Marketing

Grain Outlook Mexico’s corn crop could boost U.S. exports Livestock Angles Covid decline should help livestock prices

cast — and we’re just seven months into the marketing year! Of total commitments, we have shipped 1.3 billion bushels or 50 percent of the forecast compared to an average of 42 percent shipped. These totals should lead to the USDA raising corn exports 100-200 million bushels on the April World Agriculture Supply and Demand Estimates report. The only export sale announcement this week was 4.4 million bushels to Japan in routine business. China has officially bought 23.3 mmt of U.S. corn. Private estimates for China’s corn imports this year are increasing to over 30 mmt with recent Ukrainian purchases and assuming 2-3 mmt of the unknown sales in the United The following marketing analysis is for the week ending March 26. CORN — A drought of news this week. A weak start to the week wasn’t the end of the uptrend in corn, but it was challenged with some lower prices later in the week. Funds lightened up a portion of their long positions ahead of the March 31 Prospective Plantings and Grain Stocks as of March 1 reports. Technically, the market was bent again, but not broken with further consolidation in the May contract from $5.30 to $5.60 per bushel. This week’s May range was $5.41.5 - $5.58.75 per bushel. December corn also moved in a sideways pattern as it edged toward support in the low $4.60’s per bushel. A firmer U.S. dollar, retreating energy PHYLLIS NYSTROM CHS Hedging inC. St. Paul up cattle are now disappearing and feedlots are closer to normal numbers on feed before the Covid crisis. Cattle on feed numbers have been declining over the past several months which has helped turn the corner and improved prices for finished cattle. The replacement market has also improved since those March 2020 lows to near the levels they collapsed from. As we look ahead, the outlook appears to be positive but guarded; because a lot will depend on an improving economy which will have a direct influence on demand for product. The weeks ahead will be important as to which direction cattle prices will take into the summer months. The hog market has had an impressive rally over the past several months. As we approach the end of March and move into the month of April, the livestock markets have had a good month as prices have moved higher to levels not seen in quite a while. With the Covid infections declining and the lockdown loosening, restaurants are reopening — which has increased the demand for meat products. The outlook appears to be improving. The caveat to this is because of the unemployment problem, demand from this point forward will likely decline until the economy rebounds to better levels. All livestock markets at this writing were either overbought or approaching that condition. This would advise caution at this juncture; but does not mean higher levels can’t be attained. JOE TEALE Broker Great Plains Commodity Afton, Minn. prices, and weak wheat prices contrib- States will go to China. New crop sales Cattle prices have continued to Hog numbers have been reduced uted to limit the upside in corn. this week were 5.7 million bushels, improve since their lows established in because of the severe cold weather Argentina’s corn harvest was 7 percent complete in the central and southern regions as of March 25, according to the Buenos Aires Grain Exchange. They left their production forecast unchanged at 45 million metric tons. The recent rain was beneficial in helping to stabilize Argentina’s crop. Argentine farmer selling has been slow with 19.6 mmt sold vs. 21.1 mmt last bringing total new crop sales to 76.4 million bushels and running just ahead of last year’s 68.5 million on the books by this date. Weekly ethanol production unexpectedly pulled back after three weeks of increases. This week’s production was down 49,000 barrels per day to See NYSTROM, pg. 20 March of 2020. This has been mainly due to the fact that the market got overdone on the downside from the scare of Covid virus. This caused the lockdown of people in their homes and the closure of businesses which obviously hurt demand for beef. As things have relaxed, demand for beef has once again picked up. As a result, the backedback in February which aided the strong market in the past two months. Couple this with a good export market and prices moved to levels not seen since 2014. Currently, the market is extremely overbought and could be subject to a correction. However, this maybe short lived as the latest U.S. Department of Agriculture Hogs and Pigs report year when the crop was 51 mmt. Brazil is finishing up their safrinha corn planting. With the later than norCash Grain Markets released March 25 was friendly due to the reduced numbers. One noticeable condition is as the mal safrinha corn planting this year corn/change* soybeans/change* pork cutout has risen, the movement and pollination occurring in the heat of Stewartville $4.94 -.15 $13.09 -.53 of products has slowly decreased. This summer, Brazil’s weather will continue Edgerton $5.27 .00 $13.65 -.23 could be signaling a slowly diminishto be a topic of conversation. Jackson $5.21 -.09 $13.27 -.52 ing demand for pork because of higher Weekly export sales were exceptionally high, but within expectations, with the huge Chinese purchases during the reporting period. Sales were 176.4 million bushels to bring total commitJanesville Cannon Falls Sleepy Eye Average: $5.29 -.04 $5.11 -.01 $5.11 -.15 $5.16 $13.24 -.40 $13.41 -.25 $13.27 -.56 $13.32 prices. The next few weeks should give a signal as to which direction the hog market will take into the summer months. v ments to 2.558 billion bushels. This is Year Ago Average: $3.00 $8.35 closing in on the U.S. Department of Agriculture’s export forecast of 2.6 bil- Grain prices are effective cash close on March 30. lion bushels or 98 percent of the fore- *Cash grain price change represents a two-week period.

