Although there was too little negotiated cash fed cattle trade through Tuesday afternoon for AMS to report a trend, signs point to higher prices this week.
For instance, the five-area direct dressed steer and heifer price on Monday was $10 more than Friday at $185/cwt. Wholesale beef values remain elevated. Plus Cattle futures were limit-up again Tuesday, with expanded limits.
Live Cattle futures closed limit-up $4.50.
Except for $5.00 higher in spot, Apr, Feeder Cattle futures closed limit-up $6.75.
Choice boxed beef cutout values were lower on Choice and firm on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.01 lower Tuesday afternoon at $256.31/cwt.; it was $229 at the same time last year. Select was 34¢ higher at $245.48.
Corn futures closed mostly 1¢ to 2¢ higher.
Soybean futures closed mostly 2¢ to 4¢ higher through Aug ‘21, and then mostly unchanged to fractionally higher.
Major U.S. financial indices rebounded Tuesday, fueled by expectations that Congress was close to passing a massive economic stimulus package.
The Dow Jones Industrial Average closed 2,112 points higher. The S&P 500 closed 209 points higher. The NASDAQ was up 557 points.
“Disruptions in normal activities due to COVID-19 have produced a surge in at-home food demand. Recent reports indicate a 77% year-over-year increase in grocery meat sales in mid-March,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The spike in grocery demand has overwhelmed the retail meat supply chain, resulting in temporary shortages of meat in many grocery stores. The shortages are due to the tremendous logistical challenges of shifting meat supplies from food service channels to retail grocery channels.”
There is no shortage of meat, of course. Peel points out beef, pork and poultry production was record large in the first quarter and is projected to be record large this year at 109.3 billion lbs., 4.3% more than last year.
“Beef production is projected to be 1.9% higher year over year in 2020, totaling 27.7 billion lbs.,” according to Peel. “Increased beef production is concentrated in the first half of the year. Total steer and heifer slaughter is up 3.9% year over year for the year to date. Steer carcass weights for the year to date are up over 21 lbs. year over year with heifer carcass weights up over 12 lbs. First-quarter beef production is estimated to increase 6.6% over last year.”
Beef in freezers is also 5% more than last year, as of Feb. 29, according to the most recent USDA monthly Cold Storage report. It was 3% more than the previous month.
Frozen pork supplies were up 6% from the previous month and up 7% from last year.
Total red meat supplies in freezers were up 3% from the prior month and up 5% from last year.
Total frozen poultry supplies were slightly more than the previous month, but down 4% from a year earlier.
Progress continues in implementing the agriculture-related provisions of the U.S.-China Phase One Economic and Trade Agreement, according to Tuesday’s announcement from the U.S. Department of Agriculture (USDA) and the Office of the U.S. Trade Representative (USTR).
Among the recent actions:
*China notified the United States of proposed maximum residue levels for three hormones commonly used in U.S. beef production. This recognition by China of safe and science-based U.S. production methods particularly benefits trade with China in beef, a fast-growing market that imported $8.4 billion worth of beef products in 2019. China also removed all references to age restrictions on the beef and beef products list. For the first time since 2003, U.S. beef producers will have access for nearly all beef products into China. USDA estimates American cattlemen could export up to $1 billion per year under this improved trading environment.
*Both countries signed a regionalization agreement that will allow U.S. poultry exports from unaffected regions of the country to continue, in the event of a detection of highly pathogenic avian influenza or virulent Newcastle disease in a particular region of the United States. This action will help protect the increased access American farmers have gained in China’s poultry market. U.S. poultry exports have the potential to exceed $1 billion per year.
*China updated its list of U.S. facilities eligible to export distillers dried grains with solubles (DDGS). In 2015, U.S. producers exported $1.6 billion worth of DDGS to China. This action, if coupled with the removal of other trade barriers, will allow U.S. exporters to recapture this market.
“These steps show that China is moving in the right direction to implement the Phase One agreement,” says Agriculture Secretary, Sonny Perdue. “We will continue to work with China to ensure full implementation of its commitments and look forward to seeing further improvement and progress as we continue our ongoing bilateral discussions.”