In Friday’s Cattle on Feed report, the USDA said new placements onto feedlots in Dec were 3.5% above a year ago and the Jan 1st feedlot inventory, at 11.96M head, was 2.3% above last year. Heifers on feed are up 4.0% and now account for 38.3% of feedlot inventories - a level that indicates producers are not retaining enough females for continued herd expansion.
Read MoreThe Trump Administration signed “Phase One” of a trade agreement with China last week. This should have lit a fire under protein and grain prices - but it didn’t. What Phase One said was that China commits to purchase an additional $12.5B of agricultural products from the U.S. in 2020 above a baseline year of 2017. There were no specific targets for individual commodities – so it could potentially be 80% soybeans. What was not in the agreement was any change to the punitive import tariffs on U.S. pork.
Read MoreFriday’s WASDE report should have been bearish for corn prices. The USDA increased 2019/20 corn yield from 167.0 to 168.0 bushels per acre, bumped production from 13.66 to 13.69M bushels and cut projected exports from 1.85 to 1.78M bushels. Instead, traders are locked in on the prospects for a bump in exports associated with phase-one for the U.S.-China trade deal.
Read MoreIn Dec’s Cattle on Feed report, the USDA said new placements onto feedlots in Nov were 4.9% above a year ago. That helped push the Dec 1st feedlot inventory to 12.03M head, 2.5% above last year. In Dec’s Livestock, Dairy & Poultry Outlook, the USDA reduced projected 2020 beef output to 1.4% above a year ago – and that meager increase will be more than offset by a 7.6% jump in exports and a 5.4% decline in imports.
Read MoreIn its quarterly (12/23) Hogs & Pigs Report, the USDA pegged the Dec 1 inventory at 77.34M head, up 3.0% from Dec 2018. Market hogs (to be slaughtered from Dec-May) were 70.88M head, 3.1% higher than a year ago. The breeding herd (6.46M head) was 2.1% larger than last year. Those numbers point to record large pork supplies in 2020.
Read More‘Twas the night before Christmas and all through the House, the Dems had decreed “impeach that tweet mouse.” The Articles were hung by the chimney with care, in hopes that the Senate might soon grow a pair. The Donald was nestled all snug in his bed, watching Fox News without any dread. Then up on the Hill there arose such a clatter, I drove to DC to see what was the matter.
Read MoreIn last week’s WASDE, the USDA left 2019/20 corn output unchanged from its November report. However, only 92% of this year’s planted corn was harvested – and early snow/frost across the upper Midwest could keep that remaining 8% buried through winter. Declining corn supplies will be offset by softer demand. The USDA left its 2019/20 corn price forecast unchanged at $3.85/bushel.
Read MoreAfter years of decreases, coffee prices are on the move. Coffee futures, which dropped to $.9350/lb in October, closed at $1.2370 on Friday (12/6). The International Coffee Organization (ICO) projects 2019/20 world coffee production at 167.4M bags, 0.9% below a year ago, with Arabica output down 2.7%. Given rising world coffee consumption, the ICO projects a global coffee deficit of 502,000 bags in 2019/20.
Read MoreIn a year when China’s ASF disaster has already helped raise prices of U.S. pork and beef 90s trimmings – and is now potentially threatening poultry prices –surprisingly it’s cheese that has been the most volatile commodity. CME block cheese prices hit 5-year highs of 2.2375/lb in Sept and are currently $1.9625.
Read MoreIn Friday’s Cattle on Feed report, the USDA said new placements onto feedlots in Oct were 10.2% above a year ago. That helped push the Nov 1st feedlot inventory to 11.83M head, 1.2% above last year. Placements were skewed toward lighter weights for the 2nd straight month, partly due to poor pasture conditions
Read MoreLast week, China lifted a ban on poultry imports from the U.S. that has been in place since highly pathogenic avian influenza (HPAI) was detected in the U.S. in 2015. The U.S. has been HPAI free since 2017. In 2016/17, China had to confront its own outbreak of avian flu. This included human infections, a lack of public trust in chicken and destocking its poultry inventory to control the disease.
Read MoreFriday’s USDA WASDE report was mostly neutral for grain prices. The USDA reduced projected corn harvest as cold, wet conditions late in the growing season cut yields in key production areas. Early snow/frost across the upper Midwest will likely further reduce yields in subsequent reports.
Read MoreClass III milk futures at $20.19/cwt are up 46.2% since the beginning of 2019 and are currently 35.7% above year-ago levels. High slaughter rates have pushed the milk cow herd at its lowest level since early 2016. Global milk production is lackluster, with demand for dairy products exceeding available supplies and pushing prices higher in most parts of the world.
Read MoreFriday’s USDA Cattle on Feed report was neutral for prices. New placements onto feedlots in Sept were up 2.0% from a year ago, breaking a streak of 4 straight (YOY) monthly declines. Placements were skewed toward lighter weights, as drought in Texas likely forced feeders off of pasture prematurely. The Oct 1st feedlot inventory, at 11.28M head, was 1.1% below last year.
Read MoreOn Oct 10, the USDA’s Foreign Agricultural Service released its semi-annual projection of global livestock and poultry production. The USDA is now estimating that China’s ASF-decimated sow breeding herd will be 26M head on Jan 1, 2020, down 30% from Jan 1, 2019 and 40% below Jan 1, 2018. Chinese losses will reduce global pork production by 6% in 2019 and another 10% in 2020.
Read MoreUSDA corn crop estimates keep inching lower but are still higher than what private analysts were anticipating following the devastating spring floods in the Midwest. In Thursday’s WASDE report, the USDA cut its corn production forecast, but it also raised yield per acre and lowered projected corn usage for ethanol and exports.
Read MoreFollowing a 10-year fight, the World Trade Organization finally sided with the U.S. in a case involving subsidies the European Union gives to Airbus (the top Boeing competitor). As a result, the U.S. Trade Representative (on Oct 2) announced a plan to impose retaliatory tariffs on European products. The tariffs will go into effect on Oct 18.
Read MoreThe U.S. pork industry continues to be driven by two distinct narratives: 1) very large current pork supplies, and 2) the prospects for a huge increase in future exports due to China’s African Swine Fever hog losses. In Friday’s quarterly Hogs and Pigs report, the USDA reported total U.S. herd inventories on Sept 1st at 77.7M head, up 3.4% from a year ago and a half-point above analyst’s expectations.
Read MoreFriday’s Cattle on Feed Report was bullish for prices. The USDA said new placements onto feedlots in Aug were 9.0% below a year ago, and that the Sept 1st feedlot inventory, at 11.0M head, was down 1.3%. In last week’s Livestock, Dairy & Poultry Outlook, the USDA highlighted the Aug 9 fire at a Tyson Foods plant in Holcomb, KS, and how capacity constraints will slow the pace of cattle slaughter through year’s end.
Read MoreIn Thursday’s WASDE report, USDA crop estimates got a little closer to what private analysts were anticipating following spring floods in the Midwest. Corn output for 2019/20 was revised downward, from 13.9B bushels (Aug) to 13.8B, while average private trade estimates have increased from 13.1 to 13.5B. Corn futures, which hit highs of $4.54 on 7/12, fell to $3.40 (9/9) before recovering post-report to $3.55 on Friday (9/13).
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