Agribusiness Weekly Update: Pork sector improves

Beef
U.S. beef packer margins averaged nearly $45 per head last week, but had risen to $85 by Wednesday (June 27) on lower cattle prices, according to Hedgers Edge. Beef production increased 5% to 2.23 billion lbs. in May. Cattle slaughter totaled 2.88 million head, up 2% from the comparable year-ago period, according to USDA. The average live weight rose 7% from 2011.

Hogs & Pork
Fresh pork processing margins ran in the red by roughly $12 per head last week, losses had narrowed to $5 by Wednesday (June 27), according to Hedgers Edge. Pork production was at a record high for May, totaling 1.93 billion lbs., up 9% from the same period in 2011, according to the USDA. Pork prices are falling, putting them in a better position to compete against rising chicken and beef prices in the meat case. Retailers like Walmart are promoting pork more in recent weeks with prices savings.

Chicken
Chicken processors continue to post positive margins thanks in part to production discipline averaging 4% below a year ago. Ready-to-cook poultry weight during May increased 1% from the prior year, according to the USDA. RTC weights totaled 3.86 billion lbs. in May. The preliminary total live weight of poultry in May climbed 1% to 5.11 billion lbs., up from 5.04 billion lbs. in 2011.

Table Eggs
South central egg prices ended last week at 74 cents a dozen for medium, $1.03 for large and $1.11 for extra large, rising slightly from the prior week. Retail and food service demand ranges moderate and production this year is down about 1% from 2011.

Grains
Cash corn prices finished the week $6.66 per bushel, down from $6.81 a year ago. Arkansas Farm Bureau said corn continued to move sharply higher with December futures testing resistance just above $6.20. This suggests a possible retest of the contract high of $6.73. There is some resistance around $6.50 that might block a move to the contract high. The pre-report average guess of plantings is 96 million acres, while stocks are projected to be 3.18 billion bushels down from 3.67 billion bushels last year.   
       
Cash soybean prices closed last week at $14.67 per bushel, up from $13.29 a year ago. The July contract closed at $14.34 per bushel. August beans traded at $14.21. Soybeans trimmed recent gains with some pressure developing despite a 3% decline in the good to excellent categories. The market is looking for potential weather improvement which may or may not occur. But obviously there is more time for beans than corn. This week’s stocks report and planted acreage report will be keys to future price movement. The average pre-report estimate has soybean plantings at 75.6 million acres, up from the March number of 73.9 million acres. Stocks averaged 640 million bushels, up slightly from the 619 last year. Downside movement will be limited with November now having support at $14.   

Dairy
Milk production in the 23 major producing states totaled 16.4 billion pounds in May, up 2.1% from a year ago. The USDA revised the April production to 16 billion lbs, up 3.5% from April 2011. The production per cow averaged 1,924 lbs, up 22 lbs from May 2011. The U.S. dairy herd totaled 8.52 million cows on farms during May. Wholesale Class III milk was priced at $14.46  per hundredweight in May.
             
Ethanol
Cash ethanol prices traded at a $2.01 per gallon last week, down from $2.69 per gallon a year ago, according to USDA.  Ethanol was priced at a $1.29 per gallon discount to gasoline.