Agribusiness Weekly Update: Meat prices headed higher

Beef
U.S. beef packer margins averaged $65 per head last week, according to Hedgers Edge. Cattle prices have weakened as drought conditions have expanded dramatically in recent weeks, with 72% of the continental U.S. in some stage of abnormally dry conditions and over 51% of the country in moderate or worse drought, according to Derrell Peel, analysts at Oklahoma State University. Cash feeder steers averaged $147 per hundredweight Tuesday, down from $154 the previous day and up from $143 a year ago, according to the Wall Street Journal online price sheets.

Hogs & Pork
Fresh pork processing margins ran in the red by roughly $16 per head last week, according to Hedgers Edge. Cash hogs closed Tuesday at $96 per hundredweight, up from $91 a year ago. The deferred contracts fell to $96.22 for July and $93.30 for August but have been supported in recent days by concerns of high corn prices expected to keep a lid on production, according to the Arkansas Farm Bureau. The U.S. quarterly inventory of all hogs and pigs on June 1, was 65.8 million head, up 1% from year ago.

Chicken
Chicken processors continue to post positive margins thanks in part to production discipline averaging 3% below a year ago. Broiler growers in the 19 state weekly program placed 166 million chicks for meat production last week. Placements were down 2% from a year ago, according to the USDA. Wholesale boneless breast prices averaged $1.61 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 74 cents a dozen for medium, $1.03 for large and $1.11 for extra large, rising slightly from the prior week. Demand in retail and food service channels is light to moderate and best where features are planned. Current supplies are tight on jumbo eggs, according to the July 9, USDA report.
       
Grains
Cash corn prices closed Tuesday (July 10) at $7.70 per bushel, up from $6.68 a year ago. The July contract closed at $7.61 with September futures at $7.18, according to the Arkansas Farm Bureau. Corn was under pressure the entire session Tuesday, but it appears to be pre-report profit taking and evening of positions.The weekly crop progress report indicated a significant decline with the good to excellent categories losing a full 8 points again this week. USDA is expected to make downward yield and production adjustments. Use adjustments are also anticipated along with tightening of stocks. With little rain expected in the Midwest drought  will heighten and the market will likely move to new highs. Gaps left earlier suggest a December corn price could  top $8.45 a bushel, says Arkansas Farm Bureau analyst.  

Cash soybean prices closed Tuesday (July 10) at $16.31 per bushel, up from $13.61 a year ago. The July contract closed at $16.48 per bushel. August beans traded at $15.90. November topped $15.38 and appears headed to $16 or higher. As anticipated, soybeans slipped in yesterday’s crop progress report. However, the market also slipped as traders evened up ahead of the July report  that is expected to show reduced production estimates. There still appears to be ample upside as export demand has continued to be fairly strong, according to Arkansas Farm Bureau.

Dairy
The US dairy herd totaled 8.524 million head through May, producing 16.404 million pounds of milk per month. Milk production is up about 2.1 from a year ago, according to the USDA. Butter production was 163 million pounds, 4.8% above May 2011, but 3.8% below April 2012. Nonfat dry milk production totaled 195 million pounds, up 31.4% from the prior year. The June report will be released Monday (July 18).
                
Ethanol
Cash ethanol prices traded at a $2.16 per gallon last week, down  from $2.55 per gallon a year ago, according to USDA. Ethanol was priced at a $1.19 per gallon discount to gasoline.