Growing pessimism about the U.S. and China being able to resolve trade differences sooner rather than later cast an increasingly dark cloud over commodities last week.
Nationwide, steers and heifers sold mostly steady to $2/cwt. higher, according to the Agricultural Marketing Service (AMS).
“Some offerings in the Northern Plains were $2-$5 lower after the previous week’s sharp uptick, while some steers in the Southern Plains were $6-$7 higher at special sales,” explain AMS analysts.
Most all of that came before the announcement Thursday that the U.S. plans to assess new tariffs on an additional $300 billion worth of Chinese imports, beginning Sept. 1.
Cattle futures, especially Feeder Cattle melted.
Feeder Cattle futures closed an average of $2.61 lower on Friday. They were an average of $4.41 lower week to week ($3.02 lower at the back to $5.87 lower toward the front).
That was despite Corn futures closing an average of 13¢ lower through the front five contracts week to week on Friday. That’s 45¢ lower for those contracts in the last three weeks.
That was also despite what appears to be ongoing strength in beef demand.
Wholesale beef values gained during the week, mostly due to strength in rib prices, according to AMS.
Choice boxed beef cutout value was $2.56 higher week to week on Friday afternoon at $214.73/cwt. Select was $2.29 higher at $190.63.
Lighter year-over-year carcass weights continue to temper beef production amid increased cattle harvest.
The average dressed steer weight for the week ending July 20 was 866 lbs., which was 6 lbs. lighter than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 10 lbs. lighter at 795 lbs. Fed slaughter for the week was 20,754 head more than a year earlier. Total cattle slaughter was 20,474 head more. Beef production for the week of 527.3 million lbs. was 14.1 million lbs. more.
Lighter carcass weights also speak to currentness in feedlot marketing, which is helping support fed cattle prices.
Through late Friday afternoon, negotiated cash fed cattle trade was $1 lower in the Southern Plains at $111/cwt. Dressed sales in Nebraska were $2 higher than the bulk of the previous week’s trade at mostly $185. In the western Corn Belt, prices were steady: $115-$116 on a live basis and at mostly $185 in the beef.
However, Live Cattle futures closed an average of $2.25 lower week to week on Friday, with pressure from Lean Hog futures battered by the lack of a trade resolution between the U.S. and China.
“If feedstuff costs do not skyrocket, cattle feeders are expected to generally breakeven or post small profits late this year,” say analysts with the Livestock Marketing Information Center (LMIC). “In the situation where corn cost is already locked-in, November breakeven sales price is in the range of $105.50-106.50/cwt., and $111-112 for December.” That’s basis the Southern Plains, from non-survey estimation.
Despite ongoing pressure from the U.S.-China trade impasse, U.S. beef producers did receive some positive trade news to end the week.
The Unites States reach a new agreement with the EU on Friday that establishes a duty-free tariff rate quota (TRQ) exclusively for the United States. Under the agreement, American ranchers will have an initial TRQ of 18,500 metric tons annually, valued at approximately $220 million, according to the United States Trade Representative (USTR). Over seven years, the TRQ will grow to 35,000 metric tons annually, valued at approximately $420 million.
Under the current agreement, U.S. duty-free beef exports to the EU are only approximately 13,000 metric tons annually, valued at approximately $150 million, and risked declines going forward. The new agreement will go into effect following the European Parliament’s approval, which is expected this fall.
“We have to remember that only 4% of the world’s consumers live in this country,” says Randy Blach, CattleFax CEO. “Currently 14% of beef and beef by products are exported. More than 20% of the value of every fed steer is generated by exports. We need to have more outlets for not only our beef, but our poultry and pork.”
Through January of this year, U.S. beef exports equated to an average of $309.33 per head of fed slaughter, according to data released by USDA and compiled by the U.S. Meat Export Federation.
Blach was sharing insights at the Cattle Industry Summer Business Meeting near Denver on Tuesday. With record meat consumption expected next year, he emphasized the importance of opening export markets and resolving trade issues.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts Aug. 2 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
148,700 (+17,500) |
94,200 (+31,700) |
6,200 (-107,600) |
249,100 (-58,400) |
CME Feeder Index
| CME Feeder Index* | Aug. 1 | Change |
| $141.74 | + 2.16 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 2 | Change |
| 600-700 lbs. | $162.58 | – $2.89 |
| 700-800 lbs. | $153.73 | – $0.62 |
| 800-900 lbs. | $143.87 | – $4.86 |
South Central
| Steers-Cash | Aug. 2 | Change |
| 500-600 lbs. | $157.23 | + $0.72 |
| 600-700 lbs. | $150.82 | + $0.64 |
| 700-800 lbs. | $143.81 | + $2.00 |
Southeast
| Steers-Cash | Aug. 2 | Change |
| 400-500 lbs. | $148.68 | + $0.60 |
| 500-600 lbs. | $141.71 | – $1.29 |
| 600-700 lbs. | $135.43 | – $1.63 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 2 ($/cwt) | Change |
| Choice | $214.73 | + $2.56 |
| Select | $190.63 | + $2.29 |
| Ch-Se Spread | $24.10 | + $0.27 |
Futures
| Feeder Cattle | Aug. 2 | Change |
| Aug | $139.625 | – $4.100 |
| Sep | $138.225 | – $5.875 |
| Oct | $137.975 | – $5.600 |
| Nov | $138.425 | – $4.875 |
| Jan ’20 | $137.075 | – $4.525 |
| Mar | $136.400 | – $3.975 |
| Apr | $137.475 | – $3.325 |
| May | $137.475 | – $3.025 |
| Live Cattle | Aug. 2 | Change |
| Aug | $107.650 | – $1.000 |
| Oct | $107.825 | – $2.075 |
| Dec | $111.775 | – $2.525 |
| Feb ’20 | $115.450 | – $2.575 |
| Apr | $117.175 | – $2.600 |
| Jun | $110.500 | – $2.550 |
| Aug | $108.525 | – $2.275 |
| Oct | $110.250 | – $2.750 |
| Dec | $113.125 | – $1.875 |
| Corn futures | Aug. 2 | Change |
| Jul | $3.994 | – $0.150 |
| Sep | $4.094 | – $0.150 |
| Dec | $4.204 | – $0.140 |
| Mar ’20 | $4.264 | – $0.122 |
| May | $4.306 | – $0.116 |
| Jul | $4.166 | – $0.044 |
| Oil CME-WTI | Aug. 2 | Change |
| Sep | $55.66 | – $0.54 |
| Oct | $55.67 | – $0.66 |
| Nov | $55.66 | – $0.76 |
| Dec | $55.56 | – $0.87 |
| Jan ’20 | $55.41 | – $0.95 |
| Feb | $55.22 | – $0.99 |
Equities
| Equity Indexes | Aug. 2 | Change |
| Dow Industrial Average | 26485.01 | -707.44 |
| NASDAQ | 8004.07 | -326.14 |
| S&P 500 | 2932.05 | – 93.81 |
| Dollar (DXY) | 98.10 | + 0.19 |