Marketing

Grain Outlook Livestock Angles Corn market continues to ride Livestock markets overbought, high on interest from China short-term correction looming

The following marketing billion estimate vs. 15.278 The overall trend in liveappreciation. Therefore, the analysis is for the week ending billion bushels last month. stock futures over the past short-term outlook is for corPHYLLIS NYSTROM CHS Hedging I n . St. Paul Sept. 11. CORN — Traders returned from the long Labor Day weekend with their buying shoes on! December corn prices rallied to a new high for the move and to its highest price level since late March. It closed above the 200-day moving average resistance for the first time since August 2019 in the session just prior to the September World Agricultural Supply and Demand Estimates report. On the usage side, feed usage and ethanol were each cut 100 million, and exports were increased 100 million bushels. Ending stocks were down 253 million bushels from last month’s 2.756 billion bushel forecast at 2.503 billion bushels. The average trade estimate was 2.433 million bushels. The average farm price was raised 40 cents per bushel to $3.50 per bushel. World ending stocks for 2019-20 were JOE TEALE Broker Great Plains Commodity Afton, Minn. several months has been higher since April. The recovery has been methodical and fairly persistent during this push to higher prices in all livestock contracts. It now looks as if this recovery period is beginning to meet some resistance as markets appear to be at levels where these markets are technically overbought. Therefore, some corrective type action maybe in the offing in the near future in all of these markets. The good news is that the correcrective action with the longer term outlook still indicating positive price appreciation. This would indicate a roller coaster outlook for the next few months in the cattle market. Lately the hog market has been on rampage to higher levels as demand for pork has elevated the prices the packers are willing to pay. This has brought the lean index over the $60 cwt. for the first time in months.

There continued to be talk of a small309.2 million metric tons vs. 311.3 mmt tive action is not likely to be very Another interesting event was the er corn crop and buying interest from last month and estimates for 310.8 severe and not long in duration at this fact that the lean index went from a China. There was only one fresh export mmt. For the 2020-21 crop year, ending time. premium to the futures to a discount in sale announcement during the week of 4 million bushels to unknown destinations. Was the typhoon damage in China worse than first thought? Managed money added to their recently established net length leading into the monthly report. The Sept. 11 WASDE report was viewed as neutral with no major surprises. On the 2019-20 U.S. balance sheet, exports were cut 30 million bushels to 1.765 billion bushels and food, seed and industrial was raised 5 million bushels. This reduced ending stocks 25 million to 2.253 billion bushels. This was in-line with trade estimates for 2.236 billion bushels. On the 2020-21 U.S. balance sheet, harvested acres were dropped 550,000 acres (Iowa) and yield was slashed 3.3 bushels per acre to 178.5 bu./acre. The U.S. Department of Agriculture said they will resurvey Iowa farmers for the See NYSTROM, pg. 20 Cash Grain Markets corn/change* soybeans/change* Stewartville $3.17 +.08 $9.35 +.35 Edgerton $3.13 +.12 $9.23 +.33 Jackson $3.19 +.11 $9.23 +.36 As far as the cattle market is concerned, the recent rally appears to be meeting some resistance as beef cutouts have been easing lower and the cash trade has slipped back to near the $100 per hundredweight level. Also, the feeder market has fallen off during the past several weeks as auctions have seen prices dip since mid-August. Weights have been on the rise which will increase the amount total beef production which is likely to counter-balance the supply to the demand which would be another negative to price stocks were 306.8 mmt vs. 310.6 mmt estimated and 317.5 mmt last month. These numbers were the friendliest of the corn figures. Brazil’s 2020-21 corn production was raised 3 mmt from last month to 110 mmt with exports up 1 mmt to 39 mmt. Argentina’s corn production was unchanged at 50 mmt with exports unchanged at 34 mmt. A surprising element in the report was China’s imports were left at 7 mmt (275.6 million bushels) when we believe they have already purchased 8.8 mmt (346.4 million bushels). recent weeks. This would indicate that a positive outlook by the trade is optimistic for future price appreciation. The last segment of this rally has been extremely quick. This type of action usually ends a move rather abruptly. Short term, the market is overbought and a corrective move is likely in the days ahead. However, the longer term outlook would still be fairly positive since the relationship between cattle and hogs is still weighted toward the cattle. Eventually this disparity in price between hogs and cattle will correct sometime in the future. Another factor which is a bit worrisome is the amount of pork in cold storage. The next U.S. Department of Agriculture Cold Storage Report is due Sept. 24; and this could set the tone for price direction into the fall. v October report since many were still determining what they will harvest. Janesville Cannon Falls $3.16 $3.18 +.09 +.13 $9.30 $9.40 +.37 +.34 For marketing news This is still a record yield. Iowa’s corn yield went from 202 to 191 bu./acre, Sleepy Eye $3.11 +.12 $9.21 +.36 between issues ... Illinois from 207 to 203 bu./acre, and Minnesota from 197 to 200 bu./acre. The average trade estimate was 178.3 bu./acre. Production of 14.9 billion Grain prices are effective cash close on Sept. 15. Average: $3.16 $9.29 Year Ago Average: $3.52 $8.10 visit www. TheLandOnline.com bushels was also in line with the 14.877 *Cash grain price change represents a two-week period.

