The Rural Voice, 1983-06, Page 26by John DePutter
PREPARED MAY 12, 1983.
As suggested in last month's column,
the cattle market made a correction. The
Chicago futures rose sharply in late
March and early April, but started falling
the week ending April 15. Cash markets
lost some bouyancy too, with Omaha
choice steers dropping below $70 (U.S.)
and Toronto choice steers pulling back to
the $80-83 area. Wholesale Toronto steer
beef retreated to $1.43.
But many analysts still expect strength
into June. Normal seasonal price trends
would support this view. Declining
FARM MARKET PERSPECTIVE
supplies are expected, according to
some industry analysts, into late June
and early July. After that, "we'd throw
out the caution flag," as Roy Budlong,
Analyst for Cattlefax, a Colorado firm,
put it. There is some concern that cattle
placed into feedlots after coming off
wheat acres that were idled by PIK, will
hit the market in the third quarter.
Some analysts look for a major bottom in
hogs this fall. The 31 year cyclical
bottom may come during the August to
October period, according to Marlys
Miller of the Profarmer organization. She
suspects the bottom to be most likely in
October. Karen Curry of Heinold Com-
modities is forecasting hogs at $40. U.S.
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PG. 24 THE RURAL VOICE, JUNE 1983
by fall. Glenn Grimes, Livestock Econo-
mist at the University of Missouri, is also
bearish. "Whereas we had hogs at just
over $60 in the 3rd quarter last year, I
think about the best we'll do this year is
somewhere in the low $50's," Grimes
said. "The mid $50's have a low proba-
bility. As for the fourth quarter, we may
have an 8 per cent to a 10 per cent
increase in slaughter, which means the
mid to upper $40's. If we have as much as
a 15 per cent slaughter increase which
isn't probable but is possible, we could
be in the low $40's to upper $30's."
Despite the negativeness of the above,
one firm, Livestock Business Advisory
Services in Kansas, is talking about $53
to $58 U.S. hogs in the third quarter.
Meanwhile, a modest seasonal rally is
trying to build steam. For the week
ending May 7th, hog slaughter in the
U.S. was down 3 per cent from the week
before but up 3 per cent from a year ago.
This was not enough of a supply
reduction to start the usual spring
uptrend. Other factors stalling recovery?
Wilson Foods Ltd., the largest hog
packing house, was at one point on the
verge of bankruptcy, and had labour
problems. And wide retail margins in the
U.S. mean lower live hog prices haven't
been passed on to the customer to spur
demand.
Corn markets took all the bullish news in
April and early May. USDA reported that
PIK sign-up was incredible; the crop was
pegged at just 5.6 billion bushels for
1983, and Washington analysts said free
stocks were so tight that prices would
have to rise to the $3.15 reserve trigger. 1t
was dry in the Soviet Union, prompting
speculation of huge purchases by that
nation. Washington sent an invitation to
Moscow to negotiate a new long term
agreement. Weather was hampering
spring seeding. And here in Ontario,
buyers were raising the local basis
steadily, as stubborn holders of corn
forced them to raise bids almost to
Michigan replacement levels.
Then it all came crashing down, at least
on futures. A series of bearish reports
came from Washington. Corn acreage
officially was estimated at only 28 per
cent less than last year compared to
expectations of a 30 per cent or greater
reduction. USDA officials changed their
mind about the $3.15 trigger being hit,
and said average corn prices wouldn't
have to rise that high. Carryover this year
will be about 3.4 billion bushels, up from
the previous guess, said USDA. And the
1983-84 Soviet crop could reach 200
million metric tons or more, quenching
Moscow's thirst for grain. It rained in
Russia and poured in Australia, too; all
of this news coming between May 9th
and 11th.
Farmers ,Who were forward priced on