18 August 2023

3 minute read

By: Jim Long

North America

Last week the USDA released their current estimate of this year's U.S. corn crop - 15.111 billion bushels. To put in context the largest corn crop in U.S. history was 15.14 billion bushels in 2016. In the 2016-2017 crop here corn average $3.65 bushel. 2016 has been the only year the U.S. has produced over 15 billion bushels. To put in context 2000-2020 the average U.S. corn crop 12.96 billion bushels.

As the saying goes “the crop isn't in the bin” but it appears there will be no shortage of corn.

The U.S. national corn price Friday average $5.19 bushel the lowest price in two years. September corn closed Friday at $4.74 bushel a new contract low. Both a reflection of the massive U.S. corn crop coming in combination with Brazil's record corn harvest. No doubt we will be seeing the lowest feed prices in the last two years.

• The cattle numbers to slaughter continue to stay low. Last week 603,000, a year ago 645,000 (-6.5%). This equated to a decline of 37 million lbs. less beef in the week. Pork production last week was 3.5 million lbs. more than a year ago. Beef-Pork 33 million less lbs. in the week compared to a year ago. Year to date there has been 937 million lbs. less beef produced. 61 million lbs. more pork. No doubt less total red meat.

This dynamic will become ever more prevalent when in the future lower pork production cuts red meat total production even further. Less supply almost always leads to stronger prices.

Last Friday U.S. Cut-outs

• Choice Beef $3.02 lb.
• Pork $1.10 lb.

If we could only get on board producing better tasting pork. If pork cut-outs could get to half beefs, cut-out = $1.51 lb. everyone could be doing happy dance instead of sucking air. Worshipping “the other white meat” program did nothing but destroy the eating experience of our customers (consumers). Customers vote with their money, and obviously are ready to pay more money for beef.

• It will be interesting watching the direction of the US-chicken industry. Like the hog industry the large players have lost hundreds of millions of dollars in the last few months. Chicken prices whether whole birds or pieces are significantly down in value. Last week Tyson Foods announced the closure of four chicken plants. The chicken industry has a short cycle they can adjust supply quickly. Cut chick placements and supply drops in six weeks. Losses usually will lead to lower supply in almost any industry. If chicken cuts back, there will be less meat protein in the market. Supports pork industry.
• Denmark. Last week inventory reports from Denmark shows a finishing inventory decline year over year of 16.5%. The sow herd is now the lowest in decades. Denmark has been a major player in global pork exports for many years, the cut in supply leads to lower pork available for sale.
• An article recently on Swine Web by Jim Eadie explained the large program underway in the Canadian province of Quebec to cut pig production. The plan jointly funded by government and all producers is to generate $80 million to buy out producers for five years of production. Goal is to cut 1,000,000 hogs annually (50,000 sows). This is triggered by the slaughter plant closing of Olymel in Quebec, i.e., no place to kill hogs.

An example of Quebec’s challenge is the current hog prices in Canadian dollars. Quebec $2.14 kg carcass, Ontario the province beside Quebec $2.54 kg carcass ($40 per head difference). The planned cut of 1 million hogs will mean less total pork production in North America.