North American roundup 29 July
US store cattle price steady — at last
AFTER months of decline, US feeder (store) cattle prices appear to have finally stabilised.
The Chicago August feeder cattle contract settled yesterday (28 July) at 69.87¢/lb, up 0.10¢ from Monday and 0.40¢ higher than a week earlier. This sideways consolidation follows a precipitous fall from 83¢/lb at the start of the year.
Analysts say a drop in feed maize prices has lent some support to feeder cattle prices, because livestock generally trades in inverse relation to the cost of feed. But feeder cattle would be expected to react far more favourably to cheaper maize.
Prices have failed to do so because of the oversupply in Americas cattle feedlots. The market is burdened by a large front-end supply of live cattle ready for the packing houses and to make matters worse these slaughter cattle weigh well above average.
Live cattle prices have also moved sideways over the past few days. The Chicago August live cattle contract settled yesterday at 60.75¢/lb, 0.57¢ below the previous days close.
Prices appear to be bouncing along the bottom, with live cattle futures hitting contract lows during last weeks trading.
Some bearish analysts argue that the trend is down, especially if the live cash market falls further. But for now, cash prices are unchanged from a week ago at 50-60¢/lb in Texas.
Downward trend as US pig price swings
LEAN hogs have had a volatile week in the USA, with the Chicago August futures contract swinging from 47.5-51.0¢/lb. The contract closed yesterday (28 July) at 49.25¢/lb, up 0.45¢ from Mondays close but down 0.52¢ from a week earlier.
Having plummeted from 60¢/lb in June, market watchers fear the worst prices are yet to come. They suggest the long-term trend remains downwards because of overproduction.
The availability of cheaper feed with the collapse in the grain markets has failed to turn traders bullish. But cash hog prices for slaughter are approximately 3¢/lb higher than the August futures contract after adjusting for the differences in the contract terms and delivery.
This is an unusual short-term situation that would suggest either a drop in cash or a rally in the August futures to restore equilibrium. The cash hog market is at around 37-39¢/lb at the terminals, little changed from last week.
Pork bellies have also had a roller-coaster week. The Chicago August futures contract surged from 55.60¢/lb last Tuesday to 62¢ in mid-week trading, then retreated to close yesterday at 58.55¢/lb.
Maize price to fall further in USA?
AFTER yet another week of losses on the US maize market, many analysts remain bearish.
Traders predict that maize prices have still not reached the bottom. The continuing good weather and forecasts of ideal crop conditions in Americas corn belt have raised concerns of worsening oversupply.
The Chicago Board of Trade September futures contract reached new lows yesterday (Monday, 27 July), closing at 222.75¢/bushel, down 2¢ from Friday and more than 10¢ on the week.
The decline represents a precipitous drop from last months high of 265¢/bushel, but US farmers at least look set to enjoy excellent yields at this years harvest.
The proportion of the maize crop rated good or excellent has risen to 68%, up from 66% a week ago. The crop is further advanced than many had expected, with 80% already in the silking stage, compared with 54% at this point in the season a year ago.
AGGRESSIVE bidding in France to supply wheat to Egypt is pressuring the US grain market.
France outbid the USA this weekend in an Egyptian tender for 250,000 million tonnes of wheat. The European seller who won the tender set a new low price for the year at $86/ tonne.
At the close of trade in Chicago yesterday, the September wheat price had fallen 4.75¢ from Friday to 260.5¢/bushel, down more than 15¢ on the week.
Many analysts predict that the global glut and increasingly aggressive pricing in international markets will force US exporters to lower their prices yet again.
The wheat market has suffered some of the biggest losses amongst Americas beleaguered agricultural commodities.
US farmers continue to enjoy ideal growing conditions for their winter and spring crops but prices appear to be falling almost daily. The September futures contract has plummeted from 370¢/bushel in early February.
The latest figures suggest 87% of the winter wheat crop has now been harvested, compared with only 82% this time last year. The spring crop is maturing well and 98% of spring wheat has already headed.
Nevertheless, weather forecasts point to suitable growing conditions in coming weeks and the market is suffering from poor export demand and a drop in world prices.
CHICAGO soya prices fell again this week as the market reacted to the same bearish trends that have driven prices lower in recent months.
The large amount of carry-over stocks from last seasons soya harvest have already created an overhang in the market. This years high planted soyabean acreage, excellent growing conditions and poor export demand have also pushed prices lower.
The Chicago August soya bean futures contract suffered a week of declines to closed at 597.75¢/bushel yesterday (27 July), 1.75¢ lower than Fridays close and down 625.75¢ on the week.
Traders reacted to reports over the weekend that a US firm plans to import Argentine soya beans to the Gulf of Mexico.
The market was further hurt by worse-than-expected export figures. Export inspections of soyabeans in the week ended last Thursday totalled only 0.914 million bushels, well below pre-release estimates of 3-6 million bushels and the psychological one million bushel level.
Meanwhile, soya oil prices held their ground. The August futures contract climbed 0.15¢/lb yesterday to settle at 23.91¢/lb, slightly down from its close a week earlier of 24.20¢/lb.
Traders attribute the relative resilience of the oil market to concerns that dry weather could be hurting the oilseed crops in India. But that consideration has been partly offset by weakness in other world vegetable oil markets.
French wheat bid drives down US prices
Soya falls again in Chicago