THE LAND — SEPTEMBER 18/SEPTEMBER 25, 2020 Soybeans have rallied $1.34 per bushel since August

NYSTROM, from pg. 19

Weekly exports were strong at 71.8 million bushels with China accounting for 49.6 million bushels of the total. Total commitments for this year are 742 million bushels, up 162 percent from last year. It’s estimated China has purchased 346.4 million bushels of U.S. corn for the 2020-21 marketing year.

Weekly ethanol production was a six-week high at 941,000 barrels per day, up 19,000 bpd for the week. Ethanol stocks fell 889,000 barrels to 20 million barrels. Net margins declined a penny to 12 cents per gallon. The four-week average gasoline demand remains 10 percent behind a year ago. It seems likely Brazil will extend their zero-tariff quota on ethanol imports until after the November elections in the United States. This quota has been used exclusively for U.S. ethanol in the past.

The Rosario Grain Exchange kept their Argentine corn production estimate for this coming year at 48 mmt. The USDA’s latest figure is 50 mmt. Conab put Brazil’s 2020-21 corn crop at 102.5 mmt vs. USDA at 110 mmt.

Germany confirmed their first case of African swine fever in a wild boar. Germany is the EU’s largest producer of hogs/pork. South Korea immediately banned pork imports from Germany. Germany was urging China not to implement a full ban, but instead restrict imports on a regional basis. The situation

Trade will influence planted acres in 2021

KVENO, from pg. 14

The Land: So with a more favorable outlook brewing, should growers increase corn acres for 2021?

Kveno: This depends upon geography. Looking at southern Minnesota counties such as Renville, Sibley and Blue Earth — which are blessed with good soils — market outlooks into this 2021 crop year will pretty much dictate crop acres of both corn and soybeans. But how the political landscape looks after November elections may also influence famers’ thinking. I’m talking specifically foreign trade actions. If farmers see some positives in this unpredictable future, I could see some shifting back towards a twothirds corn, one-third soybean schedule for 2021. v

For more news briefs, visit the “Nuts and Bolts” section at www.TheLandOnline.com

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prompted a limit up day in U.S. hog futures.

Outlook: For the week, December corn rallied 10.5 cents to $3.68.5 with a weekly high of $3.69.5 per bushel. The July 2021 contract was 8.75 cents higher at $3.88 and December 2021 increased 5.5 cents to settle at $3.89.75 per bushel.

