Marketing

Grain Outlook Chinese corn imports exceeding early estimates Livestock Angles Livestock markets overbought, short-term correction looming

The following marketing Watch South American The overall trend in liveappreciation. Therefore, the analysis is for the week ending weather. Dryness in stock futures over the past short-term outlook is for corSept. 18. Argentina may push some several months has been rective action with the longer

CORN — Demand and growers to plant later corn in higher since April. The recovterm outlook still indicating money, money and demand. November and December ery has been methodical and positive price appreciation. That pretty well summarizes instead of beans in October. fairly persistent during this This would indicate a roller what has been occurring in This gives them longer to push to higher prices in all coaster outlook for the next both the corn and soybean wait for rain before making a livestock contracts. It now few months in the cattle marPHYLLIS NYSTROM CHS Hedging I n . St. Paul final planting decision. However, rains are expected in the driest areas of Argentina late next week. Argentina’s corn planting has gotten off to a quick start with planting 10 percent complete vs. 5 percent average. Weekly export sales were large, as expected. Sales were 63.4 million bushels, bringing total commitments to 805.3 million bushels just two weeks into the marketing year. This is 34.6 percent of the total USDA 2.325-billion-bushel outlook. markets for the last few weeks. Corn followed soybeans higher this week as we push toward harvest. Some areas have begun, and early reports are a little better than expected. It’s too early to have confidence if this will persist. The forecast looks favorable for harvest through the end of the month. December corn teased participants early in the week with a small decline, but the next session posted a key reversal higher as managed money added to their net long position. JOE TEALE Broker Great Plains Commodity Afton, Minn. 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 corrective action is not likely to be very severe and not long in duration at this time. As far as the cattle market is concerned, the recent rally appears to be meeting some resistance as beef cutket. 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. Another interesting event was the fact that the lean index went from a premium to the futures to a discount in recent weeks. This would indicate that a positive outlook by the trade is optimistic for future price appreciation. The Federal Reserve this week indicated they will keep interest rates low for a few years. Could this be attracting money to commodities? Demand marches on with another 35.7 million bushels sold this week, with 62 percent Weekly ethanol production was down 15,000 barrels per day to 926,000 bpd. Stocks were down 195,000 barrels at a five-week low of 19.8 million barrels. The U.S. Grains Council doesn’t expect world ethanol production to return to outs 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. 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 of the total going to China. It’s estipre-Covid levels until 2022. Weights have been on the rise which days ahead. However, the longer term mated China has purchased 386 million bushels or 9.8 million metric tons of U.S. corn. This contradicts both the A Farm Futures survey conducted in late July indicated 2021-22 corn acres will increase the amount total beef production which is likely to counter-balance the supply to the demand which outlook would still be fairly positive since the relationship between cattle and hogs is still weighted toward the U.S. Department of Agriculture and Chinese forecasts for China to import 7 See NYSTROM, pg. 11 would be another negative to price cattle. Eventually this disparity in price between hogs and cattle will cormmt this year. A massive understaterect sometime in the future. ment by both countries? China’s ag ministry is estimating three typhoons Cash Grain Markets Another factor which is a bit worrisome is the amount of pork in cold storthis year may have cut their corn production 5 to 10 mmt. A Chinese firm is predicting China’s corn imports could reach 16 mmt this year. corn/change* St. Cloud $3.15 +.09 Madison $3.14 +.07 Redwood Falls $3.22 +.14 soybeans/change* $9.50 +.52 $9.53 +.52 $9.55 +.51 age. 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 The government announced a new $13 billion aid package for growers this week. The CFAP payment for growers will be direct payments. Sign-up began on Sept. 21. The estimated payment is 23 cents for corn, 31 cents for soybeans, and 39 cents for all wheat classes. This Fergus Falls $3.04 +.12 Morris $3.12 +.15 Tracy $3.15 +.10 Average: $3.14 Year Ago Average: $3.42 $9.40 +.47 $9.50 +.53 $9.51 +.52 $9.50 $7.90 For marketing news between issues ... visit www. added payment may result in fewer Grain prices are effective cash close on Sept. 22. TheLandOnline.com forced sales for cash this fall. *Cash grain price change represents a two-week period.

