North American roundup 21 August
US ranchers lose heavily as Chicago plummets
THE American beef market is experiencing one of its most volatile periods in recent months. Cattle futures prices plummeted last week and they soared before finally collapsing yesterday (Wednesday).
The Chicago Mercantile Exchange live cattle futures contract for September closed yesterday at 59.625¢/lb, down 1.225¢ on the day and down from 62.5¢ at the start of last week.
The September futures contract followed a similar roller-coaster path, settling on 19 August at 67.975¢/lb, down almost 1¢ on the day and 2¢ lower than the beginning of the previous week.
At these levels, most embattled US ranchers are losing heavily. The market has reacted bearishly to the latest Cattle on Feed report released a week ago by the US Department of Agriculture.
The report shows that the year-on-year number of cattle being fattened up in feedlots with a capacity of over 1000 head has grown 2% to 8.99m.
Although the year-on-year number of new placements into the feedlots dropped 3% to 1.93 mn head during July, fat cattle marketings to packing houses also shrank 3% to 2.05 mn cattle.
On the positive side, there are more medium weight cattle are being slaughtered and fewer heavy cattle. This suggests that producers are slowly overcoming their reluctance to market loss-making cattle and this could help reduce long-term oversupply.
Pig prices retreat in USA
AFTER a small price recovery early last week, the US hog and pork complex has again retreated on reports of increased production which is outstripping growth in domestic pork consumption and exports.
The cash market is leading futures prices lower. Terminal prices for cash hogs are struggling at 35-35.5¢/lb. Prices in Iowa are about 2¢ down on late last week at 34.00-35.00¢/lb.
In Chicago, the September lean hogs futures contract closed yesterday (Wednesday) at 43.675¢/lb, a drop of 0.4¢ on the previous day and down from 46¢ on late last week.
Until the slaughter rate picks up, there is little to drive pig prices higher. The weekly slaughter rate is currently at 724,000 head, compared with 723,000 last week and 647,000 at this time last year.
Some analysts forecast that the weekly rate will pick up to about 2 million pigs in September due to seasonal factors and this is likely to support the lean hog market.
USA maize price at a five-year low
PREDICTIONS of a good harvest and expectations of a drop in exports have restricted US maize prices to a five-year low.
US Government reports forecast one of the largest domestic crops ever. Better weather is helping maintain the maize yield forecast at 120-160 bushels/acre in Ohio and eastern Indiana.
An influential Mid-West crop inspection has further confirmed a healthy maize yield. The inspection tour, organized by farmers representatives and the news service Pro Farmer, has the clout to move the futures market in Chicago.
On the Chicago Board of Trade, the September futures contract closed yesterday (Wednesday) at 209.75¢/bushel, up 1¢ from the previous day but down from about 215¢ early last week.
On the demand side, the international arena is hurting export prospects amid fears that the economic crises in Asia and Russia could hit overseas US maize sales.
The weakness in global financial markets is also having a negative impact on grain commodities. But floods in China could cut Chinas rice production by around 9% this year and this could boost demand for other grains.
STATESIDE wheat prices have managed to extend the modest gains posted since the start of August following a tightening of available supplies.
The Government last week revised downward its 1998/99 carryover estimate and Egypt recently purchased 250,000 tonnes of white wheat from the USA, which further encouraged market sentiment.
But analysts warn that the market is still burdened by oversupply. Grain elevators in Kansas are overflowing and the situation is likely to worsen in September as farmers try offload their crops.
The spring wheat crop is well advanced thanks to favourable weather over recent months. More than 31% of the spring wheat crop is harvested, well ahead of the 9% this time last year and the five-year average completion rate of 10%.
The Chicago September futures contract settled yesterday (Wednesday) at 258¢/bushel, down 0.25¢ on the day but up 3¢ on the week.
BETTER crop conditions in the US have slowed the rally in soyabean prices.
Modest gains for USA wheat price
Weather slows US soya rally
Prices had climbed last week on the back of forecasts for warmer, drier weather which could hurt the bean crop at this point in the season.
But forecasts this week predicted lower than expected temperatures in the Mid-West, and Iowa and Illinois have enjoyed more rain over recent days.
The Chicago September futures contract closed on yesterday (Wednesday) at 547.25¢/bushel, up 5.5¢ on the day and little changed from a week earlier.
The season is well advanced thanks to favourable weather. Farmers report that their soyabean crops are in good shape, with 23% rated fair, 48% good and 18% excellent.
More than 68% of crops are setting pods, well up on the last years 59% and well ahead of the 50% five-year average.