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Marketing
Grain Outlook Corn vaults to new contract highs Livestock Angles Feed costs keep livestock market in ‘wait and see’ mode
The following marketing Manufacturers Association As we ended the month of markets remain firm and finanalysis is for the week end- has invited the Renewable January, the livestock mar- ished cattle prices weaken, ing Jan. 29. Fuels Association and kets were mostly in the pro- look for the feeder market to PHYLLIS NYSTROM CHS Hedging inC. St. Paul National Corn Growers Association — as well as others — to a meeting to discuss the issue. General Motors announced this week they plan to be carbon neutral in their products and operations by 2040. They plan to decarbonize and transition to battery electric vehicles or other zero-emission vehicle technology. This includes a plan for 40 percent of U.S. models offered will be battery electric by the end of 2025. CORN — Rationing? What rationing? Corn vaulted to new contract highs this week to fresh seven-and-a-halfyear highs and erasing last week’s huge correction lower. Corn demand has not been rationed as indicated by big daily and weekly export sales. In the span of four trading days we sold 230.2 million bushels of old crop corn to China, 4.8 million bushels of new crop corn to China, and another 12.4 million old JOE TEALE Broker Great Plains Commodity Afton, Minn. cess of reversing direction from higher to lower. Both the live cattle futures and the hog futures experienced weekly reversals, while the feeder cattle futures were lower for the day on Jan. 29; but well off the highs for the week.This leaves the suspicion that the livestock markets could be looking at the possibility over lower markets in the weeks ahead. There has been a significant change the boxed beef trade in the past couple also suffer price deterioration in the coming weeks. The cattle complex is definitely at a crossroads at the present time and the next several weeks will determine the direction going into the spring. The hog market appears to be in a similar situation as the cattle market. The futures market in hogs experienced a reversal down on the last week of January. The pork product has declined in volume, crop bushels to unknown. Argentina received beneficial rain in of weeks which suggests lower prices like the beef, over the past several This surge in buying included the second and seventh-largest corn sales to anyone on record. The largest oneday sale on record was 146.5 million bushels to Russia in January 1991. It’s estimated China may have now purchased 17.7 million metric tons or nearly 697 million bushels of U.S. corn for this marketing year, and that doesn’t include any bushels eventually moving from unknown to China. The U.S. Department of Agriculture’s latest corn import figure for China is 17.5 mmt, the USDA China attaché projects 22 mmt of imports, but many private estimates range from 22-30 mmt with 18-20 mmt (708-788 million bushels) See NYSTROM, pg. 7 recent weeks, but the Buenos Aires Grain Exchange lowered their weekly crop ratings. Corn in the good/excellent category fell 6 percent last week to 22 percent — although they left their production estimate unchanged at 47 mmt. In Brazil, there may be a point when the benefit of rain on production will be outweighed by soybean harvest and safrinha corn planting delays. Add to this the trucker strike which was scheduled to begin Feb. 1. Depending on how long the strike lasts, harvest logistics may be severely hampered since the majority of soybeans move to paid for live inventory of cattle may be nearing a top. The volume in the choice and select grades of the boxes has dropped off as the price of each category has gone up. This could indicate demand might be slowing because of the higher prices. The export market has been pretty good which has assisted in the recent strength in the cattle market. However, as prices have risen, the question becomes will that sector also slow down as well? The feeder market also appears to be questionable as grain prices continue to remain strong. However, if the grain weeks. The good news has been the export market which has propped up the cash price paid for live inventory during the past couple of months. The decline in the cold storage of pork has dropped significantly this past few months which has also bolstered prices. The caveat would be as prices rise, demand tends to weaken. Considering the price rise we have seen lately, the market could be vulnerable to some corrective action. The next few weeks will likely give a perspective of which way hog prices will go into the spring months. v coming from the United States. Adding support to the market was a statement from the largest U.S. ethanol Cash Grain Markets producer saying China had already purchased 200 million gallons of U.S. ethanol for the first half of 2021. The most ethanol China has ever purchased in a year was 198.2 million gallons in 2016. With the inauguration of a new administration, there has been a flurry of new executive orders. The governStewartville Edgerton Jackson Janesville Cannon Falls Sleepy Eye Average: corn/change* $5.03 +.32 $5.03 +.14 $5.07 +.19 $5.05 +.16 $4.96 +.17 $5.07 +.19 $5.04 soybeans/change* $12.87 -.28 $13.02 -.31 $12.87 -.26 $12.89 -.17 $12.85 -.30 $12.99 -.31 $12.92 For marketing news between issues ... visit www.TheLand ment is making a push toward electric vehicles. What does this mean for the 5 billion bushels of corn we use for etha- Grain prices are effective cash close on Feb. 2. Year Ago Average: $3.62 $8.15 Online.com nol production? Reportedly, the *Cash grain price change represents a two-week period. American Fuel and Petrochemical
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NYSTROM, from pg. 6
market by truck.
