Annual Market Outlooks

2023 Pork Outlook: A Recipe for Fireworks?

Tue, 03 Jan 2023 19:40:34 GMT

Of all the challenges coming at the U.S. pork industry in the year ahead, economists agree it likely won’t be the price of pigs.

“The last several USDA Hogs & Pigs Reports have provided a static sow herd with no jolts in productivity,” says Joe Kerns, president of Partners for Production Agriculture. “We are likely not going to produce ourselves out of profit.”

But the challenges producers will face aren’t small. Many believe the threat of a border-closing disease such as African swine fever (ASF) continues to top the list. Not losing sight on biosecurity is key to protecting the U.S. pig herd.

“Absent that, my biggest concern is on the input side – specifically, corn,” Kerns explains. “We are running tight on a balance sheet in the U.S. with everything we know. Insert a problem with production either here or in South America combined or separate from potential demand increase (maybe China?) and we could put a serious hurt on the corn market. Throw in some tilt in acreage demand on account of renewable diesel demand and you have a recipe for fireworks.”

The demand front for pork has been impressive, but the current forecast of a slowdown in the general economy could also become an issue for pork prices in 2023, adds Scott Brown, an economist at the University of Missouri.

The coming year is likely to look a lot like 2022, points out Christine McCracken, executive director animal protein at Rabobank, with historically high costs of feed, fuel and financing costs pressuring margins.

“With nominal growth in production and steady pork exports, hog markets are expected to trend only slightly below 2022 averages. Packer demand for hogs should remain steady yet could slow if retail pork sales disappoint or exports fall short of expectations,” she says. “Any improvement in the health status of the herd or a return to trendline productivity would also limit the near-term upside in the cash market.”

Costs were a headwind to producer returns in 2022 and they will be again in 2023, agrees Lee Schulz, an economist at Iowa State University. According to the Iowa State University model for farrow to finish production, costs increased 27% or $17/carcass cwt in 2021 compared to 2020. Costs increased 18% or $15/carcass cwt in 2022 compared to 2021.

“This translates into an increase of over $60 per head in just two years. Costs are forecasted to remain at, or maybe slightly below, these record levels in 2023. Feed costs have been a big part of this increase, but pork producers use numerous inputs and services which have all been higher in 2022,” Schulz says.

The USDA National Agricultural Statistics Service prices paid indices can provide some context, he explains. The September 2022 prices paid index for commodities, services, interest, taxes and wage rates, labeled PPITW, was up 12% from September 2021 and up 24% from two years ago. Higher hog prices have only partially offset the rise in costs in 2022. On an annual basis, hog prices were only 7% higher in 2022 than in 2021. Moderation in revenues seem imminent for 2023. Hog prices are forecasted to decrease 5% from 2022 levels.

Here’s a deeper look at these economists’ pork outlook and advice for pig farmers heading into 2023.

What is your 2023 outlook for the pork industry?

Brown: In defining 2023 pork markets, I often use “sideways” to describe my outlook. Given current information on sow inventory, it appears 2023 pork production will increase by less than 300 million pounds. My current outlook for hog prices is a decline of about $5 per cwt for 2023 relative to 2022 as a weaker outlook for real Gross Domestic Product (GDP) and higher interest rates slows domestic demand growth.

Kerns: I am cautiously optimistic about 2023. Perhaps that is the most ringing endorsement we can have in a practical fashion. As an industry, we often pay more attention to the fear factors and focus on “what could go wrong.” That is human nature, and you have to be respectful of that approach, even if does not make sense from the outside looking in. It is against that backdrop where we currently have summer hogs making new life of contract highs and representing over $35 per head profits for most producers. We do not have to count on hope for our future, we can secure respectable profits right now with a combination of futures, options and insurance to take the economic risk out of the equation. That is not a normal scenario and I like the prospects of our industry to generate profits into 2023.

McCracken: We are generally optimistic on the U.S. pork market outlook as global protein supplies remain constrained, but it will be tough for producers to repeat the level of returns we have seen in the past few years. U.S. pork markets are likely to be under some pressure as consumers contend with the economic fallout of slowing growth and reduced purchasing power. Pork also faces more competition in the retail meat case from increased chicken supplies early in the year, which is likely to attract stronger promotional activity. We are more optimistic on the second half of 2023 as U.S. beef supplies will contract, leaving more room in the case for pork.

Schulz: Current levels of risk, uncertainty and input costs have producers pulling back, in spite of relatively strong hog prices. We are seeing a change in supply―a retrenching of the industry so to speak. The latest USDA Hogs and Pigs report showed as of Sept. 1, the breeding herd was 6.152 million head, down 0.6% compared to a year and the smallest September breeding herd since 2017. Hog producers said they intend to farrow 2.973 million sows during the September through November quarter, which would be down 2.5% from the same quarter in 2021. Similarly, December 2022 through February 2023 sows farrowing intentions are expected to be below year prior levels. If producers do follow through on these intentions, this would be the fewest number of sows farrowing since 2015 and will keep pork supplies rather tight through at least the first half of 2023.

According to the Livestock Marketing Information Center, pork production is forecasted to decline to 27.1 billion lb. in 2023. This would be a slight drop from the 2022 level. The lower production is based on a projected 0.7% decrease in commercial hog slaughter which would more than offset an expected 0.4% increase in carcass weights. USDA is a bit more optimistic with 2023 pork production forecasted to be slightly above 2022 production. Even with the smaller breeding herd it may be possible to see a modest growth in production in 2023 if there is productivity growth, which could come from more pigs saved per litter or heavier hog weights.

As is always the case, demand will be a key focus for market participants in 2023. Even if domestic per capita consumption is lower or flat next year, U.S. consumers paying higher real (i.e., inflation adjusted) prices would help hold the strong demand of the last several years. Pork export volume in 2023 is forecasted to be down 2% from 2022. The strong U.S. dollar is a notable headwind to U.S. pork exports.

What are the drivers of change for pork producers in 2023?

Brown: Weather remains one of the potentially important drivers. Dry weather in key corn-growing regions of the U.S. will push corn prices even higher, while good weather could lead to record corn yields and reduce corn prices from the recent high levels the industry has experienced.

Kerns: We are currently in the eye of the hurricane where everything is seemingly calm, but the storm is on the horizon. The competition for acreage brought on by sustainable aviation fuel battling for acres with renewable diesel production will cause the biggest changes, maybe ever, in how we feed animals. The full impact will not be realized in 2023, but we will start the transition and it will not be a passing fad. Large-scale production increases are not on the horizon for a myriad of reasons, we would normally be concerned about expansion as the $64,000 question. Not this year. The impact of Washington DC policies as they relate to addressing carbon concerns and the unintended consequences therein will drive the discussion in 2023 and beyond.

McCracken: The expected Supreme Court decision on California’s Proposition 12 in early 2023 will add clarity around statewide regulation of sow housing. Regardless of the final court ruling, however, customers appear to be independently moving toward open-pen gestation housing and producers appear to be accelerating efforts to transition. This is a tough investment for some given recurring herd health challenges and a higher rate environment yet follows several months of strong returns which helps cushion the blow. Nevertheless, the higher investment hurdle and managerial burden of new systems when combined with the advancing age of U.S. hog producers, could prompt further consolidation in 2023. Packers strained by unpredictable hog supplies in 2022/23 are likely to redouble their efforts to ensure sufficient production in order to optimize plant efficiencies.

Schulz: I would be remiss if I didn’t mention all the possible usual suspects including domestic and export demand, any changes in the global epidemiological conditions of ASF, the economy, state and national policy debates, productivity/disease impacts, and weather/grain markets to name a few. More uncertainty likely alters the risk–reward relationship as producers consider expansion. The more risk and uncertainty producers see, for a given level of expected profit, the more likely they will go slow on expansion once it starts.

More from Farm Journal’s PORK:

9 Questions Pork Industry Leaders Challenge You to Think About

The Real Outcomes of the Swine Health Information Center in 2022

FDA Publishes 2021 Report on Antimicrobial Use in Livestock

2020 Livestock Market Outlook Roundup

Wed, 05 Oct 2022 18:44:12 GMT

The editors at AgWeb.com are looking at experts’ projections for a variety of commodities in 2020 to help you succeed and be profitable in the coming year. Here’s a look at what analysts are expecting for the upcoming year in the protein segments.

Tighter Cattle Supplies Will Boost 2020 Prices

Mother Nature threw enough obstacles at ranching in 2019 to discourage even the most hardened of cowboys. They responded by sending more heifers and cows to slaughter than expected, which has given analysts reason for optimism in 2020.

“Broadly speaking, 2020 is shaping up to be better than 2019 for cattle prices,” says Kansas State University livestock economist Glynn Tonsor. “The main drivers would be that we are slowing down the volume of production of animals in the system, and there’s some optimism that feed costs will be supportive and trade will hold its own if not improve.”

Read more .

Pork Outlook: Don’t Let Your Guard Down in 2020

African swine fever (ASF) and tariffs are topping the list of the biggest game changers in the pork outlook. Will 2020 be a similar story to 2019 with a new verse?

It all depends on China.

Read more .

3 Milk Market Factors To Watch In 2020

The factors that drive milk prices are often complex. Dairy farmers recently walked through a three-year cycle of low prices, and while they significantly improved in the fourth quarter of 2019, questions about 2020 remain.

