Market Analysis

Why Can't Soybeans Bottom With China Purchases? Are They Buying Corn?

Fri, 19 Dec 2025 19:39:25 GMT

Corn and wheat ended higher Tuesday with soybeans lower. Livestock futures saw a down day in cattle but higher in hogs.

Corn Rallies on China Buying?
Corn futures were up for a second day after seeing technical buying and with some talk of China buying corn out of the Pacific Northwest. Ted Seifried with Zaner Ag Hedge says rumors of China purchases circulate nearly every time the corn market rallies. However, he is not seeing evidence of those purchases and doubts China needs corn. “I don’t know why China would buy U.S. corn. It wasn’t part of the agreement, which is yet to be signed. So unless it was politically motivated, I would think China would want to go to Brazil. They have this new relationship with Brazil. When it comes to their corn, I think they want to protect their relationships with Brazil,” he says.

He admits port values in the PNW did kind of spike and so did basis. However, he doesn’t think that necessarily means China. “It could be one of our normal customers, like Japan, for example,” he says.

Corn Sees Short Covering
So Seifried thinks the bounce was technically inspired buying after the March contract bounced off the 100-day moving average support area on Wednesday. However, corn has been trading sideways between that support and overhead resistance up at the 200-day moving average. He says if corn could finally close above that level for more than a day, it could take out the $4.50 area and stage a bit of a breakout.

“We saved a breakdown below the neckline of what could potentially be a head and shoulders topping formation in corn. Now, if we were able to get up and over that 200-day moving average for the fourth time, close above it and then not break down the very next day like we have the previous three times. We could potentially break out to the upside and really negate this potential head and shoulders formation,” Seifried explains.

Corn Needs a Catalyst
However, corn will need a catalyst to get above that chart resistance because farmer selling picks up when corn gets to the top side of the trading range. The catalyst could come in the January WASDE if USDA would lower yield. It would take a sizable cut to get the bulls excited and get below 2 billion bu. carryout he says. “I do think if you cut two or three bushel an acre off of corn, we’ll get below a 2 billion bu. carryover, but I don’t know about significantly below 2 billion bushel because it will be offset by USDA lowering feed and residual,” he explains.

Wheat Follows Corn
Wheat futures got spillover support from the corn market but Seifried says soft red winter wheat also saw technical buying to relieve its oversold condition. “Chicago wheat hit new contract lows Tuesday and Wednesday so it was due for a correction,” he says. However, wheat will have a tough time rallying due to the big global production. “USDA has had to continue to raise the world production number. I think we’re, what, 30 MMT off of the original number they had a few months ago,” he states. China canceling two cargoes of white wheat from the U.S. was also bearish for the market. “Anytime China cancels anything, that really does not help the market psychology.”

Why Do Soybeans Continue Lower Despite China Purchases?
The soybean market continues to slide despite the confirmation of export sales and China soybean purchases. USDA reported another 4.2 million bu. flash sale of soybeans to unknown destinations on Thursday morning and adds to the string of recent purchases that have included China. Seifried says however, that business has not been enough to support the market because it’s half the soybean purchases China made last year.

“The problem is, is that I think the markets realized that 12 million metric tons probably isn’t enough to get us to the USDA full marketing year expectations for our exports, and that they’ll probably have to cut exports again if China doesn’t buy above and beyond that 12 million metric tons. And while the buying is good, the pace does not suggest necessarily that they’re going to outperform on that one,” he explains.

Seifried says South American weather is also favorable and soybean prices in Brazil are cheaper than the U.S. and so there’s no reason for China or any other countries to buy soybeans if it isn’t politically motivated.

Funds also got near record long in mid-November while the government was shut down and they are exiting those positions. “The analyst guesses were, were so far off they weren’t even half of what the funds actually accumulated as far as their long position. And the funds have just simply lost interest in the story. And so they’re getting out of that position,” he adds.

Soybeans Make New Lows for the Move
Soybean futures made new lows for the move on additional technical selling and fund liquidation. Seifried says the market confirmed the head and shoulders top, fell to fill the chart gap areas and then closed below that level which is bearish. Funds got near record long in soybeans in mid-November and then started to bail on those positions and take profits and they are still liquidating.

