Marketing

Grain Outlook Corn market takes a dive, recovers slightly

Livestock Angles Willing packers keep cash cattle strong

Triple digit moves are an almost daily occurrence in the livestock futures as of late. Some is due to the cash prices moving in large directions on a daily basis. Some is due to the large speculative makeup in the market at the present time. Also, it is partly PHYLLIS NYSTROM due to the overall uncertainty JOE TEALE

CHS Hedging inC. of the underlying economic Broker St. Paul conditions at the present. Great Plains Commodity The current Covid-19 panic Afton, Minn. has disrupted the supply line from top to bottom for the last year and is still a factor in the uncertainty of the supply chain of the entire meat production. Another cause of wide swings is purely the dynamics of the trade. When prices move to higher prices than normal range at any given time, the volatility will normally expand. The future will decide when the volatility will diminish and the wide swings in prices will also subside. As for the cattle market, prices have moved higher over the past few weeks as packers continue to buy cattle at higher prices in an attempt to bring back a better supply of beef to the consumer. The disruptions because of the pandemic have slowed the production of beef products for the past several months. However, as we get back to

See NYSTROM, pg. 19 more normal conditions, production Cash Grain Markets corn/change* soybeans/change* Stewartville $6.55 -.20 $13.54 -1.86 Edgerton $6.33 -.49 $13.52 -2.08 Jackson $6.48 -.20 $13.55 -1.86 Janesville $6.34 -.35 $13.56 -1.86 Cannon Falls $6.30 -.32 $13.55 -1.87 Sleepy Eye $6.23 -.57 $13.64 -1.81 Average: $6.37 $13.56 Year Ago Average: $2.94 $8.23 Grain prices are effective cash close on June 22. *Cash grain price change represents a two-week period.

The following marketing The Federal Reserve sig- will increase. As this happens analysis is for the week ending naled this week they will and the supply of beef June 18. likely raise interest rates becomes more ready availCORN — Oh my gosh, where to begin! It didn’t take long for the tide to turn in the markets and for a variety of reasons. In just nine trading sessions, December corn retreated from a recent high on June 10 of $6.28.25 to a low this week of $5.30.5 per bushel. Weather forecasts are the easiest and quickest way to account for the rapid change in price direction and that’s where we’ll begin; but it’s not only weather. The fall began when forecasts indicated better chances of rainfall into the last half of June for most of the Corn Belt, but favoring the eastern belt. However, drought areas will remain unless the forecasted rain is much heavier than the current outlook. The weekly drought monitor showed Iowa had a 5 percent increase in some level of drought conditions to where nearly 82 percent of the state is at least abnormally dry and 50 percent of their corn crop under severe drought. For Minnesota, 92 percent of the state is experiencing drought, up 4 percent from the previous week. China’s Premier Li continues to talk about keeping commodity prices at twice in 2023 vs. 2024 as they indicated previously. Interest rates were left unchanged for now. They also raised their 2021 inflation rate to 3.4 percent vs. 2.4 percent predicted in March. Their comments were considered “hawkish” and pushed the U.S. dollar to fresh two-month highs. Adding fuel to the uncertainty about the markets is the administration’s apparent consideration of revising the biofuel mandates using waivers or some other alternative. The markets imploded on themselves on June 17 with corn locking down the 40-cent daily limit — leaving us to go into the weekend with a 60-cent expanded daily trading limit. Funds were estimated to have sold 35,000 corn contracts during the limit down session. The next day’s trade was more subdued as prices retraced over half of the June 17 surprising losses. Weekly export sales were within expectations but still the second-lowest of the marketing year. Old crop sales were just 700,000 bushels to bring total commitments to 2.73 billion bushels. able to the consumer, expect prices paid for live cattle to peak soon after this happens. The short-term outlook will remain questionable and expect a continuation of radical behavior in the futures market as well in the live trade. The hog market has appeared to find a potential top during the week ending on June 18. Futures prices have plummeted under heavy long liquidation as pork cuts outs have also begun to fall back from the recent rally. There is an old saying when hog prices exceed cattle prices it won’t be long before the hog market will fall. This appears to be what is taking place at the present time. Therefore, the outlook has the possibility of suggesting lower hog prices may be in the future heading into the fall months. Because the export of pork has been so exceptional over the past year, the initial drop may be the most severe followed by an easing lower as we move into the fall months. n “reasonable” levels. This seems to I would like to thank The Land for include auctioning or releasing stocks the opportunity to write “Livestock of grains and metals (copper, alumi- Angles” for their magazine for all these num, zinc) and restricting speculative years. It has been a pleasure and I will trading. According to news reports, certainly miss writing the livestock China will implement new rules for article in the future. However, after 48 commodity price indexes. Direct stake- years in the futures industry, I felt it holders in the commodity will not be was time to move on in my life and allowed to be part of the price index, retire. Thank you and God bless. v effective Aug. 1. A government agency will also determine what commodity price news will be made public. The state-owned Assets Supervision and Administration Commission reportedly ordered state-owned businesses to control risks and limit their exposure to overseas commodities markets.

