Agribusiness Weekly: Drought pressures commodity prices

Beef
U.S. beef packer margins averaged $9.87 per head last week, according to Hedgers Edge. A year ago packers were just breaking even. June fed cattle traded at $119 per cwt. last week, down 72 cents. Cattle futures posted gains early, but wound up selling off hard by the end of last week. Tight feedlot inventories reflected in Friday’s report were overshadowed by demand concerns.

Hogs & Pork
Fresh pork processing margins ran in the red by roughly $11.76 per head last week, that compared $5 per head profited last year. Packer losses widened this week as slaughter numbers are tracking 2% higher than a year ago on tepid U.S. consumer demand.

Chicken
Chicken processors have enjoyed positive margins for the past three months thanks in part to production discipline. Broiler chicks placed for meat production in Arkansas were 20 million during the week ending May 26. Placements were down 6% from the comparable week in 2011. Arkansas hatcheries set 21.7 million eggs during the week, down 6% from the same period last year.

Table Eggs
Egg prices ended last week at 79 cents a dozen for medium, $1 for large and $1.05 for extra large. Production is flat year over year.

Grains
Cash corn prices finished the week $6.63 per bushel. May contract traded at $6.76 and the July contract closed at $6.33 per bushel. Dry weather issues could push price higher. May soybean prices rose to $13.92 per bushel. The July contract closed at $14.12, up 75 cents per bushel. August beans traded at $13.95, up 1.47 on the week. Dry, hot weather across the mid-south and part of the Midwest could impact crop conditions if it persists.

Dairy
Milk production in the 23 major states during May totaled almost 16.0 billion pounds, up 3.3% from a year ago. Production per cow in the 23 states averaged 1,870 pounds for 35 pounds above last year, according to the USDA.

Ethanol
Ethanol averaged $2.15 per gallon last week, compared to $2.63 a year ago, according to the USDA. Cash ethanol prices traded at a $1.25 discount to gasoline for the week ending May 25.