Weekly export sales were beyond expectations at 72.8 million bushels. Total export commitments at 1.9 billion bushels are 75 percent of the total 2.55 billion bushel export projection. We only need 19.3 million bushels of sales per week to hit the target. Last year we averaged 29.3 million bushels per week from this time through the end of the marketing year.
Weekly ethanol production fell 12,000 barrels per day to 933,000 bpd — a 14-week low. Ethanol stocks were 26,000 barrels lower at 23.6 million barrels. Gasoline demand dropped from 8.1 million bpd to 7.8 million bpd. This is down 11 percent from the same week last year. Net margins improved a penny to a negative 4 cents per gallon.
Outlook: As stated last week, I didn’t change my bullish approach to the corn market; but I did temper it somewhat. That caution is being challenged after this week’s export action indicates we have not rationed demand, even at these high prices. March corn on the weekly chart posted a key reversal higher for the week, a friendly formation. Big export sales this week occurred when we were setting new contract highs. Based on this week’s activity, the corn the market has more work to do; but don’t forget what this market is capable of (i.e. the previous week’s 31 cent tumble). The Feb. 9 World Agriculture Supply and Demand Estimates report will attract more attention than normal to see how low ending stocks may fall.
For the week, March corn soared 46.5 cents to close at $5.47 and set a new contract high at $5.53.75 per bushel. July corn jumped 37.75 cents to $5.36.5, and December corn rallied 15 cents to settle at $4.45.25 per bushel.
SOYBEANS — After massive losses in soybeans in the previous week, soybeans recovered a big portion this week. March soybeans rallied 58.25 cents to close at $13.70 of help offset the previous week’s $1.05 loss. July soybeans moved 50.25 cents higher to close at $13.48.75 and November soybeans were 31 cents higher at $11.43 per bushel.
We had mentioned that at some point in Brazil rain benefits could be outweighed by its detriments. In this case, rain is beginning to delay soybean harvest in Rio Grande do Sul. If their soybean harvest is delayed it may mean a wider window for U.S. demand. It may also delay the planting of their safrinha corn crop, which is bigger than their first crop corn. Adding to uncertainty in Brazil is the truckers’ strike scheduled to begin Feb. 1. Momentum was growing in support of the strike as of this writing. A prolonged strike could severely restrict soybean harvest and/or movement as the majority of the crop is moved by truck to the ports. Argentina’s trucker strike has been paused after the government postponed a fuel tax increase.
The Feb. 9 WASDE is approaching. Traders expect U.S. soybean exports and imports should both increase. The USDA is currently carrying soybean imports at 35 million bushels; but talk is circulating they could be closer to 70 million bushels.
The BAGE lowered their Argentine soybean production outlook 500,000 metric tons to 46 mmt compared to USDA at 48 mmt. They peg flowering at 53 percent vs. 67 percent on average and 16 percent setting pods vs. 31 percent on average. Soybean conditions dropped 3 percent to 18 percent good/excellent.
