Editor's note: The Agribusiness Weekly Update, compiled from various sources by The City Wire staff, is presented each week. Sources include the U.S. Department of Agriculture, Hedgers Edge, Arkansas Farm Bureau and Wall Street Journal.
U.S. beef packer margins last week averaged $47 per head, shrinking to $25.65 by Tuesday (Aug. 28), according to Hedgers Edge. US cattle futures finished lower Tuesday on concerns that beef demand will weaken once the summer grilling season ends Labor Day. July beef production was 2.200 million pounds, down 2% from June but up 3% from July 2011. Cattle slaughter totaled 2.79 million head, up 1% from the previous year. The average live weight of cattle at slaughter was 1,295 pounds, up 23 pounds from July 2011, according to the latest USDA Livestock Slaughter report.
Hogs & Pork
Fresh pork processing margins were $4.80 per head last week, according to Hedgers Edge. Margins slid to $5.50 by Tuesday (Aug.28). Pork prices on the futures market declined Tuesday, The cutout value for a 200-pound pork carcass fell sharply to settle just above 84 cents a pound. Pork production was 1.721 million pounds, down 2% from June but up 5% from July 2011, according to the USDA. Commercial hog slaughter totaled 8.57 million head, up 5% from the previous July. The average live weight of slaughter hogs was 269 pounds, up a pound from a year ago.
Chicken processors are seeing very tight margins as corn and soybean meal prices remain high. Broiler growers in the 19 state weekly program placed 162 million chicks for meat production last week. Placements were up 1% from the comparable week in 2011. Cumulative placements from Jan. 1, through Aug. 18, were 5.41 billion, down 3% from the same period a year ago, according to USDA. While placements are down, the ready-to-cook weight is 4% higher than a year ago, according to a separate USDA report released Friday (Aug. 24). Boneless breast prices this summer are 14.7% higher than a year ago, but still remained relatively weak given sluggish food service demand. Jumbo wing prices averaged $1.59 per pound this summer up 104.2% from the average of 78 cents a year ago, according to Georgia Dock pricing between May 1 and July 31.
Large egg prices ranged from $1.14 to $1.18 last week, down 27 cents from last year. Table egg inventory rose 2.4% from a year ago with 1.194 million (30 dozen cases) processed, according to the USDA report from Aug. 27.
Cash corn prices traded Tuesday (Aug. 28) at $8.09 per bushel, rising 6% from a year ago. The September corn futures closed at $7.89 per bushel, corn for December delivery traded at $7.95, according to the Arkansas Farm Bureau. Corn closed mixed with front-end contracts lower and December below $8. The next support is between $7.86 and $7.80. Like soybeans, the question is whether Hurricane Isaac will cause any significant damage to unharvested corn and further reduce the crop. Declining demand and increased harvest pressure added to the negative undertone in prices this week, according to Arkansas Farm Bureau analysts.
Cash soybean prices closed Tuesday (Aug. 21) at $17.35 per bushel, up from $13.73 a year ago. The September contract traded at $17.32, up slightly while November beans closed at $17.22 ,up 3 cents. Soybeans maintained small gains on Tuesday (Aug. 28). The market appears to be in limbo as traders await Hurricane Isaac. Needed moisture is expected to fall in the Delta and across the Midwest as far north as Wisconsin. Good or bad is the question, the rain is really too late to help yields and the concern is potential damage which could send the market higher, according to Arkansas Farm Bureau analysts.
Cheese and butter prices moved up in July reflecting a seasonal decline in milk production enhanced by fear caused by dramatically rising feed costs. While milk prices are moving up, feed prices are moving up even faster, driving margins down to their lowest level since July 2009. Milk production registered its lowest year-over-year increase in June, increasing just 0.9%. Milk sales through May are up 2% compared to the first five months of 2011. Butter sales were up 1.4 million pounds year to date, a 0.2% increase. The minor increase in total sales is due to a large drop in exports, according to USDA.
Cash ethanol prices traded at a $2.53 per gallon last week, down from $2.85 per gallon a year ago, according to USDA. Ethanol was priced at a $1.24 per gallon discount to gasoline as of Aug. 28.