25 minute read
Mielke Market Weekly
This column was written for the mar- Prices report has the ratio at 1.69, which keting week ending Nov. 5. is up from 1.50 in August, but down from
Farm milk prices continue to recover, 2.27 in September 2020. but more is needed. The October Federal The U.S. all milk price averaged $18.40 order Class III benchmark was per cwt., up 70 cents from August and 70 announced by the U.S. Department of cents above Sept. 2020. The California all Agriculture at $17.83 per hundredweight. milk price, at $18.80, was up 70 cents from This is up $1.30 from September, but August and $1.50 above a year ago. $3.78 below October 2020. As of late morning Nov. 5, Class III MIELKE MARKET WEEKLY Wisconsin’s, at $18.30, was up 90 cents from August and 40 cents above a year ago. futures portended a November price at $17.76 and December at $17.63, By Lee Mielke The national average corn price slipped to $5.45 per bushel, down 87 cents which would result in a 2021 average of $17.00. This is down from MARKETING per bushel from August, but still $2.04 per bushel above Sept. 2020. $18.16 in 2020, and compares to Soybeans averaged $12.20 per bushel, $16.96 in 2019. down $1.50 from August after falling The October Class IV price is $17.04, up 68 cents from September, $3.57 above a year ago, and the 40 cents the previous month, but were still $2.96 per bushel above September 2020. highest Class IV since Nov. 2014. The Class IV aver- Alfalfa hay averaged $209 per ton, up $3 from age is at $15.44, up from $13.52 a year ago but com- August and $41 above a year ago. pares to $16.23 in 2019 Chicago-based Commodity and Ingredient
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One of the measures of dairy farm profitability Hedging LLC.’s latest Margin Watch reports, “Dairy appears to have turned the corner. A small rise in margins strengthened further over the second half the September All Milk Price and some relief in of October as milk prices continued to advance in corn and soybean prices moved the September milk deferred periods which more than offset a similar feed price ratio in a positive direction for the first rise in projected feed costs.” time since November 2020. The USDA’s latest Ag “A significant slowdown in the growth of milk production while demand has stayed strong has been attributed to some of the recent strength,” the Margin Watch stated. “The feed markets have been trending higher as strong ethanol demand for corn has helped to limit harvest pressure.”
USDA’s latest Crop Progress report shows the U.S. corn crop is 74 percent harvested, as of the week ending Oct. 31. This is down from 81 percent a year ago, but 8 percent ahead of the five-year average. Soybeans were 79 percent harvested, down 7 percent from a year ago, but 2 percent ahead of the five-year average.
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The milk price recovery is too little too late for the large dairies which came up for sale in California and Texas, according to the Oct. 28 Dairy and Food Market Analyst. Editor Matt Gould talked about it in the Nov. 8 “Dairy Radio Now” broadcast. He says nearly 28,000 cows were sold in New Mexico since June; 6,800 cows in Texas; and 6,150 in California. Of the auctions he tracks, Gould said some 51,000 head have been sold at dispersals over the last four months.
He blames low margins and says, “Dairies in Texas and New Mexico have experienced especially low milk prices so far in 2021. January thru August,
See MIELKE, pg. 13
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MIELKE, from pg. 12
prices averaged just $15.56 per cwt. in New Mexico, $2.39 below the national average. Texas was the fifth-lowest and averaged $17.31 per cwt.”
“Add in elevated feed costs,” says Gould, “up $3.16 per cwt. January thru August, and average farm-level margins fell to the lowest level in the USA since July 2013. Typically, when average revenue over feed costs are below $8.00 per cwt. for six months or more, it triggers a slowing of growth. Margins have been below that level every month in 2021 and most recently totaled just $5.46 per cwt. Dairy processors face many of the same issues.”
The September cull price for beef and dairy combined averaged $72.90 per cwt., down $3.10 from August, $6.30 above Sept. 2020, and $1.30 above the 2011 base average of $71.60 per cwt.
Quarterly milk cow replacements averaged $1,340 per head in October, down $40 from July and even with October 2020.
California cows averaged $1300 per head, down $50 from July and down $50 from a year ago. Wisconsin’s average, at $1,450 per head, was down $30 from July but $30 above October 2020. n
Cheese vats were busy in September, according to USDA’s latest Dairy Products report. Cheese output totaled 1.14 billion pounds, down 0.5 percent from August level (which was revised up 7 million pounds), but 3.3 percent above Sept. 2020. Year-to-date output sits at 10.2 billion pounds, up 3.5 percent from the same period in 2020.
