The USDA’s biannual inventory report showed 94.5 million head of cattle and calves in the United States on Jan. 1, down 1.6 percent from a year ago. January’s report also showed 11.2 million cattle on feed, down 7.1 percent from a year ago.
In February, cattle prices were still low relative to beef prices, which will lead to ample slaughter levels and flat-to-weaker beef prices. But the beef supply drop from winter into spring is expected to be sharper than usual this year. Despite recession-reduced demand, most choice middle meats—striploins, short loins, top butts—could see $2-per-pound jumps from a market bottom in mid-February to the seasonal top in May and June.
Coffee—The International Coffee Organization raised its estimate of the world’s 2008-09 coffee crop from 132.5 million to 134.2 million bags, up from 116.2 million a year earlier. The group is predicting 132 million bags in 2009. Coffee futures prices have been relatively stable in the $1.08-$1.16 range for the past three months.
Dairy—Sharply lower export and domestic demand led the USDA to slash price forecasts in January. The 2009 all-milk forecast was cut from $15.45 to $12.20 per hundredweight, down from $18.34 last year; 2009 butter dropped from $1.32 to $1.22 per pound, down from $1.43 last year; and the 2009 cheese forecast plunged from $1.69 to $1.30, down from $1.89 last year.
Block and barrel cheese prices have recovered a bit, to just above price support levels. The January Class III milk price, at $10.78 per hundredweight, is at a five-and-a-half-year low.
Low dairy product prices and low financing and storage costs have made physical hedging affordable. Producers reportedly are squirreling away product, anticipating higher prices later this year. However, the cheese and butter that is put away now will take away from demand later in the year.
Oil—January’s USDA oil crops report reduced the expected 2008-09 soybean crush by 30 million bushels to 1.685 billion. Still, the USDA raised soy oil ending stocks to 2.1 billion pounds, saying lower demand will more than offset falling output. The USDA forecast soybean oil at 34 cents per pound in 2008-09, down 35 percent from an average of 52 cents a year earlier.
Pork—The USDA said the threat of higher hog prices due to smaller 2009 supplies could be tempered by weaker demand in domestic and foreign markets. In its quarterly Hogs & Pigs Report, the USDA reported a lower second-half 2008 pig crop, down 1.6 percent, year-over-year; lower first-half 2009 farrowing intentions, down 2.4 percent; and much lower Canadian imports, down 21 percent. As a result, U.S. pork production, at roughly 23 billion pounds, will be 1.4 percent below 2008 levels. Still, pork and hog prices are forecast just 2.4 percent higher than in 2008 because of expected drops in demand.
Poultry—The trend toward lower year-over-year slaughter numbers is expected to continue through the first three quarters of 2009. Broiler meat production in 2009 is now forecast at 36.3 billion pounds, a 1.5-percent drop from the 2008 estimate. Reduced output will send broiler prices to 84 cents in 2009, up 5.4 percent from 2008.
Larger turkey supplies are expected to hold turkey prices to below year-earlier levels for most of the year. The USDA is forecasting turkey prices to average $85.50 per hundredweight in 2009, down 2.3 percent from $87.50 in 2008.
USDA New York large-egg prices averaged $1.28 per dozen in 2008, up 13 cents from 2007. Table egg production is expected to remain below year-ago levels through the first half of 2009.