NYSTROM, from pg. 19

922,000 bpd. Stocks rose 500,000 barrels to 21.8 million barrels. Net margins were 3 cents lower at 9 cents per gallon. Gasoline demand was 8.6 million bpd. The four-week average demand was down 8.7 percent from last year.

One of Mexico’s largest farm groups this week stated they believe this year’s corn crop will produce 24 mmt. This is lower than their government’s 27 mmt estimate and below the USDA’s 27.8 mmt forecast. This may mean more opportunities for U.S. corn exports.

The quarterly Hogs and Pigs report this week was friendly to hogs with all categories coming in lower than expected. All hogs were 98.2 percent vs. 100.1 percent estimated; kept for breeding 97.5 percent vs. 98.7 percent estimated; and kept for market 98.2 percent vs. 100.2 percent estimated. This may lend a modicum of pressure to corn and meal in later months.

Crude oil was all over the page this week when one of the largest container ships in the world became lodged in the Suez Canal (through which 10 percent of all global trade travels). With tugs and dredging equipment trying to free it, it may take until at least March 31 to free the ship. The value of the cargo is estimated at $12 billion. Ship traffic is backed up with the only alternative route for ships around the tip of South Africa which can add a week’s transit time.

Keep political tension between the United States and China on the radar. New sanctions (freezing assets and banning travel) against individual Chinese officials and a paramilitary organization are being taken by Canada, Britain and the European Union (and possibly the United States) in response to what is termed a genocidal campaign against Uyghur Muslims in China. China retaliated by blacklisting 10 EU lawmakers, along with some think tanks and academics, and blocking them from doing business with or travel to China.

Average trade estimates for the March 31 reports: U.S. corn acreage 93.208 million acres vs. 92 million at the USDA Outlook Forum and 90.819 million acres last year. The range of estimates is from 92 to 94.5 million acres. U.S. corn stocks as of March 1 at 7.767 billion bushels vs. 7.952 billion bushels last year. The range of estimates is from 7.573 to 7.980 billion bushels. Outlook: This week was another one of consolidation. The next direction will be dictated by the March 31st numbers with attention then focusing on U.S. planting weather. The current spring weather forecast suggests an early to normal planting season. Export demand has been stellar and should push the USDA to raise estimates on subsequent reports. However, if energy markets lose steam and the U.S. dollar rallies, it may not make a difference. May corn remains in a $5.30 - $5.60 range until we see reports.

For the week: May corn down 5.25 cents at $5.52.5, July 3 cents lower at $5.35.75, and December down a nickel at $4.66.5 per bushel.

A look at history: March 1 corn stocks were higher than the average trade guess in four of the last five years. Corn acreage on March 31 was higher than the average trade guess in three of the last five years. SOYBEANS — Old crop soybeans edged toward the upper end of their recent trading range in the first half of the week before succumbing to fund selling which resulted in a 15.75 cent loss for the week. November soybeans consolidated in the lower half of the previous week’s range, but were able to hold above longer-term support at their 50-day moving average. May soybean oil posted a limit up and two limit down sessions this week in volatile trading.

A major influence on soybeans has been the surge in world vegetable oil prices, which includes soyoil. The push toward “green” energy is increasing the demand for soyoil. Nearby, soyoil futures soared to new contract highs before pulling back as global cases of Covid increased and energy prices retreated on concern that economic recovery may not be as quick as previously expected. The USDA numbers put combined global 2020-21 stocks to use ratio of palm, rapeseed, and soyoil at 9.8 percent — the tightest since 1993-94. The total stock of those oils is projected to be the lowest since 2010-11. China’s soyoil stocks are believed to be the lowest in three years. Palm oil stocks are anticipated to fall by nearly half to 2.67 mmt by the end of 2021 in Indonesia, which is the world’s largest grower of palm oil. Increasing world vegoil demand vs. lower production is behind the forecast. U.S. biodiesel use from October through February is up 15 percent vs. last year when the USDA is predicting use to be up just 5.6 percent for the marketing year.

