Cattle news today? 08/02/19
- Thread starter Overnight
- Start date
Hmm, checked the ag report today, here are the relevant bits (It is dated today, but I think the summary is from Monday...)
The story all week has been tracking the trade news with China. This week's trade meeting in Bejing concluded with no progress and only agreement to meet again in September. Most analysts now believe the Chinese are stalling until after our election next year hoping a Democratic replacement will provide an easier path to a trade deal. Trump announced a new tariff on $300 billion dollars of additional imports from China effective September 1, if China does not progress on buying more ag products...
Foreign meddling in our elections should be interesting next year with China working to out Trump and Russia working to keep him in office...
Waiting out the election will not do anything for the red meat gap caused by the loss of millions of hogs in China. Those needs can be fulfilled from other meat producing countries like Brazil or the EU. Indirectly the U.S. will benefit as those meat producing countries ship to China instead of the U.S..Global balancing will raise meat prices around the world...
Cattle Futures. Live cattle were higher as packer must pay large premiums to purchase cattle for current needs and we are in the delivery month. Macro traders were long the market believing some good news would come from the trade meeting and those positions are now liquidated leaving the futures to trade back to fundamentals...
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Summary...
USDA announced a plan to compensate U.S. farmers and ranchers with a $16 billion dollars aid program to help those harmed by the trade wars. The plan also included benefits for those unable to plant this year’s crops because of flooding. China is one of the top buyers of American agricultural products and the weakened demand has left prices low for most farm products.
USDA Secretary Sonny Purdue said the $16 billion will be divided among soybean farms, hog farmers, dairy farms, cranberry bogs, and other agricultural operations. Payments will range between $15-150/acre based upon location and expected production. In typical fashion, the details were left to local farm officials.
Largest hit among our farmers are those raising soybeans where Chinese purchases have declined by 75% over the past year. Tariffs also have hammered pork exports, but beef exports also have suffered as witnessed by examining shipments to Hong Kong that are down by half. Hog producers will receive $11 per hog and dairy farmers will pick up 2 cents per pound of milk produced.
Equity in any government handouts is always difficult. Someone must define the differences in payments between geographic regions of the country and between crops. USDA will take care to not offend areas supportive of Trump. Larger operations will be eliminated from receiving any funds if earnings, as defined by the government exceed $900,000 and there will be a $500,000 cap on individual or company payments. How adjustments of payments to producers who benefited from hedged positions on the futures market is also unclear.
The Chinese government understands self-interest, and on Friday announced that it will waive tariffs on named ag products – soybeans, corn and pork. This will allow purchases to crank back up of those products that China sorely needs. Administration trade officials will travel to China this week to renew negotiations on a trade deal. Beef producers would hope and expect that beef should be included in these discussions of exemptions of tariffs granted to soybeans, corn and pork.
Beef producers will find help when the trade disputes with China and Japan are resolved and new agreements in place. The President is right to fight these battles, but government programs never fairly compensate those suffering the damage and this time beef has been left out.
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They make no mention of the EU thing and beef exports. Will be interesting to see what they have to say about it next week, and how futures will respond.
The story all week has been tracking the trade news with China. This week's trade meeting in Bejing concluded with no progress and only agreement to meet again in September. Most analysts now believe the Chinese are stalling until after our election next year hoping a Democratic replacement will provide an easier path to a trade deal. Trump announced a new tariff on $300 billion dollars of additional imports from China effective September 1, if China does not progress on buying more ag products...
Foreign meddling in our elections should be interesting next year with China working to out Trump and Russia working to keep him in office...
Waiting out the election will not do anything for the red meat gap caused by the loss of millions of hogs in China. Those needs can be fulfilled from other meat producing countries like Brazil or the EU. Indirectly the U.S. will benefit as those meat producing countries ship to China instead of the U.S..Global balancing will raise meat prices around the world...
Cattle Futures. Live cattle were higher as packer must pay large premiums to purchase cattle for current needs and we are in the delivery month. Macro traders were long the market believing some good news would come from the trade meeting and those positions are now liquidated leaving the futures to trade back to fundamentals...
--------
Summary...
USDA announced a plan to compensate U.S. farmers and ranchers with a $16 billion dollars aid program to help those harmed by the trade wars. The plan also included benefits for those unable to plant this year’s crops because of flooding. China is one of the top buyers of American agricultural products and the weakened demand has left prices low for most farm products.
USDA Secretary Sonny Purdue said the $16 billion will be divided among soybean farms, hog farmers, dairy farms, cranberry bogs, and other agricultural operations. Payments will range between $15-150/acre based upon location and expected production. In typical fashion, the details were left to local farm officials.
Largest hit among our farmers are those raising soybeans where Chinese purchases have declined by 75% over the past year. Tariffs also have hammered pork exports, but beef exports also have suffered as witnessed by examining shipments to Hong Kong that are down by half. Hog producers will receive $11 per hog and dairy farmers will pick up 2 cents per pound of milk produced.
Equity in any government handouts is always difficult. Someone must define the differences in payments between geographic regions of the country and between crops. USDA will take care to not offend areas supportive of Trump. Larger operations will be eliminated from receiving any funds if earnings, as defined by the government exceed $900,000 and there will be a $500,000 cap on individual or company payments. How adjustments of payments to producers who benefited from hedged positions on the futures market is also unclear.
The Chinese government understands self-interest, and on Friday announced that it will waive tariffs on named ag products – soybeans, corn and pork. This will allow purchases to crank back up of those products that China sorely needs. Administration trade officials will travel to China this week to renew negotiations on a trade deal. Beef producers would hope and expect that beef should be included in these discussions of exemptions of tariffs granted to soybeans, corn and pork.
Beef producers will find help when the trade disputes with China and Japan are resolved and new agreements in place. The President is right to fight these battles, but government programs never fairly compensate those suffering the damage and this time beef has been left out.
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They make no mention of the EU thing and beef exports. Will be interesting to see what they have to say about it next week, and how futures will respond.
I don't think that this will lead to immediate shipments to Europe. Not only does the meat have to fulfill certain European requirements, the deal Trump spoke about needs to be approved by the European Parliament. I guess that obtaining this approval could take some time.
Ahh, good point, it may not lead to immediate shipments. But I am wondering if the specerlators will peg this to a limit up on Monday. They have done so on much less news.
And EU doesn't like our meat? Well, they can take this cow and shove it. (Reference to a song, yuk yuk).
I wonder if they have gotten over the UK BSE thing yet. I have not, because BSE is the most insidious disease to ever occupy this planet. So if I was a Euro, I would WELCOME US meat in a heartbeat, instead of the possible mad-cows coming from the UK.
Unexpected benefit of Brexit?
Unexpected benefit of Brexit?
Don't even talk to me about Brexit. Not only do I not understand the politics behind it, but this moron is now the PM of England? WTF is wrong with people.
LE indeed has a funny/interesting daily candle. HE also had quite some volatility yesterday (Aug 5).
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