Analysts say prices could range from $16 to $19.50 next year. Monitor the following three factors to determine price direction.

Read more .

Hay Acres on the Rise and Fall?

Wild weather patterns took a toll on the 2019 hay season causing the nation’s hay stock to reach its lowest level since 2012 and quality to be “hit” or “miss.” Looking to 2020, regional supply and demand will continue to be the driving force behind the swing in hay acres and prices.

“Due to poor-quality hay and challenging weather in 2019, I anticipate there is going to be some feed shortages for a lot of farmers going into 2020,” says Greg Bussler, deputy director at USDA’s National Agricultural Statistics Service. “Because of this shortage, I think next year there is going to be a strong demand for farmers in the Midwest to plant more acres to hay.”

Read more .

Visit AgWeb’s Market Outlooks page for a full list of our 2020 Outlook pieces.

2021 Livestock Market Outlook Roundup

Wed, 05 Oct 2022 18:44:12 GMT

The editors at AgWeb.com are looking at experts’ projections for a variety of commodities in 2021 to help you succeed and be profitable in the coming year. Here’s a look at what analysts are expecting for the upcoming year in the protein segments.

2021 Beef Outlook: New Challenges, New Opportunities

(Farm Journal)

Disruptions to the beef industry from the COVID-19 pandemic will likely linger into 2021, but the result may not be all bad for producers, Don Close, animal protein analyst at Rabo AgriFinance told AgriTalk.

Read more.

U.S. Pork Outlook: Will 2021 Be Different?

(Farm Journal)

Five respected economists in the pork industry share their insight on what’s ahead in 2021 and ways producers can make the most of new opportunities ahead.

Read more.

2021 Milk Price Outlook: Throw the Crystal Ball Out the Window

(Farm Journal)

Government intervention creates a level of uncertainty that makes a 2021 milk price forecast nearly impossible.

Read more.

USDA Forecasts Farm Sector Profits to Remain Above Average in 2022

Wed, 05 Oct 2022 18:44:12 GMT

USDA released its latest farm sector profit forecast on Thursday. According it’s estimates, farmers may fare better than previous years in many 2022 balance sheet boxes.

Net Farm Income

Net income, a broad measure of profits, is forecast by USDA at $147.7 billion in calendar year 2022, an increase of $7.3 billion (5.2%) in 2022 relative to 2021.

The 2021 value is an increase of $45.9 billion (48.5%) relative to 2020. When prior years are adjusted for inflation, net farm income in 2021 was at its highest level since 2013.

(Farm Journal)

Net farm income in 2022 would be $0.9 billion (0.6%) lower than in 2021 yet 42.1% above its 20-year average (2002–21) of $104.0 billion in inflation-adjusted dollars.

Net Cash Farm Income

USDA forecasts $168.5 billion in 2022, an increase of $22.1 billion (15.1%) relative to 2021. The 2021 value was $29.6 billion (25.4%) above 2020.

When adjusted for inflation, 2022 net cash farm income is forecast to increase by $13.5 billion (8.7%) from 2021 and be at its highest level since 2012.

Net cash farm income in 2022 would be 34.5% above its 2002–21 average of $125.3 billion. Net cash farm income encompasses cash receipts from farming as well as farm-related income (including government payments) minus cash expenses.

It does not include noncash items — including changes in inventories, economic depreciation, and gross imputed rental income of operator dwellings — reflected in the net farm income measure above.

Cash Receipts

From the sale of agricultural commodities, USDA forecasts cash receipts to increase by $91.7 billion (21.2%, in nominal terms) from 2021 levels to $525.3 billion in 2022.

Total crop receipts are expected to increase by $36.4 billion (15.3%) from their 2021 level following higher receipts for soybeans, corn, and wheat. Total animal/animal product receipts are expected to increase even more from the previous year, by $55.3 billion (28.3%), following increases in receipts for all categories of animal/animal products.

These increases would put total cash receipts in 2022 at their highest level on record, even after adjusting prior years for inflation.

Government Payments

While cash receipts overall are expected to increase in 2022, lower direct government payments and higher production expenses are expected to moderate income growth.

Direct government payments are forecast to fall by $12.8 billion (49.7%) from 2021 to $13.0 billion in 2022. The decrease is expected largely because of lower supplemental and ad hoc disaster assistance for COVID-19 relief in 2022 compared with 2021.

Total Production Expenses

This number, including operator dwelling expenses, are forecast to increase by $66.2 billion (17.8%) to $437.3 billion (in nominal terms) in 2022.

Spending on all categories of expenses is expected to rise with the largest increase in fertilizer-lime-soil conditioner expenditures, up 44%.

Average Net Cash Farm Income

USDA forecasts farm businesses to fall 3.3% from 2021 to $98,200 per farm in 2022 (in nominal terms). However, the regional average net cash farm income outlook is mixed.

For farm businesses located in the Northern Crescent region, average net cash farm income is forecast to increase in 2022, but it is forecast to decline for farm businesses in all other regions when adjusted for inflation.

Farm businesses specializing in dairy are expected to see the largest growth in average net cash farm income in 2022, while those specializing in wheat, cotton, and specialty crops are expected to see the largest declines in 2022.

Farm Sector Equity

Ag equity is expected to increase by $315.6 billion (10.4%) in 2022 to $3.34 trillion in nominal terms.

Farm sector assets are forecast to increase $337.5 billion (9.7%) in 2022 to $3.84 trillion following expected increases in the value of farm real estate assets.

Farm sector debt is forecast to increase by $21.9 billion (4.6%) in 2022 to $496.0 billion in nominal terms but it is forecast to fall by 1.2% when adjusted for inflation.

Debt-to-asset levels for the sector are forecast to improve from 13.56% in 2021 to 12.93% in 2022.

Working capital, which measures the amount of cash available to fund operating expenses after paying off debt due within 12 months, is forecast to fall by 2.6% in 2022.

For more details, visit USDA ‘s site.

More on ag business:

Why You Need to Understand Adjusted Gross Income
USDA Doubles Down on Equipment Gains

2022 Weather Outlook: La Niña’s Encore

Thu, 30 Dec 2021 19:05:36 GMT

How will she impact drought conditions in 2022?

She’s back. La Niña has developed for the second consecutive year and is expected to last into early 2022.

“This could lead to a return of warm and dry conditions in the new year from southern California to the Southern Plains,” says Brad Rippey, USDA meteorologist. “Areas to the North may fair better, and Midwest areas could turn stormy this winter.”

How La Niña impacts and changes the current drought landscape will be key.

“As of early December, more than 55% of the country is experiencing drought,” Rippey says. “It’s the highest of almost nine years.”

(Farm Journal)

Regions with early-year dryness could be problematic for the Corn Belt, adds Eric Snodgrass, Nutrien Ag Solutions principal atmos-pheric scientist.

“I’ll be watching from Texas to South Carolina because if we see drought development there, it could be an early-season indicator drought could expand North in the growing season,” he says.

(Farm Journal)

WHAT TO WATCH

Beyond La Niña, Snodgrass is watching water temperatures in the Gulf of Alaska.

“The waters there are very cold,” he says. “If they stay cold until next spring or summer, I don’t like that for the Midwest. That’s because there is a decent correlation with cold water in the Gulf of Alaska and the potential for drought in Minnesota and nearby states.”

Here are additional 2022 outlook stories:

2022 Soybean Planting Projections are a Moving Target, Prices will Whipsaw

Drought and Demand Drive the 2022 Wheat Outlook

2022 Outlook: Why Corn’s Sweet Spot May Be Below $6 in the New Year

2022 Outlook: Pork Industry Rises from the Rubble

Don’t miss Eric Snodgrass’ preview of 2022 weather at the Top Producer Summit. Register now at TPSummit.com.

Cattle Outlook Optimistic for 2022

Thu, 30 Dec 2021 16:00:54 GMT

Optimism is building in cattle country that 2022 will finally deliver a long-anticipated bull market for cattle. Ranchers and cattle feeders saw markets turn higher in the final weeks of 2021, and while many of the challenges facing the industry last year will continue, most analysts suggest improving prices are a trend that will continue beyond this year.

“Demand for beef, both domestically and in our exports markets, was strong throughout 2021 and will continue,” says John Nalivka, Sterling Marketing, Vale, Ore. “With declining cattle numbers, we’re seeing things fall into place for better cattle markets the next couple of years.”

Market-ready supplies of fed cattle have tightened and packers are actively chasing cattle for the first time in many months. In general, cattle prices are higher now compared to a year ago and are expected to continue improving in 2022.

(Farm Journal)

Such sentiment is shared by industry analysts across the country who see robust demand continuing as the industry has worked through many of the pandemic-related challenges. CattleFax CEO Randy Blach said the cattle cycle should have seen a peak in 2020, but it was pushed back by pandemic-related slaughter bottlenecks.

“This has been a long, hard-fought battle,” Blach said. “Retail beef prices have gone up substantially and demand has been out of this world. Cattle prices just haven’t shared in that move up until now.”

Demand has been very strong for all proteins, including pork and poultry, he said.

“All the proteins have benefitted from this demand push that we’ve experienced.”

Demand may be good, but tightening supplies are the primary factor influencing analyst’s optimism.

“Cattle numbers are declining as low prices and drought have both led to herd liquidation over the past two years,” Nalivka says.

In fact, U.S. beef cow slaughter was 10% higher in 2021, and that followed a 3% increase from 2020.

