Monday, August 30, 2010

Good Year for Georgia Pecans, Bad for Peanuts

Georgia's tobacco and pecan crops are on pace for a surprisingly good year, but above-normal temperatures have taken a toll on peanuts and cotton. Pecan trees are alternate-bearing, meaning they produce a full crop every other year; most trees in Georgia are on the same cycle and this was supposed to be an "off" year for pecan production, but Georgia farmers will likely produce 75-80 million pounds, double what has been produced in other off years. Extreme heat in July and early August hurt peanut plants' ability to set peanut pods. Yield is expected to be 3,300 pounds per acre, or 7 percent less than last year. [University of Georgia Cooperative Extension]

Placements of Cattle on Feed Has Slowed

USDA released its August Cattle on Feed report last Friday, reporting its inventory estimates for feedyards with 1,000+ head capacities. Net placements of cattle on feed during July, at 1.706 million head, were down 6.3% compared to last year, marking the first month since February to see a reduction in placements relative to 2009.

While July placements were still 1-2% higher than what the trade expected prior to the report’s release, it did confirm that the sharp increase in placements during May and June slowed last month. Part of this percentage decline in placements relative to a year ago is a function of Summer 2009 placements.

Last year, May and June placements were down sharply and July placements were above the 5-year average. Thus, larger placements this May and June and smaller July placements would be expected just for average placements. Feedlot profitability and grass conditions have also driven this summer’s placement pattern.

Good feedlot returns following the rally in fed cattle prices in April encouraged higher placements in May and June. Higher corn prices, strong feeder cattle prices, and the seasonal drop in fed cattle prices contributed to July placements forecasting breakeven or even negative margins. Additionally, very good pasture and range conditions are allowing stockers to remain on grass longer this year, and thus weren’t placed on feed in July.

The largest reduction in placements was observed for 600-699 lb. feeder cattle (down 16.4%) and <600 lb. feeder cattle (down 8.8%). Placements of cattle weighing 700-799 lb. were down only 2%, while 800+ lb. placements were steady with year-ago levels. The largest decreases in placements occurred in Texas (-17.7%), Oklahoma (-29.0%), and Arizona (-16.0%), while South Dakota, Iowa, and California saw increases of 13-14%.

Marketings for the month of July totaled 1.903 million head, 1.7% less than July 2009 and about 1.5% less than analysts expected prior to the release of the report. Although these numbers are somewhat negative, an improvement in slaughter numbers in August should mitigate the impact of the lower marketings.

Further, July 2010 had one less marketing day than July 2009, so average daily marketings were actually up about 3% compared to last year. As a result, feedyards continue to remain very current.

The number of cattle on feed for more than 120 days on August 1 was 8% less than one year ago. Additionally, steer dressed weights remain below year-ago levels (8 lb. lighter) and, despite seasonally increasing, are being held in check by excessive heat and humidity in the central U.S. cattle feeding areas. With slightly more placements and fewer marketings than expected in July, the August 1 cattle on feed inventory was slightly higher than expected as well. At 9.873 million head, the cattle on feed total was 2.4% higher than August 1, 2009, but 2.7% less than the 5-year average. Overall reaction to the report was viewed mostly neutral to slightly bearish. However, overriding bullish fundamentals have continued to support fed cattle prices. Strong exports, improving domestic demand, and purchases for the Labor Day weekend provided strong support in the fed cattle market last week.

Trade developed late Wednesday afternoon at sharply higher prices, and feedyards continued to sell cattle into the evening hours beyond what was on their showlist for the week. Prices in Nebraska were generally at $155/cwt on a dressed basis, or $97-97.50/cwt on a live basis. Additional sales continued in Nebraska on Thursday, at $155-156/cwt (dressed) or $99-100/cwt (live). Texas and Kansas also saw active trade on Thursday, reaching $100/cwt on a live weight basis.

For the week, the 5-area fed cattle price averaged $98.65/cwt (live) or $154.55/cwt (dressed), up $4-5/cwt for the week. These higher prices were underpinned by a strong rally in the boxed beef market. Choice boxed beef averaged nearly $5/cwt higher last week. Higher fed cattle prices supported yearling feeder cattle prices last week that were about $1/cwt higher in Oklahoma and $2.50/cwt higher in Nebraska. Calf prices, however, were more susceptible to the $0.08/bu increase in corn prices, and ended the week at steady to lower prices. Despite a small increase in distillers grain prices last week, they continue to remain a good buy for rations, with DDGS and WDGS price trading at 70% and 60%, respectively, of the corn price (dry matter basis).

Source: Darrell R. Mark, Department of Agricultural Economics, University of Nebraska–Lincoln

Farm Supply
Illustration: Antique Cattle I

Saturday, August 14, 2010

Strong Mid-year Results for US Pork, Beef Exports

A very solid June performance allowed U.S. pork and beef exports to finish the first half of 2010 with strong momentum. According to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF), pork exports of 164,000 metric tons (361.6 million pounds) were 24 percent higher than June 2009. Pork export value was $316.4 million, up 34 percent. June beef exports were 25 percent above year-ago volumes, totaling 96,578 metric tons (212.9 million pounds), while the value in June was up 37 percent to $377.6 million.

For the first six months of the year, pork exports were 3 percent above their year-ago pace in terms of volume (951,803 metric tons or 2.1 billion pounds). But with much-improved pork prices, export value was nearly 10 percent higher at $2.35 billion. This is slightly higher than the value reached in the first half of 2008 ($2.32 billion), the year in which pork export value set an all-time record.

Export value per head during the six-month period was more than $44 - up significantly from $39.20 in 2009. The industry exported 24 percent of its total production, compared to 23 percent last year.

Beef export volume reached 495,443 metric tons (1.09 billion pounds) - up 14 percent over the first half of 2009. Export value has fared even better, rising 22 percent to $1.83 billion. Export value per steer and heifer slaughtered was $139, compared to less than $115 last year. The percentage of total production exported increased from 10 percent to 11 percent.

(Note: Export totals include both muscle cuts and variety meat, unless otherwise indicated.)