Negotiated cash fed cattle trade ended last week mostly $1 lower on a live basis at $112/cwt. It was $2 lower in the western Corn Belt at $110. Dressed trade was $2-$4 lower at mostly $174-$178.
That helped dampen enthusiasm in Cattle futures Monday, with Feeder Cattle receiving extra pressure from the continued uptick in Corn prices.
Except for 15¢ higher in the back contract, Live Cattle futures closed an average of 46¢ lower.
Feeder Cattle futures closed an average of 86¢ lower.
Boxed beef cutout values were weak on light demand and light to moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 42¢ lower Monday afternoon at $204.72/cwt. Select was 29¢ lower at $197.98.
Major U.S. financial indices closed lower Monday, pressured once again by sliding tech stocks and trade jitters. Crude oil futures were solidly higher, though.
The Dow Jones Industrial average closed 144 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 107 points.
Setting aside current trade disputes, and acknowledging the considerable potential for U.S. beef in China, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says it will take time, patience and persistence.
Peel spent part of this summer in China teaching and researching.
“Building markets for U.S. beef in China will face several challenges. Price is one of those challenges,” Peel explains, in his weekly market comments. “Beef is expensive in China relative to other meats, even more so than in the U.S. Although growing beef demand in China is the result of a rapidly growing urban middle-class population, beef remains expensive for many consumers. Imported beef from the U.S. is especially expensive.”
Although beef consumption is growing in China, Peel explains another formidable challenge is the role of beef in Chinese cuisine.
“Chinese cuisine is characterized by hot pot, stir-fry dishes and Chinese barbeque that use small amounts of beef in pieces or thinly sliced, rather than large cuts of beef,” Peel says. “Beef offals are very popular and more affordable for many consumers. For example, Chinese barbeque is not large quantities of brisket or other beef cuts, but is various meat products prepared on skewers.
Consequently, Peel explains highly marbled U.S. beef does not necessarily represent additional quality in many Chinese dishes, which adds to the price gap between U.S. beef and domestic Chinese beef or beef imported from most other countries.
“This is not to say that there isn’t potential for U.S. beef in China. However, it does illustrate that accessing the larger Chinese market is not simply a matter of shipping U.S. steaks to China,” Peel says.