“We saw the highest beef cow slaughter last year since the drought year of 2011,” Nalivka says. “From 2011 to 2013 the drought, beginning in the Southwest and moving to the Midwest, pushed the beef cow herd numbers in 2014 to its lowest point since 1952.”

With dairy cow slaughter up roughly 3% in 2021, total cow slaughter posted a 6% increase and the highest since 1996. With those slaughter numbers, Sterling Marketing projects the 2022 beef cow inventory to be 30.2 million, a reduction of roughly 1 million cows, or 3%.

Additionally, heifer slaughter in 2021 was the highest since 2011. Nalivka projects 2022 heifer slaughter to be 4% lower than 2021 and just marginally higher than during 2012.

“The higher beef cow and heifer slaughter numbers that we saw in 2021 mean reduced cattle numbers for 2022 and likely through 2024 are evident,” Nalivka says. My forecast for the January 1 total cattle inventory is 91.25 million, down 2% from the beginning of 2021, the lowest since 2015, and 475,000 more than the beginning 2012 cattle herd.”

A reduction of the breeding herd will translate into a reduction in cattle slaughter. Nalivka expects total slaughter to be down 2% in 2022 after the 3% increase found in 2021.

“I also expect carcass weights to decline this year as fed cattle numbers decline and feedlots are increasingly current with showlists and marketing cattle into a stronger market,” Nalivka said. “Assuming a 1% year-over-year drop in carcass weights, beef production in 2022 will be down 3%.”

Overall, Nalivka projects the total red meat and poultry supply, per capita, to decline about 0.5% to 220.7 pounds in 2022.

“Even if demand weakens somewhat, prices across the beef complex – including fed cattle, feeders and calves – will post notable gains during 2022,” Nalivka says. “That is further supported by global beef demand.”

In fact, beef export values soared last year and were expected to exceed $10 billion, according to USDA.

Beef exports reached 115,709 metric tons in October, up 7.5% from a year ago, while export value climbed 48% to $956.9 million – the second-highest total on record, behind August 2021. Through the first 10 months of the year, beef exports totaled 1.19 million metric tons, up 17% from a year ago. Export value increased 38% to $8.53 billion, surpassing the 2018 record ($8.33 billion) with two months to spare.

U.S. Meat Export Federation president and CEO Dan Halstrom acknowledged red meat exports face transportation challenges and rising input costs, yet he expected red meat exports would reach about $18 billion in 2021.

“While global demand is tremendous and we are cautiously optimistic about further growth in 2022, supply chain pressures are not easy to overcome and are a growing concern for exporters and their international customers,” Halstrom said.

2022 Soybean Planting Projections are a Moving Target, Prices will Whipsaw

Thu, 30 Dec 2021 15:30:27 GMT

With input prices trending higher for corn, some traders in recent weeks have predicted more crop acres could move to soybeans in 2022. Not everyone is on-board with that projection, however.

Arlan Suderman, chief commodities economist for StoneX Group, is looking at production in South America as he ponders 2022 U.S. soybean plantings.

“I think I’m going to struggle (to predict U.S. acres) particularly because Brazil looks like they’re going to have a big crop, and we have yet to see what Argentina is going to do,” Suderman says.

For now, he predicts U.S. farmers will plant 89 million soybean acres next spring – 1.5 million acres above USDA’s current forecast of 87.5 million planted acres.

“I think that 89 million is kind of the top right now for soybean acreage, given soybean’s current price relationship with corn,” Suderman says.

Scott Irwin, University of Illinois agricultural economist, is not optimistic that soybean plantings will go as high as what either Suderman or USDA anticipate. If anything, Irwin expects movement in the opposite direction, based on his economic models which indicate 2022 soybean planted acres in the U.S. will dip to 85.5 million acres. That’s 1.7 million planted acres less than the 87.2 million acres farmers planted this past spring.

(Farm Journal)

Plenty of time for acreage shifts
With the heart of planting season still months away, soybean acreage forecasts have plenty of time to move higher or lower.

Like Suderman, Jon Scheve, Marketing Against the Grain, is keeping a close eye on the Brazil soybean crop. Scheve says dry weather conditions that moved into the southern third of the country’s soybean growing area this past week could exact a yield toll there that would benefit the U.S.

“Over the next 60 days most of Brazil will be in the heart of the flowering stage and the beginning of the pod-fill stage,” Scheve reported on Monday. “Two-week forecasts indicate limited precipitation, and many traders think it might cause a yield reduction.”

In addition to weather, export opportunities will shape market opportunities and U.S. farmers’ planting decisions. Pro Farmer reported on Monday that cumulative soybean export inspections are running 22.8% behind a year ago and that USDA projects soybean exports will decline 9.5% from 2020/21.

(Farm Journal)

“We still have some soft demand coming into China because of poor hog feeding margins, and we’ll need to monitor that,” Suderman adds.

Which way will prices go?
The November USDA World Agricultural Supply and Demand Estimates (WASDE) report pegs the season-average soybean price forecast for 2021/22 is $12.10 per bushel. The price forecast went unchanged in the December report.

Irwin tells farmers to anticipate lower prices further into the new year. His economic models show soybeans at $11 per bushel for 2022/23.

Chip Flory, Farm Journal economist and AgriTalk host, says farmers can expect soybean prices to be whipsawed by a transitioning soy market in 2022.

“Because of renewable diesel and investment in U.S. soybean crush, traders are getting used to the idea of crushing for oil and potentially being buried by meal,” he says. “I’d like to claim knowledge of how this will ultimately impact soybean prices, but it’s a transition I haven’t seen in my 35 years of watching markets.”

Flory shares three trends he’s watching:
1. A year ago, upside price momentum was building. At the beginning of December, “sideways” was the only way to define the trend in new-crop soybean futures.
2. A year ago, China was buying more soybeans as a hedge in case La Niña clipped Brazilian production. This year, China importers appear confident in Brazil’s soybean supply and are waiting for lower U.S. prices to fill demand holes.
3. A year ago, the markets were battling for acres. This year, corn’s rising input prices has the soybean market on the defensive to prevent a big-time switch to soybeans in 2022.

Here are additional 2022 outlook stories:

Drought and Demand Drive the 2022 Wheat Outlook

2022 Outlook: Why Corn’s Sweet Spot May Be Below $6 in the New Year

2022 Outlook: Pork Industry Rises from the Rubble

How High Can Farmland Prices Go?

Wed, 29 Dec 2021 19:43:48 GMT

Prepare for a dynamic farmland market in 2022

The supply-and-demand equation for farmland has shifted. For the past few years, a low supply was met with weaker but adequate demand. So, prices were supported and somewhat steady. In 2021, higher commodity prices and inves-tor interest boosted demand and supply followed suit.

“Over the past 12 months, most areas of the Grain Belt have experienced an increase in the amount of land sold,” says Randy Dickhut, senior vice president of real estate operations for Farmers National Company. “A number of states have seen a 10% or more bump in the number of transactions.”

In 2021, R.D. Schrader, president of Schrader Real Estate and Auction Co., says his firm had twice as many sales above $10,000 per acre as they did in 2019 and 60% more sales above $10,000 per acre than 2020.

“One two-week stretch, ending October and beginning November, provided four sales over $13,000 per acre in In-diana and Ohio,” he says. “It was not unheard of for land to bring 150% of what it had been appraised for in the last year, especially if recreational land was included.”

MORE RECORDS AHEAD?

During the second half of the year, it seemed like every sale was a new record, says Doug Hensley, president of real estate services for Hertz Farm Management. Will this incredible price strength continue?

“In 2022, we may see some new records, but it won’t be at every sale like it seemed to be in 2021,” Hensley says. “I expect the volume of sales to moderate, as some demand has been satisfied. Plus, in 2022, we’re seeing smaller cash flow margins and the potential for higher interest rates, both of these are headwinds compared to 2021.”

At this point, if the fundamental factors supporting land prices continue in the current direction, the market should be firm to somewhat higher, Dickhut says.

“But if any of these underlying factors change or unexpected world or national events come about, the land market could pause and even change direction,” he says. “For now, the outlook for the land market is positive as farmland continues to be a safe, long-term investment.”

(Farm Journal)

Here are additional 2022 outlook stories:

2022 Soybean Planting Projections are a Moving Target, Prices will Whipsaw

Drought and Demand Drive the 2022 Wheat Outlook

2022 Outlook: Why Corn’s Sweet Spot May Be Below $6 in the New Year

2022 Outlook: Pork Industry Rises from the Rubble

2022 Outlook: Why Corn’s Sweet Spot May Be Below $6 in the New Year

Tue, 21 Dec 2021 15:24:38 GMT

Corn prices have been on a volatile ride in 2021. Since the beginning of January to today, the December 2021 corn contract rose 34.5%. With a high of $6.36 ½ set on May 7, prices have continued to bounce across the board in a range of more than $1.

(Farm Journal)

As analysts turn their attention to next year, which is creating more of a bullish outlook: corn or soybeans? The answer is mixed, but even with a tapered expectation of corn exports in the New Year, analysts are more optimistic when it comes to the price picture for corn.

“I’m a little bit softer on export demand. China has a lot of corn on the books, but they’re not taking shipment of it. That’s a concern until they start to do so that can always be rolled into the next year,” says Arlan Suderman of StoneX Group.

