Market Commentary

Iowa - Southern Minnesota plant top was $24.50, up $1.25 from the previous day.------ Chicago Mercantile Exchange Lean Hog futures closed higher. ------ Frozen pork belly futures closed higher, and pork cutout futures closed higher.

US packer margins are lower at $12.06 per cwt. ------ Mid-range carcass 51 - 52% lean (185 lb) cost is higher at US$31.53 per cwt; value of cuts is lower at $43.58.------ Values are derived from the WESTERN CORNBELT LEAN VALUE DIRECT HOG TRADE and the USDA NATIONAL CARLOT PORK REPORT reports from USDA.------ The following chart shows the relationship between the value of cuts in a carcass (referred to as "pork"), packer hog costs and packer margins since January 1998.

Canadian dollar futures are trading lower this morning, following a higher close. ------ US Dollar Index is trading in the 98.51 range. An increase in the US dollar index makes exports more expensive for the importing purchaser.

US Slaughter for the week ending March 13 was 2.75% above 1998 levels for the same week. Year-to-date slaughter is up 0.8%.

The December USDA Hogs and Pigs report estimated that U.S. inventory of all hogs and pigs on December 1, 1998, was 62.2 million head. This was 2 percent above December 1997, but 2 percent below September 1, 1998.

Breeding inventory, at 6.67 million head, was down 4 percent from December 1, 1997 and down 3 percent from September 1, 1998. Market hog inventory, at 55.5 million head, was 2 percent above last year, but 2 percent below last quarter.

The September-November 1998 U.S. pig crop, at 25.9 million head, was 2 percent ore than 1997 and 11 percent more than 1996. Sows farrowing during this period totaled 2.99 million head, 2 percent above last year. The sows farrowed during this quarter represented 43 percent of the breeding herd. The average pigs per litter fell to an average of 8.65 pigs saved per litter for the September-November period, compared to 8.67 pigs last year. Pigs saved per litter by size of operation ranged from 7.20 for operations with 1-99 hogs to 8.90 for operations with more than 5,000 hogs and pigs.

U.S. hog producers intend to have 2.89 million sows farrow during the December 1998-February 1999 quarter, 1 percent below the actual farrowings during the same period in 1998 but 8 percent above 1997. Intended farrowings for March-May 1999, at 2.88 million sows, are 7 percent below the same period last year and 1 percent below 1997.

See hogs_and_pigs_12.29.98 for the full report. Next report out March 26, 1999.

USDA's latest Livestock Slaughter report, February 20, for January 1999 estimates thatcommercial red meat production for the United States totaled 3.83 billion pounds in January, down slightly from the 3.84 billion pounds produced in January 1998.

January 1998 contained 22 weekdays (including two holidays) and 5 Saturdays. January 1999 contained 21 weekdays (including two holidays) and 5 Saturdays.

Beef production, at 2.17 billion pounds, was 1 percent above the previous year. Cattle slaughter totaled 2.96 million head, down 3 percent from 1998. The average live weight was up 23 pounds from the previous year, at 1,220 pounds.

Pork production totaled 1.63 billion pounds, down slightly from the previous year. Hog kill totaled 8.55 million head, slightly below 1998. The average live weight was unchanged from the previous year, at 259 pounds.

See the full Livestock Slaughter report at Livestock Slaughter .

Cold Storage report out February 20, for January 31 reports that total red meat supplies in freezers were up 2 percent from December 1998 and were 4 percent above January 1998. Frozen pork stocks were 3 percent above last month and were up 16 percent from last year. Stocks of pork bellies increased 13 percent from last month and were 48 percent above a year ago.

Total frozen poultry supplies were up 6 percent from last month, but were down 6 percent from last year's level. Total stocks of chicken were unchanged from last month but were 8 percent above January 1998. Total pounds of turkey in freezers increased 20 percent from last month and were 27 percent below last year.See the full report at Cold Storage

USDA Supply and Demand estimates out March 11 state that------estimated 1998 total meat production is virtually unchanged from last month.------ Forecast meat production in 1999 is raised due primarily to increased beef production; poultry production is increased slightly.------ Larger beef production results from larger-than-expected January placements in feedlots and the continued placement of heavier-weight cattle, increasing forecast mid-year slaughter and raising forecast dressed weights. Beef and pork exports are adjusted slightly this month, while poultry exports are unchanged.------ Livestock prices remain under pressure from large meat supplies. ------ With larger forecast beef production, cattle prices are expected to recover less rapidly than forecast last month.------ As red meat supplies diminish in the second half of 1999, a recovery in cattle and hog prices is forecast.------ On March 1, USDA replaced its Iowa-Southern Minnesota, No.1-3 barrow and gilt price with a new series based on a dressed carcass.------ Beginning with this issue the live-equivalent price of a plant-delivered, 51-52 percent lean hog carcass is used.------ Therefore, direct comparisons to last month's forecasts are not possible. A historical series of prices is available from the ERS website, http://www.econ.ag.gov , in the Meat Prices and Price Spreads Briefing Room under the heading "Suggested Historical Series Consistent with 1999 Pork Price and Price Spread Revisions."

May 1999 barley futures are trading at approximately $120.20, or about $2.03 with $27 Lethbridge basis removed. US Supply and Demand Estimates out March 11 indicate thatprojected 1998/99 ending stocks of corn are down 75 million bushels from last month because of larger exports. The projected price range is up 10 cents on the low end to $1.90 to $2.10 per bushel. Global 1998/99 coarse grain production is down from last month as smaller prospective crops for South Africa, Brazil, and Mexico more than offset upward revisions for several countries.------ The smaller crops in South Africa, Brazil, and Mexico are expected to result in larger imports. ------ However, the major impact of the lower South African corn crop is smaller prospective exports--down1.75 million tons from last month for the local May 1999-April 2000 marketing year.------ The reduction in South African corn exports during the U.S. 1998/99 September-August year is only expected to be around 1 million tons. Full report is at World Agricultural Supply and Demand Estimates

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