In the Cattle Markets
Dec. 15 report: Global corn stocks expected to increase.
USDA released its monthly projections for U.S. and global agricultural supply and use in mid-December. U.S. corn supply and demand was mostly unchanged. Projected food, seed and industrial corn demand was lowered by 5 million bushels (bu.) as a result of lower corn sugar processing.
This being the only change, ending stocks projections were raised by the same amount. Ending stocks are now forecast to be 848 million bu., three million higher than expectations prior to the report's release. Nonetheless, the stocks-to-use ratio is still a meager 6.7% compared to last year's 9.3%.
On the global front, corn production was raised by 7.25 million metric tons for China and 8.53 overall. This contributed to a bump in world ending stocks to 127.19 million metric tons, up 5.62 from last year.
In the report, the most unexpected value with respect to domestic production was higher forecasted soybean ending stocks. From a supply standpoint, no changes were made, but crushings and export use were forecast at 1.625 and 1.3 billion bu., respectively, collectively 35 million bu. lower than last month's estimate for the 2011-2012 marketing year. This raised ending stocks, now at 230 million bu., which is 10 million above expectations and 15 million above the previous year.
Marginal changes from last month's projections were made for beef and other competing meats. Projected beef production for 2011 was lowered from 26.414 billion pounds (lb.) in November to 26.287. Per capita domestic beef consumption was lowered 0.2 lb. from last month to 57.4 lb. Pork production was projected higher for 2011, now at 22.753 billion lb., while 2011 broiler production was trimmed slightly to 36.894 billion lb.
Cash fed cattle lost steam last week and dropped anywhere from $3 to $10 per hundredweight (cwt.). The five-area price moved lower by $4.41 per cwt. to $120.57 live, while dressed cattle were down $7.71 per cwt. at $195.49.
Feeder steers in Oklahoma markets were mostly steady, while steer calves were about $3 per cwt. lower. Feeders in Mississippi auctions were $2-$8 per cwt. higher and cull cows and bulls were $2-$5 per cwt. higher. Cash corn in Omaha was down slightly to $6.05 per bu.
Live-cattle futures were sharply lower this week. Lower wholesale beef and cash fat cattle resonated with the market, and futures prices dropped. Feeder cattle were lower, as well, as the post-Thanksgiving surge in the cash markets pulled back and brought futures with it. Corn was lower on the week but was mostly steady through Thursday, but the dive by beans and mildly bearish report for corn caused prices to fall Friday.
Wholesale beef prices were much lower this week following a dip that started the prior week. The Choice price took a big hit Thursday and ended the week at $188.57 per cwt., down $5.34 week-over-week. USDA Select continued to drift lower and ended at $172.18 per cwt., down $3.23, which narrowed the spread slightly to $16.39.
