Hit by weaker domestic and foreign demand, China’s official manufacturing PMI declined to a six-month low in January. Although this is about what was expected after a lower preliminary HSBC reading last week, a Reuters story said it heightens worries of an economic slowdown and weaker US exports.\r\n The official Purchasing Managers’ Index from the National Bureau of Statistics declined to 50.5 in January from December’s 51. A reading below 50 indicates contraction while a reading above 50 indicates expansion.\r\n The HSBC Manufacturing PMI fell to 49.5 in January, down fractionally from the flash reading of 49.6 and down from 50.5 in December.\r\n The decline reinforces concerns that China’s economy is stuttering and could become even more of a drag on the world economy in coming weeks. The Reuters story said global investors, already nervous about capital flight in emerging markets, were selling riskier assets, and this could give them another reason to continue.\r\n Emerging market stocks and currencies were sold off last week, pushing the US Dollar higher and igniting fears among commodity traders that demand for agricultural exports could be trimmed.\r\n For now, all is quiet on the eastern front as Asian countries, and China in particular, celebrate the Lunar New Year holiday. Chinese demand for US soybeans and corn declines seasonally as South American New-Crop stocks hit the world market. \r\n Traders are bracing for such a move. Many have been expecting cancellations of US soybean orders as Brazil’s harvest of what appears to be a record crop advances and the first vessels leave the ports.\r\n And, there are fears that Chinese soybean imports could decline even more as domestic demand for poultry falls off over H7N9 avian flu virus fears as human deaths continue to hit the headlines and flock sizes are cut.\r\n Hong Kong last week banned sales of live chickens for 21 days and will cull about 20,000 birds to reduce the risk of infection from the mainland.\r\n US and Russian food safety officials are talking about Russia reopening its borders to US pork and turkey products after nearly a year-long ban over fears the products may contain the growth promotant ractopamine. MeatingPlace.com said Russia’s food safety chief Sergei Dankvert told the country’s Interfax News agency that Moscow plans to end the ban, beginning with turkey in mid-February and the pork ban by March.\r\n But a rising US Dollar could limit export demand anyway.\r\n USDA’s annual cattle inventory report Friday showed 87.73 million head in the US on Jan. 1, down 1.8% from a year ago and a little lower than trade estimates. The 2013 calf crop totaled 33.93 million head, down 1.0% from last year and the 18th straight year of declines, although it was 1.1% larger than predicted.\r\n Market analysts said the continued declines likely will underpin feeder cattle prices for another year or more.\r\n The USDA’s live-basis 5-area weighted steer price last week was $145.80, down $2.45 from the previous week, although it still was $20.84 higher than a year earlier.\r\n Beef prices are dropping as fast as they went up in January. The USDA’s choice beef cutout Friday was $223.49 per cwt, down $7.26. Select was off $4.94 at $224.85. For the week, choice was down $13.77, and select was off $11.40.\r\n The choice/select spread narrowed Friday to $1.36, and there were only 73 loads of fabricated product sold into the spot market.\r\n The CME Feeder Cattle Index for the seven days ended Thursday was $171.12, down $0.43, while Jan futures settled Friday at $171.12 per cwt, down $0.55.\r\n
Cattle feeding is pretty straightforward - doing it profitably isn't.