USDA Secretary Vilsack said he received assurances from China they have African swine fever “under control.” To his credit, Vilsack said that may be overstated, but the outbreak likely isn’t as bad as last year. China’s Ministry of Agriculture Rural Affairs said 9 million sows were lost in January/ February due to ASF. It was estimated it could lead to 200 million fewer market animals.

Harvest was picking up in central Argentina during the week with the BAGE keeping their production estimate at 44 mmt. They did comment that early yields were highly variable. Argentina received rain during the week, but dry weather is forecasted to return and may adversely affect late yields. Their soybean harvest will begin in earnest in a few weeks. Farmers have sold an estimated 12.5 mmt compared to 17.5 mmt last year when the crop was 48.8 mmt. Drier weather in Brazil allowed for soybean harvest to move toward completion.

Weekly soybean exports were on the light side of expectations at 3.7 million bushels. Total commitments at 2.23 billion bushels have essentially met the USDA projection of 2.25 billion bushels. We have shipped 1.997 billion bushels of the commitments which reduces the likelihood of bushels being canceled or rolled into the next marketing year. China has just 1.1 mmt of U.S. soybeans to ship having shipped 97 percent of their purchases. Total new crop sales were 2.4 million bushels bringing total new crop sales to 189 million bushels vs. 15.2 million bushels last year.

The Canadian Pacific Railway will buy the KC Southern for $25 billion, linking Mexico, the United States and Canada. The deal needs approval from the U.S. Surface Transportation Board which is expected by the middle of 2022.

Average trades estimates for the March 31 reports: U.S. soybean acreage 89.996 million bushels vs. 90 million at the USDA February Forum and 83.084 million acres last year. The range of estimates is from 86.1 to 91.61 million acres. U.S. soybean stocks as of March 1 at 1.543 billion bushels vs. 2.255 billion bushels last year. The range of estimates is from 1.44-1.825 billion bushels. Outlook: Soyoil has provided underlying support to soybeans while the meal has taken a backseat. That changed this week with May soyoil locking limit down for the last two trading days of the week. The upcoming USDA reports kept traders cautious about adding to soybean length. The reports should provide fuel for our next direction with attention then turning to U.S. planting weather.

The Energy Information Administration said they will publish expanded biofuels and feedstock data beginning on their March 31 weekly report. The USDA said they will break out soyoil use for renewable diesel beginning with the May balance sheet.

For the week: May soybeans dropped 15.75 cents to $14.00.5, July down 11.75 cents at $13.91.25, and November soybeans lost 12.75 cents at $12.07.25 per bushel.

History for the March 31 reports: bean acreage has been below the average trade estimate in all the last three years. Soybean stocks have been higher than the average trade estimate in all the last four years.

Nystrom’s notes: Contract changes for the week as of the close on March 26: Chicago wheat retreated 13.75 cents to $6.13.25, Kansas City plunged 17.25 cents to $5.68.25, and Minneapolis was 13 cents lower at $6.14 per bushel. v

MIELKE, from pg. 18

to rise with the loosening of Covid restrictions while retail demand has held steady.

Dairy Market News says, “As market prices edged lower for block cheese, international buyer interest has ticked back up.” Plenty of milk is available and plants are running at or near capacity but cheese is moving well. Cheese inventories are around or slightly higher than a year ago. n

Spot butter got a bounce from the Cold Storage data, closing March 26 at $1.775, up 11 cents on the week, highest since June 24, and 28.75 cents above a year ago when the butter had a 26.75 cent meltdown. Sales totaled seven loads.

Butter contacts tell Dairy Market News that food service demand has grown; but some say it softened slightly from the previous week. General demand tones have “turned a corner from previous months,” says Dairy Market News, but “there is a lot of butter available.”

Cream tightening continued this week but “The big question is, which direction cream availability will take following the spring holidays.” Some contacts expect steadiness then further tightness, while others expect some loosening considering the flush season, but market tones remain “somewhat sturdy.”

Cream is ample in the west, but some contacts expect the supply may start tightening for butter makers as ice cream, sour cream, and cream cheese makers are increasing intakes. Some manufacturers report heavy butter inventories that are still growing however U.S. butter is competitively priced in international markets and export interest remains steady. Retail sales are down slightly compared to early Covid supply stockpiling from a year ago, but retail butter demand is reportedly strong heading into the spring holiday season. With restrictions softening and consumer comfort levels growing for dining out, food service demand continues to strengthen, says Dairy Market News.

Spot Grade A nonfat dry milk also strengthened on the week, climbing to a $1.17 per pound March 26 close, 1.75 cents higher on the week and 25 cents above a year ago when the powder fell 6.75 cents. There were 16 sales on the week.