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NYSTROM, from pg. 18

The U.S. Department of Agriculture’s forecast is 2.85 billion bushels. New crop sales were 10.9 million bushels. New crop total commitments are 605 million bushels vs. 140 million bushels last year.

Weekly ethanol production was down 42,000 barrels per day to 1.025 million bpd. Ethanol stocks were 642,000 barrels higher at 20.6 million barrels and a 10-week high. Net margins were down 9 cents to a positive 10 cents per gallon. Gasoline demand was up 880,000 bpd to 9.36 million bpd. This is only down 5.7 percent for the same week in pre-Covid 2019.

Corn conditions as of June 13 declined 4 percent to 68 percent good/excellent. This included a 14 percent drop in Iowa, 11 percent in Minnesota, and 6 percent in Illinois. It’s estimated U.S. corn pollination will occur 3-5 days earlier than average with 50 percent of the crop pollinated by July 14.

The Rosario Grain Exchange raised their Argentina corn estimate from 48.5 million metric tons to 50 mmt. The Buenos Aires Grain Exchange is forecasting the corn crop at 48 mmt. The BAGE also put Argentina’s corn harvest at 42 percent complete vs. 71 percent last year. Outlook: Will the crash in prices entice China back into the market? Will dry, hot weather return in a big way? What will the June 30 acreage and stocks reports say? The National Oceanic and Atmospheric Administration’s 30-day outlook for July calls for above-normal temperatures with normal chances of rain for the Corn Belt. The forecast for this period for the northern plains calls for above normal temperature but below normal rainfall. Any of these can prompt a bounce, but it may take a major weather threat to propel prices back to the highs. Weather will continue to be the lead headline; but watch for updates on the other factors mentioned above to also influence price direction.

Looking ahead to the June 30 reports, in six of the last 11 years, December corn has closed higher the day of the report. In 10 of the last 11 years, whichever direction December corn closes on report day, it closes in the same direction the day after the report. The average move higher is 15.7 cents per bushel.

For the week, July corn dropped 29.25 cents to close at $6.55.25 per bushel. The December corn contract plummeted 43.5 cents to settle at $5.66.25 per bushel. The trading range in December corn for the week went from $5.98.75 to $5.30.5 per bushel. SOYBEANS — Soybeans took advantage of the expanded daily limit of $1.50 per bushel on June 17 to set a record one-day loss of $1.18.75 per bushel in the July contract. If we still had open outcry trading pits, you would have likely heard “Sell, Mortimer, sell!” across the floor. The previous one-day loss was on July 18, 1988 when the July contract dropped $1.09.5 per bushel (the July contract was in delivery with no daily limit). Funds were estimated to have sold 35,000 soybean contracts during the race lower

MARKETING

on June 17. November soybeans have plunged from the contract high made June 7th at $14.80 to this week’s low at $12.40.5 per bushel. This was a loss of $2.39.5 in just eight trading days. The day after the price shock, soybeans retraced over half of those losses.