Wisconsin produced 289 million pounds of the September total. This figure is down 1.9 percent from August, but 1.9 percent above a year ago. California output, at 201.9 million pounds, was up 0.1 percent from August and 4.5 percent above a year ago. Idaho produced 83.3 million pounds, up 6.9 percent from August but 4.4 percent below a year ago.
Italian-style cheese totaled 486.2 million pounds, up 0.2 percent from August and 3.5 percent above a year ago. Year-to-date, Italian hit 4.3 billion pounds, up 2.6 percent.
American-type cheese, at 454.2 million pounds, was down 0.9 percent from August, but 5.1 percent above a year ago. Year-to-date, American was at 4.2 billion pounds, up 5.3 percent.
Mozzarella totaled 379.3 million pounds, up 2.1 percent from a year ago, with year-to-date at 3.4 billion pounds, up 1 percent from 2020.
Cheddar, which is traded at the Chicago Mercantile Exchange, totaled 313 million pounds. This is down 6.5 million pounds or 2 percent from August, but 9.7 million pounds or 3.2 percent above a year ago. Year-to-date,
GREENSEAM, from pg. 7
The 2020 Annual Report data shows that on average, a farmer spent almost $960,000 in the greater community. That’s an enormous ripple effect and one of the reasons why SACE continues to support farmers and provide means for them to operationalize their business.
To learn more about FBM, go to www.centerofagriculture.org and click on the Farm Business Management tab. There are a variety of scholarships available for this program along with opportunities to connect with a FBM instructor near you. A copy of the 2020 Annual Report is available on this site as well.
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Increased cheese meant less fat for butter. Churns produced 143.4 million pounds, down 4.6 million pounds or 3.1 percent from August, and 7.3 million or 4.9 percent below a year ago. Yearto-date, butter stands at 1.6 billion pounds, down 2.3 percent from 2020.
Yogurt output totaled 401.3 million pounds, up 2.5 percent from a year ago, with year-to-date at 3.6 billion pounds, up 4.3 percent.
Dry whey production totaled 75.7 million pounds, down 1 million pounds or 1.3 percent from August, and 1.3 million pounds or 1.6 percent below a year ago. Year-to-date, dry whey output is at 696.2 million pounds, down 4.1 percent from a year ago. Dry whey stocks slipped to 64.2 million pounds, down 4 million or 5.9 percent from August and were 15.7 million pounds or 19.7 percent below those a year ago.
Nonfat dry milk output totaled 122.4 million pounds, which is up 400,000 pounds or 0.3 percent from August; but were down 3.8 million or 3.1 percent below a year ago. Powder production year-to-date totaled 1.6 billion pounds, up 5.6 percent from 2020. Stocks fell to 244.1 million pounds, down 40.6 million pounds or 14.3 percent from August, but were up 5.2 million pounds or 2.2 percent above those a year ago.
StoneX Dairy Group says it’s not clear if nonfat dry milk sitting in a container at port waiting for a ship would be included in this inventory data.
Skim milk powder production amounted to 62.8 million pounds, up 1.3 million pounds or 2.1 percent from August, but were 18.3 million pounds or 22.5 percent below a year ago. Yearto-date, skim milk powder, at 408.9 n
Strength remained in the Nov. 2 Global Dairy Trade auction where the weighted average jumped 4.3 percent following a 2.2 percent advance Oct. 19. Traders brought 66 million pounds of product to market, up from 61.4 million on Oct. 5, and the most since Jan. 5.
Cheddar led the gains, soaring 14.1 percent after a 2.9 percent gain on Oct. 19. Skim milk powder was up 6.6 percent following a 2.5 percent gain. Whole milk powder was up 2.7 percent, which followed a 1.5 percent increase. Butter was up 4.7 percent, duplicating the gain last time, and anhydrous milkfat was up 4.2 percent following a 2.5 percent gain. Lactose was up 1.6 percent after gaining 5.9 percent. Buttermilk powder was down 3.8 percent.
StoneX says the GDT 80 percent butterfat butter price equates to $2.3674 per pound U.S., up 10.6 cents, and compares to CME butter which closed Nov. 5 at $1.9350. GDT cheddar, at $2.2941, was up 28.7 cents and compares to Nov. 5’s CME block cheddar at $1.5850. GDT skim milk powder averaged $1.6450 per pound, up from $1.5426. Whole milk powder averaged $1.7785 per pound, up from $1.7248. CME Grade A nonfat dry milk closed Nov. 5 at $1.57 per pound.
