Agribusiness Weekly Update: Packer margins improve

Beef
U.S. beef packer margins averaged nearly $21 per head last week, but had risen to $47 by Wednesday (June 20) on lower cattle prices, according to Hedgers Edge. June fed cattle are trading this week around $116 per hundredweight, down 3% from the prior week. Feedlot margins are dismal. In a world of high feed and feeder cattle prices and declining feeder availability, the squeeze on feedlots is likely to persist for many months, according to Darrell Peel, livestock extension specialist at Oklahoma State University.

Hogs & Pork
Fresh pork processing margins ran in the red by roughly $13 per head last week, losses had narrowed to $9.30 by Wednesday (June 20), according to Hedgers Edge. Post Memorial Day slaughter has dipped below 2 million head per week, about 1% lower than a year ago. The seven day rolling average stands at 204.5 pounds per carcass. Hog weights are running about 0.6 % higher than a year ago.

Chicken
Chicken processors continue to post positive margins thanks in part to production discipline averaging 4% below a year ago. Commercial hatcheries in the 19 state weekly program set 197 million eggs in incubators during the week ending June 16. This was down 2% from a year ago.. Average hatchability for chicks during the week was 85%. Average hatchability is calculated by dividing chicks hatched during the week by eggs set three weeks earlier.

Table Eggs
South central egg prices ended last week at 72 cents a dozen for medium, $1.02 for large and $1.07 for extra large, stable with the prior week. Retail and food service demand ranges moderate and production this year is down about 1.5% from 2011.

Grains
Cash corn prices finished the week $6.52 per bushel, down from $7.06 a year ago. July corn closed higher at $6.12, while the September contract rose to $5.68. Arkansas Farm Bureau says lower production is feared with declining crop progress numbers and dry, hot conditions on an early pollinating crop. Some are suggesting yields won’t be close to the current USDA projection of 166 bushels/acre and may not be much better than last year’s 147.2 bushels per acre. Some of the lowest estimates see corn plantings well below the 95.9 million acre projection.   

Cash soybean prices closed last week at $14.29 per bushel, up from $13.47 a year ago. The July contract closed at $14.34 per bushel. August beans traded at $14.21.With the latest supply demand report showing ending stocks of just 140 million bushels the market is quick to respond to conditions that could reduce the projected yield of 43.9 bushels per acre. Topsoil moisture maps show 50% to 85% shortages in much of the Midwest. In addition, high temperatures are impacting a large part of the area.   

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 per gallon last week, down from $2.69 per gallon a year ago, according to USDA.  Ethanol was priced at a $1.23 per gallon discount to gasoline.