Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, but Live Cattle futures bounced higher, pulling Feeder Cattle along. Apparently, traders expect solid consumer demand heading into the new year. That’s hard to argue against, given snugger front-month fed cattle supplies and wholesale beef values holding their ground.
After an average of $1.39 higher in the front two contracts, Live Cattle futures closed an average of 45¢ higher (an average of 69¢ higher overall).
Feeder Cattle futures closed an average of 52¢ higher (12¢ higher at the back of the board to 90¢ higher in spot Jan).
Corn futures closed 1¢ lower to 1¢ higher.
Soybean futures closed fractionally mixed to 1¢ higher.
Wholesale beef values were weaker on light demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 39¢ lower Thursday afternoon at $215.30/cwt. Select was 38¢ lower at $207.22. Both remained higher week to week.
Major U.S. financial indices closed higher Thursday after a sharp drop early, following the previous session’s steep gains. Given fundamentals, apparently raw emotion and the vagaries of electronic trading are firmly in charge.
The Dow Jones Industrial Average closed 260 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 25 points.
Since 2015, one in every five bushels of added feed demand for corn is due to beef and pork exports, according to a recently updated study—The Intersection of U.S. Meat Exports and Domestic Corn Use—conducted by World Perspectives, Inc. (WPI), on behalf of the U.S. Meat Export Federation.
The original study concluded that in 2015 exports of U.S. red meat accounted for 11.7 million tons of combined corn and Dried Distillers Grains with Solubles (DDGS) use. In the update, WPI analysts say that 2018 beef and pork exports will use a combined total of 14.9 million tons of corn and DDGS, which equates to an additional 459.7 million bu. of corn produced, an increase of 29% over the 2015 projections.
“While the original study utilized 2015 export numbers, combined U.S. beef and pork exports this year should be about 26% above the 2015 totals,” explains Dave Juday, WPI senior analyst. “If you look forward, we’re projecting that the baseline over the next 10 years will grow about 10% more than USDA had projected back in 2016.”
Beef and pork exports also have a direct impact on the utilization and value of DDGS, according to the updated study. Overall, the value of DDGS sold for feed to livestock represents about 23% percent of the value of ethanol per bushel of corn.
“Over the baseline period of 2018-2027, the combined value of beef and pork exports to corn and DDGS is projected to reach $22.2 billion—$19 billion for corn and $3.2 billion for DDGS. This cumulative 10-year total is almost 19% more than the $18.7 billion projected in 2016 using USDA’s 2016-2025 long term baseline meat export forecast,” Juday says.
Among other study highlights:
- About 11% of the price of corn this year will be derived from red meat exports.
- Red meat exports’ impact on corn price is 39¢/bu. (based on annual average price of $3.53/bu.).
- There would be a loss of $5.7 billion in corn value without red meat exports.