Profit Taking in Cattle
Live and feeder cattle futures were down for a second day with the market consolidating after several attempts to take out chart resistance areas. Seifried says in live cattle the market has been capped by the 100-day moving average. So, cattle are at a pivotal point and need to fill gap areas on the chart to keep moving higher.

“I mean, the good news there is that both cattle and feeders did close well off their lows. So, you know, we didn’t completely fall apart after running into the one hundred day moving average, major moving average pretty much five days in a row. Not being able to to to break through it and break out to the upside and fill the gap above us. The market finally just gave in a bit.” he says.

Cash trade will also be a key. Thursday some light trade developed in the North at mostly $358 dressed, up $4, with a range of $355 to $363 and live sales prices at $228.

Lean Hogs Finish Higher
Lean hog futures were higher on short covering and fund buying after a lower day on Wednesday. Seifried says the hog market is also getting support from a possible seasonal bottom in cash and cutouts.

Hogs Ease After Big Rally, Cattle Hit Record Highs and Soybeans Gain After Trump/Xi Call

Fri, 06 Jun 2025 13:20:39 GMT

Hogs ended mostly lower on Thursday, with all-time highs in cattle and grains mostly higher as well.

Lean Hogs Consolidate Thursday After Recent Rally

Jeff Hoogendoorn, with Professional Ag Marketing, says lean hogs ended mixed to lower on Thursday with August seeing some profit taking after making new highs for the move early in the session. August hogs have been on a big rally gaining nearly $7 in seven sessions.

The consolidation came despite a positive call between President Trump and Chinese President Xi earlier in the day and decent weekly pork exports at 36,400 MT, with a sale of 12,700 MT to China.

Hoogendoorn was at World Pork Expo and says there is optimism about the hog market with the recent rally which has been pushed by higher cash and cutouts.

The CME lean hog index is up another 82 cents to $97.57 as of June 4. Pork cutout firmed $1.50 to $108.12 on Thursday. Both are trading at their highest levels since August 2023.

Packers cut kills the last few weeks he says and cutouts responded moving above $107, but at the same time there’s not an excess supply of hogs.

The deferred lean hog contracts just made new contract highs with disease concerns in production areas like Iowa, mostly due to PEDV.

Hoogendoorn says these prices are offering some profitable levels for hog producers all the way down the futures board.

Cattle Futures Explode To All-Time Highs

Cattle futures made all time highs in both live and feeder cattle offerings.

Funds stepped back in to buy with the steep futures discount to more record cash cattle trade.

Cash broke in the South already Wednesday at $225 to $228, up $3 to $6 from last week and there were some trades at $230 in Kansas before the close on Thursday.

Later in the afternoon light cash cattle trade developed in Texas at $232, up $10 from last week’s weighted average.

Light trade was also reported in Nebraska with dressed sales at $380, up $13 from last week’s weighted averages. Live deals at $240, up $5.

Soybeans React to Positive Trump/Xi Call

Soybeans saw gains Thursday, supported by positive news that Trump and Xi’s conversation went well.

President Trump posted on Truth Social that he and President Xi had a “very good” phone call and “resulted in a very positive conclusion for both countries.” Next steps involve a meeting between the countries respective teams with Secretary of the Treasury Bessent leading the U.S. team.

The market also saw additional fund and technical buying but was stopped short running into resistance with several moving averages layered overhead on the charts.

Corn Bounces After July Hits New Lows

Corn was higher as well with spillover from higher soybeans and still adding some weather premium.

However, July made a new low for the move and hit a level not seen since October of 2024, before bouncing.

Bear spreading continued to be a feature in the corn market with December gaining on July.

Despite a tight 1.4 billion bu. carryover, Hoogendoorn says the market is telling farmers there is no concern about running out of corn.

He says some of that pressure is coming from the big crop and much lower corn prices in South America.

