Marketing

Grain Outlook It’s ‘wait and see’ as corn market watches weather

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. 16 more normal conditions, production Cash Grain Markets corn/change* soybeans/change* St. Cloud $6.09 -.44 $13.20 -.91 Madison $6.21 -.44 $13.05 -.86 Redwood Falls $6.24 -.43 $13.40 -1.06 Fergus Falls $6.19 -.39 $13.00 -.96 Morris $6.18 -.39 $13.05 -.91 Tracy $6.37 -.28 $13.38 -.96 Average: $6.21 $13.18 Year Ago Average: $2.99 $8.16 Grain prices are effective cash close on June 29. *Cash grain price change represents a two-week period.

The following marketing out of the last ten years, but will increase. As this happens analysis is for the week ending in the last five years, it has and the supply of beef June 25. closed lower twice. becomes more ready availCORN — The central and eastern Corn Belt benefited from timely rain this week Weekly corn export sales were neutral for both old and new crop. Old crop sales able to the consumer, expect prices paid for live cattle to peak soon after this happens. with more in the forecast for were 8.5 million bushels. The short-term outlook will the balance of June. In some Total commitments are 2.737 remain questionable and cases, severe storms caused billion bushels vs. the USDA expect a continuation of radiflooding but nothing which outlook for 2.85 billion bush- cal behavior in the futures was considered significant in els. We only need to average market as well in the live the big picture. 4.7 million bushels of sales trade. Big daily price swings have become the norm as the market reduces the weather premium in the market and funds reduce their net long exposure before month and quarter end. The June 30 U.S. Department of Agriculture reports for planted acreage and grain stocks as of June 1 could change the scenario, but we will have to wait and see. As of June 20, U.S. corn ratings fell 3 percent to 65 percent good/excellent. Minnesota conditions dropped 8 percent, Illinois fell 4 percent, Indiana down 3 percent, Iowa down 7 percent, Ohio up 4 percent, South Dakota dropped 11 percent, and North Dakota was 3 percent lower. to hit the USDA forecast. In the report, two corn cargoes were switched from unknown to China. China has 255.9 million bushels left to ship. New crop sales were 12.2 million bushels to bring total commitments to 617.3 million bushels. The International Grains Council raised world corn production by 7 mmt. Weekly ethanol production was up 23,000 barrels per day to 1.05 million bpd and only 2.2 percent behind the same week in pre-Covid 2019. Ethanol stocks rose 518,000 barrels to 21.1 million barrels, the highest in 13 weeks. Net margins improved 3 cents to 13 cents per gallon. Gasoline demand rose from 9.36 million bpd to 9.44 million bpd. We did see the first ethanol imports 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 fol-

The average trade estimate for the in 27 weeks at 6 million gallons. lowed by an easing lower as we move June 30 Planted Acreage report is 93.8 million acres with a range of guesses from 92.0 to 95.84 million acres. The USDA forecasted corn acreage in March at 91.1 million acres and has been using that on the balance sheet. Last year we planted 90.8 million acres. The average trade estimate for corn stocks as of June 1 is 4.144 billion bushels with a range of guesses from 3.917 to 4.546 billion bushels. Last year we had 5 billion bushels of corn on AgroConsult lowered their Brazilian into the fall months. n I would like to thank The Land for the opportunity to write “Livestock Angles” for their magazine for all these years. It has been a pleasure and I will certainly miss writing the livestock article in the future. However, after 48 years in the futures industry, I felt it was time to move on in my life and retire. Thank you and God bless. v hand on June 1. On the June 30 report day, corn stocks For marketing news were higher than the average trade estimate in four of the last five years. between issues ... Corn stocks as of June 1 have been higher than the average trade estimate visit in all the last four years. On report day, December corn has closed lower five www.TheLandOnline.com

NYSTROM, from pg. 15

corn production number from 91.1 mmt to 90.2 mmt. The Buenos Aires Grain Exchange pegged Argentina’s corn harvest at the halfway point. They kept their corn production forecast at 58 mmt. Argentina continues to struggle with low water levels with some barges stranded along the Parana River. Transportation costs are rising due to reduced loading levels. Outlook: It’s pointless to put a call on the markets before the June 30 reports and with traders eyeing every updated weather forecast as an opportunity. It’s a case of the have and have nots in terms of crop potential this year. The eastern belt is in good shape, but the Dakotas, Minnesota, and parts of western Iowa are begging for relief from the dryness. What hits the ground vs. what the radar shows can be two entirely different amounts, as we all know. Looking out your backdoor doesn’t always give you the best picture of what the market is surveying. As my mother used to say, “hope for the best, but prepare for the worst.” This may be that kind of year.

For the week, September corn skidded 47.25 cents lower to close at $5.30.25 and the December contract dropped 47 cents to $5.19.25 per bushel.

