North American roundup 28 April
Lower corn returns bolster US cattle prices
LOWER corn prices, which make it cheaper to add weight to cattle in the feedlots, have prevented United States cattle returns falling further – at least for the time being. Futures contracts in Chicago yesterday (Monday) closed at 75.625¢/lb (45.2p/lb) for the month of May, down 1.3¢ on the week.
Feeder cattle prices at auctions were generally unchanged to 1¢/lb lower. Beef prices are expected to rise due to the approaching Memorial Day weekend at the end of May and rising seasonal demand.
Early last week, packers were bidding for slaughter cattle at 64¢/lb against sellers offers of 67¢/lb. By Friday, the stand-off had ended. Owners were closing sales at 64¢/lb, down from 65-66¢/lb the week before. Packers and feeders are both suffering from a lack of profit margins and this is encouraging owners to hang on to their cattle in the feedlots.
Meanwhile, new placements into feedlots are estimated to be down by 10% from six months ago. But over the next few weeks, cattle entering feedlots are expected to include a historically large proportion of heavy animals weighing more than 700lbs. This is due to the high number of heavy cattle coming off winter wheat fields and ryegrass.
Rollercoaster week sees US maize end lower
AFTER a roller-coaster week driven by weather concerns, Chicago corn (maize) futures closed yesterday (Monday) at $2.46/bushel (£1.47/bushel), 2.5¢ down on the week.
The past few days have seen maize prices fluctuate wildly as traders tried to second-guess the crops weather prospects. So far, spring planting progress is in line with the five-year average, but its still early days and only 5% of maize is in the ground.
Wet weather forecast for coming weeks could delay field work and drive futures higher. Now, though, it looks as though half this seasons maize will be planted by mid-May.
The USA issued a long-awaited $500 million (£299m) of additional export credits to South Korea last week, including $130m for feed grains and soyameal. But analysts say competing world grain stocks mean that the package is insufficient to significantly boost US exports.
Better US returns tempt soyabean sellers
A SMALL upturn in United States soya prices encouraged producers on to the market last week. Chicago contracts continued their recent rally, gaining 5¢ on the week to close at $6.48/bushel (£3.88/bushel) yesterday (Monday). Futures have now risen more than 20¢ since mid-April.
US soya prices are being buoyed by reduced export forecasts for palm oil from Indonesia and Malaysia. Soya oil prices last week reached their highest level since January 1995 before slipping back on rumours that China was about to cancel a major order.
But the soya oil contracts for May still ended yesterday at $28.90 (£17.28), up 90¢ from a week ago. Despite the rally, analysts say the short-term outlook for soyabeans is poor. The South American harvest continues apace and US prices remain two-thirds below last years values, burdened by high carry-over stocks.
Meanwhile, the US Department of Agriculture on Friday announced $100 million of soyabean export credits for South Korea, a somewhat higher-than-expected figure.
US wheat returns down 3¢/bushel
FAVOURABLE weather for competing crops in Canada and Australia this week drove down United States wheat returns, driving Chicago futures down 3c on the week to $2.96/bushel (£1.77/bushel) yesterday (Monday, 27 April).
Prices look like they could fall further. Analysts already expect this years US harvest to yield a bumper crop. Light frost damage in south-west Kansas and a lack of rain in west Texas have caused some worries, but farmers remain well ahead with planting.
The US is estimated to be 12% planted, compared with 3% this time last year and a five-year average of 6%. Coupled with large carry-over stocks and poor exports, there is little on the horizon that will put a floor in the market.
Pig outlook remains pessimistic
TRADERS and analysts remain pessimistic about United States hog (pig) returns, saying recent gains are only a short-term blip in an otherwise over-supplied market.
In Chicago, the lean pigs contract closed yesterday (Monday) at 60.6¢/lb (36.2p/lb) for June, having lost a cent from a week earlier. The June contract has rallied by about 10% since mid-March thanks to better margins for the packers between the cost of live animals and carcass values.
But many analysts say the outlook is bearish. Some livestock economists expect pigs to hit a 26-year low this year as a current surplus of market pigs, already 8% up on last year, hits the market. The slaughter rate is expected to reach a record 102 million pigs this year.
The latest US Department of Agriculture report on pigs indicates that the breeding herd was up 2% year-on-year on March 1, an improvement on the 5% annual increase reported at the end of 1997.
But, a further slowdown in the rate of breeding herd growth depends on pig producers keeping only 2% more sows for the swine-breeding herd. Some analysts predict that this spells hard times ahead for producers.