Commodity Brokers Call CFTC's Proposal to Expand Ag Futures Trading to 24/7 a 'Nightmare'

Fri, 23 May 2025 16:23:06 GMT

The Commodity Futures Trading Commission (CFTC) is proposing to expand agricultural futures trading hours to a 24/7 schedule. CFTC says the change would make the market more vibrant, while brokers and commercial hedgers say it would lead to more volatility and more costs.

CFTC says the proposal is one that better reflects the changing dynamics of the markets.

“As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,” says acting Chairman Caroline D. Pham. “One evolving trend is the move to 24/7, 24/6 or 24/5 trading hours. I look forward to the public comments on this market innovation.”

According to the National Grain and Feed Association (NGFA), who opposes the change, the move to expand trading hours would increase costs and spur more volatility.

“Our members have been clear — expanding trading hours to 24/7 would disrupt current risk management practices, increase operational costs, and create unnecessary exposure,” says Mike Seyfert, president and CEO of NGFA, an organization with commercial hedgers as part of its membership base. “We hope the CFTC will recognize that longer trading hours do not equal stronger markets.”

The proposal is currently in a comment period. In NGFA’s feedback and formal letter, the organization listed five reasons why it is against the proposal, including:

Spreading liquidity across a wider trading time frame would create unnecessary volatility, potentially widen bid/ask spreads and expand potential for market manipulation.
The underlying cash market does not trade 24/7, thus having futures markets open for more hours while cash markets are closed would create additional exposure and risk for our members.
Its members perform their daily reconciliation functions when markets are closed. This function is critical in managing risk and exposure in cash markets.
A pause in trading in futures markets is essential for physical deliveries. This pause allows those involved in physical deliveries to assess what is changing in cash markets as well as in futures markets and ultimately their delivery economics. NGFA says that actions in the delivery market are what lead to convergence, and convergence is a critical function of the agricultural futures contracts that benefits it members.
Staffing costs for its members would unnecessarily increase to add monitoring of futures markets during the expanded weekday hours and weekends.

Market Analysts Weigh In

Brian Splitt of AgMarket.net agrees with NGFA’s analysis, saying expanded trading hours has been tested before in livestock, and it led to more volatility.

“It sounds like a nightmare to me,” Splitt said on U.S. Farm Report. “There’s a reason that the exchange tightened the trading hours for livestock. We used to trade livestock overnight, similar to what we do with the grains, and the volatility was just ridiculous. It didn’t take a lot of contracts to make the market move quite a bit. And so, I think the market just needs a rest period. I don’t see a reason why the market needs to trade 24 hours a day.”

Splitt argues the markets need some type of pause, especially with fewer traders who participate in the overnight markets. And with fewer traders, it takes fewer individuals to influence the market, which Splitt argues is dangerous.

“I agree with Brian, I think it’d be horrible,” says DuWayne Bosse, a farmer who also is the founder of Bolt Marketing. “I think the trading hours are actually too long right now. We have this kind of long pauses in between market news that the market just gets pushed and shoved by algos and volume traders, and that makes what I would call kind of wrong technical pictures on the chart. So, I think it would be a mistake.”

Comments on the proposal, which could be submitted electronically through the CFTC Comments online process , were accepted through May 21.

Why Did the Ag Markets Fade China Trade Talk News?

Thu, 08 May 2025 15:02:00 GMT

Grain and livestock futures closed mostly lower on Friday.

It was a disappointing close considering the news that top trade officials from the U.S. and China were meeting in Geneva this weekend to de-escalate the trade war.

Dave Chatterton, Strategic Farm Marketing, says the markets faded the news as the realization set in that no major breakthroughs in the trade talks are expected and a long term trade deal with China could take quite some time.

President Donald Trump also said Wednesday he’s unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.

Weather was also a headwind for the corn and soybean markets with fast planting pace and more rain in the forecast for dry areas of the hard red winter wheat belt.

The market is also positioning ahead of the May WASDE and USDA Chief Economist Seth Meyer has confirmed they will start to consider the impact of tariffs in the new crop balance sheets.

“That could make these early estimates look a bit too friendly,” says Chatterton.

July corn made new lows for the move hitting chart resistance, failing and then testing triple bottom support on the charts at $4.51.

