North American roundup 6 May
Spring rally pushes pigs higher
LIVE pig prices jumped this week in the USA as the seasonal spring rally got underway. Cash bids topped 40¢/lb for the first time this year compared with around 38-39¢/lb a week ago.
The upward trend continued yesterday (Tuesday) with reported prices as high as 42¢/lb for 220-270lb animals. Strong domestic wholesale demand for pork products is supporting the market, as are reports of South Korean buying interest in bellies.
Traders warn that the slaughter rate will have to slow down to enable the market to hang on to its gains. But higher prices are tempting farmers to bring pigs to market.
On Monday, pig slaughter under federal inspection totalled 358,000 head, unchanged from the previous week and sharply higher than the daily slaughter rate of 290,000 head this time last year.
On the Chicago futures market, contracts for lean pigs were pulled higher by higher prices. The June lean hogs contract closed on Monday (4 May) at 61.5¢/lb, up almost a cent on the previous week and up 5.5¢ on mid-March when the latest rally began.
US soyabean futures ease 7¢/bushel
SOYABEAN futures in the USA traded mostly unchanged early last week. Forecasts for drier weather in the eastern Corn Belt initially raised expectations of a delay in planting. But it was not enough to prompt a significant market rally.
The Chicago May futures contract lost its previous weeks gains to end trading on Monday (May 4) at $6.41/bushel, down 7¢ on the week.
Higher soya oil prices early in the week helped to support the market for unprocessed beans. But the oil market was hit by speculative selling following news of a jump in domestic stocks from 1.52 billion lbs last September to 1.812 billion lbs this March.
The Chicago May soya oil contract lost 36¢ on the week to close on Monday (May 4) at $28.54.
Weather drives US maize market
MAIZE prices on the Chicago futures market are fluctuating from day to day on ever-changing weather updates. But many brokers predict a long-term downward trend for maize due to the likelihood of a heavily oversupplied market.
Prices came under pressure early last week as better weather enabled planting to continue. But mid-week forecasts of rain soon drove the market higher as traders cautioned against a possible interruption to spring drilling.
By Friday, 1 May, however, forecasts of better planting conditions once again drove prices lower. But that was reversed yesterday when the market gained renewed strength from forecasts of additional rain.
Officials estimate that 39% of the maize crop is now in the ground, compared with 46% this time last year and a five-year average of 30%. The first shoots of spring are starting to show through, with 4% of the new crop emerged.
Meanwhile, export demand remains poor, putting further pressure on prices. During the week ended April 30th, customs officials inspected only about 460,000 tonnes of maize for export, compared with about 700,000 tonnes a year ago.
Chicago corn futures continued their latest downward slide which started in mid-April, with the May contract hitting a new contract low of $2.43 on Friday, 1 May . Trading closed yesterday (Monday May 4) at $2.44/bushel, down 2¢ on the week.
Wheat prices dragged lower still
CONTINUED expectations of a bumper US harvest conspired to drag wheat prices even lower last week.
The Chicago futures contract for May lost 6¢ to close at a contract low of $2.90/bushel on Friday. Ideal weather conditions mean that the spring wheat crop is already 65% planted, compared with only 12% this time last year and a five-year average of 29%.
With exports running at poor levels, some US congressmen from farming states are pushing to resume US wheat exports to Iran.
Traders say there is little hope of further subsidised exports to South Korea, and US officials have indicated they will probably refuse further agricultural credits to that country following the $1.5 billion already filled since last September.
Barbecue season lights up USA cattle prices
RETAIL beef prices are setting new highs for 1998, thanks to improved wholesale demand as Americans light up their barbecues. The choice-grade joints on 550-700lb carcasses climbed to 102.8¢/lb on Monday (4 May), from 99.2¢/lb a week ago.
Many packers see a further jump in boxed beef prices over the next 10 days ahead of the Memorial Day weekend, and are stepping up their slaughter rate. Packers slaughtered 129,000 head on Monday, one of the highest figures for the start of the week in many months.
Better product prices are filtering through to live cattle. As of the start of this week, packers were bidding 66-67¢/lb for fed cattle while sellers were asking 68-70¢/lb, compared with 64¢ bids and 67¢ offers a week ago.
Feeder cattle prices rallied strongly last week, but gave back some of their gains early this week because of strength in the corn market. The Chicago May feeder cattle contract closed on Monday at 76.7¢/lb, off slightly from last Thursdays high of just over 77¢ but still up 1.1¢/lb from a week ago.