“And the beat goes on.”
The lyrics and title of the Sonny and Cher song seem to apply in the case of tit-for-tat tariffs between the US and China as China announced its intention to implement 25% tariffs on even more imports early Wednesday. And this time, the list includes US beef.
The list also includes US soybeans, aircraft and automobiles, and the news was blamed for losses Wednesday in soybean futures. However, realization that any announced tariffs won’t take effect until the US implements its tariffs sometime in May after the US’ 30-day comment period at the earliest helped to buoy the markets later.
BEEF EFFECTS MINIMIZED
The list, published on the CNBC web page Wednesday listed “whole and half head fresh and cold beef, fresh and cold beef with bones, fresh and cold boneless beef, frozen beef with bones, frozen boneless beef, frozen boneless meat and other frozen beef chops.”
That pretty much covers it, unless references to boneless beef do not include variety meats, which is unlikely, an analyst said. China buys mostly beef variety meats that even opening its borders to US beef last year didn’t change much.
China demands its beef muscle cuts come with trace-back, although a significant quantity apparently enters through Hong Kong or Vietnam, which probably will avoid the tariffs, market analysts said. The back-door approach also may apply to pork exports.
US MEAT INDUSTRY REACTS
US Meat Export Federation President and CEO Dan Halstrom said in a statement that since the June 2017 reopening of its markets to US beef, the US has made an “exceptional” effort to provide customers with high-quality beef.
Over the last nine months, interest in US beef has gain momentum steadily in China, and its customer base has grown. But if an additional import tariff is imposed, the business relationships and growth opportunities would be put at risk.
TRADE WAR COMING? MAYBE
The equity and commodity markets have been going nuts lately as investors fret about the possibility of a trade war between the US and China. Both sides have said in news reports that they don’t want it, but investors can’t help but stew.
President Trump says his tariffs were in response to China’s theft of intellectual property, while China claims its response is commensurate with what it says are the US’ proposed unfair tariffs on aluminum and steel.
CBS News reported that China’s Commerce Ministry “on Wednesday criticized the US move as a violation of global trade rules and said China was acting to protect its ‘legitimate rights and interests.’”
China also has claimed the US tariffs were in violation of World Trade Organization rules, and that it is justified in its own tariffs.
News reports say both sides are talking already in an effort to avoid a trade war, and a Trump Tweet denies the US and China are in a trade war.
CATTLE, BEEF RECAP
Cattle sold Wednesday on the Livestock Exchange Video Auction at $117 per cwt, down $8.63 from two weeks earlier.
Cash trade was seen this week from $115 to $118 per cwt on a live basis, down $3.50 to $4 from last week. Dressed-basis trading was light at $188, down $4.
The USDA’s choice cutout Wednesday was down $1.51 per cwt at $218.17, while select was off $3.15 at $206.18. The choice/select spread widened to $11.99 from $10.35 with 127 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $134.50 per cwt, down $0.44. This compares with Wednesday’s Apr settlement of $134.50, up $3.97.