Cattle: Cash cattle last week $121.00-123.00; boxed beef higher on light movement; futures posted good gains as technical provided new buying after a range break out last week. Additionally, favorable weather, back to school and holiday demand seen supportive.
Hogs: Interior hogs mixed; pork midday cut outs modestly lower early; futures post good gains with the meat markets in general basking in the possibility of weather-generated sun in the demand side of both pork and beef.
USDA report: LIVESTOCK, POULTRY, AND DAIRY: The total red meat and poultry production forecast for 2013 is raised from last month as higher beef production more than offsets lower pork, broiler, and turkey production. Beef production is raised as greater fed cattle and cow slaughter combine with heavier average carcass weights to push output higher. Moderate feed prices and recent placement of heavy animals are expected to support higher average carcass weights in the second half of the year. Pork production is reduced largely reflecting lower slaughter in the third quarter. Broiler production is reduced as the increase in second-quarter production was smaller than expected. The forecast for second-half production is unchanged. Turkey production is lowered as hatchery data portends sharper production declines in the third and fourth quarters. Egg production is raised from last month as greater table egg production more than offsets a marginal decline in second quarter hatching egg production. For 2014, beef production is raised slightly on larger expected marketings of cattle placed in 2013. Forecasts for other meats are unchanged. Egg production is higher compared to last month as growth in the broiler breeder flock is expected to support greater hatching egg production. Beef exports are raised for 2013 on stronger shipments to several markets, while the forecast for 2014 is unchanged from last month. Beef imports for 2013 are reduced based on second-quarter data, but are unchanged for 2014. The 2013 pork export forecast is down fractionally reflecting second-quarter data, with 2014 unchanged. The 2013 broiler export forecast is higher as shipments showed continued strength in June. The forecast for 2014 is unchanged. Turkey exports for 2013 are up slightly reflecting trade data for the second quarter. U.S. Census Bureau revisions are reflected in historical trade estimates. Fed cattle prices are reduced in 2013 and 2014 as greater beef production and attractively priced competing meats are expected to pressure prices. Hog prices are raised for 2013 as demand strength is expected to continue through the end of the year. Broiler prices are reduced in 2013 and 2014 as recent price declines are expected to persist. Turkey price forecasts are unchanged from last
GRAINS & OILSEEDS:
Corn: Soybeans: The big key here is that the complacency of the market to assume both corn and bean crops are bullet-proof has ended. I mentioned in the morning comments that any ‘glitch’ in the bean market crop will earn a sharp rally and November up about 50-cents on its high after the report was nicely meaningful. That mean the lows are in? Not necessarily. But it does mean perhaps the lows will be determined a bit more carefully “just in case’ latent demand not higher than potential production can assume.
Wheat: Silly rabbit. While the USDA report was largely neutral and while corn was supportive to wheat, I suspect timid, closet corn bulls were buying corn/selling wheat. Initially not a bad idea.