Cattle Current—May 7, 2019

Cattle Current—May 7, 2019

Already bearish Cattle futures received added fuel to the downside from Trump’s weekend tweet that he would increase tariffs on $200 billion worth of Chinese imports from 10% to 25% this Friday, if a trade deal remains unsigned. The president also threatened 25% tariffs on another $325 billion worth of Chinese imports. Lean Hog futures plunged, adding pressure to Cattle futures.

Live Cattle futures closed an average of $1.05 lower.

Feeder Cattle futures closed an average of $1.30 lower.

Wholesale beef values were weak on Choice and firm on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 36¢ lower Monday afternoon at $227.00/cwt. Select was 69¢ higher at $213.98.

Corn futures closed 4¢ to 7¢ lower through May ’20 and then mostly 1¢ to 2¢ lower.

Soybean futures closed 7¢ to 12¢ lower through Aug ‘20, and then mostly 2¢ lower.

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Major U.S. financial indices closed lower on Monday, but well off of session lows, pressured by President Trump’s aforementioned comments concerning Chinese trade. 

The Dow Jones Industrial Average closed 66 points lower. The S&P 500 closed 13 points lower. The NASDAQ was down 40 points.

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“Beef markets are getting ever more complex, a trend that is likely to continue, if not accelerate,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University (OSU), in is weekly market comments. “When the vast array of horizontal beef product markets is considered, along with the complex set of vertical cattle and beef production sectors, all of which operate in complicated dimensions of time and space, there can be little doubt that the U.S. cattle and beef industry is one of, if not the most complex set of markets on the planet.”

Indeed.

“The total carcass value that drives beef and cattle markets is the net effect of several hundred products that result from slaughter and fabrication and ultimately become thousands of different products that are part of retail grocery; hotel, restaurant and institutional (HRI) markets and exports, along with markets for edible offals and other byproducts of cattle slaughter,” Peel explains.

OSU researchers recently conducted interviews with companies representing a cross-section of the beef product industry, including multiple firms at all beef market levels. The research identified issues and trends associated with the evolution of beef markets. Among them, according to Peel:

  • Increasing exports and impacts in specific beef markets.
  • Increasing demand for additional fabrication of beef products.
  • The impact of increasing carcass size.
  • Demand for bone-in versus boneless beef products.
  • Fresh versus frozen products and the use of deep chill technology.
  • Increased demand for value-added products, including more beef products resulting from additional fabrication, as well as added-ingredient products.
  • The blending of beef marketing channels with growing popularity of home food delivery resulting from increased demand for restaurant take-out along with meal kits for home delivery or in-store purchase.
2019-05-06T19:07:09-05:00

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