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'Culprits' for beef

'Culprits' for beef

FOR beef producers, bearish stories were everywhere last week: Cattle weights continued to be record heavy, beef production continued to exceed year ago and packer margins remained poor, all of which canceled out expectations for a cattle price rally on limited fed and beef supplies.

Chicken and pork production was increasing or preparing to do so.

Beef demand suddenly was becoming an issue, according to Feedstuffs sources.

In one commentary, Steve Meyer and Len Steiner, in an edition of their "Daily Livestock Report," noted that beef, pork, chicken and turkey production -- total meat and poultry production -- currently is running 3% more than year ago while consumer prices are record high.

Accordingly, consumers are being asked to pay higher prices for more product while the economy remains stuck in neutral and while consumers are paying higher gasoline prices and taxes, the latter a consequence of higher payroll taxes for Social Security, Meyer and Steiner said.

Accordingly, the issue is not demand but prices and supplies, they said.

In a second commentary, Oklahoma State University extension livestock marketing specialist Derrell S. Peel noted that beef production this year is still expected to decrease 3% from last year and potentially could drop another 5% next year, which means pressure will continue to grow on wholesale and retail beef prices in the months to come.

The question often posed, he said, is whether beef is pricing itself out of the market.

However, Peel reported that beef demand is recovering from the 2008-09 recession and, based on a demand index maintained by the Livestock Marketing Information Center, was at its highest level in five years during the 2012 fourth quarter.

Nevertheless, beef demand may not be keeping up with beef prices, which undoubtedly will be record high over the next two years, Peel said. Demand, therefore, will be influenced by chicken and pork supplies, which are expected to be "on either side of unchanged" this year, and large chicken and pork supplies will temper beef price strength, he added.

Beef demand also will be influenced by international trade. Exports, if checked by bans in China and Russia on meat from ractopamine-fed livestock, and imports, if encouraged by high U.S. beef prices that will attract increasingly more imports from Australia, New Zealand and other suppliers, will temper beef price strength, he said.

The issue is not demand but beef, pork and poultry prices and supplies, Peel said.

In a third commentary, Mississippi State University agricultural economist John Michael Riley explained that beef demand is not a measurement of consumption or a percentage of beef consumed versus chicken or pork consumed.

He said the "leading culprits" in the current discussion include the increase in Social Security taxes -- from 4.2% to 6.2% -- that went into effect on Jan. 1 as a consequence of the fiscal cliff negotiations.

This represents $1,000 less spending power per household per year, or $83 per month, Riley said, and "across all households, that adds up." It pushed consumers to make spending decisions, including switching to cheaper beef products and/or to cheaper chicken and pork products, he said.

The flu outbreak and storms in the Northeast this winter also have "displaced beef consumption," but the main worry is the decrease in take-home pay that could price consumers out of the beef market, Riley said in reference to Peel's question.

 

Export profits

In the cattle markets last week, cattle did not trade in sufficient volume through Thursday to establish prices and, at week-before levels, were $123.00/cwt., 0.4% lower than at this time last year.

In the hog markets last week, hogs fell hard, dropping $5.00-6.00 across the Corn Belt to $76.58-77.27/cwt. on a lean carcass basis last Thursday, prices that were equivalent to a $58 live cash hog market and 6.4% lower than year ago.

Analysts had expected higher prices due to cold and snow in the Midwest that they thought would force packers to pay up to get hogs in off the farms.

Analysts also had factored the good news about beef and pork exports into their forecasts for the week.

In 2012, beef exports set a new value record, and pork exports set both value and volume records (Tables 1 and 2), according to data from the U.S. Meat Export Federation (MEF).

Export markets represent "a critical profit center" for beef and pork producers, MEF chief executive officer and president Phillip Seng said, pointing to how last year's cattle and hog export values also set new per-head records, returns "that were sorely needed" for producers challenged by high corn and feed ingredient costs.

MEF said beef exports increased the per-head value of cattle by $10.36 to $216.73/cwt. last year from 2011, and pork exports increased the per-head value of hogs 1.0% to $55.87/cwt. last year from 2011.

However, the markets instead watched the announcements concerning ractopamine from China and Russia, which reported that they will no longer accept beef or pork from ractopamine-fed animals. China represents the sixth-largest export point for U.S. beef and Russia the sixth-largest export point for U.S. pork.

Neither country explained certification protocols, although it was understood late last week that China was extending its deadline for protocols from March 1 to May 1.

Ractopamine is a feed additive that enables lean muscle growth in animals, including turkeys. The U.S. Food & Drug Administration has found ractopamine to be an effective and safe product for animals, and has determined that residues in meat -- at minimum, specified limits -- are safe for human consumption.

FDA's conclusions are supported by the U.N.'s food standards body.

Accordingly, observers called the bans "saber rattling" designed more to protect domestic cattle and hog industries than consumers.

The bans would adversely affect the U.S. beef industry the most since there are pork producers in the U.S., including leader Smithfield Foods Inc., and turkey producers that already have dedicated ractopamine-free feed mills, farms and processing plants.

Smithfield issued a statement last week emphasizing the effectiveness and safety of ractopamine but explaining that it is prepared to meet customer requirements for ractopamine-free pork. Smithfield also encouraged the U.S., Chinese and Russian governments to expeditiously negotiate certification protocols.

Beef packers, meanwhile, did acknowledge last week that they have been talking with feedlots about the extent to which ractopamine use can disrupt important export markets and about the need for at least some feedlots to dedicate operations to a ractopamine-free model. However, packer spokespeople told this column that they have not placed any restrictions on their suppliers.

 

Market roundup

Elsewhere in the markets last week, the chicken markets were quiet and unchanged in end-of-the-month, needs-only buying that was balanced by limited supplies, sources said.

Chickens were $1.02-1.06 and 91-99 cents/lb. in the eastern and midwestern regions last Thursday, 12.4% higher than year ago.

