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Email Content: Poultry Industry News, Comments and more by Simon M. Shane



The following quotations for the months as indicated were posted by the CME at close of trading on Friday February 8th together with values for the reference months in parentheses. The market showed a mild decline for corn, soybeans and soybean meal in contrast to stagnation during the previous week.





Corn (cents per bushel)

March  374   (378)        

May  382  (387)

Soybeans (cents per bushel)

March  916   (917)

May  930  (931)      

Soybean meal ($ per ton)

March  307   (312)

May  311  (316)


Changes in the price of corn, soybeans and soybean meal were:-


COMMODITY                   CHANGE FROM PAST WEEK____________________

Corn:                     March quotation down 4 cents per Bu.                  (-1.1 percent)

Soybeans:            March quotation down 1 cent per Bu                     (-0.1 percent)

Soybean Meal:    March quotation down $5 per ton                          (-1.6 percent)                                 


  • For each 10 cent per bushel change in corn:-


The cost of egg production would change by 0.45 cent per dozen


The cost of broiler production would change by 0.25 cent per pound live weight


  • For each $10 per ton change in the price of soybean meal:-


The cost of egg production would change by 0.40 cent per dozen


The cost of broiler production would change by 0.25 cent per pound live weight



Soybean prices previously firmed in response to reports of drought in areas of Brazil. Approximately 20 percent of the crop projected to be 117.2 million metric tons is at risk. The market has now factored in decreased production in Brazil and Argentine.


There is fluctuating optimism concerning the outcome of the ongoing negotiations between China and the U.S. initiated at the dinner meeting during the G-20 Summit between the delegations from the U.S. and China led by their respective Presidents. Statements by members of the Administration concerned with the issue on February 8th suggest a likely extension of the March 31st deadline to raise tariffs from ten percent to twenty-five percent on over $200 billion in annual imports from China. In return China has agreed to purchase an unspecified quantity of agricultural commodities in addition to energy and heavy equipment from the U.S. to offset the negative balance of payments. An initial order of 1.5 million tons was placed in December 2018, the first since June.  The USDA announced on January 7th that orders have been placed for an additional 3 million tons to be shipped before September 2019. China has hinted at a six-year agreement to purchase soybeans mainly due to concern over drought in Brazil. Negotiations are apparently in progress in Beijing and Washington without any disclosure of specifics. Despite the pessimistic note sounded by Commerce Secretary Wilbur Ross during the World Economic Meeting in Davos, Switzerland, the President appeared buoyant on February 1st during a press briefing.


According to the February 8th 2018 WASDE Report #585, (the first issued after the December 24th 2018 Federal Shutdown), 81.7 million acres of corn will be harvested in 2019 to produce 14.42 Billion bushels. The soybean crop is projected to attain 4.54 Billion bushels from 88.1 million acres harvested. The levels of production for the two commodities are based on preliminary pre-planting projections of yield and acreage to be planted. Ending stocks were revised based on anticipated domestic use and exports.


 See the WASDE posting summarizing the February 8th USDA-WASDE Report #585 in this edition documenting price projections and quantities of commodities to be produced, used and exported from the 2018 harvest.


Unless shipments of corn and soybeans to China resume in volume, as projected, the financial future for row-crop farmers appears bleak despite the release of two tranches amounting to  $12 billion as “short-term” compensation for all producers of commodities and livestock. Corn farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. Oversupply of ethanol with the current 10 percent addition (= BTU dilution) mandate is evident from the February 8th spot price of $1.32 per gallon that has not changed materially in six weeks compared with a 2018 peak in late March of $1.60. Exports have been constrained by the retaliatory tariffs imposed by China on U.S. ethanol. Some refiners are reducing production and mothballing corn-fermentation plants.


The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. It must be recognized that the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift that keeps on giving. The mandate is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.


Copyright 2019 Simon M. Shane