Negotiated cash fed cattle trade continued to develop through Friday afternoon at no worse than steady money, according to USDA reports. Early live sales were at $119/cwt. in Nebraska and at $120 in the western Corn Belt. Early dressed sales were steady in the western Corn Belt at $188 and as much as $6 higher in Nebraska at $188-$194. Earlier in the week, live sales were steady in Kansas at $119. The Texas Cattle Feeders Association reported its members selling steers steady at $119 and heifers $1 higher at nearly $119.
Cattle futures closed sharply higher Friday, buoyed by strong demand and anticipation of snugger fed cattle supplies heading into the next quarter. Trader optimism was likely heightened by the phase-one trade agreement between the U.S. and China.
“U.S. pork and beef products have been subject to burdensome retaliatory duties in China since 2018, and this has made it very difficult for the U.S. industry to capitalize on China’s rapidly growing need for high-quality proteins. But long before retaliatory duties entered the picture, non-tariff barriers were a major, persistent obstacle for U.S. exporters looking to expand their business in China,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation. “China is the world’s largest and fastest-growing destination for imported red meat, and the U.S. industry is excited about the prospects for expanded opportunities in China.”
Live Cattle futures closed an average of $1.42 higher (70¢ to $2.45 higher).
Feeder Cattle futures closed an average of $2.09 higher ($1.42 to $3.12 higher).
Wholesale beef values were firm to higher on moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 64¢ higher Friday afternoon at $216.29/cwt. Select was $1.68 higher at $204.24.
Corn futures closed mostly 2¢ to 3¢ higher through Jly ‘21; and then mostly unchanged.
Soybean futures closed 7¢ to 9¢ higher through Jan. ’21 and then mostly 3¢ to 5¢ higher.
Major U.S. financial indices edged higher on Friday, more subdued than might be expected, given the aforementioned phase-one trade agreement between the U.S. and China. But then, there weren’t many details to go along with the announcement.
“The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange,” according to a statement from the U.S. Trade Representative on Friday. “The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement. The United States has agreed to modify its Section 301 tariff actions in a significant way.”
The United States first imposed tariffs on imports from China based on the findings of the Section 301 investigation on China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The United States will be maintaining 25% tariffs on approximately $250 billion of Chinese imports, along with 7.5% tariffs on approximately $120 billion of Chinese imports.
The Dow Jones Industrial Average closed 3 points higher. The S&P 500 closed fractionally higher. The NASDAQ was up 17 points.
“A smaller forecasted spring-born 2020 calf crop and a normal summer growing season sets the stage for next year’s fall-weaned calves to price near to slightly above 2017’s prices (i.e., above both 2018 and 2019 prices),” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.
That’s based on low feed costs and fed cattle prices projected to be 1-4% higher year over year, strengthened by another year of declining domestic per capita beef supplies, as beef imports decrease and beef exports increase.
Other than the ever-present risk of drought, LMIC analysts believe the primary potential headwind to the price forecast would come with faltering trade relative to growing total red meat and poultry production.
“U.S. per capita supply of all red meat and poultry was record large in 2019,” say LMIC analysts. “Next year (2020) there will be significantly more, and that assumes exports of beef, pork, chicken, and turkey all establish new all-time highs.”