Breast meat was $1.29-1.38/lb., 19.7% more than year ago, and full wings, after dropping 57 cents over the two previous weeks, held at $1.50-1.60/lb., down 3.1% from year ago. However, sources acknowledged that wings still were available and that they were not sure if the product has settled.

The egg markets were settled and steady in modest demand for manageable supplies, sources said. Eggs were $1.07-1.11/doz. and 99 cents to $1.01/doz. for large-sized eggs delivered to eastern and midwestern store doors last Thursday, 6.9% higher than year ago.

The turkey markets were unchanged for the sixth straight week at a national average offer of 92-99 cents/lb. for hens and retail-sized toms last Thursday, 5.4% lower than year ago. Sources said processors were working to book turkeys at current levels to establish a floor for the markets.

Fresh tom breast meat remained very weak, dropping another 2 cents to $1.65/lb. last Thursday, down 35 cents this year, down 65 cents from last fall and down 17.5% from year ago. Sources said the breast meat "problem" is becoming more and more worrisome, and the industry needs "a nice, warm, early spring" to increase breast meat demand for sandwiches.

In the dairy markets last week, butter slipped 0.25 cent to $1.60/lb. last Thursday, and barrel and block cheeses dropped 1 cent and 4 cents to $1.63/lb. and $1.6350/lb. However, butter was 14.5% more than year ago, and barrels and blocks were 10.1% and 9.9% over year ago.

Sources suggested that the butter and cheese markets were doing well in light of increased milk production, especially east of the Rocky Mountains, but noted that the drop in demand following the Super Bowl was being offset by an increase in demand for Easter and Passover.

However, sources also pointed to a big negative in the fact quick-service restaurants are shifting away from burgers due to high beef prices and switching to chicken and fish. This could have a long-term impact on cheese demand and prices, according to dairy market analyst Jerry Dryer.

Fluid (beverage) milk sales continued to decrease last year, according to the U.S. Department of Agriculture, with fluid milk sales down 3.0%. USDA said conventional milk sales were down 3.3%, while organic milk sales were up 2.3%.

 

1. U.S. beef exports (2002-12)

 

Volume (mt)

Value (billion $)

2012

1,130,000

5.510

2011

1,287,259

5.420

2010

1,067,279

4.078

2009

897,376

3.082

2008

984,712

3.619

2007

771,196

2.617

2006

655,920

2.041

2005

472,668

1.365

2004

321,967

0.809

2003

1,274,098

3.856

2002

1,233,769

3.204

 

2. U.S. pork exports (2002-12)

 

Volume (mt)

Value (billion $)

2012

2,260,000

6.300

2011

2,255,334

6.108

2010

1,917,649

4.781

2009

1,865,745

4.329

2008

2,052,447

4.884

2007

1,305,622

3.154

2006

1,262,499

2.864

2005

1,157,689

2.634

2004

1,023,413

2.227

2003

757,406

1.582

2002

726,357

1.504

Source for Tables: U.S. Meat Export Federation.

 

Volume:85 Issue:08

Livestock & poultry cash market comparisons, 2/25/13

Livestock & poultry cash market comparisons, 2/25/13

Livestock and meat ($)

Feb. 20

Feb. 13

6 months ago

Year ago

Steers, Choice, carcass, 550-700 lb., cwt., Omaha

182.31

183.68

193.73

203.00

Steers, Choice, 1,050-1,200 lb., cwt. Okla/Texas

123.00

123.00

120.00

129.00

Feeder Steers, 600-700 lb., cwt., Oklahoma City

157.50A

156.25A

143.00A

172.12A

Lean Hogs, Carcass, Iowa-Minn. 167-187 lb.*

82.65

85.31

86.32

84.66

Feeder Pigs, 40 lb. National Direct Delivered**1

75.55

80.27

19.08

85.38

SEW Pigs, 10 lb., National direct delivered**

48.39

52.12

8.08

57.43

Choice Beef, cutout, cwt.

182.35

183.53

193.83

196.88

Pork Loin, 185 lb. 51-52% lean, cutout, cwt.

93.36

87.58

96.58

97.99

Hog Corn Ratio

10.7

11.5

9.7

13.5

Steer Corn Ratio

17.0

17.1

14.8

20.1

Poultry and eggs (cents)

 

 

 

 

Chickens, Grade A, Fresh lb. Chicago

96.48a

93.95a

80.09Aa

90.45a

Hen Turkeys, Grade A, Frozen, lb., Chicago

95.50Aa

95.00Aa

110.00Aa

101.00Aa

Young Tom Turkeys, Grade A. Frozen lb. Chicago

95.50Aa

95.00Aa

110.00Aa

101.00Aa

Eggs, Grade A, Large, doz., Chicago

97.50

112.50

118.50

89.50

N/A: not available

A: average

 

 

 

*Replaces live hogs; live hogs are 0.74 of quote.
**Price quoted is per head.
**1Replaces Sioux Falls, 50-60 lbs.  2/26/07
Livestock, meat, poultry and egg prices from USDA.

 

Volume:85 Issue:08

Ingredient market prices, 2/25/13

Ingredient market prices, 2/25/13

The following prices, which include delivery, were obtained Feb. 20 from feed and grain vendors in the U.S. and Canada. The prices represent current trading values but are not guaranteed. Second column shows the amount of change since the previous week. Prices of certain products can vary depending on the processing method used. N-Nominal. N/A-Price not available.

