Screwworm, demand fears, spook cattle trade
The U.S. has again suspended transport of live cattle, horses and bison through Mexican ports of entry. The ban is expected to last at least two weeks before being reassessed. The New World Screwworm, a flesh-burrowing larva fatal to animals and often devastating to cattle herds, was found to be active as near as 700 miles from the U.S. border near Oaxaca, Mexico. Mexican officials objected to the suspension, indicating that the screwworm threat was under control and distant from the border. A similar ban was imposed upon Mexican cattle in November and lifted in February of this year. Although the screwworm primarily affects cattle, it can cause issues in humans. A Stop Screwworm Act was introduced in Congress on Friday to respond to the threat.
A dramatic price reversal on Wednesday stampeded live cattle and feeder cattle traders from bulls to bears in a U-turn of nearly $ 9 per hundred pounds by Thursday. Though screwworm fears might have contributed to the panic selling, many traders and analysts felt cattle prices had reached an unsustainable high price that had finally scared buyers away from the market.
Beef prices just hit an all-time record due to cattle inventories moving to the lowest they’ve been since the early 1950s, while U.S. population and per capita beef consumption have risen sharply. Drought has been the biggest underlying factor in creating the shortage while lack of cheaper alternatives, such as poultry and eggs has contributed to the demand side. By Friday’s close, cattle for June delivery were at $ 212.25 per 100 pounds, down about $2 on the week as the middle of grilling season approaches.
Bean oil slides limit down
The week’s grain markets were dominated by a crash in soybean oil on Thursday on rumors the Environmental Protection Agency is delaying the renewable fuel standard mandates that determine how much bean oil will be required in the formula for biodiesel.
The EPA sets the requirements for ethanol, biodiesel and other biofuels and surprised the biofuel coalition by delaying, then possibly reducing, the mandate numbers which will affect the supply, demand and production costs of those fuels developed to reduce green-house gas emissions.
Prior to the announcement, bean oil prices were at record highs so they had plenty of room to tumble which they did … and then some. The grain market watches comments from EPA chair Zeldon as closely as stock traders watch the Fed chair, and Zeldon’s uncertainties triggered the huge sell-off, locking down to the lowest price permitted by the exchange.
Bean oil is also the most popular cooking and salad oil in the U.S., though many only see the label “vegetable oil” and don’t always realize what they are eating.
The tumble in prices, as is typically the case, will be welcomed by grocery shoppers; however, farmers will suffer from lower income from producing soybeans and their products. During the wild ride, July bean oil fell from a high of 52.60 cents on Wednesday, to a low of 47.60 cents on Friday.
CME midday prices: Price per bushel: July Soybeans, $10.50; July Corn, $4.44; July Wheat, $5.25. June Livestock per 100 pounds: Cattle, $212.25; Hogs, $100.25. Metals per troy ounce: June Gold, $3,191; July Silver, $32.34. July Copper per pound: $4.58. June Crude oil per barrel: $62.50. The June S&P futures contract is trading at 5963.00.
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