Mielke Market Weekly

This column was written for the marketing week ending July 30.

Dairy farm bottom lines are getting a lot of attention these days by farmers and bankers. The National Milk Producers Federation says, “Positive aspects of the current dairy situation include a 4.7 percent annual increase for total commercial use of milk in all products, domestic and export, during March to May, when measured on a milk equivalent of total solids basis. Of total use, domestic use was 1.9 percent higher, while exports grew over 19 percent.”

NMPF admits while many year-overyear comparisons are currently less informative than usual given last year’s pandemic, “growth in total commercial use exceeded growth in both milk and milk solids production during the March to May period. That growth, plus the heat and drought situation in the western states, should start to improve milk prices and margins; although the current situation continues to reflect higher production earlier in the year.”

Thank God for pizza. Pizza uses a tremendous amount of cheese and remember it takes about 10 pounds of milk to produce one pound of cheese. One of the biggest names in the pizza business today is Domino’s; but Domino’s has seen growth nearly six times faster in international markets than in the United States, according to the July 23 Dairy and Food Market Analyst.

“The company reported that it opened 203 restaurants in foreign markets, but only 35 in the United States in second quarter 2021. Growth was concentrated in China, Japan, the United Kingdom, Germany, Mexico and Turkey,” according to the Analyst, “with impressive sales growth as well. The company said its total second quarter sales rose 17 percent year-over-year, driven by muchhigher sales in international markets with same-store sales up 14 percent. Same-store sales in the United States grew just 3.5 percent, lapping a difficult-to-beat increase of 16 percent in second quarter 2020.”

Speaking in the Aug. 2 “Dairy Radio Now,” Analyst editor Matt Gould pointed out that it’s not just pizza driving cheese sales, but credited quick service restaurant sales in general, which have soared, as we came out of the pandemic. News and information for Minnesota and Northern Iowa dairy producers

MIELKE MARKET WEEKLY McDonalds reported U.S. sales were up 26

By Lee Mielke percent from a year ago, he said, and global sales were up 41 percent, although that’s measured against weak comparables a year ago. He said, “People are getting out, getting together, and going thru drive-thrus.” Considering overall cheese consumption, the sales are quite strong, he said. Comparable sales are also occurring in other chains, according to Gould, such as Burger King, Wendy’s, Chipotle, Papa Johns, Little Caesars, and others are “performing on all cylinders right now,” he concluded.

The July 26 Daily Dairy Report adds, “Nestlé, which makes DiGiorno, Tombstone, Jack’s, and California Pizza Kitchen pizzas, saw high singledigit growth in its frozen category last year, with DiGiorno called out as a key category.” Staffing is one of the big issues they face, according to the Daily Dairy Report.

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Back on the farm, “Heat advisories lit up weather maps again this week,” according to StoneX Dairy’s July 29 “Early Morning Update.” “But this time the largest swath of heat was over the Great Plaines and Midwest. Washington State was, however, put back on an excessive heat warning once again as temperatures surge in that area of the country. All of this hasn’t meant much to the price of milk or corn for that matter,” says StoneX. “The prevailing belief is that heat will knock us down to where we ought to be as opposed to causing any great shortage. In slow demand markets, supply takes center stage. When demand improves, it’s almost all about demand.”

The cash dairy markets didn’t have a lot to feed on the last week of July. There were no major U.S. Department of Agriculture reports that the trade actively monitors, so weather, emotion and rumor ruled.

The cheddar blocks climbed to $1.6350 per pound on July 27 and stayed there — up a nickel on the week, but 61.75 cents below a year ago when they plunged 28.75 cents.

The barrels hit $1.4175 on July 26, but rolled downhill from there to close the week at $1.39. This is 1.25 cents lower on the week, 84.5 cents below a year ago, and 24.5 cents below the blocks. There were three sales of block on the week and 22 for the month of July, down from 82 in June. Barrel sales totaled 16 for the week and 111 for the month, down from 126 in June.

Packaging issues on the block side is creating an additional supply of barrels, according to StoneX.

Meanwhile, Dairy Market News reports Midwestern cheese producers’ sales remain generally healthy. Italian style cheesemakers say sales remain robust. Some cheddar makers reported generally steady and healthy sales, but some customers have grown a little more hesitant as prices soften.