OILSEED PRODUCTS

 

 

(dollars per ton)

 

 

Soybean meal

 

 

(high-protein)

 

 

Atlanta

503.00

43.00

Boston

483.00

34.00

Buffalo

474.00

29.00

Chicago

451.00

23.00

Delmarva

N/A

-

Fayetteville NC

513.00

43.00

Ft. Worth

478.00

33.00

Kansas City

435.00

19.00

Los Angeles

475.00

11.00

Memphis

460.00

40.00

Minneapolis

437.00

27.00

Okeechobee

533.00

43.00

Portland

474.15

11.35

San Francisco

475.00

11.00

Twin Falls

502.00

33.00

Soybean meal

 

 

(low-protein)

 

 

Atlanta

493.00

43.00

Boston

478.00

34.00

Buffalo

470.00

29.00

Chicago

439.00

23.00

Delmarva

N/A

-

Fayetteville NC

503.00

43.00

Ft. Worth

N/A

-

Kansas City

435.00

19.00

Los Angeles

448.00

11.00

Memphis

450.00

40.00

Minneapolis

N/A

-

Okeechobee

523.00

43.00

Portland

N/A

-

San Francisco

448.00

11.00

Soybean hulls

 

 

Atlanta

250.00

-25.00

Buffalo*

245.00

-

Chicago

235.00

-

Fayetteville, NC

245.00

-25.00

Ft. Worth*

240.00

5.00

Los Angeles

254.00

-

Minneapolis

195.00

-10.00

Okeechobee

255.00

-25.00

San Francisco

254.00

-

Twin Falls

266.00

6.00

* unpelleted

 

 

Whole cottonseed

 

 

Atlanta

265.00

5.00

Buffalo

315.00

-

Chicago

315.00

-

Delmarva

N/A

-

Fayetteville NC

265.00

5.00

Ft. Worth

350.00

5.00

Los Angeles

388.00

1.00

Lubbock

340.00

10.00

Memphis

285.00

-

Okeechobee

292.00

5.00

Portland

377.50

-

San Francisco

388.00

1.00

Twin Falls

371.00

6.00

Cottonseed meal

 

 

Atlanta

330.00

-5.00

Chicago

320.00

-

Delmarva

330.00

-5.00

Fayetteville NC

330.00

-5.00

Ft. Worth

320.00

-10.00

Kansas City

310.00

-10.00

Los Angeles

N/A

-

Lubbock

310.00

-5.00

Memphis

270.00

-5.00

Okeechobee

340.00

-5.00

San Francisco

370.00

6.00

Cottonseed hulls

 

 

Atlanta

120.00

-

Chicago

145.00

-

Fayetteville NC

120.00

-

Ft. Worth

135.00

-10.00

Okeechobee

130.00

-

Los Angeles

N/A

-

Lubbock

140.00

-5.00

San Francisco

143.00

-4.00

Canola meal

 

 

Buffalo

404.00

27.00

Minneapolis

285.00

-

Los Angeles

375.00

5.00

Montreal

N

-

Portland

359.15

6.00

San Francisco

375.00

5.00

Twin Falls

382.00

33.00

Vancouver

290.00

-

Sunflower seed meal

 

 

Fargo

240.00

-

Minneapolis

235.00

-

Linseed  meal

 

 

Atlanta

N/A

-

Chicago

315.00

-5.00

Fargo

315.00

-

Fayetteville NC

N/A

-

Ft. Worth

351.00

-

Kansas City

295.00

-

Minneapolis

295.00

5.00

Safflower meal

 

 

Los Angeles

N/A

-

San Francisco

238.00

-

ANIMAL BYPRODUCTS

 

 

(dollars per ton)

 

 

Meat and bone meal

 

 

(ruminant)

 

 

Buffalo

420.00

20.00

Chicago

460.00

15.00

Delmarva

515.00

25.00

Fayetteville NC

500.00

40.00

Ft. Worth

420.00

20.00

Kansas City

415.00

20.00

Los Angeles

365.00

-

Memphis

480.00

30.00

Minneapolis

400.00

25.00

Portland

385.00

7.50

San Francisco

365.00

-

Meat and bone meal

 

 

(porcine)

 

 

Fayetteville NC

505.00

20.00

Los Angeles

409.60

-

Memphis

485.00

20.00

Minneapolis

475.00

25.00

Flash-dried blood meal

 

 

(ruminant)

 

 

Fayetteville NC

1100.00

50.00

Los Angeles

1125.00

-

Memphis

1075.00

50.00

Minneapolis

1075.00

25.00

Flash-dried blood meal

 

 

(porcine)

 

 

Fayetteville NC

1100.00

-

Memphis

1075.00

-

Minneapolis

1100.00

25.00

Poultry byproduct meal

 

 

(feed grade)

 

 

Atlanta

500.00

-

Fayetteville NC

600.00

50.00

Ft. Worth

400.00

-35.00

Kansas City

400.00

-

Los Angeles

495.00

-

Memphis

600.00

50.00

Poultry byproduct meal

 

 

(pet food grade)

 

 

Memphis

875.00

25.00

Fayetteville NC

875.00

25.00

Hydrolized feather meal

 

 

Atlanta

650.00

-

Delmarva

650.00

5.00

Fayetteville NC

655.00

-

Ft. Worth

710.00

-10.00

Kansas City

700.00

-

Los Angeles

N/A

-

Memphis

675.00

15.00

Minneapolis

725.00

-

Menhaden fish meal

 

 

Atlanta

1595.00

-

Buffalo

1520.00

25.00

Chicago

1500.00

-

Fayetteville NC

1555.00

-

Ft. Worth

N/A

-

Kansas City

1520.00

-

Memphis

1600.00

-

Minneapolis

1750.00

-

Twin Falls

N/A

-

Blended tuna meal

 

 

Los Angeles

N/A

-

San Francisco

N/A

-

Anchovy  meal

 

 

Los Angeles

N/A

-

San Francisco

N/A

-

ANIMAL FAT, GREASE

 

 

(cents per pound)

 

 

Prime Tallow

 

 

Chicago

36.25

-

Ft. Worth

N/A

-

Los Angeles

38.50

0.50

San Francisco

38.50

0.50

Yellow grease

 

 

Buffalo

37.50

1.00

Chicago

37.50

-

Delmarva

N/A

-

Fayetteville NC

39.50

-

Ft. Worth

36.00

-

Kansas City

35.00

-

Los Angeles

37.50

0.50

Memphis

39.50

-

Minneapolis

39.50

0.25

San Francisco

37.50

0.50

Choice white grease

 

