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.
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.
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.”