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CME: Cash Fed Cattle Prices Down in W19/2017

15 May 2017

US - After surging during late April and the first week of May, cash fed cattle prices declined last week by several dollars per cwt, reports Steiner Consulting Group, DLR Division, Inc.

Still, fed cattle prices remained above a year ago. Cash feeder cattle prices were mostly unchanged early in the week, but then tended to erode. Hog prices strengthened significantly last week, with national prices averaging nearly $5.00 per cwt. (dressed basis) higher week-over-week. Cash hog prices remained below 2016’s. Both the Choice beef (see the provided graphic) and pork cutout values increased last week.

After setting life of contacts highs recently, last week both the Live Cattle (fed) and Feeder Cattle futures prices declined. Using the average of the daily closes, the October 2017 Live Cattle contract was $117.14 per cwt., dropping $1.09 week-over -week. The October Feeder Cattle contract averaged $150.00 per cwt. down $3.16 from the prior week’s average. Still, hedgers should note that the October Feeder Cattle contract last week was $30.00 above where it began the year (the week ending 6 January 2017 that contract was $120.01 per cwt.).

For the May through November 2017 hog futures contracts, prices increased week-over-week. Last week, the August Lean Hog futures contract increased compared to the prior week’s average by $1.58 per cwt. and posted its highest level since the week ending 17 March 2017. The December 2017 contract posted a slight price decline.

Looking at the news, at the top of the list was Thursday’s joint announcement by the US departments of Commerce and Treasury that progress had been made on the “US-China Economic Cooperation 100-Day Plan” (link to the Fact Sheet is here). Eleven items were listed and at the top was beef. Per the announcement, following one more round of technical consultations, China is to allow imports of US beef beginning no later than 16 July 2017. Background and comments regarding the situation and recent announcements have been provided in earlier editions of this newsletter and elsewhere. The US beef industry awaits the details and then assessments of impacts can be developed.

The other item we bring to attention was the release last week of a USDA Foreign Agriculture Service (FAS) report regarding US beef exports to Japan, our largest foreign market. Global Agricultural Information Network (GAIN) reports are done by experts stationed at our foreign embassy offices.

A GAIN report from Tokyo, titled Beef Market Share Competition to Intensify in 2018, was released 8 May (available here). The report provides insight into the competitive position of US beef in Japan relative to other countries, especially Australia.

From the report: "Monthly total US beef exports to Japan outpaced Australian beef shipments in February 2017 for the first time in 14 years. These recent successes have occurred in spite of a comparatively stronger dollar and an eight percentage point tariff disadvantage relative to Australian chilled beef, the dominant beef supplier in the Japanese market."

Looking ahead, Australia’s significant tariff advantage and their rebuilding beef herd will challenge the US. Further, at the end of the report the authors state: "Improved market access for Australia and other Pacific Rim beef exporters (New Zealand, Canada, and Mexico) under a modified TPP, or a comparable successor agreement, could further reduce US competitiveness in its most valuable export market."

On the bottom of this page is our weekly cash price and production summary, which rely on USDA Agricultural Marketing Service (Market News) reports. As indicated, that summary is preliminary because: 1) Friday’s price data are often not published until Monday; and 2) slaughter data are revised as USDA collects more detailed data from packers.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

TheCattleSite News Desk

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