Despite collapsing equities tied to China’s trade retaliation (more later), and despite the steep selloff on Friday, Feeder Cattle futures closed higher Monday, as did Live Cattle, for the most part; Lean Hogs, too.
Support likely stemmed from generally oversold conditions, position squaring from the previous session’s liquidation, as well as funds fleeing equities and parking money on the commodity side of the fence. The latest data for U.S. beef and pork exports is also encouraging (see below).
Except for 42¢ lower in near Oct, Live Cattle futures closed an average of 48¢ higher (12¢ to 67¢ higher).
Feeder Cattle futures closed an average of 86¢ higher (45¢ to $1.22 higher), with the heaviest volume since last September.
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 3¢ lower Monday afternoon at $214.70/cwt. Select was $1.04 higher at $191.67.
Corn futures closed mostly 3¢ to 5¢ higher, extending the previous session’s gains.
Soybean futures closed fractionally mixed.
Major U.S. financial indices blasted lower Monday as China responded to the latest intended U.S. tariffs by allowing its currency to slide to decade-low values—making their exports significantly, artificially cheaper—and with reports that China ordered state-owned companies to suspend purchases of U.S. agricultural goods.
The Dow Jones Industrial Average closed 767 points lower. The S&P 500 closed 87 points lower. The NASDAQ was down 278 points.
U.S. beef exports in June were up 3% year-over-year for volume (118,677 mt) and were 1% higher for value at $724.8 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was the fourth most on record for any month.
For January-June, beef exports were 2% less in volume (648,765 mt), compared to the same period last year, but value was steady with last year’s record value pace at $4.03 billion.
Beef export value per head of fed slaughter in June averaged $325.10, up 4% from a year ago, while export value for the first six months of the year averaged $312.06 per head, down 2%.
Korea and Taiwan paced beef export growth.
Last year South Korea surpassed Mexico as the second-largest destination for U.S. beef exports, and in 2019 it continues to close the gap on leading market Japan.
Exports to Korea remained on a record pace in June, increasing 2% from a year ago to 25,118 mt (a post-BSE high), while value climbed 15% to a record $178.3 million. Beef exports to Korea for January-June were 12% more than last year for volume (126,879 mt) and 15% higher in value at $921.8 million. U.S. beef now accounts for 61% of Korea’s chilled beef imports, up from 57% in the first half of last year, with chilled volume increasing 7% to 26,537 mt.
As for Taiwan, beef exports in June reached a new monthly high of 6,654 mt, up 40% from a year ago, valued at $58 million, which was 46% higher and the second highest on record. First-half exports to Taiwan were 16% above last year’s record pace in volume (31,132 mt) and 11% higher in value ($276.2 million).
“It is very gratifying to see U.S. beef posting such remarkable gains in Korea and Taiwan, and the $2 billion milestone could even be in play this year for Korea,” says Dan Halstrom, USMEF president and CEO. “Exports to Japan can definitely achieve a similar trajectory if the U.S. can get back on a level playing field with our competitors, so we are encouraged by the progress in the U.S.-Japan trade negotiations.”
U.S. beef faces a significant tariff rate disadvantage in leading market Japan, where June exports totaled 29,794 mt, down 4% year-over-year, while value was down 7% to $179 million. For the first half of the year, exports to Japan were 1% below last year’s pace in both volume (157,839 mt) and value (just over $1 billion).
All of U.S. pork and beef’s major competitors gained tariff relief in Japan this year through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the economic partnership agreement between Japan and the European Union, making red meat trade a major focus of the U.S.-Japan trade agreement negotiations that continued last week.