Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon. Many expect prices this week to be no worse than steady.
Slaughter steers and heifers sold $1-$2 higher at Sioux Falls Regional in South Dakota on Wednesday. “Packer buyers weren’t keen on pushing the market, especially on steers over 1500 lbs., but did have to pay more to get cattle bought,” explained the AMS reporter.
There were four lots (666 head) offered in the weekly Fed Cattle Exchange auction, and no takers.
Cattle futures rallied on Wednesday, led by Feeder Cattle, amid more active trade and growing Open Interest. It was hard to pin the optimism on a particular factor. Arguably, some support came from traders trying to get in front of a potential trade deal with China—leaders are scheduled to meet tomorrow and Friday.
Live Cattle futures closed an average of 51¢ higher.
Feeder Cattle futures closed an average of $2.40 higher.
Wholesale beef values were higher on Choice and lower on Select with light to moderate demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.00 higher Wednesday afternoon at $214.60/cwt. Select was 94¢ lower at $186.12.
Corn futures closed mainly unchanged to fractionally lower.
Soybean futures closed 2¢ to 3¢ higher through Nov ’20 and then mostly unchanged to fractionally higher.
Major U.S. financial indices closed higher on Wednesday, as the U.S.-China trade talk seesaw continued to rock, to the upside this time, with reports China might settle for a partial deal.
The Dow Jones Industrial Average closed 181 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 79 points.
“Regardless of the decline in Chinese pork production, the gap between Chinese supply and Chinese demand will be filled by either imported pork, or substitution of an alternative protein product,” says Brenda Boetel, a livestock economist at the University of Wisconsin-River Falls.
Prior to the outbreak of African Swine Fever (ASF) in China, Boetel explains that nation’s annual per capita consumption of pork was approximately 73 lbs.; 13 lbs. for beef and 25 lbs. for poultry.
“Chinese pork consumption is expected to drop sharply in response to soaring prices, as well as lack of physical supply,” Boetel says, in the latest issue of In the Cattle Markets. “In an attempt to curb price increases (and resulting inflation) reserve pork supplies have been released and price ceilings have been created. Nevertheless, Chinese pork prices have increased 33% to 100% since January. Additionally, retail prices for sheep, beef and chicken are also at record levels.”
Chinese pork imports were 30% higher year over year for January through August, according to Boetel. U.S. pork exports to China were 38% higher for the same period. She adds that Chinese beef imports increased approximately 57% over the same period. US beef exports to China were up 24%.
“Given that Chinese beef imports are increasing at a faster rate than pork, and that Chinese beef and poultry prices are at record levels, one can assume there has been some substitution from pork consumption to alternative proteins,” Boetel says. “…Poultry production has increased in China due to the much shorter production cycle than either pork or beef and poultry’s similar price point to pork. If Chinese consumers switch to poultry in the short-run to accommodate the Chinese pork shortage, it will take some time for Chinese pork consumption to rebound.”