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Weekly North American market update 23 Dec 2009

With the Christmas holiday coming up on Friday, US meat and livestock market activity has been toning down to varying degrees.
By Graeme Goodsir
 
But with some hiccups caused by a heavy snowstorm in eastern US last Saturday that blanketed Washington DC with up to 25 inches of snow (causing some government shut-downs on Monday), with lesser falls ranging 8 to 18 inches in other north-east states.  
 
Disruptions were caused to meat distribution operations (including raw material deliveries to beef grinders, with some uptick in lean cowbeef prices for delayed delivery schedules) but overall retail meat supplies stayed adequate for mixed patterns of consumer demand - Christmas hams and standing beef rib roasts for intended holiday meals were discounted substantially (as is normal this close to the holiday) while some other pork items were also heavily discounted - some supermarkets are promoting whole boneless loins down to $1.49/lb (lowest price in a long time, possibly reflecting "packer deals" made back in depressed times before pork wholesale prices started to rise in early November.  
 
In certain parts of US (including Pennsylvania state), pork demand is stimulated at this time for traditional German-style New Year feasts of roast pork and sauerkraut cabbage, but markets often can languish again during rest of the winter months. US hog kills continue to be near maximum plant capacity - today was 436,000 head.
 
With the wholesale "ham price put-down" continuing into Christmas week, the pork cut-out (composite carcass) value has eased by 1.5c/lb in past week - to 68.4c/lb today - but still is up substantially from a depressed 57c/lb 6 weeks ago. Futures contract prices for lean pork also eased by 1.5 to 2c/lb since last Thursday, simultaneous with corn and soybean prices falling by 10c-bushel and 70c-bushel respectively (latter being a big drop for soybeans). Prices for live hogs at auction didn't change much this week - quoted today from 39-5c/lb to 45.5c/lb - but still are way better than October levels of 32-33c/lb.
 
Lean processing beef prices stayed strong - up to 146-47c-lb in places for fresh 90CL cow (up 5c from week ago) in face of delivery disruptions on certain days this week, with grinders working maximum shifts to counterbalance upcoming holiday breaks.  Fastfood hamburger sales currently seem good, amid cold winter weather and intense holiday shopping activity. 50CL steer trim price is today quoted 73 to 75c/lb fob in midwest (over 80c/lb delivered to east coast - up 3 to 4c from week ago). Imported frozen 90CL cowbeef is not being visibly traded at present time, due to scarce supply from down under - but Australian exporters see a "glimmer of hope" for better trade next year - by their $ Aus exchange value falling during past week from $US 0.91 to $US 0.88.
 
There was another "glimmer of hope" for US fed cattle producers when USDA announced Cattle-on-Feed numbers at 1st December were down 1% from year-earlier. Supply trends aren't necessarily the main beef price determinants for year ahead - export sales momentum  and US consumer demand will be the key factors.  Meantime, the Choice-grade wholesale beef carcass cut-out value today is quoted at 138.6c/lb (up 2c from 2 weeks ago) but live prices for finished fed steers are still in the doldrums around 80c-/b (lowest in a long time). Longer-term prices for cattle futures contracts (beyond April 2010) rose 2c-lb this week, while feeder calf futures did the opposite - up 1.6c/lb for the near term, steady thereafter.
 
There were also some "glimmers of hope for next year" with US wholesale chicken trade, as USDA's 12-city average price for whole birds rose 3c/lb during the past week, to 74.7c/lb. Some analysts attributed this to strong demand for chicken wings (with price now soaring above 160c/lb - ahead of big TV gatherings for football and other big sport events) because wing removals reduce the supply of whole birds. Other chicken wholesale trade is firm for leg quarters (up to 42c/lb or better in places) but still fairly listless for boneless breast meat (ranging from 100c up to 120c/lb). Everything is "wait and see" till the New Year, when much will depend on whether the US starts seeing some job creation to lift economic confidence.
 
NOTE: This will be the last Market Notes for 2009.  We wish all readers a happy festive season, plus good health and good business progress for 2010.  Best Regards.
 
***For week ending Tuesday 22 December 2009
 
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