Soybeans have rallied $1.82 per bushel since August

NYSTROM, from pg. 10

will decline 0.3 percent to 91.8 million acres — down 200,000 from 92 million acres this year. Soybean acres were pegged at 87.9 million, up nearly 5 percent from this year’s 83.8 million acres.

Outlook: The next upside target in the December contract is the high from March at $3.86.75 per bushel. The high this week was $3.79.25 per bushel. Managed money length is only 14 percent of the record long, so there’s a lot of room if they want to continue to buy.

Is the party coming to an end? Demand and money, money and demand. Nothing has changed and until the market tells us it’s done, be cautious. Where is your risk? It likely lies to the downside. You may want to explore various ways to do this. Watch for yield updates as harvest gets underway as well as price action in soybeans.

For the week, December corn rallied a dime to close at $3.78.5, July gained 7.5 cents at $3.95.5, and December 2021 was 3.5 cents higher at $3.93.5 per bushel.

SOYBEANS — I’m getting a little breathless at these lofty levels compared to where we were trading just a month ago. November soybeans on Aug. 18 closed at $9.13.75 and on Sept. 18 we settled at $10.43.5 per bushel — a $1.29.75 rally! The low in August was $8.65.25 and the high in September so far is $10.46.75 — a steady climb of $1.81.5 per bushel! A new contract high in the November contract is now $10.46.75 per bushel, reaching its highest price on the continuous chart since June 2018.

The market has underestimated early Chinese demand and is now paying for it. Futures prices are now back to pre-trade war levels. Volume in the

It may seem farmers can’t catch a break in 2020, but there was a little good news to celebrate this week. On Sept. 14, federal regulators refused to allow a group of petroleum refiners in 14 states to forego requirements to blend ethanol into the gasoline they make.

Congress required blending of at least 15 billion gallons of ethanol a year into the nations fuel supply. The waivers were originally designed to help small refineries meet the federally-mandated ethanol targets. However, much to the chagrin of corn growers, larger refineries also have received exemptions from the Trump administration.

The petroleum refiners had sought 54 exemptions retroactively (some as far back as 2011) which would have allowed the petroleum industry to remove hundreds of millions of gallons of corn-based ethanol from the market.

The decision from the EPA rejects 54 so-called “gap-year” petitions which allowed refiners to skip blending in ethanol between 2011 and 2018, though

MARKETING

November futures contract rose to its biggest for a lead month since October 2017!

Weekly export sales were 90.3 million bushels, at the top of expectations. Total export commitments for the 2020-21 marketing year as of Sept. 10 are 1.188 billion bushels. That is 56 percent of the USDA’s 2.125-billion-bushel export outlook for the entire marketing year! This week, China bought 36 million bushels of U.S. soybeans — bringing their total 2020- 21 U.S. purchases to nearly 676 million bushels. Another 29.8 million bushels were sold to unknown destinations. Whether or not all these sales will come to fruition is yet to be seen if South America’s soybean crop hits on all notes.

There is chatter that Chinese buying will slow by mid-October, but there is no sign of that yet. Soybean harvest has begun in areas around the Midwest and early reports indicate they are slightly better than expected. It’s too early to make any assumptions, but we’ll be looking for confirmation.

On Sept. 20, the United States is preparing to ban downloads of TikTok, a Chinese-controlled social media app. The administration wants to have it under a U.S. company, or ban it entirely. Both Oracle and Wal-Mart are considering buying a piece. This has not interfered with China’s buying, but demonstrates other factors could spill over into the agricultural sector.

The market has factored in a huge crop for South America, but weather there will become a larger factor in our price outlook over the next four months. Dryness in Argentina and parts of Brazil may be somewhat alleviated next week with forecasts for another 14 are still under consideration. The EPA found the applicants did not make a sufficient economic case for needing a break.