Despite the concern over the current status of corn exports, AgriTalk Host Chip Flory says corn seems to be finding true demand. He says total corn demand this year was estimated up slightly from last year in USDA’s November Supply and Demand Report.

“Most impressively, that estimate comes with the national average on-farm cash corn price expected to be up 90¢ from 2020-21, and more use at a higher price indicates a ‘real increase’ in demand,” says Flory.

The highlights for Flory include:

Feed and residual use has found a home in the 5.6- to 5.7-billion-bushel range.
Exports won’t reach last year’s level and will fall about 250 million bushels as China finds alternative feeds and alternative sources for feed grains.
The difference is ethanol.

(Farm Journal)

Input Dilemma

Even with a dimmer outlook on corn exports in 2022, Suderman says the key metric to watch is the price of inputs. He says as long as inputs remain high, with some even at record levels, he thinks the price of corn could also remain strong.

“But as far as the U.S. corn market, its primary objective in the months to come is to make sure we plant enough corn with these high fertilizer prices,” he says. “The price of corn has to remain at a level the farmer can afford to pay, and fertilizer prices keep going up. That means the corn price has to go up. But if fertilizer prices break that allows the corn price to break in availability supplies is a factor there too. But we’re not expecting that to be a major problem here in the United States. It will be though and some other competitor nations.”

Matt Bennett of AgMarket.net expects the acreage picture to remain competitive in 2022, as input prices and availability will be a tipping point on acreage for next year. But even with the horror stories about fertilizer prices and availability, he still thinks farmers won’t make a mass exodus away from planting corn. Reports already indicate areas like Missouri are seeing 140% of normal anhydrous ammonia applications for this time of year. And in northeast Iowa, retailer say more nitrogen has been applied this fall compared to last fall. Bennett points out an uptick in fall applied nitrogen this year has been very regional.

“The producers that were hesitant to prepay anhydrous, now they’re betting on not only having the ability to put it on in the spring due to mother nature, but they’re going to be betting on the fact that it’s going to go down from these lofty levels we currently see. So, I think from an acreage standpoint, I still think that 90 million [acres] for soybeans and 90 millions [acres] for corn is what we’ll see in 2022,” says Bennett.

Corn Still Pencils

Flory points out the input price rise seen the second half of 2021 has growers sharpening their pencil and running the numbers on potential returns on 2022 corn and soybeans. At the end of November – despite the rise in fertilizer prices – corn was holding its own.

“Potential net returns for corn in the Midwest were good enough to keep growers committed to crop rotations for 2022,” says Flory. “However, corn’s input costs were also high enough to discourage corn acreage expansion. Unless corn can increase plantings from 2021, odds are corn carryover will remain tight into the 2022-23 marketing year – and likely into the 2023-24 marketing year.”

The Crude Factor

Another factor that could fuel corn prices into the New Year is the price of crude oil. Typically, strong oil prices translate into strong corn prices, and Suderman says even though that may continue to be the case in 2022 he thinks volatility will still be at play.

“I think particularly as long as inflation stays high and crude oil in the energy sector is a big part of that,” says Suderman. “That means that we manage supply and demand at a higher price level than we otherwise would do so. And so we can still have sell offs, we can still have that opportunity, but it means that we see the buying come in at a quicker level to kind of provide some underlying support for this market. “

Searching for Support

Suderman says when you look at the energy situation across the globe, plus potential acreage shakeups in some areas, corn prices could find support in 2022.

“So I think as we go forward, the world’s kind of stays tight on corn for another year with the fertilizer problems that we have with reduced acreage in Europe and in the Black Sea region, reduced fertilizer application rates in Brazil and their Safina crops and dryness risk. I think we stay in there and we keep some support underneath the corn market going forward. And I think it’ll present some opportunities for the US farmer,” Suderman adds. “

“December 2022 corn futures posted a contract high on November 24, 2021, at $5.65. Most market regions sported basis levels that supported $5.25-plus, fall 2022 delivery cash bids,” Flory adds. “Throughout calendar year 2021, I heard Pro Farmer Editor Brian Grete say countless times, “Corn is too cheap at $5 and too high-priced at $6.” I think I’ll hear it from Brian several times in the year ahead, as well.”

2022 Outlook: Pork Industry Rises from the Rubble

Mon, 20 Dec 2021 18:19:44 GMT

The pork industry is still evolving out of the rubble of the coronavirus pandemic, says Lee Schulz, an economist at Iowa State University. But certainly, more optimism abounds in the U.S. pork outlook heading into 2022 than the industry experienced a year ago.

“With the world in the throes of the COVID-19 pandemic, no one knew how things were going to fall out a year ago,” says Joe Kerns, president of Partners for Production Agriculture. “Who could blame us?”

Although the U.S. is still feeling the impact of COVID-19, it is not surprising us any longer, Kerns adds.

“We are trying to understand the ramifications rather than having all kinds of questions in the air, specifically as it relates to the animal supply relative to shackle space,” Kerns says.

Economists believe pig farmers have every reason to be more confident going into 2022 so long as the U.S. can keep foreign animal diseases such as African swine fever (ASF) out of the country.

“Biosecurity is likely to be top of mind in 2022 — not only to keep African swine fever from entering the U.S., but also to address many of the herd health challenges we saw in the past year,” says Christine McCracken, executive director animal protein at Rabobank.

U.S. hog prices depend on domestic meat demand as well as the ability of the industry to export pork out of the country, adds Scott Brown, an economist at the University of Missouri. Strong exports of U.S. pork to China will move hog prices higher, while a reduction could make prices move lower.

Structural drivers such as labor shortages and inflation will continue to keep the 2022 pork outlook interesting.

“Despite rising pay, finding employees is more and more difficult. It’s a labor shortage, and I don’t use the word shortage lightly. The robust demand for agricultural labor faces a backdrop of increasingly threatening macroeconomic and demographic trends,” Schulz says.

These four economists weigh in on the 2022 pork outlook and share their advice for pig farmers heading into the new year.

What is your 2022 pork outlook?

Brown: Hog prices in the first half of 2022 should be reasonably good as pork supplies remain below year-ago levels. Prices probably won’t reach 2021 levels but should keep producers in the profitable range. The second half of 2022 is less certain as supplies expand, placing downward pressure on prices. For the year, hog prices should be around 10% lower than 2021.

Kerns: My outlook is cautiously favorable. I think we’ve got a good setup. There are things we need to do – specifically, biosecurity to keep ASF at bay -- but I think we have a very promising outlook. On a scale of 1 to 10, I give the pork outlook an 8. Input costs moved higher in 2021 and should moderate a bit in 2022. The real key is, and always be, what happens to revenue. The forward curve for pork looks good, but the trick is turning the demand for pork into demand for pigs to allow the producer to participate.

McCracken: We expect another strong year as the supply of pork is expected to be fairly well balanced with demand – which typically supports a healthy margin environment for producers and packers. That isn’t to say the industry will not face challenges. The same cost pressures we saw this year, including labor, energy and distribution, are still going to be issues in 2022 and in some cases, possibly worse. Regulatory constraints will also raise costs in the year ahead – not only in California with Proposition 12, but with line speeds, immigration and water use. Overall inflation in 2022 will make the business more challenging for producers and consumers, which could ultimately impact demand for pork. The upside of rising costs and labor constraints is a general reluctance by producers to rapidly expand production, which should extend this period of profitability for the industry.

Schulz: Swine inventory expansion or contraction seem equally likely given current and potential market signals. Costs were a headwind to producer returns in 2021. According to the Iowa State University model for farrow-to-finish production, costs were estimated to have increased 26% or $17 per carcass hundredweight (cwt) in 2021 compared with 2020. This translates into an increase of $35 per head in 2021 compared with 2020. Feed costs were a big part of this, but pork producers use numerous inputs and services and most all were up notably in 2021. Many non-feed variable costs could be up again in 2022. Propane prices, for instances, are expected to jump this winter. Higher hog prices have helped offset the rise in costs. On an annual basis, hog prices were 50% higher in 2021 than in 2020. Moderation in costs and revenues seems imminent for 2022. Costs are forecasted to decrease 5% from 2021 levels. Still, on an annual basis, costs are expected to remain quite elevated relative to historical levels. Hog prices are forecasted to decrease 13% from 2021 levels.

What will be the drivers of change for pork producers in the year ahead?

Brown: Pig inventory levels and productivity growth will be supply-side drivers in the year ahead. The last Hogs and Pigs Report was bullish regarding current hog inventories. Increases in sows farrowed or additional sow inventory could stress processing capacity in late 2022. U.S. consumer meat demand and the level of pork imports by China will be the big demand drivers in 2022.

Kerns: We’ve barely begun to understand the ramifications of the shift to renewable diesel fuel. Soybean oil is a highly coveted lipid that will more than likely move into further refinement with the renewable diesel concept. As a feeding industry, we are not going to have as much fat at our availability and what we will have will be more expensive. The flipside? We’re going to have an abundance of soybean meal available that should be competitively priced. On the revenue side, we’re tracking favorably. We’re compromised now with the labor situation in plants preventing us from conversion. Producers will receive a bit lower value for the product than they normally would if we had a full labor force. Unfortunately, I don’t see that changing. With the exception of a border closing disease, we’ve got every reason to be optimistic about how we look from the revenue side and even the input side.