Fourth of July holiday: once the markets close at their normal time on Friday, July 2, they don’t reopen until 8:30 a.m. on July 6. SOYBEANS — Soybeans traded the entire week within the June 17 trading range. That was the session we plunged a record $1.18.75 per bushel in the July contract. This week was mostly lower based on new weather forecasts every six hours, the upcoming Acreage and June 1 Stocks reports, and positionevening ahead of month and quarter end.

The USDA did announce fresh combined new crop soybean sales to China and unknown totaling 43.3 million bushels and a small sale of meal to Mexico split between 2021-22 and 2022-23 crop years.

The market got a surprise ahead of the weekend when the Supreme Court ruled in favor of small refineries seeking exemptions from federal law requiring increasing levels of biofuels in blending. At question in the case before them, the Court said the Environmental Protection Agency issued certain waivers when the refineries in question had not received continuous prior extensions of the first exemption. The administration had been considering alternatives for small refineries due to the high cost of Renewable Identification Numbers. Renewable fuel groups were against waivers citing lost business for their products. What happens now is in question, but will the administration issue many waivers considering their green policy?

Soybean yields aren’t determined in June, meaning we have a wider window for soybeans to recover from current adverse dry weather. There are areas, however, where full recovery won’t be the case, i.e. the northern plains. Severe weather hit parts of the Midwest. Is there a point too much becomes an issue? What the June 30 Acreage report says will be a major driver of how weather will be treated. Keep in mind that this year’s soybean acreage increases were centered in areas where last year’s prevent plant acres were the largest — again in the northern plains.

The average trade estimate for the June 30 Planted Acreage report is 89 million acres with the guesses ranging from 87.9 to 90.4 million acres. In March, the USDA forecasted acreage at 87.6 million acres, and they have been using that number on the balance sheet. Last year, we planted 83.1 million soybean acres.

The average soybeans stocks as of June 1 are estimated at 787 million bushels with the range of guesses from 696 to 952 million bushels. Last year, we had 1.381 billion bushels of soybeans on hand.

In each of the last four years, the June soybean stocks number has been below the average trade estimate. Soybean acreage on the June report has been lower than the average guess in all the last five years. The average trade estimate for soybean stocks is 787 million bushels vs. last year’s 1.381 billion bushels. The average trade estimate for planted soybean acres is 88.96 million acres vs. 87.6 million estimated in March and last year’s 83.1 million acres. On report day, November soybeans have closed higher in four of the last five years.

Weekly export sales were on the high end of expectations and an eight-week high for old crop but below estimates for new crop. Old crop sales were 5.2 million bushels to bring total commitments to 2.269 billion bushels. The USDA’s target is 2.28 billion bushels. China has 27.6 million bushels of old crop purchases left to ship. New crop sales were 1.7 million bushels to bring total commitments to 279.6 million bushels.

China announced they will send teams from the National Development and Reform Commission into the country to investigate bulk commodity prices and supplies. This fits into announcements earlier in the month about controlling market information and keeping prices at “reasonable” levels. China was also encouraging its hog producers to not panic and continue producing despite negative margins.

As of June 20, U.S. soybean conditions fell 2 percent to 60 percent good/excellent. Minnesota’s conditions dropped 8 percent, Illinois improved 3 percent, Indiana down 3 percent, Iowa fell 4 percent, Ohio up 1 percent, North Dakota 1 percent lower, and South Dakota plunged 12 percent. Outlook: World vegetable oil markets were a bright spot for the week until the Supreme Court’s decision nearly wiped out the week’s gains. Soyoil posted a key reversal lower to the end week while canola oil held gains into the weekend. It is still very early in the season for soybean yields to be determined. We will continue to trade high volatility and large daily ranges. We need to be on the other side of the June 30 reports to set our next direction. Buckle up, boys, we’re not done yet!

For the week, August soybeans crumbled 52.25 cents to $13.02.75 and the November contract slid 43.25 cents to $12.69.75 per bushel.

Nystrom’s notes: Contract changes for the week as of the close on June 24 (September contracts): Chicago wheat fell 25 cents to $6.40.75, Kansas City was 6.75 cents lower at $6.09, and Minneapolis surged 41.75 cents to $8.08 per bushel. v

Swine study provides credible information

SWINE & U, from pg. 10

vide 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 partici-

pation 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 Butter inventories building for fall demand

MIELKE, from pg. 14

reported to be disrupting production. Inventories are growing and ready for fall demand. Retail sales are soft but steady and food service demand remains strong, says Dairy Market News.

Grade A Nonfat dry milk closed June 25 at $1.2650 per pound, unchanged on the week but 24.5 cents above a year ago. Nineteen sales were reported for the week.

Dry whey saw a June 25 finish at 57.75 cents per pound, down 3.25 cents on the week but 26.5 cents above a year ago, with two sales reported for the week.

Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at lkmielke@juno.com. v