Tensions between refiners and the corn and ethanol producers arose in 2019 after EPA approved more than 80 waivers for refiners.

The Renewable Fuels Association sued, which prompted the latest round of waivers EPA is now rejecting.

“Rejecting the petitions is simply the right thing to do, and today’s decision marks a big step forward toward fully restoring integrity to the Renewable Fuel Standard. This should serve as the final nail in the coffin of these gap-year petitions, and we are eager to put this dark and sordid chapter in the history of the RFS behind us once and for all,” the Renewable Fuels Association, which represents ethanol producers, said in a statement.

Iowa Democrat Representative Abby Finkenauer agreed the EPA decision will help Iowa farmers, but rain late in the week. If La Niña confirms, Argentina’s forecast leans wetter for October, then drier in November/December. Brazilian soybean acreage in the north and northeast regions is expected to expand 6 percent this year — the fastest rate in four years.

The August National Oilseed Processors Association crush was lower than expected at 165 million bushels vs. 169.5 million bushels forecast. This was a ninemonth low for the crush. Soyoil stocks at 1.5 billion pounds were close to the pre-report estimate.

Outlook: From a technical standpoint, the next upside target in November soybeans is $10.71 per bushel on the continuous chart. November soybeans have closed higher for six consecutive weeks. Money has flowed steadily into soybeans as managed money builds their net long position. Managed money length is at 76 percent of the record long. Will they push the record with harvest beginning? So far, the market has not given any indication it is done, but that doesn’t mean you don’t still need to manage your risk. What if politics interfere with China’s buying spree? What if seasonals take over and prices pull back? There are many alternatives to protect the downside if you have old crop bushels left to sell or need to catch up on new crop sales. This can be done through flat price sales, option strategies, or a combination.

For the week, November soybeans soared 47.5 cents to settle at $10.43.5, July jumped 35.5 cents to $10.30.25, and the November 2021 contract was 24.75 cents higher at $9.76.25 per bushel.

Nystrom’s Notes: Contract changes for the week as of the close on Sept. 18: Chicago December wheat rocketed 33 cents higher to $5.75, Kansas City followed suit, up 33 cents at $5.04.25, and Minneapolis rallied

EPA rejects refinery waivers of ethanol blending

19 cents to $5.51.25 per bushel. v reminded that the Trump administration had approved previous waivers which removed 4 billion gallons of ethanol from production. “Today’s decision by the EPA to reject dozens of pending petitions for small refinery exemptions should have been made years ago — before the Administration gave 85 exemptions to oil companies. They shouldn’t be celebrated for deciding not to further worsen the economic challenges our rural communities are currently facing,” Sen. Amy Klobuchar (D-Minn.) said in a release.

While maintaining the ethanol production levels, the EPA decision also is likely to bring an end to the small refinery exemptions that have plagued the ethanol industry. If the decision isn’t appealed or if it is upheld on appeal, only a few small refineries would remain eligible for waivers, said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

This report was compiled from releases from various sources. v

Growers need to be vigilant stewards of the 2021 crop

By DICK HAGEN

The Land Staff Writer Emeritus

OLIVIA, Minn. — Blue skies, bright sunshine and comfortable temperatures greeted Brevant Seeds dealer representatives to a Sept. 3 event hosted by Brad Pietig. I had an opportunity to sit down with Brevant Retail Product Seth Kveno Agronomist Seth Kveno for a quick question-and-answer session. Kveno brings with him about 20 years in this constantly pulsating seed industry. His business card reads, “The BOLD new future of the seed industry has a name. It’s SETH.”

The Land: What four key areas should farmers be visualizing for Crop Year 2021?

