Negotiated cash fed cattle prices made solid gains for the week, with live prices $2 higher in the Southern Plains at $103/cwt., $4-$5 higher in the Northern Plains at $106-$107 and $1-$5 higher in the western Corn Belt at $104-$105. Dressed trade was steady to $5 higher at mostly $165.
Cattle futures continued higher on Friday, supported by stronger fed cattle prices and apparent commercial interest.
Except for 10¢ lower in the back contract, Live Cattle futures closed an average of $1.09 higher, (27¢ to $2.07 higher).
Except for $2.00 lower in newly minted away Sep, Feeder Cattle futures closed an average of $1.21 higher.
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 93¢ lower Friday afternoon at $212.58/cwt. Select was 53¢ lower at $189.86.
Corn futures closed 1¢ lower.
Soybean futures closed fractionally mostly 3¢ to 5¢ lower.
Major U.S. financial indices closed lower on Friday, with reports that the White House was considering ways to limit U.S. investment in Chinese companies.
The Dow Jones Industrial Average closed 70 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 91 points.
When the weather finally permits Australia to begin rebuilding its drought-decimated cowherd, the U.S. may have more beef export opportunity, according to the Livestock Marketing Information Center (LMIC).
“Through July, Australia is reporting 4.9 million head slaughtered, an increase of 8% over the same time period in 2018,” say LMIC analysts, in the most recent Livestock Monitor. “Since April 2018, each month (except November 2018) over 50% of Australia’s total slaughter has consisted of cows and heifers. Typically, when a majority of total slaughter is comprised of females this is an indication that the herd is contracting. Increased cow and heifer slaughter has led to a 4% growth in beef production through the first seven months of 2019. Much of the growth has been absorbed by expanding foreign demand, especially in China as they are looking to fill a meat protein supply gap left behind by a declining hog herd due to the spread of African Swine Fever (ASF).”
For perspective, the most recent peak in Australian cattle inventory was 29.3 million head in 2014, according to LMIC. The USDA Global Agricultural Information Network (GAIN) pegs the 2019 inventory at 25.73 million head and forecasts next year’s inventory at 24.48 million head, which would be 16.4% less than the recent peak and the fewest in three decades.
“As China’s demand for beef is rising, especially for grain-fed beef, Australia has been well positioned to fill demand,” LMIC analysts explain. “This is expected to change in 2020 as USDA’s GAIN report is forecasting Australia’s cattle sector to start herd rebuilding efforts if weather conditions improve. Rebuilding efforts will require more females causing lower slaughter levels and reduced available beef supplies for export in 2020.”
LMIC currently forecasts U.S. beef exports to grow 6% in 2020 with ample supplies and competitive prices spurring shipments.