See MIELKE, pg. 18

NOTICE OF FARMLAND AUCTION

JACKSON COUNTY - BELMONT TOWNSHIP RONALD R. WERNER TESTAMENTARY TRUST

LEGAL DESCRIPTION

Parcel 1: APPROX. 80.0 +/- ACRES - S½ SW¼ OF SECTION 13, TOWNSHIP 103, RANGE 35, JACKSON COUNTY, MINNESOTA. Exact legal to govern. Parcel ID#: 02.013.0600

Parcel 2: APPROX. 164.0 +/- ACRES – N ½ NW ¼ & W ½ NE ¼, SECTION 30, TOWNSHIP 103, RANGE 35, JACKSON COUNTY, MINNESOTA. Exact legal to govern. Parcel ID#: 02.030.0400 *Parcel 2 will be split into one 80-acre parcel and one 84-acre parcel and sold separately.

TERMS

Each parcel shall be sold separately upon the same terms described below: 1. The live auction shall take place at the Jackson National Guard Armory, 108 County Highway 51, Jackson, MN 56143, on Thursday, August 12, 2021, at 10:00 a.m. 2. The successful Bidder will be required to submit an earnest money check in the amount of $25,000. The check shall be made payable to Premier Title Services Trust Account. 3. The successful Bidder will be required to execute a purchase agreement on completion of the bidding. The entire remaining balance of the purchase price, without interest, will be due and payable on or about November 30, 2021, or other such time as the parties agree, at which time title will be conveyed by a Trustee’s Deed. 4. Real estate taxes and assessments due and payable in 2021 will be paid by Seller. The successful Purchaser will assume responsibility for all taxes and assessments due and payable in 2022 and thereafter. 5. This property is being sold in an “AS IS” condition and the Seller makes no representations as to its acreage, tiling, or condition. The potential Purchaser shall inspect and be familiar with the present condition of the subject property, including but not limited to soil suitability, slope, grade or grades of land, irrigation, flood plain, weed and pest spectrum, habitat areas and the general flow and direction of irrigation waters and drainage.

MIELKE, from pg. 15

Milk availability, after showing signs of increased prices the previous week, slipped back to the $5 under realm. A number of cheesemakers were running flush with internally sourced milk but cheese stocks are not burdensome.

Western cheese demand, both retail and food service, held steady this week and the lower prices remain favorable to international buyers. Port congestion continues to delay loads which are building in warehouses due to a shortage of truck drivers and limited available shipping supplies, according to Dairy Market News.

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Butter fell to $1.6225 per pound on July 28 (the lowest since Feb. 26), but rallied some two days later to close at $1.6425. This is down 5.25 cents on the week but 3.5 cents above a year ago. Six sales were reported on the week and 55 for the month, down from 90 in June.

Butter producers continue to say summer sales lag week to week but they are not overly concerned as orders are generally in line with seasonal expectations. Cream availability is sporadic, but butter plant managers are able to clear cream if they are open to paying freight costs from Western states. That said, they say spot cream availability is up one week and down the next. Lighter ice cream production, seasonally, is assisting in availability week to week.

Cream is tightening in the west, according to Dairy Market News, but available to meet needs. Transporting cream remains a challenge as tankers and drivers are still in high demand with limited availability. Some plants are reducing butter output while others are maintaining active schedules. Inventories are heavy though much is under contract.

Retail sales are steady but down from last year’s pandemic baking buys. Some grocers are advertising promotions to move more butter. Food service orders are level but, in light of recent CDC guidance, public health officials in several counties have

Food buyers habits keep changing

BEEF TOUR, from pg. 14

tour. Plus, I see strong families; strong work ethic; strong spiritual motives with a rampant generational attitude … setting up for next generations so their kids, their grandkids and succeeding generations can also make it work is a super motivation. It seems to me these folks thrive on that number-one ambition to be a team member on the winning team!” Kafka admitted there is lots of competition in the Morse and Jeff Kafka feed industry — which is good for business and customers alike. “We play off each other,” he stated. “That means we keep each other honest too. So we’re little different than good cattlemen. We work hard at being good; even harder at being better. Yes, there’s a constant ‘checks and balances’ system in the feed industry too. Yes, we too get hurt by our mistakes; but we thrive on our good works and that’s an ongoing pleasure of working with the Minnesota cattle men every year … and all other cattlemen too I need say.”

