15 minute read
Marketing
Grain Outlook Corn, soybeans joined at the hip
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not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk. See NYSTROM, pg. 14
Cash Grain Markets 14.460 billion bushels in June. The average trade estimate for 2021-22 U.S. corn ending stocks is 1.488 billion bushels, up 3 million bushels from last month. corn/change* soybeans/change* For 2022-23, ending stocks are estimated at 1.442 St. Cloud $6.59 -.56 $14.48 -1.03 billion bushels vs. 1.400 billion last month. Madison $6.79 -.78 $14.58 -1.09 World ending stocks for 2021-22 are forecasted at Redwood Falls $6.84 -.76 $14.78 -1.09 311.32 mmt vs. 310.92 mmt last month and for 2022Fergus Falls $6.54 -.76 $14.18 -1.24 23 310.49 mmt vs. 310.45 mmt last month. Argentina’s Morris $6.74 -.65 $14.33 -1.18 corn crop is predicted at 52.38 mmt vs. 53.0 mmt last
The following marketing analysis is for the week Tracy $6.81 -.76 $14.73 -1.08 month and Brazil’s corn production at 116.47 mmt vs. ending July 8. 116.0 mmt last month.
CORN — In post-holiday trading, corn extended the Average: $6.72 $14.51 June payrolls were up 372,000 compared to the previous week’s losses, only to overdo it and spring Year Ago Average: $6.21 $13.18 250,000 increase that was expected. The unemployback from five-month lows in the second half of the week. In a general overview, it looks like the June Grain prices are effective cash close on July 12. ment rate was steady at 3.6 percent. This may cast positive waves to commodities. 30 reports weren’t bullish or bearish and bulls need to be fed. Traders’ outlook on the economy pivoted from fear of inflation to fear of recession. Outlook: Watch the weather forecasts for shortterm price direction but outside factors driving money flows will also be impactful. The current forecasts look slightly warm and dry as we head to pollination. *Cash grain price change represents a two-week period.
December corn futures dropped below the February insurance level of $5.90 Corn finished with a flourish into the weekend to close with the first weekly gain when they traded as low as $5.66.5 before bouncing. Long fund positions exited in three weeks. If the current forecast verifies, we could see additional gains. and drove the market to pre-invasion price levels. Oversold conditions and a drier weather forecast for later this month then attracted money back to the market. This allowed the market to correct and erase the early week losses. Fund length in corn at mid-week was estimated to be the smallest since October 2020 and in soybeans the smallest since December 2021. There is an overhead gap in the December contract from $7.25.75 to $7.28.25 per bushel from June 21. For the week, September corn was 13.5 cents higher at $6.33.25 and December rallied 16 cents to $6.23.5 per bushel. Historical action in December corn for the balance of July favors whichever direction it settles the first trading day after the July 4 holiday, which this year was lower. I would
The weather over the Fourth of July weekend was seen as favorable for the expect weather and outside economic interest in commodities to take precedence crops, but longer-term forecasts later in the week looked drier into mid-July. over history.
The U.S. dollar soared to its highest level since December 2002 as investors looked for a safe haven.
Added to the list of war-related incidents, a Russian-flagged ship which was supposedly carrying “stolen” Ukrainian grain was allowed to leave a Turkish port even after Ukraine reportedly supplied evidence the grain was stolen. Ukraine had asked Turkey to detain the ship. Ukraine has called upon Turkey to explain. Events in Ukraine will continue to be monitored, but it feels like the grain repercussions have mostly been built in the market.
Conab expects a slightly bigger Brazilian corn crop at 115.7 million metric tons based on a better safrinha crop. The USDA is carrying Brazil’s corn crop at 116 mmt. Conab is estimating corn exports at 37.5 mmt which is well below the USDA’s 44 mmt export forecast.
Corn conditions as of July 3 fell 3 percent to 64 percent good/excellent with Illinois down 5 percent, Iowa down 3 percent, Indiana down 11 percent, but Minnesota improved 4 percent. Seven percent of the corn was silking compared to 11 percent on average.
Poor weekly export sales were unable to curb the price rally ahead of the weekend. Old crop sales showed net cancellations of 2.6 million bushels. Total sales commitments are 2.4 billion bushels. We need to average 8.3 million bushels of sales per week to hit the USDA’s target of 2.45 billion bushels. New crop sales were 4.4 million bushels, bringing total sales to 255.4 million bushels.
Weekly ethanol production fell 7,000 barrels per day to 1.044 million bpd. Stocks decreased by 744,000 barrels to 23.5 million barrels. Ethanol exports in the first five months of the calendar are up 24 percent from last year. Gasoline demand was up 491,000 bpd to 9.41 million bpd. Ethanol margins dropped to a negative 17 cents per gallon, down 29 cents per gallon for the week.
For the July World Agriculture Supply and Demand Estimates report, the trade is estimating U.S. corn yield at 177.025 bushels per acre vs. 177.0 bu./acre last month. Corn production is expected at 14.52 billion bushels compared to
MIELKE, from pg. 12
3.1 percent following a 4.7 percent drop. Skim milk powder was down 5.2 percent after inching up 1 percent last time, and whole milk powder was down 3.3 percent following a 0.6 percent slip.
