Negotiated cash fed cattle trade ended the week mainly steady with the previous week on a live basis at $115 in the Southern Plains, $116 in Nebraska and mostly $116-$117 in the western Corn Belt. Dressed trade was steady to $3 higher at $186 in Nebraska and at $185-$187 in the western Corn Belt.
Live Cattle futures tried to firm early in Friday’s session but gave way to further losses as sharp follow-through pressure continued in Feeder Cattle, despite sharply lower Corn futures on the day.
Added pressure on commodities came from news that President Trump plans to impose 5% tariffs on Mexican imports, beginning June 10, unless that country makes significant progress toward stemming the flow of illegal immigrants across its northern border into the U.S. Should that come to pass, the move also casts a shadow over ratification of the U.S.-Mexico-Canada trade agreement.
Live Cattle futures closed an average of $1.47 lower. That’s an average of $3.79 lower in the previous two sessions.
Feeder Cattle futures closed an average of $3.52 lower ($1.77 lower to $5.10 lower in spot Aug), in the heaviest trade volume since early April. That made for an average of $7.62 lower in the last two session.
Wholesale beef values were weak to lower on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 37¢ lower Friday afternoon at $223.21/cwt. Select was $1.18 lower at $207.69.
Corn futures on Thursday closed 4¢ to 9¢ lower, presumably on profit taking, month-end position squaring and worries about tariffs on Mexico.
Soybean futures closed 9¢ to 11¢ lower.
Major U.S. financial indices dove lower Friday on the aforementioned threat of U.S. tariffs on Mexican imports.
Crude oil futures (WTI-CME) closed another $2.98 to $3.10 lower through the front six contracts. That’s $5.11 to $5.32 lower in the last two sessions.
The Dow Jones Industrial Average closed 354 points lower. The S&P 500 closed 36 points lower. The NASDAQ was down 114 points.
African Swine Fever (ASF) continues to spread geographically and numerically.
According to analysts with CoBank’s Knowledge Exchange Division, it has already caused the loss of hundreds of millions of pigs across China and Southeast Asia, creating a massive shortfall in animal protein supply for those regions through 2020, and possibly for years to come. They add that the shortfall will have significant implications for the U.S. animal protein and feed sectors.”
Assuming the U.S. remains free of AFS, it stands to gain via more exports of pork and other animal proteins.
“The U.S. continues to remain a low-cost exporter of protein products and is in strong position to be a major beneficiary as China and other Asian markets ramp up their imports,” says Will Sawyer, CoBank lead economist for animal protein. “But if the trade dispute with China remains unresolved, the upside trade potential for the U.S. meat sectors may not be fully realized.”
At the same time, the U.S. looks to continue losing feed grain exports. The reduction of feed demand due to ASF will be especially painful for elevators, crushers, and feed mills focused on Chinese markets, according to CoBank.
In a new report from CoBank, African Swine Fever Implications for U.S. Ag, analysts project a 30% decline in the Chinese hog herd for 2019-20, compared to 2017-18, would reduce soybean meal consumption by 9 million metric tons (mmt) and corn consumption by 28 mmt.
Reduced feed grain demand will likely linger as China begins to rebuild its herd.
As of May 23, the World Organization for Animal Health (OIE) AFS situation report indicated a total of 3,835 ongoing outbreaks and 2,607 new outbreaks. For perspective, the previous report (Apr. 26-May 9) indicated 1,322 ongoing outbreaks and 157 new ones. Countries and territories reporting on new or ongoing ASF outbreaks included: Europe (Belgium, Hungary, Latvia, Poland, Romania, Russia and Ukraine); Asia (China, Hong Kong and Vietnam) and Africa (South Africa).
In an effort to prevent a global ASF pandemic, OIE launched a global initiative for the control of ASF at its 87th General Session last week.
“Given the global socioeconomic repercussions of ASF, controlling the disease is a high priority for both affected countries and those free of the disease,” according to an OIE statement. “Although ASF poses no risk to human health, it is devastating for the economy of pig farms and for international trade, with repercussions for the livelihoods of farmers and for food safety.”