 

Chicago

42.00

-

Minneapolis

44.25

0.75

Bleachable fancy tallow

 

 

Buffalo

41.00

1.00

Chicago

41.00

-

Ft. Worth

38.00

-

Los Angeles

N/A

-

Minneapolis

42.50

1.00

San Francisco

N/A

-

Vegetable-animal blend

 

 

Ft. Worth

37.00

-

Los Angeles

36.63

-

Minneapolis

39.75

0.25

San Francisco

36.63

-

Poultry grease

 

 

(feed grade)

 

 

Delmarva

41.00

1.00

Fayetteville NC

39.50

-

Memphis

38.50

-

Poultry grease

 

 

(pet food grade)

 

 

Memphis

44.50

-

Fayetteville NC

44.50

-

GLUTEN, HOMINY

 

 

(dollars per ton)

 

 

Corn gluten meal

 

 

Buffalo

690.00

-

Chicago

605.00

10.00

Kansas City

690.00

-

Los Angeles

680.00

-

Corn gluten feed

 

 

Buffalo

225.00

-

Chicago

208.00

-

Fayetteville NC

275.00

-

Kansas City

265.00

-

Okeechobee

295.00

-

Twin Falls

N/A

-

Wahpeton

N

-

Hominy feed

 

 

Atlanta

325.00

3.00

Boston

280.00

5.00

Buffalo

293.00

-1.00

Chicago

228.00

-2.00

Fayetteville NC

325.00

3.00

Kansas City

240.00

5.00

Los Angeles

305.00

5.00

Okeechobee

343.00

2.00

San Francisco

305.00

5.00

Twin Falls

310.00

-

BREWERS, DISTILLERS

 

 

(dollars per ton)

 

 

Brewers dried grains

 

 

Chicago

N/A

-

Kansas City

N/A

-

Malt Sprouts

 

 

Chicago

175.00

-

Milwaukee

N/A

-

Winona, Minn

N/A

-

Distillers dried grains

 

 

Atlanta

333.00

-2.00

Boston

325.00

4.00

Buffalo

285.00

-5.00

Chicago

265.00

-5.00

Fayetteville NC

331.00

-2.00

Kansas City

330.00

-

Los Angeles

320.00

-1.00

Minneapolis

260.00

-

Okeechobee

340.00

-5.00

Portland

314.50

-5.50

San Francisco

320.00

-1.00

Twin Falls

326.00

1.00

Brewers yeast

 

 

(dollars per pound, sacked)

 

 

Chicago

0.65

-

Milwaukee

0.72

-

Minneapolis

0.72

-

ALFALFA

 

 

(dollars per ton)

 

 

Dehydrated pellets

 

 

(17% protein)

 

 

Alfalfa Center

355.00

-

Buffalo

422.00

5.00

Chicago

390.00

-

Kansas City

375.00

-

Los Angeles

N/A

-

Minneapolis

300.00

-20.00

Toledo

390.00

-

San Francisco

N/A

-

Suncured pellets

 

 

(15% protein)

 

 

Atlanta

N/A

-

Ft. Worth

345.00

10.00

Kansas City

335.00

-

Los Angeles

N/A

-

Portland

319.00

-

San Francisco

N/A

-

WHEAT MILLFEEDS

 

 

Shorts

 

 

Chicago

240.00

-

Ft. Worth

N/A

-

Los Angeles

257.00

1.00

Millrun

 

 

Los Angeles

248.00

1.00

Portland

240.00

-

San Francisco

248.00

1.00

Twin Falls

N/A

-

Bran

 

 

Buffalo

240.00

25.00

Chicago

240.00

-

Los Angeles

252.00

1.00

Minneapolis

360.00

-

Middlings

 

 

Buffalo

210.00

25.00

Chicago

240.00

-

Fayetteville NC

N/A

-

Ft. Worth

263.00

-3.00

Kansas City

205.00

5.00

Los Angeles

255.00

1.00

Memphis

252.00

-

Minneapolis

230.00

-

Okeechobee

N/A

-

DAIRY BYPRODUCTS

 

 

(dollars per hundredweight)

 

 

Dried skim milk

 

 

Ft. Worth

155.00

-0.50

Minneapolis

155.00

-0.50

Dried buttermilk

 

 

Ft. Worth

141.00

-2.00

Minneapolis

141.00

-2.00

Whole whey

 

 

Chicago

60.00

-1.75

Ft. Worth

59.00

-1.00

Kansas City

64.50

-

Minneapolis

59.00

-1.00

Whey protein concentrate

 

 

Ft. Worth

124.00

-1.00

Milwaukee

124.00

-1.00

Lactose

 

 

Ft. Worth

71.00

-1.50

Minneapolis

71.00

-1.50

OATS, RICE PRODUCTS

 

 

(dollars per ton)

 

 

Rolled oats

 

 

Chicago

570.00

-

Kansas City

520.00

-

Minneapolis

542.00

-

Crimped oats

 

 

Chicago

450.00

-

Kansas City

400.00

10.00

Minneapolis

457.00

-

Pulverized oats

 

 

Chicago

185.00

-

Minneapolis

173.00

-

Reground oat feed

 

 

Chicago

130.00

-

Kansas City

140.00

-

Minneapolis

97.00

-

Oats

 

 

(dollars per bushel)

 

 

Buffalo

4.35

-

Minneapolis

3.79

-0.15

Portland*

270.00

-

(*per ton)

 

 

Rice bran

 

 

Atlanta

N/A

-

Ft. Worth

265.00

-

Freeport

N/A

-

Kansas City

223.00

-

Memphis

N/A

-

San Francisco

246.00

-

Stuttgart, Ark.

N/A

-

Rice millfeeds

 

 

Atlanta

N/A

-

Ft. Worth

125.00

-

Freeport

N/A

-

Kansas City

N/A

-

Memphis

N/A

-

Stuttgart, Ark.