McCracken: There are a few structural drivers impacting the industry and it is difficult to tease out which are cyclical and which are likely to have a lasting impact. Herd health challenges and the threat of ASF are likely to drive accelerated investment in infrastructure and changes in management. But to be successful, we still need labor – and that is a constraint with no easy fix. Labor will remain the limiting factor in 2022. Competition for workers is fierce and that will not only force the industry to pay more to attract and retain talent, but it will also change how the industry views labor going forward. A shortage of drivers, workers at our plants or servers at our restaurants will not only add cost, but it will ultimately impact the global competitiveness of U.S. pork.

Schulz: I would be remiss if I didn’t mention all the possible usual suspects, including domestic and export demand; any changes in the global epidemiological conditions of ASF; the economy, state and national policy debates; productivity/disease impacts; and weather/grain markets. Some of these are obviously interrelated. The challenging labor situation certainly needs to be on this list. One thing clearly revealed by the COVID-19 pandemic is heightened vulnerability where labor is most involved.

If you could offer up one piece of advice to producers in 2022, what would it be?

Brown: Risk management will be more important than ever, and producers should prepare for continued market uncertainty. Both hog prices and input prices will be prone to volatility. Feed costs have been moderating for several weeks but future price moves will hinge on the size of the South American crop and U.S. corn and soybean plantings next spring. Fertilizer prices are making that planting decision more difficult here in the U.S. Next year, U.S. hog prices will hinge on domestic meat demand strength as well as the ability to export pork out of the country. China will play a key role again in 2022. Strong exports of U.S. pork to China will move hog prices higher, while a reduction could make prices move lower.

Kerns: The pork production community has a relatively recently revised tool from the government available in the form of subsidized insurance. I think every single producer owes it to themselves to participate in these markets, to take advantage of a tool they might not know about but is absolutely becoming our go-to methodology to protect revenue into the future. The LRP, which stands for livestock risk protection, or LGM, which stands for livestock gross margin, are two different programs that went through very significant changes in 2020. They did so without much fanfare because we were in the throes of COVID-19 in an unprofitable scenario. As we work through 2021, and look forward, both of these programs continue to become more robust. The current administration wishes to enhance them. I think they are fantastic tools to protect what is already on a forward curve. If we do get some aberration, it provides pork producers an economical way to protect and create a viable future.

McCracken: Be prepared for disruption. There is a growing list of factors that could derail the industry, but with planning and risk management you can limit the severity of their impact on your operations. The U.S. reliance on global markets for 27% of demand remains a huge vulnerability. The loss of any one market can be managed, but more widespread disruption remains a risk. Part of the answer lies in the diversification of exports, but there also needs to be a relentless focus on biosecurity. Explore every tool to limit your exposure or consider diversifying your risk.

Schulz: Margins are expected to tighten in 2022. Be prepared to make the best of the situation by maximizing pricing opportunities and minimizing losses. Consider all tools and strategies available to accomplish price risk management goals. For decades, it seemed price risk management meant taking a position(s) in the customary futures or options markets. These are still available and can be very effective. There are also several enhanced or new tools available, including Livestock Risk Protection (LRP), Livestock Gross Margin (LGM) and CME Pork Cutout futures and options contracts.

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Supply Chain Jenga: Be Careful What Piece You Remove Next

2021 U.S. Pork Outlook: Volatility and A Little Optimism

Tue, 22 Dec 2020 22:29:00 GMT

The industry appears to be set for another year of large hog supplies that will stretch processing capacity and pork demand, says University of Missouri economist Scott Brown. Demand growth will need to continue in 2021 and any slowdown could make 2021 a tough year, he cautions.

Five respected economists in the pork industry share their outlook on what’s ahead in 2021.

Dan Basse, president of AgResource Company
AgResource’s outlook for the U.S. pork industry is for production to be up 2.4% in 2021 while input prices like corn/soymeal rise, thereby hurting margins. China is rapidly expanding its hog herd which will curtail red meat imports and raise their soybean/corn imports in the years ahead. Both will combine to squeeze U.S. pork producer margins. China’s hog carcass price should relax with time to equal other world exporters sometime late in 2021. How much China curtails its meat imports depends on its political adherence to Phase 1. U.S. corn/soybean prices only relax with record large South American crops. We forecast U.S. 2020/21 soybean/soymeal supplies to be exceptionally tight. Pork producers need to be locking down feed costs into late winter on strong CBOT corrections. U.S. domestic pork demand is surprising record large. Post-COVID-19 demand has been the bull driver of product prices since May. The demand does not appear to be slowing down. Americans are consuming more meat at home than with foodservice.

Scott Brown, economist at University of Missouri
What is known with relative certainty is supplies of pork will be large in 2021. While the most recent Hogs and Pigs Report showed a 1.5% decline in the breeding herd as of Sept. 1, productivity is likely to grow by a similar amount, canceling out the reduction in fewer sows. Even if steeper cuts to the breeding herd are made before the end of 2020 and pork production declines in 2021 relative to this year, production will still be higher than any year prior to 2020. The demand outlook is mixed, with longer-term consumer response to this year’s COVID-induced recession yet to be determined. While meat and pork demand at grocery outlets has been brisk, many restaurants remain limited by COVID restrictions. The rate at which full restaurant re-opening takes place is one of many unknowns, along with how stressed consumer finances will be next year, depending upon further federal government stimulus.

Although it will still be some time before China is not importing large amounts of pork, the recent growth in exports will be difficult to match in 2021. All the unknowns on the demand side will lead to volatility in hog markets. While the markets will likely afford some opportunities to lock in profits for 2021, the year could be a tough one financially. While it is impossible to perfectly pick the highs, knowing opportunities of relatively higher hog prices are likely to present themselves during the year and being poised to lock in those prices for at least a portion of your production can make a big difference in surviving an overall difficult financial environment.

Dermot Hayes, economist at Iowa State University
It should be a profitable summer and a modestly profitable year, but that is what we thought this time last year as well.

Christine McCracken, executive director – animal protein at Rabobank
It is likely to be another year of volatility in the U.S. pork industry – but it would be difficult to top 2020. The industry is ending the year on a high note. Strong export demand following the discovery of African swine fever (ASF) in Germany and the subsequent ban on German exports into key markets creates an unexpected opportunity for U.S. processors. Exports into Japan, South Korea and China are expected to remain supportive to prices to start the year, but remain unpredictable – especially given the current political climate and the questions around whether Germany can win less restrictive trade terms. Recent market strength has allowed U.S. producers to limit losses in 2021, but they need to remain vigilant in controlling costs and looking for opportunities to manage risk.

John Nalivka, president of Sterling Marketing
I am optimistic, but preface that by saying where we are today is a result of the strong export market which is largely driven by our exports and sales to China. I anticipate continued relatively tighter supply and hog numbers into the first quarter. As we go into the second quarter, that supply of hogs is going to grow because I think the industry has adjusted, with producer margins well into the black now and making money. I’ve got hog numbers up 9% in the second quarter, as we begin to see some growth this fall with increased farrowings, that’s still against a 6% drop in the second quarter of 2020. Assuming everything continues to run smoothly with regard to the market, then we’ll get producers back on that growth rate they were at prior to COVID-19, generally 3% to 4% growth year over year in each of the quarterly inventories. My price forecast generally runs ahead of 2020. During the first half, that’s not very difficult, obviously. When we get into the fourth quarter, I see prices start to weaken some so that basically leaves me with hog prices relatively close to where we were in 2019.

This is the first story in a three-part series. Read the full series .

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Don’t Assume Anything in 2021, Economists Advise Pork Producers

Hard Questions the Pork Industry Needs to Tackle in 2021

U.S. Pork Outlook: Will 2021 Be Different?

Mon, 14 Dec 2020 16:00:21 GMT

Many people would like to push fast forward to 2021 and forget 2020 ever happened. Will 2021 be a better year for the U.S. pork industry? Most economists think so, but they’ll be the first to admit that’s what they thought last year.

The industry appears to be set for another year of large hog supplies that will stretch processing capacity and pork demand, says University of Missouri economist Scott Brown. Demand growth will need to continue in 2021 and any slowdown could make 2021 a tough year, he cautions.

“Keeping all the pieces in balance and working together is the key,” says John Nalivka, president of Sterling Marketing. “Capacity is more than just how much space you have to bring hogs into the plant and slaughter them, it also has to do with capacity beyond that – on further processing and fabrication.”

When everything is working really well, the highly efficient U.S. pork production system is great, he says. But as the industry saw in 2020, all it takes is one kink in that system to create upheaval.

Although no one holds a crystal ball to shed light on exactly what a new year will bring, Christine McCracken, Rabobank executive director – animal protein, says, “The disruption of the past year gave everyone a preview of just how bad things can get when plants are closed, customers are lost, labor is compromised, or export markets are lost. For the most part, the industry came through the experience with a few bruises and limited lasting damage.”

Five respected economists in the pork industry share their insight on what’s ahead in 2021 and ways producers can make the most of new opportunities ahead.

What is your 2021 pork outlook?

