Wholesale beef values bounced higher Tuesday on good demand and light to moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.21 higher in the afternoon at $212.76/cwt. Select was $2.07 higher at $210.30.
That and stronger Lean Hog futures helped Live Cattle futures close an average of 22¢ higher.
Other than unchanged and 10¢ higher in the back two contracts, Feeder Cattle futures closed an average of 12¢ lower.
Corn futures closed fractionally lower to 1¢ lower.
Soybean futures closed fractionally lower to 1¢ lower.
Major U.S. financial indices closed mixed and little changed Tuesday, with better than expected quarterly earnings from the likes of J.P Morgan Chase, but skittishness over Wednesday’s scheduled signing of the phase-one trade deal between the U.S. and China.
The Dow Jones Industrial Average closed 32 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 22 points.
“Beef exports are generally expected to be strong in 2020,” says Josh Maples, Extension livestock economist at Mississippi State University. “The latest World Agricultural Supply and Demand Estimates (WASDE) projection for 2020 beef exports is 3.3 billion lbs., which would be a new record and about 9% above 2019 levels.”
Although U.S. beef exports in 2019 look to be less year over year—4.6% less for January through November—in the latest issue of In the Cattle Markets, Maples emphasizes it was not a weak year.
“The 3.02 billion lbs. of 2019 beef exports projected by WASDE would trail only the 3.16 billion lbs. exported in 2018,” Maples says.
Heading into 2020, Maples notes the bevy of trade deals, either recently signed or in progress and ultimately signed, will add support.
As well, both African Swine Fever and the horrendous fires in Australia promise to impact the global flow of animal proteins.
With respect to the latter, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says, “Wildfires (in Australia) have burned over 15 million acres, an area the size of West Virginia, and are not yet under control as of Jan. 10. Roughly 9% of the Australian cattle herd is in areas significantly impacted by the fires; another 11% are in regions partially impacted by the fires.”
Drought-forced herd liquidation pushed last year’s Australian beef production and exports higher than previously projected, with female slaughter reaching record proportions of total cattle slaughter, according to Peel. This year, he says Australian beef production is forecast to decrease nearly 15% year over year to the lowest level since 2010. Australian exports are projected to decline by more than 19%, compared to 2019.
“It is mid-summer in Australia and the drought continues unabated with severe rainfall deficits and above average temperatures,” Peel explains. “Additional herd liquidation is likely if conditions do not improve. In any event, Australian cattle and beef production will be reduced for the foreseeable future and rebuilding, whenever it can begin, will take several years.”