Editor's note: The Agribusiness Weekly Update, compiled from various sources by The CityWire staff, is presented each week. Sources include the U.S. Department of Agriculture, Hedgers Edge, Cattle Buyers Weekly, Derrell S. Peel, Oklahoma State University, Arkansas Farm Bureau and Wall Street Journal.
U.S. beef packer margins averaged $11.70 per head last week, sliding to $4.47 by Wednesday (Aug.1 ), according to Hedgers Edge. Steve Kay of Cattle Buyers Weekly said margins have declined from $77 per head during July. That loss is related more to price declines in boxed beef than live cattle prices. On the live side, the mid-year total cattle inventory is down 2% while the beef cow herd is down 3%. Though beef cow slaughter is down over 9% from last year, cow culling still exceeds heifer placement and the herd continues to decline, according to Derrell Peel, analyst at Oklahoma State University.
Hogs & Pork
Fresh pork processing margins ran in the red by roughly $3.80 per head last week, according to Hedgers Edge. Margins remained slightly negative by $1.77 per head Wednesday (Aug.1) Steve Kay said hog supplies are tighter and rising grain costs continue to squeeze hog farmers that have been downsizing their herds accordingly.
Chicken processors are seeing tighter margins related to higher grain costs. Production discipline continues averaging 4% below a year ago. Broiler growers in the 19 state weekly program placed 161 million chicks for meat production during the week ending July 28. Placements were down 1% from the comparable week a year earlier. Wholesale boneless breast prices are averaging $1.56 per pound this week, down from a seasonal high $1.75 per pound in June. Wholesale chicken prices have risen 7.9% in the past year, according to Georgia Dock pricing on Aug. 1.
Large Southeast egg prices ranged from $1.52 to $1.56 last week, up 49 cents from last year. Table egg production last week was up 3.7% from a year ago with 126,000 (30 dozen cases) processed, according to the USDA report from July 30.
Cash corn prices traded Tuesday (July 31) at $8.18 per bushel, up from $7.33 a year ago. The September corn futures closed at $8.07, corn for December delivery traded at $8.05, according to the Arkansas Farm Bureau. Corn came under early selling pressure as the market failed to follow through on yesterday’s move higher. Crop conditions continue to decline with almost half of the U.S. crop rated poor to very poor. How bad is it? Well the Illinois crop has nothing in the excellent category and only 9% with a good rating, according to Arkansas Farm Bureau analyst.
Cash soybean prices closed Tuesday (July 31) at $17.30 per bushel, up from $13.70 a year ago. The August contract traded at $17.21, down 43 cents while November beans closed at $16.41, down 21 cents. Soybeans closed mixed as the market lost upward momentum. There is little to suggest the long term uptrend is ending. Crop conditions continue to deteriorate and demand remains fairly substantial. Rain expectations remain uncertain. It is known that yields are declining and that production is less with each day that passes without rain. Price will have to ration a limited supply, one that is now a couple hundred million bushels below the July estimate for use, according to Arkansas Farm Bureau.
Total cheese output (excluding cottage cheese) was 897 million pounds, 0.9% above June 2011 but 2.1 % below May 2012, according to Aug. 1 dairy report. American cheese production totaled 366 million pounds, 0.2% above June 2011. Butter production was 137 million pounds, down 3.2% below a year ago. Nonfat dry milk, for human consumption totaled 169 million pounds, up 15.1% from a year ago.
Cash ethanol prices traded at a $2.52 per gallon last week, down from $2.90 per gallon a year ago, according to USDA. Ethanol was priced at an 75-cent per gallon discount to gasoline as of July 27.