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, Arkansas Farm Bureau, U.S. Meat Export Federation and Wall Street Journal.
U.S. beef packer margins last week averaged a loss of $25 per head, according to Hedgers Edge. With higher operating costs the beef sector is facing serious economic challenges. Packer margins are being squeezed between higher live cattle prices and consumers balking on higher beef prices in the meat case. Beef consumption per capita is expected to decline to 55.2 pounds this year, down from 57.3 in 2011, according to USDA estimates.
Hogs & Pork
Fresh pork processing margins were a $20 per head last week, according to Hedgers Edge. Pork processors are making good money as they have an adequate supply of hogs and decent consumer demand both domestically and abroad. United States inventory of all hogs and pigs on June 1 was 65.8 million head, up 1% from a year ago. Sows farrowed during this period totaled 2.92 million head, up slightly from 2011 but down slightly from 2010.
Chicken processors are seeing very tight margins as corn and soybean meal prices remain high. Broiler-type chicks placed for meat production in Arkansas were 20.8 million during the week ending Sept. 15. Placements were up 7% from the comparable week in 2011. Arkansas hatcheries set 19.4 million broiler-type eggs last week up 2% from the same period last year. Consumers are paying 43% more for leg quarters and 15% more for chicken breasts today than a year ago, according to Georgia Dock prices this week.
Large egg prices ranged from $1.30 to $1.40 last week, up 28 cents from last year. Table egg inventory fell 1% from a year ago with 1.027 million (30 dozen cases) processed, according to the USDA report from Sept. 17.
Cash corn prices traded Wednesday (Sept. 19) at $7.63 per bushel, rising 14.86% from a year ago. The December corn futures closed at $7.40 per bushel, corn for March delivery traded at $7.44, according to the Arkansas Farm Bureau. Corn was sharply lower this week as December violated support at the July spike low just under $7.50. The failure to hold there will likely result in a push toward the measuring gap at $6.75. Fundamentals haven’t changed a lot, but export demand is fairly weak, according to Arkansas Farm Bureau analyst.
Cash soybean prices closed Wednesday (Sept. 19) at $16.67 per bushel, up from $12.90 from a year ago. The November contract traded at $16.40, down 29 cents while January beans closed at $16.39, down 39 cents. Soybeans continued the selloff this week. November has broken several layers of support at this point, including a major uptrend. The next layer of support is at $15.55. Eventually the market may attempt to close the breakaway gap that starts around $14.78. Value buying will likely stop the skid, but it is a question of where the buyers come back into the market, according to Arkansas Farm Bureau analyst.
U.S. milk production during August totaled 15.3 billion pounds, down 0.2% from August 2011. July revised production at 15.5 billion pounds, was up 0.7% from July 2011. Production per cow averaged 1,803 pounds for August, 10 pounds below August 2011. The number of milk cows on farms totaled 8.50 million head, 32,000 head more than August 2011, but 4,000 head less than July 2012.
Cash ethanol prices traded at a $2.35 per gallon last week, down from $2.72 per gallon a year ago, according to USDA. Ethanol was priced at a $1.32 per gallon discount to gasoline as of Sept. 17.