Basse: AgResource’s outlook for the U.S. pork industry is for production to be up 2.4% in 2021 while input prices like corn/soymeal rise, thereby hurting margins. China is rapidly expanding its hog herd which will curtail red meat imports and raise their soybean/corn imports in the years ahead. Both will combine to squeeze U.S. pork producer margins. China’s hog carcass price should relax with time to equal other world exporters sometime late in 2021. How much China curtails its meat imports depends on its political adherence to Phase 1. U.S. corn/soybean prices only relax with record large South American crops. We forecast U.S. 2020/21 soybean/soymeal supplies to be exceptionally tight. Pork producers need to be locking down feed costs into late winter on strong CBOT corrections. U.S. domestic pork demand is surprising record large. Post-COVID-19 demand has been the bull driver of product prices since May. The demand does not appear to be slowing down. Americans are consuming more meat at home than with foodservice.

Brown: What is known with relative certainty is supplies of pork will be large in 2021. While the most recent Hogs and Pigs Report showed a 1.5% decline in the breeding herd as of Sept. 1, productivity is likely to grow by a similar amount, canceling out the reduction in fewer sows. Even if steeper cuts to the breeding herd are made before the end of 2020 and pork production declines in 2021 relative to this year, production will still be higher than any year prior to 2020. The demand outlook is mixed, with longer-term consumer response to this year’s COVID-induced recession yet to be determined. While meat and pork demand at grocery outlets has been brisk, many restaurants remain limited by COVID restrictions. The rate at which full restaurant re-opening takes place is one of many unknowns, along with how stressed consumer finances will be next year, depending upon further federal government stimulus.

Although it will still be some time before China is not importing large amounts of pork, the recent growth in exports will be difficult to match in 2021. All the unknowns on the demand side will lead to volatility in hog markets. While the markets will likely afford some opportunities to lock in profits for 2021, the year could be a tough one financially. While it is impossible to perfectly pick the highs, knowing opportunities of relatively higher hog prices are likely to present themselves during the year and being poised to lock in those prices for at least a portion of your production can make a big difference in surviving an overall difficult financial environment.

Hayes: It should be a profitable summer and a modestly profitable year, but that is what we thought this time last year as well.

McCracken: It is likely to be another year of volatility in the U.S. pork industry – but it would be difficult to top 2020. The industry is ending the year on a high note. Strong export demand following the discovery of African swine fever (ASF) in Germany and the subsequent ban on German exports into key markets creates an unexpected opportunity for U.S. processors. Exports into Japan, South Korea and China are expected to remain supportive to prices to start the year, but remain unpredictable – especially given the current political climate and the questions around whether Germany can win less restrictive trade terms. Recent market strength has allowed U.S. producers to limit losses in 2021, but they need to remain vigilant in controlling costs and looking for opportunities to manage risk.

Nalivka: I am optimistic, but preface that by saying where we are today is a result of the strong export market which is largely driven by our exports and sales to China. I anticipate continued relatively tighter supply and hog numbers into the first quarter. As we go into the second quarter, that supply of hogs is going to grow because I think the industry has adjusted, with producer margins well into the black now and making money. I’ve got hog numbers up 9% in the second quarter, as we begin to see some growth this fall with increased farrowings, that’s still against a 6% drop in the second quarter of 2020. Assuming everything continues to run smoothly with regard to the market, then we’ll get producers back on that growth rate they were at prior to COVID-19, generally 3% to 4% growth year over year in each of the quarterly inventories. My price forecast generally runs ahead of 2020. During the first half, that’s not very difficult, obviously. When we get into the fourth quarter, I see prices start to weaken some so that basically leaves me with hog prices relatively close to where we were in 2019.

What is your advice for producers in 2021?

Basse: U.S. pork producers need to be thinking forward about margins amid the uncertainty of China import demand. Lock down profit margins when offered in coming years.

Brown: Do not pass up opportunities to eliminate at least a portion of the price risk you face in both feed and hog prices. 2021 could be another year where feed costs stay low and hog prices remain profitable, but there remains risk in both sides that should be at least partially minimized. In addition, start thinking now about 2022 and beyond. How can your operation survive in a world without large increases in the demand for U.S. pork exports? The U.S. is likely to ship about 2 billion more pounds of pork in 2020 relative to the average levels of 2015-2017. This amounts to about 7% of total U.S. pork production. If full ASF recovery is achieved in the next 12 or 18 months in China and other markets, can the U.S. industry remain at its current size and still be profitable? What changes to your operation will allow for financial stability and not just survival if demand suffers a downturn in the next two years?

Hayes: Sell more hogs on the carcass price and fewer on the negotiated market. Use the futures or one of the subsidized insurance products to lock in or protect positive margins when possible.

McCracken: Make a plan. 2020 has been a very trying time for many – one that I hope we don’t have to repeat any time soon. But oftentimes when an industry is seriously challenged, it learns its vulnerabilities. I would proactively address those weaknesses whether that is by managing risk, strengthening your balance sheet or finding new markets for your pigs - you can limit the financial impact of another disruption. Having a plan before you need it and when you still have a choice, is a significantly better option than being forced to make tough decisions in the middle of a crisis.

Nalivka: Do not assume anything. We came into this year and who would have thought that by the latter part of April, things would turn into such a wreck? Be aware things can change rapidly and have your financial house in order. When these things happen, you have to manage risk. Managing risk includes the market, production risk and anticipated shortfalls. You have to ask yourself, “Am I prepared to work through that and manage the risk that I will face as a result of that?”

What is the most important question the pork industry needs to ask itself now?

Basse: How long will China import demand persist with their hog herd in dramatic expansion?

Brown: How does the U.S. pork industry adjust to a potential slowdown in the growth of exports? There are many signals pointing to a tougher period to continue to grow exports and the recent expansion seen depends critically on China. The soybean industry experienced the effects of depending on one market too heavily and the pork industry should be planning a strategy if the same issue occurs. China’s recent self-sufficiency goals in pork may not be attainable quickly but they should not be ignored.Hayes: What do we do when Chinese pork production recovers in 2023 or 2024? We need alternative export markets.

McCracken: What will the industry look like in 10 years and will my operation be competitive? The pace of change in the industry is accelerating, as technologies improve and markets become more global. Will producers adapt to this new environment and meet customer expectations around traceability, sustainability and quality? What is already clear is that the hurdles keep getting higher. Packers are also facing a more challenging operating environment, with greater regulatory scrutiny, new global competition, an aging workforce and continuously evolving needs of the consumer. Ultimately, the industry needs to consider whether it will continue to compete on cost or if new tools and technologies might offer new opportunities for growth.

Nalivka: How long will China be in the market to the extent they are, representing 31% of our U.S. pork exports? China won’t always depend upon the U.S. to the extent they are now. Are there other markets that we can continue to grow as China gets its herd back in production and doesn’t need to buy as much pork from us as they are now? To me, that’s the $64 question on the export side and not getting ahead of ourselves because of current profitability.

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2017 Outlook: Top 6 Hog Market Movers

Thu, 19 Nov 2020 03:30:19 GMT

Pork producers have definitely seen better times than the present, but there are some bright spots on the horizon. Thankfully, prices haven’t declined as far as many analysts expected, but producers have a long way to go before they’re consistently making money. Here are six key factors that will influence pork producers’ profitability in 2017.

1. Grain Prices Will Remain Low

Many pork producers are also grain farmers, but whether you buy your inputs or raise them, the cost of production for pigs will remain low in 2017. The U.S. Department of Agriculture reports that a sharp increase in corn supplies in Argentina and Brazil is expected to intensify the competition facing U.S. exports during the latter part of 2016/17.

“Despite strong export commitments, U.S. export prospects are unchanged, reflecting increased competitor supplies and the expectation of slower pace of sales when countries of the Southern Hemisphere start exporting new crop,” wrote Tom Capehart and Olga Liefert in USDA’s recent Food Outlook report. With global consumption projected only marginally higher, global ending stocks will rise.

Increasingly, the prospects for major price changes in both markets are linked to South American production outcomes and the ability to export corn and soybeans into foreign markets.

With bean meal around $325/ton, producers can book bean meal and hedge, “or go to a crusher and book it just as far out as you can,” Steve Meyer, Vice President of Pork Analysis, EMI Analytics says. “If we have record crops here and in South America next year, it might go down to $270, but locking it in now is probably a good idea. It’s near the bottom side of the range,” he says.

2. Low Market Prices

It’s a good thing grain prices are low, because with the expansion the industry saw after 2014, and steady productivity improvement following Porcine Epidemic Diarrhea virus, the U.S. has a lot more pigs than it does slaughter capacity. Don’t expect the trend to change in 2017.

Unfortunately, prices have declined significantly more than cutout value, which reflects wholesale prices.

“Over the last decade hog carcass prices averaged above 90% of pork cutout value,” Ron Plain, Professor Emeritus at the University of Missouri, says. “This fall, it was below 70% of pork cutout and falling. Whenever hog slaughter approaches slaughter capacity, packing plants become a bottleneck in the flow of pork, causing hog prices to drop much faster than wholesale pork prices. Hog prices as a percentage of pork cutout are expected to remain unusually low until the new hog slaughter plants open later in 2017,” he says.

There is a positive component to this scenario, however. If you’ve been to the supermarket lately, you’ve noticed low retail prices on pork, which is a primary driver of demand.

“We do not have a demand problem at this point. The economy is a little soft and I’m concerned about that, but I think it is remarkable consumer attitudes have held up, because they usually go down in an election year,” Meyer says.

“One measure of meat demand is expenditures and even though expenditures were down 2.5% this year, I’m not concerned because we’re comparing to numbers that were remarkably strong a year ago,” Meyer says.