Harvest is just around the corner and the coming week’s weather should be conducive for pushing the crop to maturity. Funds have moved recently to a net long position, which is unusual for this time of year. However, demand is strong, and growers have been tight holders — even at these price levels. I would expect we should see a nominal pullback once combines hit the field and we get a better idea of yields. Consider protecting your downside if you have bushels that need to move at harvest.

SOYBEANS — November soybeans ran their streak of higher closes to 12 before breaking it in the session prior to the WASDE report. On report day, the new crop contract ran to its highest level since May 2018. November soybeans as of Sept. 11 closed higher in 13 of the previous 14 sessions.

The USDA announced fresh soybean sales to China and/or unknown every day of the holiday-shortened trading week. It’s now estimated China has purchased 584 million bushels of 2020-21 U.S. soybeans, and chatter is they are still inquiring for bushels through possibly February. Last year at this time, China had only bought 40.4 million bushels of U.S. soybeans for the 2019-20 crop year.

The WASDE report was viewed as neutral for soybeans, but that didn’t stop the November contract from surging to a high of $9.98. This just missed the psychological $10 level and the $10.05 contract high. On the 2019-20 U.S. balance sheet, crush was raised 10 million bushels and exports were increased 30 million bushels to 1.68 billion bushels. Ending stocks were 40 million bushels lower than last month at 575 million bushels. The trade estimate was 603 million bushels.

On the 2020-21 balance sheet, bumped the yield 1.4 bu./acre lower to 51.9 bu./acre — still a record. This was close to the trade expectation of 51.6 bu./acre. Iowa’s yield fell from 58 to 54 bu./acre, Illinois from 64 to 62 bu./acre, and Minnesota from 51 to 52 bu./ acre. Production of 4.3 billion bushels was 112 million lower than last month’s 4.425-billion-bushel estimate. The refreshed number was slightly above the 4.276 billion bushel trade expectation.

Usage categories were unchanged. Ending stocks of 460 million bushels compared to estimates for 455 million and last month’s 610-million-bushel outlook. The average farm price was jumped 90 cents from last month to $9.25 per bushel.

World ending stocks for 2020-21 were 93.6 mmt vs. 93.5 mmt estimated and 95.4 mmt last month. Brazil’s 2020-21 soybean crop was increased 2 mmt to 133 mmt with exports up 1 mmt to 85 mmt. Argentina’s soybean crop was left alone at 53.5 mmt with exports at 7.5 mmt. China’s soybean imports were unchanged at 99 mmt or 3.64 billion bushels.

The Climate Prediction Center put the odds at 75 percent that La Niña will continue through the northern hemisphere winter. This usually means drier conditions across Argentina and just northeastern Brazil. For the United States, it suggests heat and drought across the west, hurricanes in the Atlantic, colder winter for the northern United States. If it lasts into the spring, it could mean a below-trend U.S. winter wheat yield.

Conab raised this year’s (already harvested) Brazilian bean crop from 120.9 mmt to 124.8 mmt. USDA is at 126 mmt. Conab’s president said Brazil should look at least temporarily halting import tariffs on beans and corn due to high domestic prices and low supplies. The tariff is currently 8 percent on imports outside Mercosur. AgRural put Brazil’s 2020- 21 bean crop at 131.3 mmt up from their August 129.3 mmt estimate. They also estimate Brazilian farmers have sold an impressive 48 percent of the soybean crop they have yet to plant, plus 2.2 percent of the 2021-22 soybean crop! The Rosario Grain Exchange is estimating next year’s Argentine soybean crop at 50 mmt with acreage up 0.6 percent to 42.7 million acres. USDA is at 53.5 mmt.

Weekly export sales were larger than expected at 116.2 million bushels with 58.5 million bushels to China. Total commitments for the 2020-21 crop year are 1.098 billion bushels already, with the year just beginning. This is 216 percent higher than where we started the 2019-20 marketing year.

Outlook: November soybeans surged 28 cents higher for the week to close at $9.96 and topping out at $9.98 per bushel. The July contract jumped 16.75 cents to $9.94.75 and November 2021 only managed at 1.25 cent gain to $9.51.5 per bushel.