Cheddar was up 1.4 percent after leading the declines last time with a 9 percent plunge.
StoneX says the GDT 80 percent butterfat butter price equates to $2.4992 per pound U.S., down 25 cents, after gaining 6.5 cents in the last event, and compares to CME butter which closed July 8 at $2.97. GDT Cheddar, at $2.2263, was up 1.5 cents, after losing 22.2 cents last time, and compares to July 8’s CME block Cheddar at $2.11. GDT skim milk powder averaged $1.8428 per pound, down from $1.9397. Whole milk powder averaged $1.7966 per pound, down from $1.8713. CME Grade A nonfat dry milk closed July 8 at $1.7475 per pound.
Volume purchased by the North Asia region (which includes China) continues to be lower than year-ago levels, according to StoneX; but once again, purchases grew from the previous event. “North Asia market share has returned to over half of the auction purchases. Purchases by Southeast Asia and the Middle East were also higher than year-ago levels.”
As stated, CME block cheddar plunged 8.75 cents on July 5 and stayed put at $2.0850 per pound until July 8 when a sale took it back up to $2.11. This is down 6.25 cents on the week, but 38.5 cents above a year ago.
The barrels dropped 4 cents July 5, to $2.165, but finished July 8 at $2.1825. This is 2.25 cents lower on the week, 60.25 cents above a year ago, and 7.25 cents above the blocks. There were two cars of block sold on the week and three of barrel.
Midwestern cheese producers tell Dairy Market News they’re facing challenges. While milk supplies are currently available, some farmers are downsizing due to a lack of help. Add to that, the availability of milk haulers in the region. Some are selling their trucks, while others are retiring and leaving the business altogether. Spot milk was moving at similar to strong discounts, at least on average, to pre-holiday levels this week, as low as $6 under Class.
Retail demand for cheese is steady to lower in the West as higher prices are affecting purchases. Food service is also softening but export demand remains strong due to U.S. competitive prices. Regional milk is available for cheese makers to run busy schedules although output was steady to lower this week, as plants planned down time for the holiday weekend. Labor shortages and delayed deliveries of production supplies continues says Dairy Market News. n
Butter lost 7 cents July 5 but ended the week at $2.97 per pound. This is down 4 cents on the week, but $1.295 above a year ago, with 47 sales reported. It is the highest weekly total since the week of Sept. 20, 2021.
Butter contacts relay that cream is steadily available but butterfat components are seasonally sliding. Weather in the upper Midwest has yet to put a notable dent in available cream. Churning is busy in spite of a lack of employees. There are growing concerns that consumer purse strings are expected to tighten as gas, fuel, and grocery costs rise, says Dairy Market News. Contacts suggest consumers are less likely to buy butter in larger quantities or may look at alternatives.
Cream inventories are still available in the West but demand is strong as ice cream and butter makers are running busy schedules. Labor shortages and delayed supply deliveries continues to keep them below capacity. Demand for butter is softening in retail markets as rising prices cause some to switch to alternatives. Food service demand is also declining as
See MIELKE, pg. 15
United States can’t match Brazil’s soybean price
NYSTROM, from pg. 13
The July WASDE report will be released on July 12 at 11 a.m. The monthly report will incorporate the June 30 acreage and stock numbers.
SOYBEANS — Soybeans reacted in the same manner and for the same factors as corn this week. Huge losses early in the week in the palm oil market cast a negative tone on the markets, but then palm oil began to rally from its lowest point since mid-2021. Adding to the rebound in soybeans was the strength in soyoil and crude oil’s recovery to above $100 per barrel. November soybeans held above psychological support at $13.00 per bushel with the low this week at $13.02.5 per bushel. A weak Brazilian real keeps the U.S. uncompetitive as Brazil’s soybean harvest winds down. There was trade chatter that China had canceled five to eight U.S. soybean cargoes for new crop, but there was no confirmation. Soybeans filled the overhead gap established on July 5 with a good rally into the weekend.
Net cancellations in the old crop slot of 5.9 million bushels on the weekly export sales report did little to discourage buyers. Total old crop commitments are 2.2 billion bushels and remain above the USDA’s export forecast for 2.17 billion bushels. New crop sales were very good at 8.9 million bushels. Total new crop commitments are 504.8 million bushels to stay well ahead of last year’s 345.3 million bushel total.
There are fears of slower economic growth in China after more cases of Covid and massive testing were reported. Ideas that further lockdowns in Shanghai will slow any recovery continue to be a concern for demand. The Chinese government is considering allowing local governments to sell $220 billion of bonds and use the proceeds to fund infrastructure projects. Indonesia is considering lowering its palm oil export tax to jump-start its exports.
Conab slightly lowered its Brazilian soybean production estimate to 124 mmt from 124.3 mmt last month and compared to the USDA forecast of 126 mmt. Soybean exports were unchanged at 75.2 mmt vs. USDA at 75 mmt.