“With lower prices, we’re incentivizing people to eat more meat, and we’ll have a high level of availability,” Meyer says, “but we’ll have huge slaughter numbers, and we don’t see an end to the growth at this time.”

3. Exports Vitally Important

The repeal of mandatory country-of-origin labeling (mCOOL), low U.S. pork prices, and relisting of plants for export to China are encouraging indicators for U.S. producers, despite a strong dollar. China is the world’s largest producer of pork, but it is expected to import even more product in 2017. Pork prices have been low in China and its growing economy allows Chinese consumers to add more meat to their diets. In fact, China has already become the world’s largest pork-importing country this year, snatching the spot held by Japan for more than two decades.

“Unfortunately, the U.S. pork industry was able to capture only a small portion of China’s import demand,” Ron Plain, Professor Emeritus at the University of Missouri, says. “Most of the benefits went to the European Union. From 2005 through 2014, the U.S. was the largest pork exporting nation. Now, we are second to the European Union.”

Rabobank’s 2016 fourth quarter report finds that abundant supply and looming slaughter capacity constraints in the U.S. are pressuring global pork prices, a situation exacerbated by slowing Chinese imports.

“This will result in a further decline of the Rabobank Five-Nation Hog Price Index in Q4, which turned unexpectedly in Q3,” says Albert Vernooij, Animal Protein analyst at Rabobank. “Prospects for 2017 are weak, with global trade expected to stabilize and all main producers in expansion mode, making supply discipline key to the outlook.”

Competition for the Chinese market will intensify as more countries and companies obtain export permits. For Europe, 2017 prospects are soft, with rising competition in Asia and the declining British pound pressuring returns from this important local market, according to Rabobank. Herd expansion needs to stop or decline to support prices. However, Europe still has a competitive advantage over the U.S. because its exchange rate is so much better. This year, the EU had 70% market share of imports to China.

Brazil has seen a slight rebound in prices. Combined with the expected decline in feed costs, Rabobank believes this will support production and exports in 2017.

The Trans-Pacific Partnership would have been a huge benefit to U.S. pork producers. The new administration includes a number of people who support trade, which is encouraging. Industry analysts hope President-elect Trump will take a more moderate approach toward trade, as he has on some of his other far-reaching claims made during the campaign.

Ports will need to remain open and relationships with major trade partners must be solvent as well for trade to remain the important component it is. The United States is one of the top three producers and exporters of pig meat in the world (the EU and China being the other two producers and the EU and Canada being the other large exporters) and, therefore, its influence on the global market is significant.

4. Retail and Food Service Influence

Major food service and retail companies will require hogs to be raised under certain management conditions in 2017. For example, some suppliers say they’ll purchase products from suppliers who no longer use individual sow housing. Dallas Hockman, Vice-President of Industry Relations for the National Pork Producers Council (NPPC), says these requirements have created a lot of discussion, and NPPC has had multiple conversations with McDonalds on origin and traceability.

Whether these changes are being required based on activist pressure or consumer demand is debatable, but arguing with reality is futile. In other words, it’s unlikely recognized management practices or science will turn the ship around.

Another important change is the desire by consumers to know their food’s origin from farm to plate. That’s easier to accomplish with other species, explains Hockman.

“It’s one thing to talk about muscle meats, but when you get into trim from all different parts of the pig, these companies are buying based on spec codes. We’re making progress in moving in that direction and we’ll see what happens going forward,” Hockman says.

While these requirements are difficult to meet in commodity pork products, some processors will dedicate lines to identity-preserved products. It also creates opportunities for producers who wish to develop niche markets.

5. Consumer Influence

We live in the age of activism, Hockman says, and it’s driven by three primary factors: foodie influencers, social media and retailers desire to differentiate themselves.

Foodie influencers like Dr. Oz, the Food Babe, members of the media or other self-proclaimed experts have found a home on social media. Consumers tend to “share” philosophies that agree with their own, whether factual or otherwise, and it’s proven that “fake news” has more lasting power than real news. Until consumers are willing to do their homework by checking facts, this trend is likely to continue.

Sadly, activist groups have capitalized on this phenomena and “feed into” consumers distrust of agriculture and food production. As the result, the industry often find itself in a defensive position.

The world of social media is changing how people feel about food, and there is turbulence in the food-service arena. Geographic expansion is no longer the only factor that ensures marketplace profitability, so retailers and food-service companies are looking for ways to differentiate themselves.

“We live in an era of activism dominated by books,” Hockman says. “We have lots of activities taking place with key players in the media world and with activist groups surrounding antibiotics, sow housing and other issues. There are either attacks on brands or it’s driven through the political side of the equation, and it’s all resulting in what we consider to be nervousness.”

“What drives most retail sales is what we call the ‘golden horseshoe,’” Hockman says. It’s the center aisle of the retail store, which consists of branded items that can be found in most stores.

“Where retailers differentiate themselves is on the perimeter, which is primarily with the commodities: milk, dairy, produce and meat.”

6. Regulatory Restrictions

The Veterinary Feed Directives go into effect on Jan. 1, 2017 and while industry groups have worked diligently to prepare producers, the impact of the VFD remains to be seen. The dialogue surrounding disease resistance isn’t going away anytime soon, but it is our hope that the human medical profession will take more responsibility for the issue, since it’s proven that the misuse of antibiotics is the major source of resistance.

While the industry has done an excellent job of self-regulating in terms of best management practices surrounding antibiotic use and humane handling practices, more government oversight may be inevitable, perhaps not in the next four years but certainly long-term.

The recently announced proposed changes to the Grain Inspection Packers and Stockyards Administration (GIPSA) are a good example of how government agencies are likely to continue their overreach. That means producer organizations – and producers themselves – will need to remain diligent in protecting their interests.

The editors at AgWeb.com are taking a look at experts’ projections for a variety of commodities in 2017 to help you succeed and be profitable in the coming year. Tune in periodically over the next six weeks as we add outlooks for corn, wheat, cotton, cattle, machinery and more. Read all the outlook pieces here .

Outlook: A Long Hard Grind

Thu, 19 Nov 2020 03:26:59 GMT

The bear is awake and has sent prices well below many farmers’ production costs. The issue is not how deep the correction will be, but how long it will be! The grain markets have not experienced a multiple year bear market since 1997 to 2001. Many believe global demand will quickly bail out prices, and the bears are getting overly excited.

If a global producer does not experience a significant yield reduction by mid-2015 all unpriced farmers have painted themselves into a nasty corner. In the end, the market will not turn bullish until the bins are empty, acres are reduced, demand is stimulated and yield reduction weather concerns start to mount. All of these key variables for higher prices will take time and patience.

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The biggest part of this year’s bear market is now factored into the picture. The cash market will put the bottom in during harvest as farmers are forced to make room for a bin-busting crop. If the U.S. corn yield is more than 170 bu., lead month futures will find support between $3.25 and $3.50.

Sales Index Key

Excellent sales opportunity...10

Excellent buying opportunity...1

After harvest, the real issue is farmers getting extremely attached to their crop because the prices are well below total costs. To get cash flow, I would not be surprised to see farmers put corn under loan and then get their crop insurance payment and government check with the new farm program to simply get by. The problem is that little will be done with the 2014 crop until next summer. This sets the stage for real downside price pressure if we see trend-line yields on 90 million planted acres.

I know low prices will stimulate demand, but it is not going to explode. Livestock and ethanol farmers are making good profits. Granted, they could expand, but I see only modest interest in doing so. Domestic usage will be stable to slightly higher, but nowhere near what needs to be seen to use up excess inventory. This places a tremendous burden on exports. China appears to be experiencing a solid crop, so don’t expect any major demand surge.

With balance sheets still very strong and a tremendous amount of on-farm storage, I fear farmers believe they can just wait out the bear market. Don’t be surprised to see a range bound market well into 2015 with the risk of the deferred contracts falling to the nearby price if we don’t see significant acreage reduction next spring.

Getting anticipated 2014 and 2015 crops priced at today’s levels will be extremely difficult. If we have trend-line yields next summer, prices will likely get very, very low next fall putting in multiple year lows.

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As I write this outlook, the soybean market still has time to see a rally in late August if the dry conditions persist. If August rains develop, the possibility of yields stabilizing on increased acres could bury this market. On top of this, South American farmers have already announced they will plant more soybeans. The final nail in the coffin will be China deciding to shift a few more acres away from corn to soybeans.

This all suggests that, with the potential for a jump in stocks well above 400 million and possibly 500 million, the darling of the grain and oilseed market will become the dog! The record high prices of 2012 have done exactly what markets should do—rationed usage and stimulated global production. How low and how long does the market have to go to build back demand and reduce supply? I don’t believe it will be done in one marketing year. Balance sheets are just too strong. I fear two or maybe three years will be needed.

The pressure is on farmers to make some hard decisions now—whether to sell aggressively to protect current values or wait and hope for a weather event to bail out the market and hope it does not hit their farm.

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Wheat has taken a big hit alongside corn and soybeans, but we are nearing value levels. There are signs some European and Indian farmers will not have a bin busting crop, but I don’t see a fast bounce off the lows with corn and soybeans under so much pressure.

If anyone is storing wheat, I assume they rolled to the December contract to capture carry. Consider moving from a straight futures position to a vertical put strategy to keep some downside protection but reduce upside risk exposure.