“Need is say, if you haven’t been caught on the wrong side of the market then you likely haven’t been in business more than a week. For example, crazy as it seems, yet this year corn markets had upwards of 90 cents a day; then suddenly a reverse plunge the same way. That applies in the feed industry too when it comes to buying all the various byproducts in our total ingredient packaging; plus, of course, the grains making up our total formulated feed offerings.” “We headquarter at Muscatine, Iowa … familyowned with Gage Kent still at the helm. And without tipping off any secrets, we’ve got some new products based around the product called NutraVantage — developed for our specialty feeds. Also, we have a new team called ‘Innovative Solutions’ which is continually working in new consumer foods.” Kafka confessed tying into the continually changing buying habits of the American food buyer is challenging. “It’s not easy,” he said. “Fitting this into our ever changing ingredients of our various Kent feeds sort of complicates the issue even more. Our Innovative Solutions team has the exciting challenge of harnessing new ingredients from our ethanol processing plant also at Muscatine. So lots of byproducts just from that industry and that’s why the Human Foods Division called Precision Foods. Yes, when you’re working with Kent Feeds you are working with connections in both the animal feed world and the human foods industry. Suffice to say it’s on ongoing process!”

Are cattle feeders fairly confident about their immediate future?

“Sure!” Kafka said. “They’ve all lost money and they’re all eternal optimists. Nothing different in that scenario except the stakes seemingly keep getting bigger!” v issued, or considering mask recommendations again for indoor settings. It remains to be seen what impact that might have.

Spot Grade A nonfat dry milk hadn’t seen much movement in recent sessions until July 29’s 1.5 cent jump. It added another quarter-cent the next day to close at $1.2675 per pound. This is up 1.5 cents on the week and 29 cents above a year ago. Chicago Mercantile Exchange sales totaled six for the week and 34 for the month, down from 76 in June.

StoneX reported nonfat dry milk values in this week’s National Dairy Products Sales report took an unexpected jump on stronger volume along with an announcement of decreasing volumes on GDT which spooked the market higher.

CME dry whey lost 3 cents on July 29 and stayed there at 50.25 cents per pound. This is down 3.5 cents on the week, but 16 cents above a year ago. Four sales were reported on the week and 17 for the month, up from 11 in June. n

StoneX says stock level building is keeping pressure on the market and logistic issues continue to be a hurdle with movement of domestic product as well as getting product to port for shipment.

In the week ending July 10, 53,700 dairy cows were sent to slaughter, down 2,100 from the previous week but 3,600 or 7.2 percent above that week a year ago.

This week’s Crop Progress report showed 79 percent of the U.S. corn crop was silking, as of the week ending July 25. Eighteen percent is at the dough stage.

Looking to soybeans, 76 percent were blooming. Forty-two percent were setting pods. Fifty-eight percent were rated good to excellent.

StoneX reports, “Grains traded slightly higher on July 29 led by the wheat market as export sales continue to run strong. North Dakota yields were projected at 29.1 bushels per acre vs. 43.6 for the five-year average. That was an eye opener and gives insight to how poor the corn/bean crop likely is out west.”

“That should mostly be priced in at this point,” says StoneX. “Supply still has some concern, but demand looks like it’ll be the key driver for prices soon.” n

Checking the international scene, HighGround Dairy reports New Zealand had a record second quarter for dairy exports, mainly due to the jump in volume to China. Whole milk powder exports were up 82 percent, though some of those gains were offset by steep losses to the Middle East and North Africa.

Whole milk powder exports to China jumped 147 percent in June alone, according to HighGround Dairy, and first half of the year exports have been record high for whole milk powder, fluid milk and

See MIELKE, pg. 21

Grain Outlook Wild swings expected in the corn market Financial Focus Important retirement income birthdays over 50

PHYLLIS NYSTROM

CHS Hedging inC. St. Paul

See NYSTROM, pg. 20

Cash Grain Markets corn/change* soybeans/change* Stewartville $6.21 -.36 $13.40 -1.14 Edgerton $6.23 -.19 $13.35 -.89 Jackson $6.15 -.26 $13.24 -.90 Janesville $6.17 -.08 $13.17 -.98 Cannon Falls $6.20 -.17 $13.36 -.68 Sleepy Eye $6.10 -.22 $13.20 -.88 Average: $6.18 $13.29 Year Ago Average: $2.64 $8.21 Grain prices are effective cash close on Aug. 3. *Cash grain price change represents a two-week period. See JOHNSON, pg. 20