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Kveno: Bottom line profitability is perhaps always smarts’ is a never-ending challenge; and hopefully number one. That starts with aggressive marketing. linked to never-ending rewards too! A few years ago when we had $5 to $7 corn, a few cents when you sell didn’t matter so much. Not so today, however. Now even a few cents can make or break a farming operation going into the new year. Number two? A firm cropping plan which includes a trusted crop advisor: your local retailer, or a crop consultant. The Land: We also hear it’s been a good year for corn rootworm beetles — especially egg laying this fall? Kveno: I agree — especially in the eastern part of Minnesota because of increasing continuous corn acres. We’re seeing a fair amount of corn rootworm activity and also heavy numbers of beetles. Number three would be implementing that plan with your local provider doing agronomic inputs of fertilizer, necessary fungicides and seed selections with appropriate trait technologies and high-yielding genetics. Yes, partly to blame is farmer neglect. Many don’t use soil-applied insecticides, or aren’t planting cornrootworm traited products. Plus the economy has given pause to whether they should spend that additional money. However, now we are seeing an elevat

And number four would ed amount of beetle-feeding be proper equipment. I on corn ear tips, and succubelieve the importance of lent silks still coming out. how and where to place each seed and all other inputs has now come to a peak. So if you were seeing this activity in your fields this fall, be vigilant this coming year. That’s why I can see

The Land: We read and an increase in corn roothear good yields begin with worm-treated corn sales good roots. But as we witthis season; and/or insectinessed today at this show cide treatments — whichplot event, there is so much ever route a producer more. Please explain. decides. If 2021 continues to Kveno: What you saw today are new Brevant corn and soybean varieties available for 2021. You’ve heard Photo by Dick Hagen What happens if there is some residue herbicide solution in spray tanks of commercial field look like a stronger market year for corn, we want to protect every bushel to harvest. the line, ‘Today’s hybrids spraying rigs? That concern has prompted The Land: With farm start with 500-bushel many harsh tongues from neighbors in recent economists advising profits potentials right out of the times, despite the extreme care of commercial start with lowering producbag.’ Yes, that’s doable and crop sprayers. tion costs, how do you advise a few have succeeded. But Two Brevant soybean test plots adjacent to root protection? that reality includes a host of additional practices starting with superior genetics, proper seed placement in well-drained soils, then protecting your investment with insecticides and perhaps rootworm technologies too. U.S. Highway 71, south Olivia, showcase the results of inadequate tank cleaning. “What you see here is a susceptible variety, Liberty Link, which is not tolerant to either Dicamba or 2,4-D,” explained Seth Kveno of Brevant Seeds. “And you see no damage to the soybeans — no stunting and no symptomology that would be indicative of 2,4-D damage. But look at the row below my left arm: damage withKveno: This goes back to your local fertilizer source providing a sulfa insecticide — if you have that opportunity. Not all new planters are set up with that capability today because many growers decided against that protection. So that may

However, this all hinges out proper clean out of nozzles, filters and leave you focusing on rooton being a good steward of pumps prior to loading your crop spraying worm technologies within your crop … watching it closely throughout the growing season to identify any potential issues, and correcting as needed. Gone are the days when you could plant, spray with Roundup, then head to the lake for a few days of fishing and loafing. We keep uncorking new management issues and chemicals if not planting herbicide-tolerant soybeans.” Stunted soybeans were RR2 sprayed with a 0.5 percent spray solution of Engenia at 12.8 fluid ounces, post-emergence. This is equivalent of five gallons of spray solution left in a 1,000-gallon tank. Brevant’s Enlist E3 soybeans can be sprayed with Enlist herbicides, glyphosate and glufosanate. Specifics: Near zero volatility: up to 96 percent less volatile and 2,4-D ester; combines with the seed industry today. EPA now mandates all rootworm technologies are ‘pyramid stacked’ which means there is no single mode of action. However ‘trait stacks’ on Brevant hybrids prolong the efficacy of the rootworm protection. My advice: always protect new ideas on how to maxilow-drift nozzles for a 90 percent reduction in your investment with propmize production. Yes, ‘crop physical drift compared with traditional 2,4-D. See KVENO, pg. 14

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