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www.thelandonline.com — “Where Farm and Family Meet”
THE LAND — MAY 14/MAY 21, 2021
MARKETING
Grain Outlook Corn finally takes the plunge
Cash Grain Markets
corn/change* soybeans/change* St. Cloud $6.60 -.37 $15.59 +.26 Madison $6.68 -.26 $15.29 -.11 Redwood Falls $6.68 -.33 $15.74 +.21 Fergus Falls $6.73 -.22 $15.49 +.37 Morris $6.68 -.34 $15.29 +.11 Tracy $6.66 -.29 $15.62 +.01
Financial Focus How the Federal Reserve works
The following marketing analysis is for the week ending May 14. CORN — Whoever predicted we would use the 40-cent daily trading limit in corn this week may have been using a crystal ball. How do you spell volatility? C-O-R-N. Money ran for the exit the day after the report with massive fund selling and many were left wondering why, why today? One hypothesis was the halting of barge traffic on the Mississippi River at Memphis due to a structural crack in the bridge on I-40. If the stoppage is prolonged and we can’t ship commodities, does that help solve the tight supply situation? Within 48 PHYLLIS NYSTROM hours river traffic was back up CHS Hedging Inc. and running with no restrictions. St. Paul Priority was being given to any traffic related to the Department of Defense, fuel for Nashville, passenger vessels, southbound traffic, and then northbound traffic. Another idea was the World Agricultural Supply and Demand Estimates report wasn’t bullish and weakness was extended. Whatever pushed the button gathered herd mentality and prices blazed lower. However, China continues to buy U.S. new crop corn and Brazil’s safrinha corn crop continues to shrink with dry conditions. Some of this was offset amid ideas for increased U.S. corn acreage with good planting weather. Grower sales were nearly nonexistent on the slide with many hoping now for “when we get back there” to add to new crop sales. This week’s action drives home how much risk you have in a market that hit eight-plus year highs. I’m not saying we have seen the top, but it illustrates how quickly things can change. The much anticipated May 12 WASDE report made a few changes to the 2020-21 balance sheet: Food, Seed and Industrical was down 5 million and exports raised 100 million to 2.775 billion bushels. Ending stocks were down 95 million at 1.257 billion bushels vs. estimates for 1.275 billion bushels. The first official 2021-22 balance sheet used the March 30 acreage number of 91.1 million planted acres, up 300,000 acres from last year. Using a yield of 179.5 bushels per acre (3 bu./acre above trendline), they pegged this fall’s crop at 14.95 billion bushels. Year-on-year ethanol usage at 5.2 billion bushels is up 225 million bushels.
The livestock markets have experienced a very choppy trade over the past few weeks as prices moved at times very erratically. Overall, the live cattle and the hog have moved higher over the past few weeks as the cash and product markets rallied. The exception was the feeder cattle market which reacted to the increasing corn market which put pressure on price in both the cash trade and the futures trade. Overall, the next few weeks in these markets could set the tone for the livestock markets as for the direction in price direction into the summer months. JOE TEALE Cattle — both futures and cash Broker — have rallied since the start of the month of May. The cash trade Great Plains Commodity Afton, Minn. has been the catalyst of the advancement as packers became slightly more aggressive in accumulating inventories. This was primarily due to the increasing boxed beef prices paid by the end users. One noticeable problem is as prices have gone up in the boxed beef trade, the volume has gone down. This may portend that at some point the boxed beef prices may top, which in turn could top the prices paid by the packer for cattle. At this time, the number of cattle available appear to be more than adequate to meet the packer’s needs. Therefore, the possibility for a top in a further price advancement in the cattle market are getting less likely in the days ahead. If the demand for beef were
Have you ever taken a close look at paper money? Each U.S. bill has the words “Federal Reserve Note” imprinted across the top. But many individuals may not know why the bill is issued by the Federal Reserve and what role the Federal Reserve plays in the economy. Here’s an inside look. The Federal Reserve, often referred to as “the Fed,” is the country’s central bank. It was founded by Congress in 1913 to provide the nation with a safer, more-flexible, and more-stable monetary and financial system. Prior to its creation, the U.S. economy was plagued by frequent epiMARISSA sodes of panic, bank failures and JOHNSON limited credit. Profinium The Fed has four main roles in Wealth Management the U.S. economy (source: Advisor FederalReserve.gov, 2020). Economy watch — In addition to its other duties, the Fed has been given three mandates with the economy: maintaining maximum employment, maintaining stable price levels, and maintaining moderate, long-term interest rates. It’s important to remember the Fed cannot directly control employment, inflation, or long-term interest rates. Rather, it uses a number of tools at its disposal to influence the availability and cost of money and credit. This, in turn, influences the willingness of consumers and businesses to spend money on goods and services. For example, if the Fed maneuvers short-term interest rates lower, borrowing money becomes less expensive, and people may be motivated to spend. Consumer spending may stimulate economic growth, which may cause companies to produce more products, and potentially, increase employment. When short-term rates are low, the Fed closely monitors economic activity to watch for signs of rising prices. On the other hand, if the Fed pushes short-term rates higher, borrowing money becomes more expensive, and people may be less motivated to spend. This may, in turn, slow economic growth and cause companies to decrease employment. When short-term rates are high, the Fed must watch for signs of a decline in overall price levels. Supervise and regulate — The Fed establishes and
See NYSTROM, pg. 15
See TEALE, pg. 19
See JOHNSON, pg. 19
Average:
$6.67
$15.50
Year Ago Average: $2.74 $7.78 Grain prices are effective cash close on May 18. *Cash grain price change represents a two-week period.
Livestock Angles Grain prices temper optimism
Information in the above columns is the writer’s opinion. It is no way guaranteed and should not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk.