As for anticipated 2015 production: Prices are at levels where if the crop is sold, the farmer is locking up a loss. Buy September 2015 calls and sell out-of-the-money puts to help pay for the positions. This can help insulate a seasonal cash selling strategy from January to March on winter injury. If the corn rakes in trend-line yields next year, corn will pull down wheat prices. Timely sales will be essential to keep 2015 losses to a minimum.

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Hogs have had a tremendous flat price rally. Three big questions exist:

1. Has all reduced inventory moved through the market? We’re getting to the end of the PEDv reduction.

2. Will it repeat next year? This is the immediate issue. Contracts for December 2014 and beyond are discounted to nearby contracts in anticipation of getting back to normal production. There is big risk on producers. If we see another disease outbreak, the spring and summer contracts will respond. It is critical to have a limited risk selling plan, such as long puts rather than straight short futures or forward cash contract sales.

3. How fast will hog farmers react to low feed costs and start herd expansion? There are rumblings of construction; is it new expansion or updates to old buildings?

It is just a matter of time. Remember back in 2012 how corn farmers thought prices were going to stay firm forever? Look at what their experiencing now. The same cycle will occur for hog farmers; devise a plan to protect expected production for the last half of 2015 and most of 2016.

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Fat cattle demand is not being rationed as fast as many believed it would. It is a testimony to how much the U.S. consumer still likes beef.

Exceptionally strong beef values have moved the feeder cattle market to record levels. The net result has been a slowdown in cattle placements on feed, as backgrounders are betting on improving pasture conditions to keep the cost of gain down.

The problem facing producers who feed out fat cattle is buying placement feeders at record levels. Although this is offset by lower feed costs, it is critical demand remains stable. I don’t believe anyone can bet on that.

Consider buying in-the-money puts rather than selling futures or forward contracts. Buy as deep-in-the-money as possible to reduce any hint of time value decay and to be as close to a short futures position as possible. The biggest advantage to this strategy is if prices rally, it is possible to improve the bottom line; if prices drop, inventory is protected.

This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Utterback Marketing Services Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not and will not rely solely on this communication in making trading decisions. Distribution in some jurisdictions might be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services Inc. believes are reliable. We do not guarantee that such information is accurate or complete, and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

Before You Run to the Field

Thu, 19 Nov 2020 03:26:25 GMT

The oilseed, grain and livestock markets all came out of the fall doldrums and really extended their gains in February and March. The strong performance of the stock market in 2013 helped to raise expectations that global economies are recovering and demand has stabilized.

I know you get tired of me saying it, but as a farmers, you’re in business to produce a crop and then try to get a fair return on your investment. This places you in the difficult situation of hoping for a bullish trend when unpriced and a bearish trend when inventory is priced.

All I can suggest is this: When you start to sell at a profit and the market continues to move higher, it might be an opportunity to sell future production for even greater returns.

Weather will be a major player in the grain markets this year. It will work on our emotions: “Hope” that you have a good crop and a national yield-reduction event occurs. “Fear” that if you sell, the price will go higher. “Greed” that this time it will be different and a home run is possible. Don’t be the last rat out of the corn crib because there is a big rat-catching dog waiting right outside the door!

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As you read this, you’re more than likely on the run, getting ready to start planting (unless you’re in the South). The market bounce in late February to early March was as much related to the expectation of cold weather as the disruption of grain from the Black Sea region. The old rule of thumb—buy the rumor, sell the fact—is a good guide. Have a floor under a large percentage of your expected 2014 inventory about a week before planters pick up the pace in the Midwest. The later we get into April to early May, the more bullish the market will be. If the crop is pretty much planted by the middle of May, then the pressure reverts back onto the bull to prove that hot, dry conditions are going to reduce spring-delayed crops.

2013 crop. Any remaining old crop corn should be priced at $4.90 basis the July contract. Do not remain open the basis; get it sold. If you believe prices are going higher, place yourself into a limited risk, vertical call strategy (July or September contract), but keep the premium cost down. If dry weather sparks a bullish breakout after the June supply and demand report, adjust the long position accordingly to open up the top side potential.

2014 crop. I hope producers have already priced a considerable portion of expected inventory and are moving back to a limited-risk strategy. You should have 75% coverage no later than the May supply and demand report. A long vertical put strategy is preferred to cash or futures. Roll all puts into futures or cash positions in late June to early July, when we are confident of planted acres and yields.

2015 crop. The biggest opportunity lies with the 2015 crop. USDA suggests a yearly average cash value of $3.30 in its recent baseline projections. If we see trend-line yields the next two years, supply will grow faster than demand. If we do see a late May to early June price event that drives
December 2015 to between $4.90 and $5.10, a 50% short futures position should be implemented with no call defense strategy. I would not start working on a defense strategy for the 2015 position until October. Again, locking up a solid price and then defending against a weather event seems more responsible than producing it and hoping the market will be bailed out. One of these days, this strategy will get buried!

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The soybean sector is really a tale of two markets. The old crop is exceptionally strong because of continued Chinese buying. I don’t anticipate the old crop will get much below $13 until we are well into summer, but just as important, current high premiums are difficult to justify. Be satisfied with current prices, and get the bins cleaned up. Use any further market strength to sell expected 2014 inventory.

2014 crop. The battle of USDA numbers is on—soybean export estimates versus the potential for greater- than-expected planted acres. Exports will likely cool off and we will back off from the current 78 million metric tons—a huge overestimation—by summer. The anticipated 79.5 million planted acreage figure released at the USDA Agricultural Outlook Forum is going to go up. The only issue is how much. If we see a cold spring, soybean acres could jump above 81 million, which will place a lot pressure on November 2014 soybeans.

I’m very concerned about pricing expected 2014 production at $11.80 or better. It is imperative to have the ability to improve selling price if the market moves higher. Therefore, be long the November puts and reduce cost by selling out-of-the-money old crop puts. I would not want to be in short cash or futures until late June.

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Wheat should be in a seasonal decline. The market has digested the impact of harsh weather on wheat. Are producers going to plow under any wheat?

Short positions should already be in place. It’s time to start thinking about rolling long put positions into futures or cash to avoid time value decay. As for where to park hedges, roll back to the July contract by late March to take advantage of any widening of the spreads as harvest nears.

Be warned—I expect speculative interest will be attracted to selling July wheat and buying corn, placing additional pressure on the harvest delivery time period. The only real hope for wheat prices to rally into summer is if the corn complex gets into a weather bull market and pulls up wheat.

Summary: It is time to use short cash and futures to reduce the cost of options. It is time to get in position to capture any increase in carry. If we see a seasonal price fall into May or June, feed buyers need to start developing their long buying plan.

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This market has already seen record highs this year, but by the time you read this, we should have most of the fundamental uncertainty about supply factored into the market. Then the issue will quickly become: How high can prices go before the consumers say it’s too much?

The big premiums during summer months versus the October and December contracts will probably allow these months to firm up as we move into summer. In fact, if we start seeing any type of herd rebuilding, it will only reduce the available inventory numbers we see this fall—when we expect expansion to start anyway.

Hog producers need to get a plan in place this summer to protect late 2015 and beyond price-risk exposure. With these historic high profit margins, it is only a matter of time before demand adjusts downward and production adjusts upward. It is time to start scaling in.

Tighten your focus. Be cautious until we get a technical confirmation of a top. Keep hedging in the deferred contracts. The target time period to start selling is June to August.

For now, there are no target prices. Get to the bank and get lines of credit established, get accounts opened up and start placing modest orders above and below the market with the intent of increasing this coverage as summer continues to develop.

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Cattlemen with unpriced inventory in the pen and no sales made are very happy. If anyone hedged below the market, they wish they never heard about futures and hedging.

The exceptional market rally in cattle has the bull in full control right now. Demand has not reacted to higher prices, while inventory numbers are stagnate and weights are still high.

I suspect that the retail system is reluctant to push up retail prices too drastically because of the overall negative impact on consumer demand. This can’t last long, though. The problem is the retail chain will start pushing prices up right when demand seasonally increases since cook-out season is right around the corner.

Don’t fight this market with straight short futures or cash sales. This is a situation where a floor should be kept under the market at breakeven and leave the upside open. Prices should remain firm throughout most of the summer since the hog market is under so much stress with its lower inventory numbers.

Again, I can’t stress enough the long-term risk we run. All I know is that these exceptionally high prices will start to ration demand and increase production—domestically and internationally. This will eventually lead to lower profit margins.

2015 cattle. Now is the time to start looking at a 2015 defensive strategy. I suggest producers consider selling the deferred using futures, then come back into the market during the summer or fall months and have a plan to use a vertical call to defend upside risk exposure on technical breakouts. This would create a synthetic put position, but it does not reduce all the cash flow risk of the futures to merely offset the loss potential if the market does rally.

Again, start getting a floor under the deferred on technical weakness this summer and defend with a long call strategy on technical breakouts. I know this strategy is not as clean as many would want, but these are unusual times that require maximum flexibility with a strong emphasis on cash flow preservation.

This material has been prepared by a sales or trading employee or agent of Utterback Marketing Services Inc. and is, or is in the nature of a solicitation. This material is not a research report prepared by Utterback Marketing Services, Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Distribution in some jurisdictions might be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction without registration, the market commentary in this communication should not be considered a solicitation. The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Utterback Marketing Services Inc. believes are reliable. We do not guarantee that such information is accurate or complete, and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.