Retail demand is good with Thanksgiving just a week away. Large and extra large are being exchanged at premiums to existing quotations. Mediums and Jumbos are less sought after and were being exchanged at discounts at midweek.

Acquisition interest is there for breaking stock but sellers were not said to be offering through this channel as of Wednesday. The egg product segment was at a standoff at midweek.   Sellers were holding firm on pricing and buyers were acquiring only their immediate needs. Business had ground to  a halt as of Wednesday afternoon.

The market is steady to full steady.

 

The cash hog market was flat to weak by Wednesday afternoon with most plants having booked their needs for the week. Live hogs weights were averaging about 3 pounds higher than this time last year.

17/20 pound hams are tight and suppliers with inventory are asking for more money. Larger hams are more available. Over all hams have hit a lull that is not expected to hold. They are projecting to move up after next week and into December. Bone in Butts have firmed and are projecting into the mid $.80’s in December. Bone in loins are projecting to $1.05 in December. Boneless are projecting into the mid $1.40’s in the same time frame. Bellies were steady at midweek. 42% trim moved higher on Wednesday with improved buying interest.

Overall a firming trend seems to be in effect. Packers were reporting a positive margin of $9.82 per head on Wednesday.

Hog farmers, on the other hand, continue to suffer. Dr. Ron Plain, a live stock economist with the University of Missouri extension has reported that U.S. pork producers have now lost more money than they lost in 1998-1999, which has been described as a pork price disaster. During the last 24 months the average hog was marketed at a $19.18 loss per head. The reason is over supply forcing down live hog pricing combined with high production costs (i.e. feed prices). Farmers have sent sows to slaughter but they have held back gilts(younger female hogs) which works against supply reduction efforts. Plain also predicted that the situation will get worse before it improves. Bankers will begin to force the issue. They now have little room to maneuver and many feel that they will not be renewing a lot of hog loans. Plain estimates that Hog production would have to decrease 15% from peak levels before farmers will hit a breakeven point.

The 22^nd largest producer in the nation went out in North Carolina last week and rumors persist that many small producers in Indiana are in a very precarious positions. If this trend holds live hog pricing could tighten up next year at some point.

 

Packers bid $83.00 cwt early in the week on live cattle. Last week the market settled between $83-$85.00 cwt. The call is for the market to settle in at the lower end of that range this week. The packers have cleaned up some inventory this week. A good bit of effort was being applied to round cuts at midweek. Chuck rolls were said to have cleaned up considerable at midweek. Loins vary from packer to packer and are described as choppy over all. Choice Ribeyes and PSMO tenders traded up a little although some new inventory has surfaced on Ribeyes and is creating spot buy opportunities in the market. Grinds are firm with the short kill coming next week. Packers reported a meager positive margin of $2.00 per head at midweek.

Overall not much change except the round and chuck cuts are cleaning up from last week. 

 

The cheese markets continued to move on divergent courses as of  Wednesday. The block opened at $1.5825 on Monday and held there through Wednesday. This was up $.0115 from last week’s closing average of $1.5710. The barrel opened at $1.4425 on Monday and held through Wednesday also but this was down $.0315 from last week’s close of $1.4740.

Butter held steady at $1.525 from Monday through Wednesday which was dead even with last week’s closing average. Non Fat Dry Milk grade a opened at $1.38 on Monday , moved up to $1.40 on Tuesday and held there through Wednesday. This put the Monday through Wednesday average at $1.3933 which was up $.0213 from last week’s closing average of $1.3720. Extra grade Non Fat Dry Milk opened at $1.40 on  Monday and held there through Wednesday. This was no change from the previous week’s closing average.

The block barrel spread is now at $.14 with the barrel being lower. This is much more that the $.03 to $.05 cents we see on the yearlong average. High American type cold storage inventories may be the culprit. It should move in line as these inventories are reduced.

