Cattle Current Daily—Dec. 25-26, 2019

Cattle Current Daily—Dec. 25-26, 2019

Merry Christmas to All!

Cattle futures edged mostly higher amid light holiday trade Tuesday.

Except for unchanged in Jun, Live Cattle futures closed an average of 18¢ higher.

Except for 5¢ lower in Mar and Oct, Feeder Cattle futures closed an average of 12¢ higher.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial indices closed little changed in Tuesday’s holiday-shortened session.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed fractionally lower. The NASDAQ was up 7 points.

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While domestic beef demand remains relatively flat over recent times, Elliott Dennis, livestock marketing economist at the University of Nebraska—Lincoln says export demand for U.S. beef increased 100% since 2010, compared to a 50% increase in export demand for other U.S. animal proteins.

 “As export demand for U.S. beef grows, this signals to expand production with a yield and quality grade product that each individual country demands. Likewise, certain countries demand/require the livestock, and cattle in particular, be raised, treated, and housed in certain ways,” Dennis explains, in the most recent issue of In the Cattle Markets. “For example, the E.U requires hormone-free beef. Other countries, such as China, require similar regulations. For cattle to be ‘export eligible’ they need to meet certain requirements, many of which arguably have little to do with the meat quality (i.e. yield and quality grade), flavor, and tenderness. Just as the industry has adjusted to meet domestic consumers demand for marbled products, so the industry could adopt similar practices to make more cattle export eligible.”

Although premiums vary by month, Dennis explains they’re around $20/cwt. for non hormone treated cattle (NHTC—never treated with hormones) and $25 for all natural (never treated with hormones or antibiotics).

“Now, whether it is profitable to chase NHTC and All Natural premiums depends on each operation’s structure, strategy, and available resources,” Dennis says. “Other protein industries faced similar issues and opportunities and have responded. The pork industry changed in a dramatic fashion this past year by removing all ractopamine (i.e. hormone) from pork production making hogs now China export eligible. Granted, China is facing African Swine Fever (ASF) and massive shortage of pork, but the premiums and market share opportunity was large enough to switch production practices. The change in the beef industry will not be as dramatic as the pork industry for a variety of reasons, but moving forward, some change in production practices is likely if the industry is going to keep up with export demand that has been sharply increasing over the last 10 years.”

2019-12-24T15:03:35-05:00

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