Agribusiness Weekly: Meat production up despite high grain costs

Beef
U.S. beef packer margins last week averaged $22.60 per head, shrinking to a negative $3.80 by Wednesday (Sept. 5), according to Hedgers Edge. Beef production, at 2.20 billion pounds, was 3% above the previous July, according to the U.S. Department of Agriculture. Cattle slaughter totaled 2.79 million head, up 1% from July 2011. Severe drought has increased the current herd culling rate to 11.4%, which is above the long term average of 9.6%, but well below the 2011 rate of 12.3%. Additional cow culling may be needed this fall, according to Glen Selk, extension specialist at Oklahoma State University.

Hogs & Pork
Fresh pork processing margins were a $7.04 per head last week, according to Hedgers Edge. Margins jumped to $15.35 by Wednesday (Sept. 5). For the past three weeks federally inspected hog slaughter has run more than 6% above year-ago rates due to drought and record heat. USDA’s weekly sow purchase data suggest that producers are watching prices closely.

Chicken
Chicken processors are seeing very tight margins as corn and soybean meal prices remain high. There were 162 million broiler chicks placed last week, down 1% from year ago. Cumulative placements this year are down 3% from 2011. While placements are down, the ready-to-cook weight is 2.8% higher than a year ago according to a separate USDA report released Sept. 4. Boneless breasts traded at $1.76 per pound this week, up 14% from a year ago, according to Georgia Dock pricing.

Table Eggs
Large egg prices ranged from $1.14 to $1.18 last week, down 9 cents from last year. Table egg inventory fell 1.3%% from a year ago with 1.179 million (30 dozen cases) processed, according to the USDA report from Sept. 4.

Grains
Cash corn prices traded Wednesday (Sept. 5)  at $8.15 per bushel, rising 7.55% from a year ago. The September corn futures closed at $8.07 per bushel, corn for December delivery traded at $8.05, according to the Arkansas Farm Bureau. Corn firmed, coming out of the 3-day holiday weekend. Crop yields out of the Midwest continue to be abysmal, further declines could be noted in future USDA reports. Unlike soybeans, demand appears to be declining and that could limit further gains. December corn is sideways with support just below $8 and resistance at levels of $8.40 to $8.49, according to Arkansas Farm Bureau analysts.       

Cash soybean prices closed Wednesday (Sept. 5) at $18.22 per bushel, up from $14.98 from a year ago. The September contract traded at $17.71, up slightly while November beans closed at $17.68, up 12 cents. Soybeans made another new contract high as November hit $17.89 before seeing gains trimmed later in the session. Big gains of over 30 cents were registered in 2013 contracts as the market attempts to buy acres back from corn. The soybean/corn price ratio is near 2.08, which still favors corn. Soybean export demand continues strong, which suggests price is not rationing the limited supply yet, according to Arkansas Farm Bureau analysts.  

Dairy
USDA dairy product report Sept. 5 indicates total cheese output (excluding cottage cheese) was 874 million pounds in July, up 2.3% from a year ago. American cheese production totaled 356 million pounds, 1.8% above July 2011. Butter production fell to 2% to 133 million pounds.

Ethanol
Cash ethanol prices traded at a $2.55 per gallon last week, down from $2.90 per gallon a year ago, according to USDA. Ethanol was priced at a $1.23 per gallon discount to gasoline as of Sept. 4.