Chicago | Reuters — Chicago Mercantile Exchange live cattle futures rose to their highest prices since April on Monday after the U.S., Canada and Mexico said they struck a deal on a trilateral trade pact.
News of the agreement, reached over the weekend, eased concerns that the United States would exit the North American Free Trade Agreement (NAFTA) that has propelled U.S. agricultural export growth for a quarter century.
“The higher opening was probably some feel-good news” about the trade pact, said Larry Hicks, president of CattleHedging.com
CME October live cattle futures settled up 0.225 cent at 113.675 cents/lb., after the nearby contract touched its highest price since April 12 (all figures US$). Most-active December ended up 0.1 cent at 118.95 cents, after reaching a life-of-contract high at 119.75 cents.
CME October feeder cattle finished up 0.475 cent at 158.65 cents/lb.
CME October hogs advanced 2.575 cent to 64.75 cents/lb. and December hogs rose 1.925 cents to 59.85.
Tyson Foods, the biggest U.S. meat processor, said the trade agreement was positive news.
“We look forward to the approval of a new deal and the removal of retaliatory tariffs and other trade barriers so that U.S. farmers and companies like ours can continue to expand in these important markets,” company spokesman Gary Mickelson said.
Last year, the U.S. exported to Canada 116,561 tonnes of beef worth $796 million and 237,972 tonnes worth $980 million to Mexico, according to the U.S. Meat Export Federation, a trade group.
Cargill, one of the world’s biggest processors of ground beef, said it was important to determine whether the new agreement was better than NAFTA.
“At first glance, we’re encouraged with efforts to modernize some chapters that specifically affect trade in agricultural goods,” spokeswoman April Nelson said.
Demand for U.S. beef has been strong recently and prices for feed grains have been low, prompting cattle ranchers to expand their herds. The large number of cattle should put pressure on futures by the end of the week, Hicks said.
“We’ve got good demand supporting it,” Hicks said about the cattle market. There are “too many cattle to follow through” on recent gains, though, he added.
There were 11.1 million U.S. cattle and calves being fed for slaughter as of Sept. 1, a record for that date since the U.S. Department of Agriculture began tracking the data in 1996.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.