CME: Happy Thanksgiving!

US - CME's Daily Livestock Report for 25 November 2008.
calendar icon 26 November 2008
clock icon 3 minute read

Steve Meyer writes: I’m going to exercise a bit of editorial licence today in wishing our readers a very happy Thanksgiving holiday. When bad news abounds, we can often overlook many of the good things that continue to make our lives meaningful. Please pause to think about them tomorrow or this weekend as you gather to observe this most American of holidays.

All of us at DLR (I, Len Steiner and Altin Kalo of Steiner Consulting Group and John Harangody, Tom Clark and Anne Carrera of the CME Group) are first most thankful for you, our readers. This project started five years ago with just a few hundred recipients. Today, you number in the thousands and we appreciate your interest in our letter and your help in spreading the word. Thank you.

As I visit with people from other parts of the world, I become more and more aware of how blessed we are to have the market institutions and services we have in the United States. While our systems have some foibles to be sure, the mere presence of active, liquid futures markets and broad, accurate and timely supply and price information provide us a remarkable information base for decision making.

And let us pause to thank those who have gone before us and shared (or continue to share) their wisdom. Well-known farm broadcaster Orion Samuelson observed during a presentation I attended in Illinois yesterday that he thought we might not be in this financial mess had we availed ourselves of the counsel of more people who lived through the Great Depression. There are few of them left and there are even fewer still active in the business matters of today. Their advice to “not buy anything you cannot afford and not borrow anything you can’t pay back” would have served many well in the past few years.

And one bit of market insight. The reductions in the broiler sector are not just short-term cuts to egg sets and, ultimately, slaughter and production. The industry is in the process of making longer-term cuts in output. The chart below shows monthly USDA data for the number of broiler-type laying hens in breeder flocks. October data indicate the lowest number of breeder hens is the lowest in over a decade. This number is obviously seasonal and the annual bottom usually occurs in October but the rate of decline this year and recent financial performance of Pilgrim’s, Tyson and others suggests that it may not be over. Also notable is the lack of growth in the breeder flock since 1999 — a time period that saw total broiler production increase by 24.7%.

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