Factors mentioned in the corn comments were also active in the soy complex. There were unconfirmed rumors after the crash lower that China had stepped in to purchase eight U.S. soybean cargoes off the PNW for October. If accurate, this would be the largest U.S. soybean purchase in four-and-a-half months. Coincidence so shortly after China had expressed growing concern over rising prices and their intention to keep prices reasonable, which contributed to the record pullback?

Soyoil prices plunged down their normal limit and then down their expanded limit at mid-week before heading into the weekend on a positive note. World vegetable oil markets were on the defensive throughout the week. Palm oil production is expected to increase into the summer.

Weekly export sales were in the lower half of expectations. Old crop sales were 2.4 million bushels. Total commitments are 2.26 billion bushels vs. the USDA’s target of 2.28 billion bushels. New crop sales were 300,000 bushels to bring total commitments to 278 million bushels vs. 203.4 million bushels last year. The May National Oilseed Processors Association Crush was disappointing at 163.5 million bushels compared to ideas for 165.2 million bushels. Soyoil stocks were 1.67 billion pounds vs. 1.71 billion estimated.

Soybean yields are usually made in August and the current above trendline outlook is not guaranteed. This is a year where we need nearly ideal conditions to keep ending stocks at comfortable levels. This is why the acreage and stocks numbers on June 30 will be very important. Soybean conditions as of June 13 were down 5 percent to 62 percent good/excellent. Iowa’s rating fell 12 percent, Minnesota’s 9 percent, and 10 percent in Illinois. Outlook: Big macro selling late in the week left many with their jaws hanging down. Prices bounced into the weekend, but the volatile markets will likely put many on the sidelines until there is more confidence in the weather forecasts or there is a better grasp on how the macros may continue to affect the agricultural sector. Are the markets broken? At times it feels like it, but this is the hand we’re dealt. Stay vigilante and manage your risk in these volatile times. Current prices aren’t as attractive as a few weeks ago, but profits can still be made.

July soybeans nosedived $1.12.5 to close at $13.96 per bushel. The November soybeans plunged $1.25.75 to settle at $13.13 per bushel. The range this week in the November contract was from $14.30.5 to $12.40.5 per bushel.

A historical look at November soybean action the day of the June 30 reports shows they have closed higher the day of the reports six times in the last 11 years. The average move higher on report day is 30.6 cents per bushel in the November contract.

Nystrom’s notes: Contract changes for the week as of the close on June 18 (July contracts): Chicago wheat was down 18 cents at $6.62.75, Kansas City declined 31.5 cents to $6.06.5, and Minneapolis was only 2.25 cents lower at $7.62.5 per bushel. v

www.TheLandOnline.com Swine study provides credible information

SWINE & U, from pg. 10

study will help identify niche marketing pig farmers and learn what specific or even older-style health challenges these producers face.

Why should selected producers participate?

Producers who are selected to participate in the 2021 NAHMS swine study can benefit the swine industry in many ways. The study will provide transparent, credible information on industry practices which will help counter misinformation. It will assist the U.S. swine industry to understand disease preparedness strengths and vulnerabilities; as well as help policymakers and industry stakeholders make science-based decisions. The study will provide data which can be used by researchers and private enterprise to focus on swine health issues — both large and small. It will also help identify educational needs related to health and production on small and large swine farms.

The NAHMS Swine team is gearing up to meet and visit with swine producers across the United States beginning in the summer of 2021. Producer participation is a great way to provide credible data to researchers, and later in the study, to get some biologics testing of the herd. Data collected in this 2021 Study will provide an unquestionable benchmark for swine production and health in the United States, and assist the industry in planning for the future.

Diane DeWitte is an Extension Educator specializing in swine for the University of Minnesota Extension. Her e-mail address is stouf002@umn.edu v