N/A

-

Rice hulls

 

 

Ft. Worth

72.00

-

Kansas City

43.00

-

DRIED PULP

 

 

(dollars per ton)

 

 

Citrus pulp pellets

 

 

Atlanta

270.00

5.00

Fayetteville NC

280.00

5.00

Okeechobee

235.00

5.00

Los Angeles*

N/A

-

*(sold wet)

 

 

Beet pulp pellets

 

 

Atlanta

N/A

-

Boise

N/A

-

Chicago

280.00

-

Fayetteville NC

N/A

-

Kansas City

535.00

-

Minneapolis

230.00

-

Portland

285.00

5.00

Saginaw

250.00

-

Beet pulp shreds

 

 

Mpls (sacked)

395.00

-

Los Angeles*

N/A

-

San Francisco

N/A

-

Twin Falls

N/A

-

*bulk, wet

 

 

GRAINS

 

 

Barley feed

 

 

Kansas City

7.00

0.10

Los Angeles (cwt)

15.40

-

Portland (ton)

290.00

-

San Francisco (cwt)

15.40

-

Feed wheat

 

 

Atlanta (bu.)

N/A

-

Fayetteville NC (bu.)

N/A

-

Kansas City (bu)

9.09

-

Los Angeles (cwt)

N/A

-

San Francisco (cwt)

N/A

-

Corn

 

 

(dollars per bushel)

 

 

Atlanta

8.52

0.03

Boston

7.19

0.04

Buffalo

7.65

0.08

Chicago

7.36

0.05

Delmarva

7.38

0.05

Fayetteville NC

8.32

0.03

Ft. Worth

N/A

-

Kansas City

7.41

0.05

Los Angeles*

15.67

0.22

San Fran (rail)*

15.67

0.22

San Fran (truck)*

N/A

-

Memphis

7.30

0.05

Minneapolis

6.94

0.03

Okeechobee

8.77

0.03

Portland (per ton)

291.75

0.75

(*per cwt)

 

 

Milo

 

 

(dollars per bushel)

 

 

Atlanta

N/A

-

Fayetteville NC

N/A

-

Ft. Worth

N/A

-

Kansas City

7.01

0.05

Los Angeles*

15.40

0.03

Memphis

6.65

-

*(per cwt.)

 

 

Ground grain screenings

 

 

(dollars per ton)

 

 

Ft.  Worth

251.00

2.50

Kansas City

150.00

-

OTHER

 

 

(dollars per ton)

 

 

Almond hulls

 

 

Los Angeles

178.00

-

San Francisco

168.00

-

Bakery feed

 

 

Atlanta

330.00

-

Buffalo

278.00

-7.00

Fayetteville NC

335.00

-

Memphis

325.00

-

Minneapolis

300.00

5.00

Feed urea

 

 

Buffalo

N/A

-

Ft. Worth

545.00

-

Los Angeles

N/A

-

Minneapolis

N/A

-

Salt

 

 

Kansas City

57.00

-

Los Angeles

50.00

-

Cane molasses

 

 

Ft. Worth

N/A

-

Houston

165.00

-

Kansas City

200.00

-

Los Angeles

N/A

-

Memphis

N/A

-

Minneapolis

220.00

-

New Orleans

165.00

-

San Francisco

N/A

-

 

Volume:85 Issue:08

Record 2013 crops projected

Record 2013 crops projected

THIS is going to "sound a little bit like déjà vu" was the disclaimer U.S. Department of Agriculture chief economist Joe Glauber gave in delivering the department's annual grain and oilseed outlook last week.

Hosting USDA's annual Agricultural Outlook Forum, Glauber said the 2013 forecast is very similar to the forecast presented a year ago -- one that calls for record corn and soybean crops.

Last year's record forecast did not come to pass, as one of the worst droughts in a half-century withered production across near-record planted acreage.

With a return to trend-line yields and only a slightly smaller planted area this year, USDA forecasted corn and soybean production to set records, at 14.530 billion and 3.405 billion bu., respectively.

Corn production, if realized, would be a 35% jump from last year's parched production. With a return to normal weather and productivity at 163.6 bu. per acre, 96.5 million acres planted would yield the largest corn crop in history and would result in a sharply lower price than farmers reaped in 2012 (Table 1).

USDA projected a season-average corn price of $4.80/bu. due to the 28% jump in the supplies. The increased production will far offset the smallest carry-in projected in 17 years.

Looking at the demand side of the ledger, USDA forecasted total corn usage at 13.0 billion bu., up 1.7 billion from the 2012-13 marketing year. A sharp rebound in feed usage -- 950 million bu. -- accounts for most of the increase, and although exports will also bounce back from this year's 41-year low, corn sales abroad will still achieve their second-smallest total since 1993-94.

Compared to the sharp uptick in feed and export demand, ethanol demand for corn is projected to show a much more muted recovery, rising 175 million bu. The total projected ethanol use of 4.675 billion bu. is still 344 million bu. smaller than the record set in 2010-11. Those projections suggest that 36% of the U.S. corn crop will be utilized in the production of ethanol, off from USDA's estimate of 40% for both 2011-12 and 2012-13.

Ending corn stocks are pegged to more than triple the 2012-13 forecast, reaching 2.177 billion bu. The forecast notes that, while use will approach the record demand levels of 2009-10 and 2010-11, strong global competition will limit the expansion of exports, allowing stocks a chance to rebound significantly. That relative abundance will put a great deal of pressure on prices by harvest.

Soybean production is projected to increase 13% to 3.405 billion bu. (Table 2). With a national average yield of 44.5 bu. per acre and planted acreage of 77.5 million, USDA projected slightly more acres shifting from cotton production to soybeans and slightly more double-crop seedings in soft red winter wheat regions.

Domestic soybean use is projected to be 1.795 billion bu., up 3% from 2012-13, with the domestic crush up 45 million bu. and domestic soybean meal feeding up 1.7%. Soybean prices, like for corn, are expected to moderate with a return to trend-line yields, with USDA forecasting an average price of $10.50/bu.; soybean meal prices are expected to fall to $300 per ton (Table 3).