 

Beets are still a hot button issue crop. Processing of beets is winding down and budget packs are not expected to be met.  Of the major canning crops, carrots, mixed vegetables, and potatoes remain to be packed. While processing is underway, wet weather has been an issue. It is still too early to tell but full budget packs may not be achieved.

 

Apples are in the opposite position in terms of supply from last year. Last year, it was difficult to find apple products. This year all three US regions are well supplied and processors are vying for marketshare.

Pears from the Northwest are in adequate but not abundant supply. Pricing has remained relatively firm being attributed to increases in the cost of cans.

 

Weather has been an issue in one of the largest growing regions North Dakota and that is triggering the reports of a less than expected crop year. The degree of shortage is not yet clear. More acreage was available to beans this year, yields were up and then the weather hit.  Exports are still in high demand as Mexico continues to suffer from drought and this puts pressure on pinto and black beans. A clearer picture should appear after the USDA report on December  11.

 

The markets are firm with minimal inventory across most lines.  Plant downtime and inventory cuts have kept supplies tight and short.

Whole birds and WOGs are well supported with retail ads keeping these items trading at current markets.

Breast have tightened up and are steadier as prices paid are being reported at up money.  Product moving into Canada continues at a good rate keeping these items tighter.

Cutlets receiving additional interest as breast meat demand gets stronger.  Chunk meat and trim meat supplies are firm as supply is for the most part nonexistent.

Legs and leg quarters are rated full steady.

Wings continue short. With all the industry cut backs the shortage of available wings has been estimated at approximately over 500 million.

ICE Futures Canada (ICE) grain and oilseed futures ended Wednesday's session mainly higher with canola lifted by the lack of farmer selling.  Canola saw a very heavy trade with the bulk of the activity being intermonth spreading as participants rolled their January contracts into the March contract ahead of month end.  The total canola volumes were estimated at 16,128 contracts, up from Tuesday's 10,055 contracts, including an estimated 10,426 contracts involved in the spread trade.   Canola was higher in the overnight market, prompted by gains in international vegetable oil prices. Canola held onto gains as the North American trading session got underway and the CBOT soy complex opened higher. However, canola gains faded as the US soy complex gave up its advances and canola ended modestly higher.

Canola drew much of its support from the firm tone in the US soyoil market with the sluggish farmer selling giving good support as well.  Cash dealers have indicated that farmers have become increasingly bullish and are looking for the cash market to climb to the C$9.00/bushel level before selling.  Also contributing support were friendly technical signals and a weak Canadian dollar, analysts said. Routine export demand from Mexico and Japan also underpinned values.   Capping the gains were ideas that canola was becoming overbought with the continued uncertainty about exports sales to China also weighing on the market. The gyrations and eventual losses in the CBOT soybean market also weighed on prices.  Exporter and crusher buying were augmented by speculative buying with much of that buying felt to be commodity fund interest, particularly when the January contract penetrated resistance at the $404-$405 level. The selling was mainly commercial.

Global edible oil markets on positive tone during the past couple of weeks. Weak dollar along with prospects of surge in demand also supported the sentiment.

Thus far, Brazil Soybean sowing is 48% completed as against 41% in previous year.  On the other hand, Argentina sowing progress is at around 12.1 % completed as against 17.9% in previous year.  Though recent rains in Argentina have helped the rise of the crop prospects, around 4 to 5 million hectares of the projected area of 19 million hectares are reported to be facing drought problems.

At the Palm Oil front, stocks are  high at Malaysia 1.97 million tons ending Oct'09. However, a jump in exports during first 15 days of Nov'09 has offset much of the bearish effect.  Yesterday crude palm oil futures prices on Malaysia's derivatives exchange ended lower in cautious range bound trade.  Prices stayed in a narrow trading range, above the support level of MYR2,350, with the expectations of a rise in palm oil exports paring losses, according to trade participants.

Domestic grain contracts were mostly mixed overnight with soybeans once again finding solid buying interest against outside market pressure as energies and Dow futures were weaker, while the U.S. dollar was higher.   If the overnight session is any  indication, domestic soybeans should rally despite pressure from the outside markets.