Canada canola futures traded within a relatively narrow window during this week, but managed to close near the top end of that range by Thursday. Spreading accounted for the bulk of the volumes, with short-covering off of recent lows behind much of the strength.

 

Wheat futures posted gains during the week, although a turn higher in the US dollar index limited the upside. US wheat continues to be overpriced in the international markets, and the strong currency only exaggerated that fact.

 

Soybeans moved higher during the week, while corn turned lower. Both commodities were also range-bound overall with movements in the currency and energy markets resulting in some choppy trading days. While it could be argued for both soybeans and corn that the lows were in for the time being, the looming South American crops remained a fairly significant bearish price influence.  The USDA held its annual outlook forum this week, and put out some estimates on the 2010 US crop. The USDA analysts are predicting a 3% increase in US corn acres, to 89 million acres, while soybean area is expected to be down 0.6%, to 77 million acres.  Production of the crops was estimated at 13.16 billion bushels for corn, which would be relatively unchanged on the year, and 3.26 billion for soybeans, a 3% decline.    A lot of the area that would normally have been planted to winter wheat in the northern US states wasn't seeded this past fall due to the late harvest, which means growers will be putting corn on that land instead. The price outlook on corn is said to be looking reasonably good, especially with lower fertilizer costs this year.  Actual planting conditions in the spring will no doubt lead to all kinds of adjustments to actual seedlings, as will the market conditions over the next month, seed availability, and any number of other factors. The area will no doubt be planted with something and the discussion will once again turn to whether there is too much or too little of this or that commodity.

Retail demand is holding steady. Heavy eggs are being sought for breaking stock and transactions are supportive of existing quotes. Buying interest on liquid whole egg has increased. Liquid white demand is up also and being sought at a variety of price points. The dried segment shows reduced demand. The frozen segment shows little demand as well as the value added market.

The market is steady to slightly up.

 

The live hog market was up on Wednesday. Higher beef pricing has shifted some demand to pork. Last’s week’s slaughter was 2.09 million head, down 2.3% from this week last year. U.S. pork exports during 2009 were 4.126 billion pounds. This was down 11.6% from 2008 but was still the second highest year in the history of the industry. The average carcass weight of barrows and gilts slaughtered the week ending 2-9 was 199 pounds down 1 pound from the week before and 3 pounds the same week last year.

Hams are still being purchased by Mexico and they are still rated steady with tight supply. Trimmings are steady to slightly higher. Butts are projecting to $.85 FOB in March. Bone in loins are projecting $1.15-$1.18 FOB into March and Boneless are expected to be in the $1.55 FOB range in March. Spareribs are flat. Sirloins are steady.

Packer margins which had slipped to nearly break even rebounded to $6.36 per head on Wednesday.

 

The live traded at $92.00 cwt on Tuesday in Texas and Kansas, which was steady with last week. Last week the live was up $3-4.00 per cwt. over the previous week. Weights on live cattle continue to run light. The weather is a factor here. Last week’s slaughter was 620,000 head, up 3% from last week.

Beef packers are reporting tight supply and well sold positions. Prompts are scare. The choice/select spread has narrowed to $.79 cwt or $.0079 per pound, almost even. Packer margins have rebounded here as well to a plus $19.95 per head. Middle Meats and end cuts are steady. Grinds are steady now but may come down in a couple of weeks. Chucks and Outsides are steady. Thin meats took some moderate price advances. The market is steady to firm.

 

The U.S. milk herd reversed its downward trend in January with 9.085 million head estimated by the USDA. This is down 2.4% from the previous January 2009 but 3000 more than in December. The herd is now 227,000 head lighter than last year with cow numbers now 84,000 below the five year average.

Production per cow is 1.9% greater than last year on a daily basis. This is  72 pounds higher per cow than five year average. This increase is probably due largely to younger replacement cows producing more milk than the ones that were retired.

 

In December total cheese production was estimated at 862 million pounds which was .8% below the same month last year for the first time since March 2008. In 2009 total cheese production hit 10.1 billion pounds surpassing a billion for the first time. In December American cheese production was 349.4 million pounds, down 2.6% compared to December 2008. 

Total cheese inventories were at 980.8 million pounds in January which was 11.2% higher than last year and 1.5% higher than December.  This was the highest inventory level since 1984 when 1.2 billion pounds went into inventory. American cheese inventory totaled 595.3 pounds, 11.6% above the previous year and 1.8% higher than December.

The USDA reported that 27.1 million pounds of cheese were exported in December. This was up 38.1% from last year and 6 million pounds above November. Total cheese exports for 2009 were down 17.4% over 2008 but were still well above the total of the years prior to the sustained exports.

 

In December butter production was 149.6  million pounds, down 4.3% compared to the same month in 2008. This was still 13.6 million pounds above the five year average.

In January the U.S.D.A. put butter inventories at 169.9 million pounds up 27.7% from December but 3.8% lower than 2008. Butter stocks increased in January but below the normal rate for this time of year.

The U.S. exported 7.8 million pounds of butter in December up 195% from December 2008. This is about 5% on the production for the month. 2009 butter exports were 72% lower than 2008.

 

Extremely low priced poor quality pintos on the market, that were the result of an extremely wet harvest, are now nearly out of the market all together.What was looking like a two tiered market is beginning to single out as much of the lower priced product has been purchased for Haiti relief. That means in due time a more customary market for beans will be seen. Prices are expected to remain at current levels and begin increasing as the  market filters out. Black beans are still experiencing strong demand and prices should be holding. Other varieties of beans are doing are well in terms of supply and demand and price.

 

Pine nuts and pecans are expected to continue to experience price pressure. With already low supplies and  larger than usual exports, supply and demand is dictating higher pricing.  This is not expected to be a brief blip of higher pricing but a more drawn out longer term experience.

 

While the refrigerated tomato world is experiencing troubles related to the Florida freeze, canned tomatoes are still doing well. While some shrewd operators will move toward canned for their non-sliced tomato needs, it is not expected to affect inventories enough to alter pricing. The supply side is still stronger than demand and quantity deals are still being made.

 

The already limited supply of beets and potatoes are getting smaller. Restrictions and allocations are continuing and growing into more sizes. Pricing should remain firm to higher for available product as we head toward a limited spring pack in late April. For the last few years the spring pack has not been large enough for allocations and restrictions to be removed but have been a welcomed relief.

Activity the beginning of this week as been slow, flat and sluggish.  These adjectives are typical for the month February, with this year being no different.   The winter weather this year has also played it’s part in slow business with another round of weather hitting the North East.

Whole birds and WOGs are holding their own at current market levels.  Whole breasts and breast fronts trade at steady levels.  Tenders and boneless breast rated at about steady.

Dark meat is about steady.  Drumsticks feeling the pressure with markets reflecting some downward movement. 

Wings continue to be a bit unsettled with markets continuing this week’s trend of downward movement.