November soybeans have rallied over $1.32.75 per bushel from the August $8.65.25 low to this week’s $9.98 high. Excellent demand from China and limited grower selling have been the drivers of the futures and basis rally. Whether this can last into harvest is unknown, but funds have continued to build their net long position. Focus will begin to turn our harvest progress and South American planting weather. Dryness may be a concern in Argentina and Brazil, but they still have about a month before planting begins. How deep China’s demand is will be watched carefully — especially if South American weather does not pose a problem. Watch for pullbacks as the market absorbs any new selling or lack thereof.

Nystrom’s Notes: Contract changes for the week as of the close on Sept. 11: Chicago December wheat fell 8.25 cents to $5.42, Kansas City was 1.25 cents lower at $4.71.25, and Minneapolis dropped 10.25 cents to $5.32.25 per bushel. World wheat ending stocks were reported at a record 319.4 mmt for the 2020-21 crop year. v

Dairy demand continues its roller coaster ways; data is ‘mixed’

MIELKE, from pg. 18

even though cream supplies are almost back to preholiday levels. Butter inventories have grown a bit. Domestic sales remain stable. Current lower U.S. prices could stimulate more international sales, but current export demand is unchanged. USDA issued a request to purchase 2.6 million pounds of butter on Sept. 3, with a planned delivery between January and April of next year,“ but “Covid-19 and its repercussions on consumers’ behaviors and lifestyles are keeping the butter market unsettled.”

Grade A nonfat dry milk had a good week, climbing to $1.0425 on Sept. 9, though it closed two days later at $1.04. This is a penny higher on the week, but 1.5 cents below a year ago, with 28 carloads exchanging hands on the week at the CME.

CME dry whey saw little change, closing Sept. 11 at 35.50 cents per pound. This is up 2.25 cents on the week, but 4.25 cents below a year ago, on six sales for the week.

U.S. dairy cow slaughter totaled 54,100 in the week ending Aug. 29, down 500 head from the previous week, and 7,600 or 12.3 percent below that week a year ago.

n

Dairy demand remains “extremely volatile,” according to Matt Gould, analyst and editor of the

The U.S. Department of Agriculture’s Minnesota Crop Progress and Condition report for the week ending Aug. 28 stated corn had reached the dough stage or beyond on 97 percent of the acres. This figure is well ahead of last year and nine days ahead of the five-year average. Corn acreage was 63 percent at or beyond the dent stage, 16 days ahead of last year and five days ahead of average. Corn condition rated 52 percent good and 27 percent excellent.

Soybeans were 25 percent turning color, 10 days ahead of last year and three days above average. Scattered accounts of soybeans dropping leaves were reported. Soybean condition dropped to 80 percent good to excellent, tying the lowest rating this year.

During the month of September, the vast majority of the corn crop will reach the dent stage (R5 stage). The kernel moisture declines to approximately 55 percent as the starch content increases at this stage. The milk line on a corn kernel progresses from the top of the kernel (early dent) to the bottom (late dent).

The next growth stage is R6 or physiological maturity when all kernels on the ear have attained their dry matter maximum accumulation. Eventually a black abscission layer forms indicating that moisture and nutrient transport from the plant has ceased. The black layer forms on kernels beginning at the ear tip and progressing to the butt. Once physiological maturity (R6-black layer which ranges from 30 to Dairy and Food Market Analyst newsletter. Speaking in the Sept. 14 Dairy Radio Now broadcast, Gould said demand collapsed in April and we were dumping milk. The latest data is “mixed,” he said, as restaurants reopened and people flocked to retail stores, but that has slowed.

June commercial cheese disappearance was up 6.3 percent from June 2019, but that fell to 3.2 percent in July. Butter demand was up 15 percent in June, but dipped in July, down 5.1 percent.