StoneX Nov. 3 “Early Morning Update” points out that China’s participation in the GDT was reduced from the last event but the sharp rise in cheese was driven by bidding out of Africa, not Asia, “likely reflecting the dearth of available cheese out of Europe.” They ask, “What’s worse than high-priced cheese? Answer: No cheese. Or cheese that is not reliably delivered on time.”
See MIELKE, pg. 14
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MIELKE, from pg. 13
“That seems to be the story emerging for cheese globally,” says StoneX. “The price spreads may say a lot about global demand. They may even indicate something about global supply. But what we think they really reveal is that of all the cheese exporters out there, the U.S. is, for now, the least reliable.”
The U.S. has enjoyed good exports, StoneX says, but “lately it seems the world favors more certainty around deliveries and they’re willing to pay a premium for it. In the meantime, we may have a small glut of cheese available here. Add what appears to be a seasonal slowdown and you have a recipe for weaker prices.”
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The Nov. 3 Daily Dairy Report says congestion at U.S. ports and limited availability of shipping containers have constrained U.S. dairy exports, according to a USDA Global Agricultural Information Network report. The Daily Dairy Report citied data from Indonesia as an example of the lost U.S. sales and says European seaports face less severe backlogs so importers are reportedly switching their buying from the United States to Europe and Oceania.
That said, the September U.S. export data remains encouraging. Nonfat-skim milk powder exports totaled 154.5 million pounds. This is up 16.2 percent from Sept. 2020, with solid gains to Mexico, according to HighGround Dairy.
Cheese exports totaled 75.2 million pounds, up 20.5 percent from a year ago, and HighGround Dairy says third quarter exports were the strongest on record, led by gains to Mexico, Japan, and Chile.
The United States shipped 6.8 million pounds of butter, up 111.5 percent, and topped year ago levels for the tenth consecutive month. Canada remained the top destination.
Dry whey exports, at 41.4 million pounds, were off 0.2 percent from a year ago.
Cheese imports, at 38.4 million pounds, were up 14.4 percent, and we took in 10.7 million pounds of butter, up 8.8 percent from a year ago. n
Meanwhile, U.S. cheese prices continued to head lower as they entered November. The CME cheddar blocks closed Nov. 5 at $1.5850 per pound. This is down 9 cents on the week and 75.75 cents below a year ago when they plunged the second largest drop ever, losing 44 cents, as traders anticipated results of the Presidential election and the uncertainty of the government’s Food Box program.
The barrels finished Nov. 5 at $1.5025. This is down 31.75 cents on the week, 81.5 cents below a year ago when they lost 21.25 cents, and are 8.25
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cents below the blocks. There were five sales of block on the week at the CME and 26 of barrel.
After several weeks with barrel prices above the blocks, the situation corrected itself this week as a few contacts report that barrels have become a bit harder to move. Some believe this may signal more volatility for the next few months. Midwest cheesemakers suggest block demand has been steady and are trying to stay ahead of buyer calls, though a few plants are short workers and cannot run at full capacity. Milk intakes are in good balance with processing and spot load prices returned to near flat Class III to $1 above Class this week.
Western cheese demand for food service and retail is softening but interest in international markets is still strong. Transportation delays continue to challenge. A shortage of truck drivers continues to cause delays while port congestion is delaying loads. Contacts say that softening demand and cheese inventories being sold at a discount have contributed to lowering prices. Cheese plants are running busy schedules where available while others are limited due to decreased milk supplies and staffing shortages.
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Butter headed for $2 per pound, marching to $1.98 on Nov. 2 (the highest since June 4, 2020), with a sale on Nov. 3 hitting $1.9925. But gears reversed and butter closed Nov. 5 at $1.935, a halfcent higher on the week and 50.5 cents above a year ago, with 24 cars exchanging hands.
Cream tightness continues for Midwest butter makers as seasonally heightened production of dips and whips pulls heavily on cream supplies. Butter production is busy, but some contacts tell Dairy Market News of having to work around delayed cream deliveries and labor challenges. Butter demand is steady to stronger across food service and retail sectors and market tones remain bullish.
Cream is available to meet demand across the West though a shortage of truck drivers is causing delays. Demand for butter is strong in food service and retail, which is continuing to pull heavily on butter inventories
Grade A nonfat dry milk saw a Nov. 5 finish at $1.57 per pound, up 1.25 cents on the week (the highest since Aug. 5, 2014) and 50.5 cents above a year ago, on 12 sales.
