click image to zoom A little bit about a lot of things. Sorry, but none of them are good for livestock and poultry producers:
• Soybean meal futures hit a new all-time high today with the nearby July contract hitting $457.50 per ton (a record-high high) before closing at a record-high close of $454.10. The weekly continuation chart appears at right. Both figures broke records set the week of July 11, 2008. For what it’s worth, that July contract went off the board three weeks later at $388.30, over $65/ton lower. The nearby contract was down by $100 by August 4, 2008 and went below $300/ton by the end of September 2008. None of this means this will happen in 2012 — but it underscores that things can change in a hurry if the right conditions prevail.
• Continued dry, hot weather has a number of analysts dropping their corn yield estimates rapidly. A poll conducted and published by Reuters this week pegs the 2012 yield at 153.4 bushels per acre, down 3.9 bushels or 2.5 percent in just the last week. Even more sobering, Allendale Inc. research director Rich Nelson says current July weather forecasts will push the national yield down to nearly 145 bushels per acre. That would be over 2 bushels lower than LAST year. This all comes on the heals of last week’s 8% drop in the proportion of acres rated in either good or excellent conditions. Last week’s 48% is the lowest rating for week 26 since 1988, the last widespread, severe drought in the U.S. Cornbelt.
• The United States’ lost its appeal of the World Trade Organization’s (WTO) finding that mandatory country of origin labeling (MCOOL) violates WTO trade rules. That is no surprise to many industry observers, ourselves included. The WTO Appellate Body said MCOOL provides “less favorable treatment to imported Canadian cattle and hogs than to like domestic cattle and hogs.” Specifically, the Body pointed out that MCOOL imposes recordkeeping and verification requirements that cause a disproportionate burden on upstream producers and processors of livestock relative to the information conveyed to consumers or retail meat products.
Both the National Pork Producers Council and the National Cattlemen’s Beef Association issued tactfully worded statements to the effect of “We told you so a long time ago!” Both groups fought MCOOL from its inception in the 1990s because they believed MCOOL would put our trade relationships with Canada and Mexico in jeopardy. Those fears may now be realized.
Mexico and Canada ranked 2nd and 4th, respectively, among U.S. pork export markets in terms of volume in 2011. They ranked 2nd and 3rd, respectively, in terms of pork export value. They were the top two markets, again respectively, for both volume and value for U.S. beef in 2011.