Negotiated cash fed cattle trade last week ended up steady to $1 lower in the Southern Plains at $99-$100/cwt., and steady to as much as $5 lower in Nebraska and the western Corn Belt at $100-$102. Dressed trade was $3-$8 lower in the western Corn Belt at mostly $160. It was $7-$10 lower in Nebraska at $155-$160.
Week to week on Monday, the 5-area direct average steer price was $1.66 lower on a live basis at $100.07/cwt. It was $6.66 less in the beef at $159.17.
Light trade, last week’s lower cash prices and the stronger dollar all helped dampen interest in Cattle futures Monday.
Live Cattle futures closed an average of 51¢ lower.
Except for 5¢ higher in spot Sep, Feeder Cattle futures closed an average of 67¢ lower.
Wholesale beef values were weak to lower on light demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 26¢ lower Monday afternoon at $220.62/cwt. Select was $2.03 lower at $196.57.
Although they closed off of session highs, Corn and Soybeans continued higher.
Corn futures closed mostly 3¢ to 4¢ higher.
Soybean futures closed 1¢ to 3¢ higher.
Major U.S. financial indices closed lower Monday, with worries that sharply higher oil prices could slow the global economy.
Oil prices shot higher after the weekend attack on Saudi Arabian oil fields. Some estimates put the temporary lost oil production at approximately 5-6 million barrels per day.
Through the front three contracts, crude oil futures (WTI-CME) were up an average of $7.78; up and average of $7.03 through the front six contracts.
The Dow Jones Industrial Average closed 142 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 23 points.
China has a growing appetite for beef, although they’re not getting much from the U.S.
“Projections for 2019 show China importing 18.7% of global beef imports,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Along with another 6.1% of imports into Hong Kong, the China/Hong Kong region currently accounts for a 24.8% share of world beef imports.”
For comparison, Peel says China accounted for 8.7% of world beef imports in 2015; 13.1%, including Hong Kong. For broader context, total world beef imports increased by 17.7% in the five years from 2015 to projected 2019 totals. During that period, beef imports in China increased 153.4%; a 62.2% increase for Hong Kong.
“The rapid growth in Chinese beef imports has dramatically altered global beef flows with several countries now exporting a significant share of total exports to China,” Peel explains. “China receives the majority of beef imports from Brazil, Uruguay, Argentina, Australia, and New Zealand.
There are a number of reasons the U.S. has yet to become a key beef provider to China, despite gaining access in 2017.
For one thing, Peel says the market for higher quality, more expensive U.S. beef needs to be developed, a lengthy and arduous process currently curtailed by the trade war between the two nations.
“Restrictions on production technology allowed in beef exported to China (implants, beta agonists, etc.) mean that the supply of U.S. beef available for the Chinese market is limited,” Peel explains. “The U.S. is currently caught in a chicken and egg situation of not having much supply for the Chinese market and not having enough market potential to warrant increased production to meet Chinese demand. Nevertheless, it is important for the U.S. to participate in the growing Chinese beef market. At current levels, if the U.S. could achieve a 10% market share of Chinese beef imports, it would add over 11% to total U.S. beef exports.”