While soybean meal supplies are expected to recover somewhat, supplies of soybean oil are expected to tighten even further, supported by an increase in the renewable fuel standard's biodiesel use mandate to 1.28 billion gal. for 2013. Accordingly, soybean oil used in biodiesel is expected to grow by 300 million lb. from 2012-13 levels, and soybean oil will account for just more than half of expected biodiesel production in the U.S.

Soybean exports are projected to maintain their blistering pace, growing to 1.5 billion bu. and boosting the U.S. share of global trade. Demand from China will be key as the country typically accounts for more than half of world imports of soybeans.

 

Market recap

Given that traders have largely assumed that crops will return to trend-line yields in 2013, the markets reacted relatively favorably to the USDA outlook. While corn and wheat prices settled in a range of 5-20 cents lower last Thursday, prices inched higher by midday Friday as traders sifted through USDA's balance sheets.

Soybeans were the big winner last week, breaking the $15/bu. mark on the nearby contract early in the final trading session of the week and hitting 16-week highs for the front month in the process.

Export demand last week was good for soybeans, with China back in the market. Through its daily reporting system, USDA announced major sales of both old-crop and new-crop soybeans three out of five days last week, with 410,000 metric tons of beans sold to China last Friday, 350,000 mt of which were for new-crop delivery.

Last Tuesday, Germany-based analyst Oil World cut its forecast of Argentina's soybean crop by 2 million mt, though it boosted its forecast of Brazil's harvest by 500,000 mt. Logistical problems with getting Brazil's soybeans to market were touted frequently last week as the reason luring Chinese buyers back to the U.S. to make their soybean purchases.

In its weekly report, the Energy Information Administration noted that ethanol production rebounded for a third week, hitting an average production of 797,000 barrels per day, the largest output in six weeks. Daily corn usage climbed back above 12 million bu., although distillers grain production fell to just shy of 80,000 mt per day.

 

Ingredient watch

USDA's outlook suggested that feed prices should moderate throughout 2013 -- pending a return to normal weather and production in the U.S. and elsewhere. Multiyear droughts are still very much a possibility and a concern for end users, and recent market lulls mark potential pricing opportunities.

Notably, USDA projected a roughly $150-per-ton drop in soybean meal prices. Currently, soybean meal is the major competitor to most other protein meals, with marketers and merchandisers of substitute ingredients being more in tune to soybean prices than they are worried about direct competitors' pricing within a given ingredient market.

Prices for rendered animal proteins firmed again last week as production continued to tighten. While slaughter weights are increasing and packers are slowing chain speeds or running fewer shifts per week, the overall supply of rendered product is shrinking.

While last week's announcement of a proposed change in the U.S. risk status for bovine spongiform encephalopathy would be positive to global trade in ruminant proteins, marketers are concerned about the recently announced case of avian influenza in Mexico because many containers of grease and poultry meals head south of the border to feed Mexican broilers.

 

1. Corn supply, demand and price by marketing year

 

2010-11

2011-12

2012-13

2013-14

Planted acres (million)

88.2

91.9

97.2

96.5

Harvested acres (million)

81.4

84.0

87.4

88.8

Yield (bu./acre)

152.8

147.2

123.4

163.6

 

-Million bu.-

Production

12,447

12,360

10,780

14,530

Beginning stocks

1,708

1,128

989

632

Imports

28

29

100

25

Supply

14,182

13,516

11,869

15,187

Feed, residual

4,795

4,548

4,450

5,400

Ethanol

5,019

5,011

4,500

4,675

Food, seed, other industrial

1,407

1,426

1,387

1,435

Total food, seed, industrial

6,426

6,437

5,887

6,110

Total domestic use

11,221

10,985

10,337

11,510

Exports

1,834

1,543

900

1,500

Total use

13,055

12,527

11,237

13,010

Ending stocks

1,128

989

632

2,177

Stocks:use

8.6

7.9

5.6

16.7

Season avg. farm price ($/bu.)

5.18

6.22

7.20

4.80

 

2. Soybean supply, demand and price by marketing year

 

2010-11

2011-12

2012-13

2013-14

Planted acres (million)

77.4

75.0

77.2

77.5

Harvested acres (million)

76.6

73.8

76.1

76.6

Yield (bu./acre)

43.5

41.9

39.6

44.5

 

-Million bu.-

Production

3,329

3,094

3,015

3,405

Beginning stocks

151

215

169

125

Imports

14

16

20

15

Supply

3,495

3,325

3,204

3,545

Crush

1,648

1,703

1,615

1,660

Seed

87

90

89

87

Residual

43

1

30

48

Total domestic use

1,779

1,793

1,735

1,795

Exports

1,501

1,362

1,345

1,500

Total use

3,280

3,155

3,080

3,295

Ending stocks

215

169

125

250

Stocks:use

6.6

5.4

4.1

7.6

Season avg. farm price ($/bu.)

11.30

12.50

14.30

10.50

 

3. Soybean meal supply, demand and price by marketing year

 

2010-11

2011-12

2012-13

2013-14

 

-1,000 tons-

Production

39,251

41,025

38,450

39,385

Beginning stocks

302

350

300

300

Imports

180

216

250

165

Supply

39,732

41,591

39,000

39,850

Domestic use

30,301

31,550

29,900

30,400

Exports

9,081

9,741

8,800

9,150

Total use

39,382

41,291

38,700

39,550

Ending stocks

350

300

300

300

Avg. price ($/ton)

345.52

393.53

445.00

300.00

 

Volume:85 Issue:08

Grain & ingredient cash market comparisons, 2/25/13

Grain & ingredient cash market comparisons, 2/25/13

Major feed ingredients

Feb. 20

Feb. 13

6 months ago

Year ago

Corn No. 2, Chicago, bu.

