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Weekly North American market update 18 Jun 2009

US livestock and meat markets were very confused this week.
Weekly North American market update
No.1 pork integrator Smithfield Foods yesterday reported its first yearly net loss in 30 years (a whopping US$190 million of red ink - 96c per share - and all incurred with hog raising, which reflects the pain that individual US hog producers are also suffering). And Fitch credit-rating service warned that ongoing stigma caused by "swine flu" publicity (which the World Health Organisation raised to precautionary "level 6 pandemic status" during past week) could further impair US pork exports to numerous countries. For time being, Mexico (where H1N1 began) continues to be the largest-volume market for US pork - with Japan close second - and hopefully this export trade momentum will continue.
 
US live hog prices at auctions today were quoted in 38 to 40c-lb range (fractionally above week-ago) but the pork carcass cut-out (composite wholesale value) slipped below 55c-lb for first time this year (to 54.9c). As more sows were liquidated, live sow prices at auction became depressed in a wide range of 20 to 29c-lb - from peaks early this year above 50c.
 
Sausage makers (main users of sow meat) have benefited from lower costs, reflected in good retail bargains for hot dogs (see also Italian sausage reference below). For producers who are still raising hogs, there is a glimmer of hope for lower feed costs - corn futures prices declined during past week by near 30c-bushel (currently ranging 408 to 429c-bu) and soybean futures contracts for current year fell by 30 to 40c-bushel (now 1082 to1206c-bu).
 
The US fed beef market complex stabilized this week, despite packers continuing to keep national daily kills near maximum capacity at 129-130,000 head. Feedlots continued to be willing sellers at live prices around 81-82c-lb, and the Choice-grade carcass cut-out today is quoted at 140.4c-lb (exactly same as week-ago, with some wobbles in-between) – but the leaner Select-grade carcass cut-out recovered by 1.3c-lb, to register 134.0c-lb today.
 
Live cattle futures contract prices are same as week ago (ranging 80 to 89c-lb & bobbling) while feeder calf futures prices stayed in the same narrow range as week ago (97 to 98c).
 
Some dense confusion continued in cowbeef markets. USDA kill figures said percentage of dairy cows in this month's kills is up 4 to 6% (with beef cow kills down nearly the same), but dairy industry data says total numbers in all dairy herds are staying near the same, in spite of some voluntary buy-outs starting, because heifer replacements are filling the gap.
 
Normally at this time of year - with July 4 Independence holiday festivity just over 2 weeks away - there is an expected build-up of orders for hot dogs and hamburger beef. Grinders today reported a slight pick-up from recent sluggish business, but no zing - reminiscent of buying reticence that followed May 25 Memorial Day holiday weekend. Ground beef sales may also be currently hindered by extension of recent wet weather in north-east US (today was very cool and rainy in Pennsylvania state) - and by more consumer belt-tightening as gasoline prices rise toward US$ 3.00 at pumps. In separate context, some local nurseries said this week that their business is benefiting from more folk planting vegetable gardens this year (like the President's wife is publicizing) and from other folk focused on gardens in lieu of going on vacations. (but not having backyard cook-outs to the same extent as before) .
 
Wholesale cowbeef prices were erratic during past week. Canner-cutter carcass cut-out took a big plunge of 2.45c-lb last Thursday (when most cow boners were anxious sellers), made some slight recovery on Friday-Monday-Tuesday, then dropped another 1.3c today, to finish at 107.1c-lb (down 2.3c for the week). Fresh 90CL boneless cowbeef traded with volatility (ranging from 129c to 140c-lb at times, according to USDA reports, and yesterday ranging 132-136c-lb) and is quoted today as 134-135c-lb fob (compared with 134-138 range week-ago). Imported frozen 90CL cowbeef had some related trading problems, but remained in tight spot supply - and prices stayed in a narrower range of 133 to 135.5c-lb - with quotes today near 134c-lb fob. Beef exporting countries that sell to the US continue to grapple with rising currency exchange rates that hurt pricing.
 
All in all, great uncertainty continues in US red meat markets (and in US export trade), but local retail meat prices in central Pennsylvania state this week stayed close to last week's levels (as per Wegman's, Giant-Ahold, Weis & Karns). Specials include US$1.99-lb for Italian sausage, also for 80CL ground beef (US$2.49 for 85CL ground - firmer trend), US$1.79 to US$1.99 for boneless, skinless chicken breasts, 69c to US$1.19-lb for leg quarters; 99c-lb for whole chickens & same low price for "Ball Park" brand of frankfurters (either all-turkey, or combo beef-pork-turkey - with limit of 4 x 1-lb packages per person).
 
Beef items include Choice-grade rib eye steak US$5.99 (in numerous places), whole butt tenderloin for $6.99-lb (special sale at Weis - custom cut), boneless sirloin steak US$3.99, top round steak for London broil US$2.49 to US$2.99-lb, boneless chuck
steak US$2.29 (reduced from before) and 80CL beef patties at US$2.39-lb. 
 
In fresh pork case - Smithfield-brand shank-end ham portion is 89c-lb (butt end is US$1.09), center-cut boneless chops US$2.59-lb, whole bone-in loin US$1.18 (custom cut), whole boneless loin US$1.89, fresh spare-rib US$1.99 and succulent pork tenderloin US$3.99.
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