News that Canada will join the U.S. and Mexico and a new North American trade agreement—the United States-Mexico-Canada Agreement (USMCA)— fueled optimism in commodity and equity markets to start the week.
Between the news, firmer wholesale beef values and last week’s steady negotiated cash fed cattle trade, Cattle futures moved higher.
Live Cattle futures closed an average of 34¢ higher.
Feeder Cattle futures closed an average of $1.24 higher (47¢ to $1.52 higher).
Wholesale beef values were higher on fairly good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.20 higher Monday afternoon at $205.08/cwt. Select was $1.19 higher at $194.63.
Major U.S. financial indices mostly surged higher Monday with the late weekend news about the United States-Mexico-Canada Agreement (see below). CME Crude Oil futures (WTI) closed $2.05 to $2.19/bbl. higher through the next 12 months. Spot Nov closed $6.62 higher than two weeks ago at $75.30.
The Dow Jones Industrial Average closed 192 points higher. The S&P 500 closed 10 points higher. The NASDAQ was down 9 points.
Regarding announcement of a United States-Mexico-Canada Agreement (USMCA), U.S. Secretary of Agriculture Sonny Perdue issued the following statement:
“The new USMCA deal is important for our economy as a whole, including the agricultural sector, which counts Canada and Mexico in our top three trading partners. I have long said that I believe our country is located in the best neighborhood on Earth – North America – with valuable allies to our north and south. We have secured greater access to these vital markets and will maintain and improve the highly productive integrated agricultural relationship we have as nations. Notably, as one of the President’s top goals, this deal eliminates Canada’s unfair ‘Class 7’ milk pricing scheme, cracks open additional access to U.S. dairy into Canada, and imposes new disciplines on Canada’s supply management system. The agreement also preserves and expands critical access for U.S. poultry and egg producers and addresses Canada’s discriminatory wheat grading process to help U.S. wheat growers along the border become more competitive.”
“Numerous factors will affect the likelihood of a seasonal stocker calf price low in the next month,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Supplies will grow as feeder volumes increase to a seasonal peak by early to mid-November. With the larger 2018 calf crop, the fall run of calves is expected to exceed last year. However, demand for wheat pasture stockers may partially or totally offset increased stocker calf supplies.
“I really don’t expect much more increase in stocker prices, but additional increases are possible in the next couple of weeks. As we move through October into November, feeder prices are likely to stabilize or perhaps move lower, but the seasonal low may be quite muted.”