 

 

 

 

Processor bid*

7.09A

7.15A

8.33A

6.49A

Terminal bid*

7.08A

7.09A

7.88A

6.28A

Milo, Kansas City, cwt.

12.51

12.42

13.83

11.16

Soybeans, Chicago, bu.

 

 

 

 

Processor Bid

15.02A

14.30A

17.38A

12.69A

Soybean Meal, 48% Decatur Bid

450.30A

422.70A

566.30A

330.80A

Cottonseed Meal, Memphis, ton

270.00

275.00

410.00

190.00

Linseed Meal, Solvent, Minneapolis

295.00

290.00

345.00

185.00

Meat and Bone Meal, Chicago, ton

460.00

445.00

475.00

330.00

Fish Meal, Menhaden, Atlanta, ton

1,595.00

1,595.00

1,375.00

1,125.00

Corn Gluten Meal, 60%, Chicago, ton

605.00

595.00

730.00

480.00

Distillers Dried Grains, Chicago, ton

265.00

270.00

305.00

195.00

17% Dehy. Alfalfa Pellets, KC, ton

375.00

375.00

363.00

329.00

Millfeeds, Midds, Minneapolis, ton

230.00

230.00

275.00

153.00

Molasses, Cane, Houston, ton

165.00

165.00

155.00

170.00

Dried Citrus Pulp, Atlanta, ton

270.00

265.00

335.00

170.00

Whey, Whole, Chicago, cwt.

60.00

61.75

51.75

70.50

Rolled Oats, Minneapolis, ton

542.00

542.00

552.00

479.00

Barley, Los Angeles , cwt.

15.40

15.40

16.10

13.25

Feeding Wheat, Kansas City, bu.

9.09

9.09

9.10

6.47

* Chicago corn and soybean prices for latest and previous week are the middle of the range of to-arrive bids; soybean meal prices are midrange of processor quotes. Chicago corn and soybean prices provided by USDA Market News. Six months, year ago comparisons are all spot cash. Based on prices reported by Feedstuffs' market reporters.

A: average

N/A: not available

 

Volume:85 Issue:08

Kraft sues Cracker Barrel

Kraft sues Cracker Barrel

KRAFT Foods Group Inc. has filed a lawsuit against Cracker Barrel Old Country Store over Cracker Barrel's plans to expand into supermarkets with Cracker Barrel brand bacon, ham and other foods.

Kraft wants a marketing agreement to be declared void between Cracker Barrel and John Morrell & Co. in which Morrell would produce the food products for Cracker Barrel.

Kraft noted that it began producing Cracker Barrel cheese in 1954 and that Cracker Barrel Old Country Store, which operates 620 casual restaurants around the country, was established in 1969.

Kraft said it has never taken issue with the restaurant because it sold only a few candies, mixes and sauces under the Cracker Barrel brand and only in its restaurants and on its website.

However, Kraft said the agreement with Morrell to branch out into supermarkets violates Kraft's Cracker Barrel cheese market. Kraft has more than 20 Cracker Barrel products, including bars, blocks and slices.

Morrell is a business of Smithfield Foods Inc.

Kraft, based in Northfield, Ill., is the largest cheese manufacturer in the U.S., marketing under the Kraft, Philadelphia and Velveeta brands, as well as Cracker Barrel. It also has the Oscar Mayer line of meat products.

Cracker Barrel is based in Lebanon, Tenn.

Volume:85 Issue:07

Johanns to leave Senate

Johanns to leave Senate

FORMER agriculture secretary and current Nebraska Republican Sen. Mike Johanns has decided he will retire from the Senate after only one term. Johanns was secretary of agriculture during George W. Bush's second term before leaving to run for his current Senate seat.

In an email to supporters Feb. 18, Johanns said at the end of this term, he and his wife Stephanie will have been in public service for more than 32 years.

"With everything in life, there is a time and a season. ... Between the two of us, we have been on the ballot for primary and general elections 16 times, and we have served in eight offices. It is time to close this chapter of our lives," Johanns said.

As secretary, he was able to easily relate to farmers and commonly shared his times growing up on a dairy farm. It's likely that unique farm boy work ethic that speaks volumes for those in the countryside.

During his nearly three-year stint as agriculture secretary, Johanns developed an in-depth farm bill proposal based on listening sessions he conducted across the country, which became the foundation for improvements and reforms adopted in the final 2008 farm bill.

He seems to be ruled by common sense, especially when it comes to keeping congressional intent intact and the Environmental Protection Agency under scrutiny.

Earlier this month, Johanns introduced four bills in the Senate to increase the transparency and oversight of EPA.

"Everyone from mayors to public utility providers to farmers and ranchers has expressed concern with EPA's aggressive agenda and lack of understanding about how our economy works," Johanns said. "It's not simply what EPA is doing that bothers so many of our nation's job creators; it's how EPA is doing it. I've heard countless times that EPA is not transparent or responsive but, rather, shortsighted and arrogant."

Also this year, Johanns joined Sen. Pat Roberts (R., Kan.) in introducing legislation to overturn duplicative EPA pesticide permit registrations after similar legislation failed to move in the last Congress.

The Roberts-Johanns bill amends the Federal Insecticide, Fungicide & Rodenticide Act to change Clean Water Act (CWA) permitting so that new CWA registrations for use near water are not necessary if the product is already registered with EPA.

He also was a part of the "Gang of Eight" bipartisan group to encourage movement on improving the nation's fiscal station.

Johanns joins a growing list of senators who will not seek re-election in 2014, including Sens. Saxby Chambliss (R., Ga.), Tom Harkin (D., Iowa), Jay Rockefeller (D., W.Va.) and Frank Lautenberg (D., N.J.).

Johanns said he is "confident" that there will be many more opportunities to serve Nebraska and the nation.

For agriculture's sake, I hope that's true. Johanns is a true friend of agriculture, which seem to be in short supply these days.

With former Massachusetts Sen. John Kerry moving to secretary of state, the rash of retirements will hasten a wholesale makeover of a Senate that was once far more stable.

