Brazil/US Beef Trade Benefits To Come Slowly

Meaningful beef trade volumes from last week’s agreement with Brazil to open both markets to fresh and chilled beef likely will take a while, said two prominent agricultural economists.

Ron Plain and Scott Brown, agricultural economists at the University of Missouri, co-authored an outlook report that looked into that development and concluded that any significant beef movement would “be a while in developing.”

Last week, the USDA announced Brazil would allow imports of US beef for the first time since the 2003 case of Bovine Spongiform Encephalopathy, or BSE.  At the same time, the US agreed to open its market to fresh and chilled beef from Brazil.

But Brazilian beef will be sharing a 64,805-tonne tariff-rate quota with several other countries.  This shared quota equals only 15.5% of the Australian beef quota.

 

ECONOMY ADDS JOBS, YET MARKETS STRUGGLE

 

The US economy added 255,000 jobs in July, about 75,000 more than trade expectations, the economists pointed out.  Average wages increased by 8 cents an hour.

More people with money should be good for meat demand, yet fed cattle prices reported to the USDA were weaker last week, and cattle and beef markets continue to struggle.

The USDA’s preliminary five-market average price for fed steers was $116.91 per cwt, down 1.7% from $118.92 the previous week when fed cattle prices were higher in heavy sales volume.

Two weeks ago, the 5-area average price for slaughter steers sold on a live weight basis was $118.92 per cwt, up 92 cents from the previous week, but down $29.56 from a year ago.

After three weeks of decline, beef cutout was higher last week, and the trend is continuing this week.  Monday, the choice boxed beef cutout value was $201.67 per cwt, up $0.48 from Friday, which was up $2.67 from the previous Friday’s $199.00.  The select carcass cutout Monday was $194.18, up $0.56 from Friday, which was up $3.98 from $190.20 the previous Friday.

Last week’s cattle slaughter totaled 581,000 head, down 4,000, or 0.68% from 585,000 the previous week, but up 37,000, or 6.80% from 544,000 a year ago.  Year-to-date, cattle slaughter was up 3.9% and beef production was up 4.4%.

The average steer dressed weight for the week ending Aug. 13 was 822 pounds, up two from the week before, but down 15 from a year ago.

Prices for 700- to 800-pound feeder steers in the Southern Plains last week were $151.92 per cwt, according to USDA Agricultural Marketing Service data.  This was up $5.74, or 3.90% from $147.17 the previous week

 

CONSUMER DEMAND FALTERING

 

The Oklahoma State University’s monthly Food Demand Survey showed the amount consumers were willing to pay for steak, chicken breasts and deli ham declined in August although willingness to pay for hamburger held about steady.

The survey also showed consumer willingness to pay rose 2.29% month-over-month for pork chops, and for chicken wings jumped 14.4%.

At-home food expenditures in the August survey were up 1.86% to $96.49 a week, while away-from-home food expenditures were down 4.48%, the survey said.

 

CASH CATTLE MARKETS QUIET

 

Cash cattle markets Monday were quiet after trading steady to lower last week at $118 to mostly $119 per cwt on a live basis, and at 187 on a dressed basis, down $1 to $3.

The USDA’s choice cutout Monday was $0.48 per cwt higher at $201.67, while select was up $0.56 at $194.18.  The choice/select spread narrowed to $7.49 from $7.57 with 81 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $149.51 per cwt, up $1.56.  This compares with the Aug settlement Monday of $148.65, down $0.42.