US pigs retreat from highest price this year
CASH prices for live pigs slipped below 40¢/lb again last week, after climbing to the highest level this year. Terminals ranged from 39.50-40.50¢/lb, with prices dropping off towards the end of the week.
But futures prices are holding their ground in choppy trading, suggesting that many players expect the market to recover this week. Packers are expected to buy strongly this week, especially as cut-out values are improving and thereby widening packers margins.
The Chicago June lean hogs contract closed on Monday (11 May) at 61.67¢/lb, up 0.75¢ from Friday and a 0.17¢ gain on the week before.
The slaughter rate last week was 1.847m head, little changed on the previous week, but up sharply from 1.615m head a year ago.
American soyabeans go up, then down
SOYA oil prices jumped to their highest point since early 1995 in the USA last week, thanks to a global shortage of vegetable oils. The Chicago May soya oil contract has now rallied $0.60 in a week to close at $29.14 on Monday (11 May).
The soyabean market, however, has had a roller-coaster ride in recent days. Last weeks rally – prompted by heavy rain in the eastern part of the mid-west – suggested that early soyabean seedings could be delayed. And logistical problems in South American ports appeared to be hampering exports from the southern hemisphere. As a result, the Chicago July soyabean contract gained 9.5¢ to close on Friday (8 May) at $6.575/bushel.
But the July contract dropped by 7.5¢ to $6.50/bushel on Monday in line with other grain prices and drier weather forecasts for the eastern corn belt.
Demand for beans is sluggish due to a slowdown in the crush rate for soya oil production. The latest weekly statistics show that the weekly crush was 28.48m bushels, down 1.1m bushels on the previous week.
Better weather limits US maize prices
BETTTER maize prices on the American market appear to be limited by expectations of a good spring crop and greater global competition for US exports.
The western maize belt continues to enjoy excellent planting conditions and planting is on schedule with 39% of the crop in the ground, compared with 46% a year ago and a five-year average of 30%.
On the international market, China is exporting increasing quantities of corn, albeit of poor quality.
Over last week, the contract had managed to gain 2.75¢/bushel to $2.483/bushel on Friday (8 May). But this rally proved short-lived and the Chicago July futures contract dropped sharply on Monday (11 May) by 7.5¢/bushel to settle at $2.408/bushel when new forecasts suggested drier weather conditions in the eastern corn belt.
The market remains very weather-sensitive. Any forecasts of above-average precipitation could indicate planting delays in coming weeks, which could support prices.
Over-supply fear fails to knock US wheat
CONCERN over suggestions that higher-than-expected EU exports will drive world wheat prices lower has failed to affect the US wheat market adversely.
Officials from the United States Department of Agriculture had expressed worries that cheaper EU wheat shipments could impede US exports and lead to an over-supplied domestic market. Coupled with a drop in demand for imported wheat from China, this was expected to result in a fall in US wheat prices.
But US wheat prices last week were driven higher by weather-related issues, including wet conditions in the midwest which are delaying spring planting. The Chicago May contract closed on Monday (11 May) at $2.947/bushel, compared with $2.90 a week earlier.
Looking ahead, many analysts expect prices to remain at this level – at least in the short term. Although rain in the midwest could delay planting, it would take substantial precipitation to have much impact. About 65% of the spring wheat crop is already planted, compared with only 12% last year and a five year average of 29%.
US cattle prices steady after falling
AMERICAN cattle prices slumped last week after packers proved unwilling to dig deeper into their pockets for finished cattle.
Following a week of daily losses on the Chicago exchange all last week, feeder cattle steadied on Monday (11 May), thanks to weaker corn prices. The Chicago May feeder cattle contract closed at 75.72¢/lb, up 0.20¢ from Friday, 8 May at 75.52¢/lb but still down 1.48¢ on the week.
The weekly slaughter rate of 703,000 head was the highest since the second week of January and some analysts see this is a bullish sign for the near future. They say that packers have probably processed a large part of their live inventory and will therefore be back in the market shortly and ready to pay up.
But other commentators disagree, expecting packers bids to drop to 64¢/lb in the week, which could help account for the weakness in the futures market.
Meanwhile, beef cut-out prices extended their gains early in the week thanks to seasonal demand, but then drifted back on Friday (8 May). The choice grade cut-out on a 550-700lb animal closed at 103.5¢/lb, up from 102.8¢/lb from a week earlier.