Agribusiness Weekly Update: Beef prices rise

Beef
U.S. beef packer margins averaged $20 per head last week, deteriorating to $6 by Tuesday (July 18), according to Hedgers Edge. The mid-year Cattle Inventory report will be issued this week and the July 1 beef cow inventory is expected to be down year over year. Beef cow slaughter is down nearly 10% for the year to date compared to last year and is down 12% compared to 2010, according to Derrell Peel, analyst at Oklahoma State University. Cash feeder steers averaged $145 per hundredweight Tuesday, up from $136 a year ago, according to the Wall Street Journal online price sheets. The USDA says consumers will be paying more for beef at the grocery store for the rest of year.                                     

Hogs & Pork
Fresh pork processing margins ran in the red by roughly $14 per head last week, according to Hedgers Edge. Cash hogs traded Tuesday at $93 per hundredweight, even with a year ago. The deferred contracts were $97.07 for July and August contracts slid to $90.42. Hogs continued downward as poor operating margins have reduced packer demand. Continued weakness in wholesale pork suggests demand could remain soft over the next several weeks, according to Arkansas Farm Bureau.

Chicken
Chicken processors continue to see margins tightening quickly as grain prices escalate. Broiler-type chicks placed for meat production in Arkansas were 19.9 million last week. Placements were up slightly from the comparable week in 2011. Arkansas hatcheries set  20.3 million broiler-type eggs during the week, down 4% from the same period last year. Wholesale boneless breast prices averaged $1.60 per pound last week, down from a seasonal high $1.75 per pound in June. Prices have risen 4% in the past year.

Table Eggs
South central egg prices ended last week at 72 cents a dozen for medium, $1.05 for large and $1.14 for extra large, rising slightly from the prior week. Demand in retail and food service channels is moderate. Current supplies are a little tighter in recent weeks according to the July 16, USDA report.
       
Grains
Cash corn prices traded Monday (July 16) at $8.03 per bushel, up from $6.60 a year ago. The September futures rose to $7.76, corn for December delivery traded at $7.72, according to the Arkansas Farm Bureau. Corn gapped higher on continued weather concerns, and made new contract highs. Reports suggest that yield prospects are getting more dismal every day. The market anticipates another sharp decline in corn condition in this week’s crop progress report, says Arkansas Farm Bureau analyst.  

Cash soybean prices closed Monday (July 16) at $16.57 per bushel, up from $13.91 a year ago. The August contract traded at $16.34, up sharply while November beans topped $15.95 and are headed to $16 or higher. Soybeans moved to new highs as drought conditions across the country continue. The market is anticipating another shock when the crop conditions report is released this week –  55% of the U.S. is considered to be in moderate to extreme drought. The worst since the mid 1950s, according to Arkansas Farm Bureau.

Dairy
Dairy cow numbers averaged 9.270 million April through June. USDA expects that number to drop to 9.230 million in the third quarter and to 9.175 million by year end. Those lower numbers will translate to less milk production and rising prices. USDA expects the all-milk price to range from $16.70 to $17.10 per hundredweight in the third quarter and from $17.25 to $17.95 in the fourth quarter.

Ethanol
Cash ethanol prices traded at a $2.40 per gallon last week, down  from $2.75 per gallon a year ago, according to USDA.  Ethanol was priced at an 88-cent per gallon discount to gasoline as of July 13.