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CME: Governors Urge Assistance for Pork Sector

by 5m Editor
10 August 2009, at 9:04am

US - USDA will release yet another highly anticipated Crop Production report (and the accompanying World Agricultural Supply and Demand Estimates or WASDE) on Wednesday, 12 August at 8:30 a.m. EDT, report Steve Meyer and Len Steiner.

The August report is the first of the crop year that uses objective data to predict yields. In addition, USDA has "re-surveyed" many areas regarding corn and soybean acreage following the July Acreage report that surprised almost everyone with the number of estimated corn acres. So, this year’s August report has a bit more intrigue than normal. Results of Dow Jones’ monthly survey of grain market analysts appear in the table below.

Average Range USDA, July 2008
(Billion Bushels)
Corn Crop 12.472 11.792 - 12.814 12.290 12.101
Soybean Crop 3.213 3.000 - 3275 3.260 2.959
Wheat Crop, All 2.150 2.086 - 2.238 2.112 2.500
(Bushels per Acre)
Corn Yield 157.1 153.0 - 160.3 153.4 153.9
Soybean Yield 42.1 40.9 - 43.5 42.6 39.6

As a group, analysts expect the corn yield estimate to be higher than that of July while they expect USDA to reduce the soybean yield slightly. Readers should note that the 153 bushel per acre estimate that marks the bottom of the range of corn yield estimate is perhaps an outlier — the next closest estimate was 155.6 bushels per acre. Analysts also expect USDA to slightly raise its estimate of the 2009 wheat crop.

Governors of eight states sent a letter to the Obama Administration on Friday requesting assistance for struggling pork producers. The letter does not, as some reports indicated, ask for any sort of bailout for the US pork industry. It asks for three things:

  • A $50 million purchase of pork products for public feeding programs.
  • A relaxation of the current spending cap on Section 32 funds to allow their use for the $50 million purchase.
  • That the administration turn up the heat on China to drop its "unwarranted" ban on imports of US pork products predicated on Novel H1N1 influenza.

Three other governors indicated that they would request assistance with letters of their own but the nature of those requests were not known.

It should be noted that the first request is not at all unusual. Many producer groups make the same request when prices fall. In fact, government purchases of several products have been so large this year that they have depleted the available funds and predicated request #2. China is the only US export market of any significance that is still banning US pork.

The value of a hog purchased through a negotiated trade fell to less than $100 on Friday. That hog cost roughly $135 to produce.