Dry whey crept up to 66 cents per pound, up 3 cents on the week, highest since April 29, and 23.75 cents above a year ago. Four cars were sold on 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
By DICK HAGEN
The Land Staff Writer Emeritus
OLIVIA, Minn. — When looking at what’s ahead for agriculture in 2022, what better contact than a personable, well-informed banker in your home town? That logical process directed me to a Q & A session with Erik Peterson, President Erik Peterson of F&M Bank in Olivia, Minn.
I’ve known Erik for several years. His father, former Olivia area farmer Paul Peterson, and I were long-time associates in the booming era of RBA Seeds and Keltgen Seed Company.
The Land: In view of a droughty season and some recharging of soil moisture this fall, how optimistic are you about farming outlook for 2022?
Peterson: Well Dick, we’re always optimistic! Even in the toughest times farmers have a lot of grit and determination to make the most from the hand they’re dealt. 2021 certainly brought challenging weather with a lack of rain in most areas around us; but still ended up with surprising yields for such little rainfall. No bin busters by any means, but not the catastrophe it could have been either.
The Land: Yes, better-than-expected yields — both corn and soybeans — for many area farmers this fall. So does this generate better-than-expected net income figures for our farmers also?
Peterson: I’d say many will actually land a little below what we projected coming into the 2021 growing season. We already had higher commodity prices factored in and production was right around average; but input costs continued to increase throughout the year making for some headwinds.
The Land: Fertilizer prices are virtually exploding, so should farmers be cautious about how much fertilizer they should be purchasing for next spring?
Peterson: It’s unreal what’s happening in the fertilizer market over a short period of time. There’s some great analysis which shows, for the current NOLA Urea spot price of $700 per ton, we need corn prices over $10 per bushel to justify that input cost. Something has to give to bring this into balance. Place your bets accordingly.
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The Land: You’ve heard some of the impressive sale prices on farm land this season … and likely to stay strong for some time I’m told. If an older farmer is looking at retiring, should selling the farm now be an inevitable thought?
Peterson: It’s tough to ever call a top or bottom to a market; but land prices are the strongest we’ve seen in years. It’s worth looking at converting assets to cash; but then the next question is where to generate a return on that cash? The current low interest rate environment is certainly fueling some of the land price increase. Most are pretty skeptical that rates can stay this low much longer; but we’ve also witnessed times where “stagflation” takes hold — inflation (and rising interest rates) without real growth in the economy. Add tax and estate planning wild cards from the federal government and it’s certainly worth a review.
The Land: In China, because of rebuilding of their pig industry, is supporting record grain imports. Yet China’s economy is in a world of hurt too according to recent television reports. What’s your take on this issue?
Peterson: This is probably over-simplified, but some of China’s actions stem from what’s happening with their other trade partners. For example, inflation is running rampant in Brazil, where their central bank already increased interest rates five times this year with more expected to come before year end. This continues to make their products more expensive which makes U.S. commodities more attractive. Regardless of how China’s economy is doing, they’ll make sure their people have food at the lowest possible price.
The Land: With the net worth of many individual farmers increasing substantially in recent times, are there any particular concerns from your point of view as a prominent and respected ag lender?
Peterson: Wow, prominent and respected? I think you have the wrong guy!
From what I’ve seen so far, the last commodity and asset run-up is close enough in the rear-view mirror where lessons learned are still fresh. It’s also really tough to buy new paint right now; so that’s acting as a restrictor too — helping to throttle some spending.
The Land: When it comes to suggestions for farmers concerning financial management these days, do you have a listing of the top 10 Do’s and Don’ts?
Peterson: How about just a few friendly reminders without sounding like a preacher?
As year-end approaches, be careful taking on debt in order to postpone a tax liability. When times get lean again, the payment is still there. I know it’s easy to say until facing the actual tax bill!
Most have already refinanced to lower fixed interest rates; but if you haven’t already, there’s still time!
And finally, a wise man once said there’s only two things we farmers don’t like: 1 — change; and 2 — the way things currently are. v
The U.S. Department of Agriculture has begun mailing ballots for the Farm Service Agency county and urban county committee elections to all eligible agricultural producers and private landowners across the country.
Each committee has from three to 11 elected members who serve three-year terms of office, and at least one seat representing an LAA is up for election each year. Newly elected committee members will take office Jan. 1, 2022.
“Now is your opportunity to elect fellow farmers and ranchers in your community to serve on the local county committee,” said FSA Administrator Zach Ducheneaux. “These committees are a critical piece to the work we do by providing knowledge and judgment as decisions are made about the services we provide. Your voice and vote matters.”
