in tariffs and non-tariff barriers across the board…this will allow us to compete more effectively with people across the board, particularly the TPP countries and Europe.”
The U.S. tariff disadvantage in Japan increased when the U.S. withdrew from the Trans Pacific Partnership (TPP), while the other 11 nations involved in TPP ultimately agreed to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). With it, key U.S. beef export competitors, including Australia and Canada, gained tariff advantage over the U.S. on beef exports to Japan.
“This announcement is tremendous news for U.S. farmers and ranchers, and for everyone in the red meat supply chain, because it will level the playing field for U.S. pork and beef in the world’s most competitive red meat import market,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “It is also a very positive development for our customer base in Japan, which USMEF and our industry partners have spent decades building. These customers have been very loyal to U.S. pork and beef, but our exports to Japan could not reach their full potential under Japan’s current tariff structure.”
According to Lighthizer, Japan currently imports about $14 billion worth of U.S. agricultural products.
“The Meat Institute applauds the Trump Administration for negotiating better access to a critical and growing market for American beef and pork,” says Julie Anna Potts, CEO of the North American Meat Institute. “The U.S. will be better able to compete with the Comprehensive and Progressive Trans-Pacific Partnership nations and the European Union for valuable market share.”
“Removing the massive 38.5% tariff on U.S. beef will level the playing field in Japan, and we are very thankful to President Trump and his trade team for continuing to fight on behalf of America’s ranching families,” says Jennifer Houston, president of the National Cattlemen’s Beef Association. “Last year, Japanese consumers purchased over $2 billion of U.S. beef, accounting for roughly one-quarter of overall U.S. beef exports.”