Weekly export sales were disappointing for old crop at just 17.1 million bushels, but exceeded estimates for new crop at 57.5 million bushels. Old crop total commitments are 2.125 billion bushels or 95.3 percent of the USDA’s 2.23 billion bushel outlook. We need to average 4 million bushels of sales per week to achieve the forecast. New crop export commitments are 133 million bushels vs. just 11.3 million bushels last year as of Jan. 21.
Outlook: When I said last week to buckle up for a bumpy ride, I didn’t know just how bumpy it could be. This week was a daily rollercoaster with large daily trading ranges. I was amazed at how quickly both corn and soybeans cut last week’s sell-off. This will likely continue until at least the February WASDE report.
Harvest weather in South America will a factor in the coming weeks, but how we play out on the demand side isn’t going away. Strong vegetable oil prices have also been contributing to soy complex support. There is trade talk of meal end-users having a difficult time in getting meal offers from processors for the summer months. Where and at what price will processors be able to source soybeans this summer? Have we rationed demand? Currently, it doesn’t feel like it and big daily swings are becoming more common. Hang on, the ride hasn’t come to a complete stop.
Nystrom’s notes: Contract changes for the week as of the close on Jan. 29: Chicago March wheat rallied 28.5 cents to $6.63, Kansas City was up 24.75 cents at $6.38, and Minneapolis was 21 cents higher at $6.33.5 per bushel. v
ST. PAUL — Minnesota Crop Improvement Association recognized a number of individuals at its 118th annual meeting on Jan. 13.
The Association’s Achievement in Crop Improvement Award was given to Dr. Don Wyse, Professor of Agronomy and Plant Genetics at the University of Minnesota. The award recognizes exemplary service to the seed industry as well as outstanding leadership in agriculture. Dr. Wyse came to Minnesota in 1974 to accept a weed scientist position. The focus of his work quickly became quackgrass control in Kentucky bluegrass. His work has been a key part in the success of the grass seed industry in Minnesota but has also benefited others in agriculture. Today, through the Forever Green Initiative, his work focuses on Kernza and other perennial and winter annual crops.
MCIA also recognized four Premier Seedsman awardees. Bob Ehlers of Elbow Lake has been a certified seed producer for 45 years. Today he owns and operates Red River Marketing Company near Elbow Lake. He grows certified wheat and soybean seed.
Clyde Kringlen of McIntosh, Minn. has been associated with certified seed since he and his father purchased McIntosh Farm Service in 1981. Kringlen has worked with local seed growers conditioning and selling certified wheat, oats, and barley. Over the years, Clyde developed a passion for wheat production and today manages wheat seed production for West Central Ag Services
Dean and Dennis Terning of Cokato, Minn. grew up in a seed corn producing family. They also grew certified seed of small grains and soybeans, conditioning it in a seed plant built by their father Ralph. In 1985, Dean and Dennis began producing hybrid seed corn for their retail brand, Terning Seeds. Today they can produce, harvest, and dry seed corn from over 6,000 acres.
University of Minnesota research scientist Donn Vellekson and veteran MCIA field inspector Randy Krzmarzick were the recipients of MCIA’s Honorary Premier Seedsman Award, which recognizes individuals not directly involved in seed production but who have actively supported the seed industry.
Vellekson began working at the University of Minnesota, St. Paul, in 1975. As a research scientist, his career has been devoted to turf grass and forage seed production research. He grew up on a crop and livestock farm near Dawson, Minnesota, and graduated from the University of Minnesota, Crookston. Initially, his work focused on Kentucky bluegrass, timothy, and birdsfoot trefoil. Much of Donn’s work is done at the Magnusson Research Farm near Roseau and today perennial ryegrass is a primary emphasis.
Randy Krzmarzick has been a MCIA field inspector for 22 years. From his home farm near Sleepy Eye, Minn., he has walked thousands of acres across southwest Minnesota inspecting fields of oats, wheat, soybeans, and occasionally corn. Each field must be evaluated prior to harvest for varietal purity, other crops, and weeds.
This article was submitted by the Minnesota Crop Improvement Association. v