Gould said, “We’re still seeing big gyrations in demand and trends are moving kind of quickly.” Deeper analysis shows we still have strong growth at retail, he said, but foodservice is particularly weak due to the restaurant shutdowns. “Add in government purchase programs (and there have been several) and that’s how you end up with a total cheese demand number that’s well above a year ago.”

Per capita dairy product consumption in 2019 was up 7 pounds or 1 percent from 2018, according to USDA. Gould said that’s important because dairy consumption is rising. The media points to declining fluid milk sales, he said, but that is not declining dairy sales. While we are consuming less fluid milk, we are eating more cheese and butter and those are bright growth spots for the dairy industry.

Gould also talked about processor supply management programs which were implemented months 35 percent moisture) is achieved, it is a physical process to dry the grain down to a harvest moisture between 20 and 25 percent moisture. Corn generally reaches maturity (black layer) at 55 to 60 days after tassels emerge. Stress to corn from dry conditions between now and maturity can reduce kernel weight, accelerate the arrival of maturity and dry-down of grain, and reduce stalk strength.

Many growers this year anticipate Oct. 1 as a target date for corn grain harvest given a week one way or the other — depending on weather and hybrid maturity. Grain drydown until then is dependent on hybrid and air variables. Air variables include air temperature, relative humidity and air movement while hybrid variables include ear orientation, tightness and length of husks and kernel hardness. Sunny days dry corn faster than cloudy days, even if the heat units are the same. To drop one percent moisture: 30 growing degree units for grain which is at 25-30 percent; and 45 growing degree units for grain at 20-25 percent. Growing degree day accumulation for corn planted around May 1 at the Waseca Research and Outreach Center was 2280 as of Aug. 31.

Yield can be estimated prior to harvest using the following procedure. It should be noted more accurate yield estimation requires multiple samples from representative locations throughout a field.

Step off the length of a row equal to 1/1000th of an ago on milk and said they account for more than 15 percent of the U.S. milk supply. The milk overwhelmed processors, he said, and while the programs were relaxed in second quarter, they’re being looked at again in third quarter due to concern over incoming milk volumes.

n In politics, Wisconsin-based American Dairy Coalition praised legislation spearheaded by Rep. Mike Gallagher (R-Wis.) which calls on the USDA and Department of Health and Human Services to remove current caps on saturated fat and allow schoolchildren and others the opportunity to drink whole milk and other full-fat dairy products at school. “The current proposed 2020-25 Draft Dietary Guidelines for Americans are once again not allowing full-fat dairy products into schools,” says the ADC, and a bipartisan group of Wisconsin legislators are asking USDA and HHS to “address concerns that the 2020 Dietary Guidelines Advisory Committee failed to consider a massive body of recent peer-reviewed research showing that longstanding caps on saturated fats are no longer supported by science.” Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be As corn harvest nears, use this method to calculate yield

reached at lkmielke@juno.com. v acre (17 feet, 5 inches in 30-inch rows; or 23 feet, 9 inches in 22-inch rows) and count the number of harvestable ears in that length of row.

Husk every fifth ear (only husk representative ears), and count the number of rows per ear (always an even number) and the approximate number of kernels per row.

Calculate the average number of rows per ear and kernels per row from the husked ears.

Estimate the number of kernels per ear by multiplying the average number of rows by the average number of kernels per row.

Multiply kernels per ear by the number of harvestable ears in 1/1000th of an acre to estimate the number of kernels per acre.

Divide the number of kernels per acre by 90 (assuming 90,000 kernels per bushel) to get bushels per acre. To be even more conservative and assume poorer grain fill, divide by a larger number such as 95. If you think grain fill has been exceptional and that kernels are larger than normal, consider dividing by a lower number such as 85.

Repeat the procedure throughout the field as many times as you deem representative.

This article was submitted by Dave Nicolai, Extension Educator, Crops, and Terry Salmela, University of Minnesota Extension. v