MARISSA JOHNSON Profinium Wealth Management Advisor

The following marketing percent and it’s been suggested Most children stop being making withdrawals from analysis is for the week end- that may increase to a 40 per- “and-a-half” somewhere qualified retirement plans ing July 30. cent reduction in drafts. That around age 12. Kids add “and- without incurring a 10 perCORN — Corn spiked lower when traders returned from the weekend, but traded sideways, higher from there until July 30’s risk-off action erased most of the week’s gains. The weather continued to be the dominant feature, but a strong wheat market and weaker U.S. dollar also provided support. Funds were buyers this week, but volumes have thinned, and many traders went to the sidelines after tiring of big swings and large daily trading ranges. Rumors persisted of Chinese and Canadian interest in new crop U.S. corn, but nothing was confirmed. Also, watch the Delta’s weather as their corn harvest nears. The exporters and end users are counting on those bushels to get them through to harvest in the Corn Belt and rain delays won’t be welcome. Brazil’s corn traded to new highs as certainly increases transportation costs, which narrows the premium of U.S. corn to South America. Argentina’s corn harvest is 81 percent complete with the Buenos Aires Grain Exchange’s production estimate at 48 mmt. Weekly export sales were the lowest of the marketing with net cancelations for old crop of 4.5 million bushels. China accounted for 4.7 million bushels of the cancelations which reduces their unshipped purchases to 141.7 million bushels. The market seemingly ignored the report, but exports may not quite reach the USDA number. Total old crop commitments are 2.74 billion bushels compared to the USDA’s 2.85 billion bushel outlook. We need to average 10.3 million bushels of sales per week to reach the forecast. New crop sales were very good at 30.8 million bushels to bring total commitments to 665.7 million bushels. There were no new crop sales to China. a-half“ to make sure everyone knows they’re closer to the next age than the last. When you are older, “and-ahalf” birthdays start making a comeback. In fact, starting at age 50, several birthdays and “half-birthdays” are critical to understand because they have implications regarding your retirement income. Age 50 At age 50, workers in certain qualified retirement plans are able to begin making annual catch-up contributions in addition to their normal contributions. Those who participate in 401(k), 403(b), and 457 plans can contribute an additional $6,000 per year in 2019 (The catch-up limit is adjusted in $500 increments.). Those who participate in Simple IRA or Simple 401(k) plans can make a catch-up contribution of up to $3,000 in 2019. And those who participate in traditional IRAs can set aside an additional $1,000 a year (If you reach the age of 50 before the end cent federal income tax penalty. This applies to workers who have contributed to IRAs and employer-sponsored plans, such as 401(k) and 403(b) plans (457 plans are never subject to the 10 percent penalty). Keep in mind that distributions from traditional IRAs, 401(k) plans, and other employer-sponsored retirement plans are taxed as ordinary income. Age 62 At age 62 workers are first able to draw Social Security retirement benefits. However, if a person continues to work, those benefits will be reduced. The Social Security Administration will deduct $1 in benefits for each $2 an individual earns above an annual limit. In 2019, the income limit is $17,640 (Social Security Administration, 2019). Age 65 At age 65, individuals can qualify for Medicare. The Social Security Administration recommends applying their biggest end users bought up to 30 Weekly ethanol production decreased of the calendar year, Internal Revenue three months before reaching age 65. corn cargoes from Argentina. Brazil’s 14,000 barrels per day to 1.01 million Service, 2019). It’s important to note that if you are Foreign Trade Secretariat reported Brazil has already imported 1.1 million metric tons of corn this year and it may bpd. Stocks were up 215,000 barrels at Age 59½ At age 59½, workers are able to start already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A (hospitalization) increase to 3.5 to 4 mmt by the end of and Part B (medical insurance) without the year. They usually import 1 to 1.3 an additional application (Individuals mmt of corn annually. The U.S. can decline Part B coverage because it Department of Agriculture is estimat- requires an additional premium paying Brazil’s corn imports at 3.5 mmt. ment.). Brazil is finishing up their safrinha corn harvest and frost events are giving credence to a shrinking crop. Private estimates for Brazil’s total corn crop run in the 85-90 mmt range, but the USDA is at 93 mmt. Brazil’s corn exports could be reduced by as much as 2-5 mmt which could mean higher U.S. corn exports in the coming year. Age 65 to 67 Between ages 65 and 67, individuals become eligible to receive 100 percent of their Social Security benefit. The age varies, depending on birth year. Individuals born in 1955, for example, become eligible to receive 100% of their benefits when they reach age 66 years and 2 months. Those born in 1960 or

Argentina struggles with low water later need to reach age 67 before they’ll curtailing vessel capacity. Vessel load- become eligible to receive full benefits ing capacities have been slashed 25