Comments provided by Jeff Swenson of DATCP.
The Chinese government is accepting tariff waiver applications. The waivers would go into effect on March 2 and would be valid for one year. A total of 697 U.S. products qualify for the tariff waiver application process. Agricultural products qualifying include pork, beef, and soybeans. It’s thought that meat will be one of the priorities for import, making it a good bet that waivers will be granted. The number of new coronavirus cases declined over the weekend, but 2,000 deaths in China have been attributed to the illness. American goods are building up in Chinese ports with too few workers available to unload and distribute them. Apple announced that demand for its products may outpace supply due to manufacturing stand-stills in China from the Coronavirus. While not an agriculture headline, the news had a ripple effect in the markets.
Farmers across the United States are planning for the 2020 crop season. While planting intentions are being debated, most analysts are saying more soybean acres and fewer corn acres will be planted in 2020. This isn’t unanimous, however, with some saying the opposite will be the case. Weather concerns are creeping up in most planting conversations. Some states, North Dakota and Wisconsin for instance, still have crops in the field. There are reports of standing water and saturated soils in central Illinois. Meteorologists are starting to talk about a wet spring similar to 2019. Unfinished 2019 field work and a late planting season in the Corn Belt will lead to uncertainty and prevent plant acres once again.
Hormel has joined Tyson Foods in stopping the use of hogs fed ractopamine. Hormel announced that beginning April 1, they will no longer accept hogs that have been fed or exposed to the feed ingredient that promotes lean muscle development in the final stages of finishing. China does not allow the ingredient’s use, nor do they accept pork imports from hogs that have been fed ractopamine. This move positions the U.S. to better answer China’s need for pork. The Chinese government has announced it will release another 20,000 metric tons of frozen pork from its reserves on February 21.
The Czech Republic’s agriculture minister said it will be culling close to 140,000 chickens and turkeys after an avian influenza detection. It’s reported a second case of H5N8 was found and the farm was closed and steps are being taken to prevent its spread. A 3 kilometer protection zone and 10 kilometer surveillance zone has been set up. The Chinese government had announced earlier this month that they were dealing with an outbreak of avian influenza (H5N1) as well.
Average fed steer carcass weights came in at 897 pounds during the latest weekly report. While that was down 4 pounds from the previous week it was 12 pounds heavier than the same week a year ago. Heifer carcasses averaged 879 pounds and that’s a pound above the prior week and 13 pounds heavier than the year previous. Steer carcass weights peaked in 2015 at 892 pounds. Lower carcass weights can be the result of adverse weather – cold, wet – or that cattle feeders are staying “current” meaning they are not holding on to cattle longer waiting for higher prices. An increase in carcass weights has an impact on beef supply since a few pounds per carcass adds up. A USDA Cattle on Feed report comes out Friday. Average industry estimates ahead of the report are 2.3 percent higher than a year ago for total cattle on feed, placements (yearlings and calves placed in feedlots) at 1.5 percent above a year ago and marketings 1 percent above a year ago.
Fed Cattle futures contracts had been trending lower before catching an updraft this week. Cash cattle were $1.00 to $2.00 lower last week compared to the week prior. There haven’t been many cattle bought directly from feedlots this week, but reports are that packers would like to buy cattle steady with last week while feedlot operators are asking for prices $1.00 or $2.00 higher. Midwest auction market prices are steady to higher than last week on the better end of beef breed cattle with the top lots selling to $122.00/cwt. Holstein steer prices have hung in and been steady in recent weeks, with some individual dairy steers selling for over $100.00/cwt. this week, with many of the better steers bringing $92.00 to $97.00/cwt. If futures prices trend higher this week and cash cattle finish the week higher, it could mean the seasonal low has been established.
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