Supply

     As demand continues to languish, Smithfield plants in the midwest and Tyson slowed kills as a means to boost prices at the wholesale level.  The strategy appears to have worked as the LS500 (Carcass Composite) price picked up over $10/cwt in the last 10 days but live prices remained stuck in the mid to upper $50 range. 

     USDA reports year-to-date slaughter down a little over 4%, just shy of 2.6 million head.  The biggest problem remains the export markets where May results revealed exports down over 30% from a year ago.  Japan was perhaps the biggest disappointment since its demand had remained firm until the recent report where the month over month decline was just over 13% and the year over year decline over 15% in tons shipped.  China and Hong Kong are returning to 2006-2007 levels and were down dramatically since the purchase boom of last year.

     I was hanging around some beef guys last week and I have to say, it was a great time.  The people involved in animal production in this country (and around the world that I have traveled) are some of the most genuine, thoughtful, fun-loving and creative human beings I have ever met.  A lot of them are suffering now of course both financially and psychically as they face the daunting uncertainty of low prices and record input costs.

     One of the guys I was talking to reacted genuinely surprised and intrigued when I shared with him the inevitability of his business shrinking over the next 10 years.  I told him he had to read a little bit wider than his trade magazines if he wanted to see the future more clearly.