Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, but early indications appeared positive.
For instance, 264 head of Choice 2-4 steers weighing an average of 1,402 lbs. brought an average of $108.16/cwt. at the fat auction in Tama, IA. Country trade in the region last week was at $104-$106.
At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold $2-$4 higher than a week earlier, with instances of up to $5 higher. One example: 330 head of Choice 2-3 steers weighing an average of 1,467 lbs. brought an average of $103.84.
There were only 846 head offered in the weekly Fed Cattle Exchange auction, and no takers.
Cattle futures recovered the majority of the previous session’s decline, helped along by lower Corn futures and the firmer feel to cash prices.
Live Cattle futures closed an average of 79¢ higher.
Except for 27¢ higher in the back contract, Feeder Cattle futures closed an average of 96¢ higher.
Wholesale beef values were weak on Choice and steady on Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 50¢ lower Wednesday afternoon at $212.97/cwt. Select was 15¢ lower at $185.90.
Corn futures closed mostly 2¢ to 4¢ lower.
Soybean futures closed 1¢ to 5¢ lower through May ’20 and then mostly 1¢ to 4¢ higher.
Major U.S. financial indices closed sharply lower on Wednesday, with follow-through pressure from the previous day’s weak manufacturing data and growing concerns about economic growth, tied to the ongoing uncertainty about a U.S.-China trade deal.
The Dow Jones Industrial Average closed 494 points lower, making for a decline of 837 points in the last two sessions. The S&P 500 closed 52 points lower—down 88 points in the last two days. The NASDAQ was down 123 points—213 points lower in the last two sessions.
Analysts with CoBank’s Knowledge Exchange division (CKE) say trade volume is expanding and will begin to yield benefits to producers across the meat and poultry industries.
“Beef exports have improved from the sluggish start at the beginning of the year. May and June exports were flat year over year, an improvement from February, March and April when exports were down approximately 5%,” say CKE analysts, in CoBank’s Quarterly U.S. Rural Economic Review. “The outlook for beef exports brightened after the U.S. and Japan signed an important trade agreement in late August with Japan announcing in late September it will phase in tariff reductions on beef, which currently carries a hefty 38.5% tariff. This will likely pave the way for U.S. beef to regain a competitive footing with countries in the CPTPP, which the U.S. opted out of last year.”
Moreover, CKE analysts say the impact of African Swine Fever on global pork supplies is just beginning to be felt in the U.S. animal protein sector. U.S. pork exports to China were up 28% through the first half of the year, but they say those gains were offset by declining exports to Mexico, Korea and Japan.
“As we look to the remainder of 2019, though, the U.S. has resolved some key
trade disputes in the steel and aluminum tariffs with Mexico, and signed a new trade agreement with Japan. Also, and likely more importantly, the U.S. set a new record for pork exports to China in July,” explain CEK analysts. “If these trends continue, and exports improve to Mexico and Japan, then U.S. supply and demand will continue to improve to a greater degree through the remainder of 2019 than the futures market indicates.”
As for U.S. beef and China, according to the CoBank report, “While it’s unlikely that the U.S. will export beef to China, China’s overall beef imports continue to climb, thus helping to tighten trade flows that may have historically competed with the U.S. market.”