Volume:85 Issue:08

Smithfield, Kansas City Sausage form joint venture

Smithfield, Kansas City Sausage form joint venture

SMITHFIELD Foods Inc. has reported a 50/50 joint venture with Kansas City Sausage Co. LLC, including its Pine Ridge Farms LLC sow farm, to build Smithfield's packaged meat business, especially in breakfast and dinner sausages.

Terms of the joint venture were not disclosed.

The breakfast and dinner sausage categories represent a market worth more than $4 billion per year in foodservice and retail sales, according to the announcement.

This represents "a big opportunity" for Smithfield to grow in two important packaged meats segments "that haven't been a focus for the company," chief executive officer and president C. Larry Pope said.

Kansas City Sausage has been one of Smithfield's largest customers for live sows to process sows and produce sausage, and the joint venture will enable Smithfield to move sows directly into branded packaged meats, Pope said.

The venture will merge Kansas City Sausage's efficient, low-cost operations and high-quality products and Smithfield's strong brands and marketing and sales team to continue to expand both companies' packaged meat businesses, Pope said.

Kansas City Sausage, with sales totaling $200 million, has operations in Des Moines, Iowa, and Kansas City Mo. In Des Moines, the company produces raw materials for sausage as well as for hams and hides. Its Kansas City plant is the newest sausage processing facility in the U.S.

Smithfield, headquartered in Smithfield, Va., is the largest hog producer, pork processor and pork packaged meat company in the U.S., with sales totaling $13 billion.

Volume:85 Issue:08

Tyson acquires tortilla maker

Tyson acquires tortilla maker

TYSON Foods Inc. reported that its subsidiary, Tyson Mexican Original Inc., has purchased Don Julio Foods of Clearfield, Utah, a maker of corn and flour tortillas and salty snacks such as potato chips, tortilla chips and pretzels.

The products are sold to retailers across the U.S. under the Don Julio and Clover Club brands.

Terms were not released, but Tyson said it plans no management or other personnel changes. Don Julio has about 50 employees.

Tyson Mexican Original is the second-largest manufacturer of tortillas in the U.S., with a majority of its sales to foodservice customers. Accordingly, the acquisition will open foodservice markets to Don Julio and retail markets to Tyson Mexican Original, according to the announcement.

Don Julio "is an example of a brand that's the right fit for Tyson," Tyson chief executive officer and president Donnie Smith said.

Don Julio was founded by Craig Fisher in 1994. It outsourced production until Fisher opened a tortilla manufacturing plant in Clearfield in 2002 and, soon thereafter, purchased Clover Club Foods.

Tyson acquired Mexican Original in 1983 and expanded in through three tortilla plants. Mexican Original employs about 1,300 people.

Tyson, headquartered in Springfield, Ark., is the largest chicken producer and the second-largest beef and pork processor in the U.S. and is a leading manufacturer of packaged foods. The company reported fiscal 2012 sales of $32.3 billion.

Volume:85 Issue:08

WhiteWave grows across all products

WhiteWave grows across all products

THE WhiteWave Foods Co., created in Dean Foods Co.'s initial public offering of its WhiteWave division, has reported increased earnings for its fourth quarter and full year in 2012.

The company said it achieved growth across all product categories, led by its plant-based beverages and foods and its coffee creamers.

WhiteWave said growth was softened somewhat by significant year-over-year increases in marketing expenditures and increases in distribution and warehousing costs that were a consequence of "rapid volume growth."

The company's results attest to "the power of our brands" and their position in some of today's fastest-growing product segments, WhiteWave chair and chief executive officer Gregg Engles said.

"We are at the heart of a broad and sustained movement toward convenient, flavorful, nutritious and responsibly produced beverages and foods," he said.

Dean sold a minority stake in WhiteWave in an initial public offering last year (Feedstuffs, Oct. 29, 2012) and plans to spin off much of the remainder of the company in May. Dean plans to retain a 19.9% stake in WhiteWave that it will monetize or distribute at a later date.

WhiteWave, which is listed on the New York Stock Exchange as WWAV, has two business divisions: one in North America and one in Europe.

Its financial results are shown in the Tables.

In North America, WhiteWave makes and markets plant-based beverages and foods such as the Silk brand almond, coconut and soy drinks, premium dairy products under the Horizon Organic label and coffee creamers under the International Delight and Land O'Lakes names.

The company said the North American business continued to experience good growth in the Silk products, especially Silk PureAlmond, and noted that Silk holds the number-one position in the plant-based category. WhiteWave said it introduced Silk Iced Latte and Silk Fruity & Creamy yogurts in the quarter.

The company said it expanded its premium dairy products in the quarter with the introduction of TruMoo flavored milks in shelf-stable, single-serve packaging that provides convenience. TruMoo is a line of flavored milks that are lower in sugar than traditional flavored milks and that contain no high-fructose corn syrup.

WhiteWave said its coffee creamers continue to benefit from increased coffee consumption and the "whitening" trend. The company said it introduced a new "lights line" of International Delight creamers that each have just 100 calories.

In Europe, WhiteWave makes and markets plant-based beverages and foods under the Alpro name. The company said results benefited from increased volume and currency translation in the quarter, although currency translation was a negative for the year.

WhiteWave is based in Dallas, Texas.

 

1. WhiteWave earnings and sales*

 

-Fourth quarter-

-Full year-

 

2012

2011

2012

2011

Sales (million $)

609

543

2,306

2,044

Earnings (million $)

31

23

104

80

Earnings per share (cents)

18

13

60

46

 

2. WhiteWave operating results* (million $)

 

-Fourth quarter-

-Full year-

 

2012

2011

2012

2011

North America

Sales

514

447

1,900

1,596

Income

54

47

204

163

Europe

Sales

NA

NA

NA

NA

Income

7

6

24

27

*For the quarters ended Dec. 31, 2012, and Dec. 31, 2011.

 

Volume:85 Issue:08