Producers must participate or cooperate in an FSA program to be eligible to vote in the county committee election. A cooperating producer is someone who has provided information about their farming or ranching operation but may not have applied or received FSA program benefits. Also, for county committee elections, producers who are not of legal voting age, but supervise and conduct the farming operations of an entire farm, are eligible to vote.
Producers can find out if their LAA is up for election and if they are eligible to vote by contacting their local FSA county office. Eligible voters who do not receive a ballot in the mail can request one from their local FSA county office.
To be counted, ballots must be returned to the local FSA county office or be postmarked by Dec. 6.
Ballots to elect urban committee members were sent beginning Nov. 1, 2021. These elections will serve local urban producers in the same jurisdiction. A fact sheet on the urban county committee election and a list of eligible cities can be found at fsa.usda.gov/elections.
This article was submitted by the U.S. Department of Agriculture. v
By RICHARD SIEMERS other pilots. After leaving the service, he moved to The Land Correspondent commercial airlines as a pilot and instructor.
MONTGOMERY, Minn. — In some ways, While visiting his parents in the small Wisconsin Montgomery, Minn. honors veterans with the same town of Wautoma, he saw a display of plaques with respect that most Iowa and Minnesota photos of veterans and their individual towns do. The local American Legion stories in the foyer of the community spearheaded the development of Veterans building. Memorial Park … and a fine memorial it is. “I thought it was a great idea,” Grimm said, “but Montgomery didn’t have a com-
The attention is centered on a tiled munity building. I thought that instead of area with an American flag flying above concentrating the plaques in one place, the Minnesota flag and a POW/MIA flag why not disperse them throughout which flank it. Behind fly the flags of Montgomery’s business district.” each of the armed services. There is a statue of a soldier, and eagles — one a large carved eagle encased in Plexiglas which stands beneath the roof of a shelter. The shelter also houses a display of photos and stories of veterans. A granite monument sits front and center. He took his idea to Montgomery’s American Legion Post #79 and told them he was willing to pay for it. With the Post’s cooperation, the word went out, stories and photos were gathered. Grimm had a friend who made the wooden frames, and each veteran tribute was
What is different from any other town framed behind glass. Many businesses this writer has been in, the honoring of accepted them in their windows, and othveterans is not confined to a memorial. ers were posted on exterior walls. They are recognized throughout the downtown business district. Pictures and stories of veterans are displayed up and down the main street in store windows After a couple of decades, the wooden frames deteriorated and would leak water — especially those posted outside. and on the sides of buildings. The idea for See GRIMM, pg. 18
that came from John Grimm. Air Force veteran Grimm moved to Montgomery in 1992. He flew during the Vietnam War, but instead of going overseas the Air Force kept him home to train Photos by Richard Siemers John Grimm in front of the lodge at The Harbor
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GRIMM, from pg. 17
With the expertise of another Legion friend, they were all converted to waterproof panels. Three hundred and thirty-nine tributes are now on display in the Veterans Memorial Park, on the side of the Legion building, and throughout downtown Montgomery.
he decided he would welcome him — since living in a mess is better than being homeless. It turned out the man was experienced at sheetrocking and was able to exchange labor for a place to live. With the three cabins, The Harbor has room for 15 occupants. When Grimm did not come up with enough veterans to fill the apartments, he opened it up to other low income residents, but veterans will always receive preference. Still energetic at the age of 80, Grimm is probably not done with the projects he dreams up. Coming from a family of veterans (his father and brothers also served in the military) honoring veterans with plaques, and now by providing housing for them, Stories of area veterans are on display throughout downtown Montgomery. John Grimm has made Montgomery a place where veterans are honored in a
The American Legion Post continues the veterans unique way, and can be at home. program as more tributes are added. It is not limited to Montgomery natives. Anyone can add the photo and story of a veteran they wish to honor. There is a fee to cover the cost.
Honoring the past service of veterans is well and good, but what about after their service? Grimm was aware of the plight of homeless veterans and wanted to do something about that, too. He often drove by a resort about a mile north of town which had gone bankrupt. There was a central building and three cabins. He envisioned a place for veterans to live. Grimm found a way to purchase the property, named it The Harbor, and went to work converting the main building into ten apartments.
A month into the project, he received a phone call from the mother of a homeless veteran. While Grimm Veterans Memorial Park in Montgomery, Minn. was just getting started on the year-long remodeling,
With three cabins and the main building, The Harbor has room for 15 occupants.
For more information, especially on The Harbor, you can contact John Grimm at (612) 756-1075. Information about the Veterans Program and the Memorial Park is at the Montgomery American Legion website, www.montgomerymnamlegionpost79.org. v
This cross is on display at the Veterans Memorial Park shelter.
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