Cattle markets have been amazing and are just now starting to gear up for grilling season. The Choice beef cutout peaked at $340 recently and demand is proceeding on a normal seasonal track. Prices should go higher over the next few months.
Futures markets are showing all fed cattle contracts over $200 and feeder cattle contracts at $290. If you’re prone to doing some risk management, now it would be a good time to check your options
Wednesday was Liberation Day, according to President Donald Trump. I see this as trade diplomacy and the tariffs won’t be as dramatic as some in the news media want you to think. There has been plenty of protectionism around the world and free trade has suffered; everyone wants to sell into the U.S. market because we have the money.
It sounds like every import will pay 10% tariffs and then negotiate reciprocal tariffs with each country. But if you make that product in America, you will pay no tariffs and put Americans back to work.
It’s kind of nice to have an administration that wants to fix as much as they can in a short amount of time. And it appears that we’re all going to get some kind of haircut. We all know it has to happen with the country $37 trillion in debt and deficit spending at $2 trillion a year. We need more businessmen to run for office, not professional politicians.
How is all this tariff talk going to affect the beef and cattle industry? So far, it hasn’t done much. I’m told that export markets contribute $400 per head on fed cattle. It will be interesting to see how our trading partners respond. I don’t think anyone will try and play hardball; many countries have already capitulated and lowered their tariffs.
China seems to want to shake the beef market and hasn’t renewed export permits for beef plants, but they have renewed permits for pork and poultry exports. China became our third largest beef export destination since the last Trump administration. I would have to assume that the gray market will return and much of that beef will go through other Asian countries, as it did before.
The National Cattlemen’s Beef Association (NCBA) was supportive of Trump’s tariff plan. Senior Vice President of Government Affairs Ethan Lane said in a press release, “For too long, America’s family farmers and ranchers have been mistreated by certain trading partners around the world. President Trump is taking action to address numerous trade barriers that prevent consumers overseas from enjoying high-quality, wholesome American beef. NCBA will continue engaging with the White House to ensure fair treatment for America’s cattle producers around the world and optimize opportunities for exports abroad.
“Some examples of beef tariff issues are:
• Australia has sold roughly $29 billion of beef to American consumers. Meanwhile, we have not been able to sell $1 of fresh U.S. beef in Australia due to non-scientific barriers.
• Vietnam places a 30% tariff on U.S. beef while Australian beef faces no such tariff.
• Thailand places a 50% tariff on U.S. beef.
• Brazil and Paraguay have a history of dangerous foot-and-mouth disease, but despite overwhelming evidence of their animal health risk, the Biden administration continued to allow U.S. market access to Brazil and Paraguay.
• The European Union places numerous non-scientific ‘Green Deal’ restrictions on American beef, limiting market opportunities.”
However, panic seemed to hit all markets, and they are all down, which I’m sure is temporary. The U.S. economy is the strongest in the world and is resilient. In a few months, much of this tariff talk will be history and every trading partner will have recalibrated tariff rates, and I hope we can tear down non-tariff trade barriers.
Beef trade around the world has always been a challenge for all countries mostly due to disease issues, but also political issues, and clearly the world is changing and the status quo is changing.
It was also nice to see the Trump administration to give Trade Promotion Authority some wheels after the Biden trade blunder. I wouldn’t worry about the beef markets, I would continue to pray for spring rain. — PETE CROW
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