Agribusiness Weekly Update: Beef packers see losses widen

Beef
U.S. beef packers lost $97.99 per head processed, versus  38 cents lost a year ago. Cattle slaughter was down 5.9%, while beef production fell 2.7% from a year ago. Despite a moderation in cattle price, packer margins continue to deteriorate. Packers have been unable to buy cattle cheap enough to offset the rapid decline in boxed beef prices, which plunged in March. Choice meat cutout hit a high $198.80 per cwt. on Feb. 29 but continues to decline closing at $183.46 as of March 29, according to Cattle Buyers Weekly.

The persistence of negative beef publicity surrounding “pink slime” and lean finely trimmed beef is concerning as grilling season approaches Retail choice beef prices remain at an all-time high still trending above $5 a pound.

Hogs & Pork
Pork processors lost $1.14 per head last week, compared to $12.23 profited last year. Weekly hog slaughter numbers fell 0.2%, while pork production increased 0.3% compared to 2011. According to sources, Walmart is preparing to cut pork prices at retail post Easter and other retailers will likely follow. This should improve U.S. retail demand and allow domestic volumes to increase. Internationally, export demand remains solid with Japan in particular importing significant quantities at high margin.

Chicken
The chicken processing margin averaged 0 cent  a pound, 9 cents better than a year ago. Broiler egg sets were down 5.69 to 197 million eggs. Heads slaughtered declined 4.7% year over year, while pounds produced fell 2.5%. For the week, breast meat prices averaged $1.28 per pound, 5 cents below the year-ago period. Leg quarters were 49 cents per pound up 6 cents  from 2011 levels. At $1.53, wing prices traded 66 cents above last year’s price.

Table Eggs
The egg margin averaged 54 cents per dozen, 22 cents higher than a year ago. Southeast egg prices were $1.24 per dozen, up 21 cents from a year ago. Prices in the most current week are trending 5 cents higher to $1.29 per dozen as retail is good and foodservice demand is moderate ahead of the Easter holiday period.
       
Grains
Cash corn prices finished the week down one penny to $6.43 per bushel and 10% lower than a year ago. Soybean prices rose 36 cents to $13.83 per bushel, up 1.2% from a year ago. Despite more acreage devoted to corn this year, supplies for both grains are expected to be tight.

Dairy
Class III milk price for March finished at $15.72 per cwt., down 19% from last year. Retail milk price averaged $3.50, up from $3.30 a year ago.

Ethanol & Energy
The ethanol crush margin averaged 45 cents per gallon, up 14 cents from last week and 24 cents below last year. Ethanol averaged $2.27 per gallon, trading at a $1.12 discount to gasoline. It’s the largest discount to gasoline since June 2008.