There were a few early negotiated fed cattle sales in Nebraska Monday at $122.50/cwt., but too few to trend. Live sales there last week were at mostly $123.
Cattle futures closed higher, buoyed by firmer outside markets and oversold conditions. There’s also the most open interest in Live Cattle for at least nine months.
Live Cattle futures closed an average of 76¢ higher (37¢ higher at the back to $1.27 higher in spot Feb).
Feeder Cattle futures closed an average of 98¢ higher.
Corn futures closed fractionally mixed.
Soybean futures closed mostly 1¢ to 2¢ higher.
Wholesale beef values were steady to firm on moderate to fairly good demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 23¢ lower Monday afternoon at $214.28/cwt. Select was 55¢ higher at $208.21.
Follow-through support helped major U.S. financial indices close higher Monday, maintaining robust gains from the previous session. Optimism included Friday’s employment report and hopes concerning trade talks with China.
The Dow Jones Industrial Average closed 98 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 84 points.
“Evolving market dynamics make it easy to underestimate how the impacts and costs of trade issues will continue to grow in 2019,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Direct impacts from tariffs are the most visible. In particular, Peel mentions the impact on U.S. pork and soybeans, resulting from reciprocal tariffs with China. There’s also the impact on U.S. pork and dairy products from tariffs imposed by some countries in retaliation for U.S. tariffs on steel and aluminum imports.
“Economic impacts of tariffs may be initially limited mostly to changes in margins if the disruptions are perceived to be short-lived,” Peel explains. “Later, the impacts will evolve from the initial market shock to larger and more permanent adjustments. With more time and ongoing uncertainty about trade issues, more and more of the cost of tariffs are passed on to buyers; alternative product flows develop; lost market shares become much more difficult to undo. The direct costs of tariffs are difficult to measure but certainly grow over time.”
Less visible is lost opportunity.
For instance Peel says, “The U.S. withdrew from the Trans-Pacific Partnership (TPP) two years ago. The remaining 11 countries continued and launched the revised TPP (CPTPP) in January 2019. Not only does the U.S. not have the benefit of tariff adjustments and increased market access with TPP; going forward the U.S. will be increasingly less competitive and likely lose ground relative to TPP participants. The stated U.S. intention to negotiate bilateral trade deals with Japan and others has so far not resulted in new agreements or even serious discussions.”
All of that is before considering the toll tariffs levy on the overall U.S. economy.
“It is nearly impossible to know how much trade and investment has been postponed or abandoned as a result of trade uncertainty the past two years,” Peel says. “The combined direct impacts, lost trade opportunities and ongoing uncertainty are reducing growth potential for U.S. and global economies, and those impacts are likely to grow in 2019, barring improvement in trade issues.”