Dry whey set another record high since trading began on the Chicago Mercantile Exchange, hitting 62.75 cents per pound on March 24, a level not seen in previous National Agriculture Statistics Servicesurveyed prices since 2014. It was unchanged the rest of the week, up 1.5 cents on the week and 29.75 cents above a year ago. Only two sales were reported all week.

n

Cooperatives Working Together member cooperatives accepted 34 offers of export assistance this week that pushed the milk equivalent of CWT assisted export sales in 2021 over one half billion pounds. Sales included 1.368 million pounds of cheddar, Gouda, and Monterey Jack cheese, 699,417 pounds of butter, 1.64 million pounds of anhydrous milkfat, 335,103 pounds of cream cheese, and 4.41 million of whole milk powder.

The product will go to customers in Asia, Central and South America, the Middle East, North Africa and Oceania through July and puts CWT 2021 exports at 11.2 million pounds of American-type cheeses, 8.35 million pounds of butter, 3.65 million pounds of anhydrous milkfat, 13.54 million of whole milk powder, and 3.87 million pounds of cream cheese. n

Hoards Dairyman Managing Editor Corey Geiger gave listeners a lesson on cheese in the March 29 “Dairy Radio Now” broadcast. Based on a recent Dairy Livestream program, we talked about blocks and barrels because they are so much a part of milk pricing but Geiger said that the two are not created equal.

Blocks can either weigh 40 pounds or 640 pounds, while barrels weigh in at 500 pounds. Most cheese plants specialize in one or the other and there’s often not much switching between the two. Blocks

Rainfall network seeks volunteers

The state climatology office in the Minnesota Department of Natural Resources needs volunteer rainfall monitors for the Community Collaborative Rain, Hail and Snow Network (CoCoRaHS). The network includes more than 20,000 volunteers nationwide who measure precipitation in their backyards using a standard four-inch diameter rain gauge.

Volunteers perform rainfall monitoring activities at home and submit their reports online. The data are used to verify high rain totals after big events, monitor drought conditions and inform projections about floods, make precipitation maps more accurate, and provide needed guidance on Minnesota’s changing climate.

Volunteers are particularly needed outside of the immediate Twin Cities metro area. To participate, rainfall monitors must purchase or provide a standard four-inch diameter rain gauge (available at discount through CoCoRaHS) and have internet access to submit reports. CoCoRaHS provides online training on how to observe weather trends and how to submit precipitation and weather event reports.

To sign up to become a CoCoRaHS rain observer or for more information, visit https://www.cocorahs.org/ application.aspx or contact Luigi Romolo at luigi. romolo@state.mn.us.

The website includes lesson plans for STEM students and instructional videos for all participants. v are usually “ready to eat,” he said, and have a certain flavor and melting consistency. They are also colored by a natural additive and most Americans outside of the Northeast eat a yellow cheddar.

One of the participants in the livestream was Kurt Epprecht, who operates Ohio-based Great Lakes Cheese Company. Epprecht said barrels are generally an easier bet for cheesemakers to make because of their valuable white whey.

Most customers who buy whey want it to be white, Geiger explained. Whey is typically made from barrel cheddar which is white and therefore has more value. Many countries stipulate they will not accept bleached whey, a necessary process if it comes from yellow cheddar. That’s very important in the infant formula market, Geiger said.

Another topic of the livestream concerned the use of Mozzarella cheese in milk price discovery. Mozzarella is the most consumed cheese in the United States, according to Geiger — even ahead of cheddar. But one of the participants, dairy buyer and trader Ted Jacoby, CEO of T.C. Jacoby and Company, says including Mozzarella in milk pricing would be difficult.

He points out that every plant which produces Mozzarella differs “so an even exchange for Mozzarella is a really difficult thing to establish.” And, “most Mozzarella is a part-skim product, so you’re automatically skimming fat,” he said, and “the components are different than a whole milk cheese, so that throws off that correlation between cheddar and Mozzarella. Mozzarella can also be sold frozen, while most cheddars cannot, so bottom line, Geiger believes block and barrel cheddar will remain a mainstay in price discovery.

Last of all, we wanted to know, is barrel cheese really in a barrel? “It used to kind of resemble a chemical or fluid barrel,” answered Epprecht. “It was metal, but since then it has gone to a plastic bag and a corrugated box with multiple dimensions. It was very much a barrel at one point, but now it’s a cylindrical 500-pound block that is usually vacuum-packed,” he concluded.

Lee Mielke is a syndicated columnist who resides in Everson, Wash. He may be reached at lkmielke@ juno.com. v