U.S. soybean conditions as of July 3 fell 2 percent to 63 percent good/ excellent; but are expected to show some improvement in the coming week. Illinois conditions fell 4 percent, Iowa down 3 percent, Indiana down 11 percent, but Minnesota was up 7 percent. Three percent of the soybeans were setting pods which were right on average. Sixteen percent of the soybeans were blooming compared to 22 percent on average.
The trade is anticipating 2022-23 U.S. soybean yield at 51.5 bu./acre, unchanged from last month, with production at 4.532 billion bushels vs. 4.64 billion bushels in June. The average trade estimate for U.S. 2021-22 soybean ending stocks is 208 million bushels, up 3 million bushels from June; 2022-23 ending stocks are expected at 211 million bushels vs. 280 million in June. 2021-22 world ending stocks are estimated at 86.43 mmt vs. 86.15 mmt in June and for 2022-23 they are expected at 99.37 mmt vs. 100.46 mmt last month. For South America, Argentina’s soybean crop is estimated at 43.32 mmt vs. 43.40 mmt last month and for Brazil at 125.86 mmt vs. 126.0 mmt last month.
Outlook: After trading in nearly a dollar range this week soybeans finished on a strong note. Soybean prices plunged early in the week on decent weather into oversold conditions from which they recovered nicely. Volatility in money flow will keep traders on their toes. You may expect to see big trading ranges into the July report and beyond.
The July WASDE balance sheet may provide continued support as fewer than expected acres are reflected into the numbers and a sharp cut in 202223 ending stocks vs. last month is anticipated. History suggests whichever way November soybeans close the first session after the Fourth of July, they will close in that direction for the month of July. But has this year done much of what is “expected?”
For the week, August soybeans managed a 3.5 cent gain to $15.13.25 and November eked out a 1.25 cent increase at $13.96.5 per bushel.
Weekly price changes in September wheat for the week ended July 8: Chicago wheat up 45.5 cents to $8.91.5, Kansas City rallied 32.25 cents to $9.45.75, and Minneapolis jumped 43.75 cents to $9.91.75 per bushel. v
MIELKE, from pg. 14
restauranteurs reduce hours due to labor shortages and higher input costs.
Grade A nonfat dry milk was down 5.5 cents July 5 and the next day fell to $1.74 per pound — the lowest since May 16. It rallied to a July 8 close at $1.7475. This is still down 5.5 cents on the week, but 49.75 cents above a year ago, on 12 sales.
Dry whey saw its July 8 finish at 49 cents per pound. This is down a penny, and 1.75 cents below a year ago, with two sales recorded on the week at the CME.
n
U.S. dairy margins improved over the second half of June as projected feed costs decreased more than milk prices with both markets trending lower, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.
“The corn market in particular has been under extreme pressure with risk premium being removed on improved weather forecasts.” the Margin Watch stated. “USDA released the revised acreage report at the end of the month along with Quarterly Grain Stocks. Both figures were considered largely neutral relative to expectations. The corn acreage figure was pegged at 89.92 million compared with the average trade estimate of 89.69 million and up 431,000 acres from the March Planting Intentions.”
The Margin Watch cited details from the May Milk Production and Cold Storage reports, concluding, “Strong cheese production has kept pressure on the market recently;” and “a combination of high spot butter prices and strong demand both domestically and in the export market have likely led to the stocks drawdown, with cheese manufacturing diverting milk supplies from driers.”
In the week ending June 25, 50,900 dairy cows were sent to slaughter, down 3,200 head from the previous week, and 4,900 or 8.8 percent below a year ago.
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
DDGS can provide considerable feed savings
SWINE & U, from pg. 11
rable to feeding conventional corn/soybean meal diets (Stein and Shurson, 2009).
Significant feed cost reductions have been achieved when using these high DDGS inclusion rates to the point where many large pork producers are attempting to find ways to use even greater amounts (50-60 percent) in grower/finisher diets. However, to achieve optimal growth performance and carcass composition when feeding diets containing more than 30 percent DDGS, re-examining the threonine requirements and managing excess leucine relative to isoleucine and valine must be considered.
The effect of DDGS fiber and amino acids in the gut
The high fiber content of DDGS may increase the threonine requirement because of increased mucin production in the gastrointestinal tract, which occurs when feeding high fiber diets to pigs. Mucin contains significant amounts of threonine, which is lost and not used for growth. Corn protein in DDGS also contains high amounts of leucine relative the pig’s requirement, and excess leucine reduces the utilization of two other amino acids: valine and isoleucine. Therefore, feeding diets containing high amounts of DDGS may result is suboptimal growth performance if these conditions are not properly managed in diet formulations.
Research is underway to evaluate ways to overcome these challenges and further increase DDGS use in nursery and growing/finishing pig diets.
Jerry Shurson is a professor of swine nutrition at the University of Minnesota Department of Animal Science. He can be reached at shurs001@umn.edu. v
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