Logic suggested follow-through selling in Cattle futures to start the week, given Friday’s Cattle on Feed report showing about 2% more feedlot placement in July than expected. Instead, they roared higher, helped along by news that the U.S. and Mexico reach a new trade agreement (see below).
Besides which, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out in his weekly market comments, feedlots remain current in marketing, despite the increased cattle numbers.
Live Cattle futures closed an average of $2.04 higher (95¢ to $2.60 higher).
Feeder Cattle futures closed an average of $2.58 higher ($1.02 to $3.60 higher).
The weighted average fed steer price (5-area Direct) was $1.22 lower last week on a live basis at $108.77/cwt. It was 32¢ lower in the beef at $172.94.
Wholesale beef values were firm on Choice and higher on Select with moderate to good demand and light to moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 31¢ higher Monday afternoon at $213.63/cwt. Select was $1.03 higher at $204.85.
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The U.S. and Mexico reached a free trade agreement Monday, which should bolster the price outlook for some commodities and could smooth the way for trade talks with Canada.
“After a year of tough negotiations, the United States and Mexico reached a trade agreement that is fair and reciprocal and will strengthen both nations’ economies,” according to a statement from U.S. Vice President Mike Pence. “The U.S.–Mexico Trade Agreement is a win for American ranchers, manufacturers, and auto workers. Our nations have agreed to new rules that will maintain duty free access for agricultural goods on both sides of the border. In addition, we have agreed to eliminate non-tariff barriers and take other steps to encourage more agriculture trade between our two countries. Unlike any previous bilateral trade deal, this agreement includes the strongest labor standards, and these requirements are fully enforceable. The President and our entire Administration are grateful to President Peña Nieto and his negotiating team for their good faith efforts to get this deal done. Today is a win for the American people and we look forward to working with members of Congress in both parties to swiftly approve this new trade agreement.”
“This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities. Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers,” said U.S. Agriculture Secretary Sonny Perdue. “We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well, and restore us to a true North American Free Trade Agreement.”
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Major U.S. financial indices jumped higher Monday, with news of the trade deal between the U.S. and Mexico.
The Dow Jones Industrial average closed 259 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 71 points.