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Genesus Global Market Report - USA

by 5m Editor
23 March 2012, at 9:39am

US - Margins continued to deteriorate since the end of February as hog prices dropped while meal moved higher and corn stayed relatively flat over the past two weeks, writes Doug Lenhart, General Manager of Genesus USA.

From a historical perspective, profit margins remain strong – at or above the 80th percentile of the past five years with the exception of nearby Q2. Despite this, forward margins are now $2.00-$4.00/cwt. lower than where they were a couple weeks ago.

Genesus Global Market Report
Prices for the week of March 11, 2012
Country Domestic price
(own currency)
US dollars
(Liveweight a lb)
USA (Iowa-Minnesota) 85.99¢ USD/lb carcass 63.63¢
Canada (Ontario) 1.57¢ CAD/kg carcass 57.53¢
Mexico (DF) 21.18 MXN/kg liveweight 75.18¢
Brazil (South Region) 2.15 BRL/kg liveweight 53.49¢
Russia 95 RUB/kg liveweight $1.47
China 15.19 RMB/kg liveweight $1.09
Spain 1.29 EUR/kg liveweight 77.63¢

On the feed side of the equation, USDA’s March WASDE report held few surprises for the market which now appears to be in a waiting mode for the acreage figures due at the end of the month. USDA did confirm lower estimates for South American soybean production, supporting soybean meal. Corn’s balance sheet was left unchanged from February, keeping a neutral tone in that market.

Hog prices meanwhile have been under pressure lately as concerns mount about deteriorating packer margins and what this portends for hog demand moving into spring. With hog weights rising counter-seasonally and cutout values falling, hog prices may have to follow suit.

Many producers who have added coverage recently given the very strong historical margin opportunities are now assessing those strategies for adjustments ahead of the quarterly Hogs and Pigs and grain stocks reports at the end of the month, along with the Prospective Plantings from the USDA. Adding flexibility back into tactical strategies given the recent break in hog prices as well as the strong rally in soybean meal look particularly attractive heading into these reports.

2nd Qtr ’12 Most Recent Offering of $7.50, the low was $2.42, the high has been $19.39 and the 5 year percentile of 56.2 per cent.

3rd Qtr ’12 Most Recent Offering of $8.33, the low was $1.20, the high has been $14.07 and the 5 year percentile of 77.5 per cent.

4th Qtr ’12 Most Recent Offering of $3.10, the low was ($0.14), the high has been $7.19 and the 5 year percentile of 79.0 per cent.

1st Qtr ’13 Most Recent Offering of $3.62, the low was $3.62, the high has been $6.04 and the 5 year percentile of 75.4 per cent.