That agreement has been a high priority for both the beef and pork industries for some time. South Korea represents a large and relatively affluent consumer market for US meat. South Korea is already an important export destination for US beef and pork. In 2010, South Korea was the fourth largest importer of US beef and veal by value, with imports valuing almost half a billion dollars. In addition, South Korea was also the fourth largest importer of US pork by value, with imports valuing about $172 million dollars. So far in 2011, meat exports to South Korea are well ahead of last year's pace. On a volume basis, through July beef exports to South Korea were up by 53%. Pork exports were up by 130%. Domestic beef and pork industries in South Korea have been severely impacted by an outbreak of foot-and-mouth disease (FMD) that began last November. The pork industry has borne the brunt of the outbreak. According to USDA Foreign Agricultural Service, about 30% of the South Korean swine herd and about 5% of the cow herd has been depopulated as a result of FMD. Looking forward, pork exports to South Korea should remain above historic norms for the next year or two as the domestic industry there goes through the slow process of rebuilding its productive capacity.

It clearly would have been preferable to have had the South Korean FTA passed long ago -- even years ago -- to have stayed ahead of key competitors in the phasing out of import restrictions. Still, it is good news that the deal is now finally all but passed. As has been noted before in this space, in coming years, the US beef industry will be looking to export markets like never before to achieve demand growth. Markets like South Korea will thus be increasingly important to the economic health of the US industry.

While the belated advancement of a trio of free trade agreements helped highlight the positive story of export demand for meats, the US employment situation report on Friday illustrated the continued headwinds for domestic demand created by a weak general economy. Friday's employment report actually wasn't terrible. The unemployment rate was steady at 9.1%. The economy actually added 103,000 jobs in September -- a number that included 45,000 Verizon workers returning from a strike. The sobering thing about the report is that it continues to show a US economy that is essentially drifting sideways. Even counting the returning Verizon workers (which is probably an overly generous way to count), the economy is just maybe adding enough workers to keep unemployment stable. There is little sign of it heading down. Wages are also relatively flat. Hourly earnings were up in September by just enough to offset the decline from August. Similarly, the average workweek increased slightly in September -- by 0.1 hours, the same amount by which it had declined in August. In short, the overall economic picture may not be looking much worse, but it is hard to say it's looking much better either. So far beef demand has weathered the weak economic conditions pretty well. Rather than having to count on that continuing, it would be nice to see things start to pick up a bit.

The Markets

Last week, cash fed cattle trade got underway fairly early in the ballpark of $120, about steady with the prior week. For the week, prices ended up a bit higher than the prior week. Last week's 5-area price worked out to just under $121 compared with just over $120 the week before. Wholesale beef prices edged slightly higher most of last week. The Choice cutout ended the week at $184.41; and the Select ended at $169.58 -- continuing the run of wide CH/SE spreads from recent weeks. Last week's National Feeder and Stocker Cattle Summary from USDA AMS called calf prices $3 to $6 higher on average. This is not too surprising given the big, and largely unanticipated, run-up in cash fed cattle week-before-last and the big correction in the corn market following the bearish quarterly Grain Stocks report. That kind of price strength in calf markets can be hard to come by at this time of year when the fall runs are well under way.