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CME: Livestock Futures Markets Lower During W49

12 December 2017

US - In the cash markets, last week’s fed steer (live) prices were lower but remained above 2016 (up 7.3 per cent), reports Steiner Consulting Group, DLR Division, Inc.

Oklahoma feeder steer (600– to 700-pound) prices were about unchanged week-over-week and 21.6 per cent above a year ago. Cash hog prices were higher for the week and remained well above 2016’s. Wholesale (cutout) values were largely unchanged last week and continued to be above a year ago. The Choice beef cutout value was up 9 per cent year-over-year and pork increased 11.4 per cent.

Livestock futures markets were lower last week (except Lean Hogs in August and October of 2018, both of which were slightly higher). All the Live Cattle (fed) contracts through December 2018 were down week-over-week using the average of the daily closing prices. The April fed contract averaged $120.97 per cwt., declining $4.84, reaching its lowest level in 10 weeks.

Similarly, all the Feeder Cattle futures contract months through November 2018 posted lower prices last week. The March Feeder contract declined by $6.80 per cwt. and averaged $145.09, which was the lowest in 13 weeks. The February through July Lean Hog contracts all slipped from the very high levels posted two weeks ago. For example, at $83.65 per cwt. for the week, the April 2018 contract declined by $0.83.

Japanese GDP Up Last Friday, the Japanese government reported that their economy grew an annualized rate of 2.5 per cent, which was 1 per cent above expectations. The latest quarter (July-September, was revised higher from the preliminary data (up 1.4 per cent). Growth in Gross Domestic Product (GDP), the total value of goods and services produced in the country adjusted for inflation, has been steadily gaining but rather modest. The Japanese economic expansion has reached seven consecutive quarters, which is the longest stretch since comparable data have been available (1994). For comparison, the US GDP increased at an annual rate of 3.3 per cent in the third quarter of 2017.

On a tonnage basis, from 2013 through 2016 Japan was the largest foreign market for US beef. In 2016, it represented 25.6 per cent of US beef exports. Turning to pork, during both 2015 and 2016, Japan was the second biggest buyer from the US, and before 2015 it was consistently the largest foreign market. The rather strong Japanese economy has likely supported increased imports of red meats. Also, the US Meat Export Federation has attributed the demand improvement in part to some substitution away from seafood caused by relatively high prices.

Each month so far this year, Japan has bought more US beef than a year ago, and annual sales are at a record pace (official data are through October). Japan’s imports of pork year-to-date have exceeded 2016’s. However, US pork shipments to Japan have struggled the last two years. The European Union, Canada, Mexico, and Chile have all posted large increases tonnage sold to Japan. The US share of that important pork market could continue to erode as those countries move forward with new trade agreements that involve Japan.

Below is our weekly production and cash price summary from USDA Agricultural Marketing Service (Market News Division) reports.


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


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