Federally inspected beef production rose last week but remains below the previous five-year average as tight fed cattle supplies keep slaughter in check.
Beef production last week rose above the same week a year earlier, but this is because of where the Independence Day holiday was observed.
This continued tight beef production level is keeping domestic prices near record highs, discouraging beef exports and encouraging beef imports.
In May, US beef plus beef variety meats exports fell 14,501 tonnes, or 14.1%, to 88,466 tonnes from 102,967 tonnes a year earlier, according to USDA data. Exports to all major destinations (Canada, Hong Kong, Japan, Mexico and South Korea) were down except South Korea, which held steady.
The value of those exports also declined, going to $556.7 million from $589.3 million, a dip of $32.5 million, or 5.52%.
Year-to-date beef and variety meat exports are down 48,951 tonnes, or 10.2%, to 430,393 tonnes from 479,344 last year.
However, the value of year-to-date exports was up $40.5 million, or 1.54%, to $2.678 billion from $2.638 billion. So US beef customers were paying more to get less quantity or to get lower-quality products, or both.
Data show, though, that customers were opting for less quantity. The weekly hide and offal value of cattle (made up of hides and internal organ products) continues to decline and is very near to dropping below the five-year average.
After dipping to their lowest point in five years, this year, US beef and veal exports were expected to rise next year as more cattle become available to the packer, production rises and prices fall.
And while nowhere near the highs seen in March, the US Dollar Index strengthened in June, inciting some to predict a choking of US beef exports.
The Index is mostly lower in electronic trading as a US-led group of countries reaches a nuclear agreement with Iran. Economic sanctions against the country are to be eased in return for inking the document. This likely will cause crude oil to decline, along with safe-haven currencies like the greenback.
CASH CATTLE STEADY/WEAK
Cash cattle markets are quiet and could remain quiet for most of the week.
Plains markets weakened through the week last week, with a few trades at $151 to $152 per cwt on a live basis giving way to a mostly $150 market, which was about steady with the previous week.
On a dressed basis, cattle traded last week at $238 to $241 per cwt, also about steady.
The USDA’s afternoon beef cutout value was down $0.98 per cwt at $236.00, while the select value was $232.70, off $1.29. Volume was active at 110 loads of fabricated product being sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Friday was $224.51 per cwt, up $3.07, well above the Aug futures contract settlement of $211.32.