“It was a big outside day lower,” explains Chatterton, “And so tomorrow’s action will be important to see if there is further technical breakdown.”

Wheat has been an anchor for the corn market with improving crop conditions tied to recent rain.

Lower prices relative to corn are pushing wheat into the feed ration.

The higher dollar and lower crude oil markets were also bearish for the grain complex.

The FOMC meeting concluded with the Fed holding interest rates steady at 4.25% to 4.50%, as widely expected.

However, Chatterton says Fed Chair Jerome Powell said the labor market was solid and inflation was still somewhat elevated, but the uncertainty in the economic outlook moving forward tied to tariffs.

Cattle futures saw a correction off of Tuesday’s new contract highs, despite higher cash trade.

So far business in the South, has ranged from $218 to $220, steady to $2 higher, with $219 paid on Wednesday.

So is this divergence a concern?

Chatterton calls it a healthy correction in a bull market that continues to be supported by cash and consumer demand with Choice beef values at two year highs.

Lean hogs also had a disappointing day, also fading at least slight progress on trade with China.

Tariff Delay Rallies Ag and Outside Markets, Trumps China Trade War

Wed, 09 Apr 2025 20:36:40 GMT

Grain, livestock and especially outside markets soared on Wednesday.

Arlan Suderman, StoneX Chief Commodities Economist says the markets reacted positively to the 90-day delay on reciprocal tariffs for countries that reached out to negotiate with the U.S. and did not retaliate.

A 10% universal tariff is still in place but over 75 countries have reached out to avert tariffs and were rewarded.

It was an unprecedented day in the stock market which reversed and surged in reaction.

“Its a smart move by the Trump Administration because it buys them time to negotiate deals with these 75 countries and the markets have time to absorb that news and calm down,” he explains.

Suderman says this also puts to rest the talk of global recession, which had tanked the stock market, the energy sector and even cattle futures.

“I think the market took it as a positive step forward. Now it’s up to the Trump administration to actually come through and turn those negotiations into something positive, meaning lower tariffs for everybody. And if they can do that, we can actually result to see greater global economic growth and greater demand for commodities,” he adds.

The grain and livestock futures also posted a relief rally despite the escalation of the trade war with China.

China announced retaliatory tariffs of 50% which drew a negative response from President Trump as he slapped another 125% tariff on Beijing.

Suderman says, “Ultimately containing China is one of Trump’s top goals and since they
led the way in retaliation, that’s another reason he said that if any country retaliates, we will keep adding to it. Since that’s what they’ve done, he doesn’t want to give any signal of rewarding that type of behavior,”

He says it took Trump three years to get a trade deal out of China in his first term and he is trying to get a quicker response this time around.

“With a weaker economy, he felt like he could do that. Now, I don’t know if we’re any closer to a trade agreement with China, Because right now they feel like they’re being bullied, so their pride is hurt, and so they’re backing off and they’re fighting.”

The Chinese are trying to buy time according to Suderman.

“Hoping that the consumer will turn on Trump, and therefore Congress will turn on Trump and limit his powers or ability to do this. But today’s move kind of cuts that strategy short,” he adds.

The total tariffs on U.S. pork imports into China, according to the U.S. Meat Export Federation, are at 131% and for beef at 106%.

The American Soybean Association confirmed China’s tariffs on U.S. soybeans are now at 114%.

At what point does China finally break down and negotiate?

Suderman says that’s hard to predict.

The grain markets were shrugging off the China news before the tariff delay as Chinese tariffs won’t impact the current soybean crop and the White House also said it was pausing the Section 301 fees on vessels of Chinese origin and is looking at restructuring those fees.

He thinks the markets can go back to trading their own fundamentals and in the case of the grains that includes Thursday’s WASDE.

Suderman anticipates a tightening of the balance sheets, at least for corn which is positive.

Grains Markets Absorb Tariff News, But Why Did Livestock Fail?

Tue, 08 Apr 2025 18:38:33 GMT

Grains end mostly higher on Monday, with livestock seeing triple digit losses.

Naomi Blohm, Total Farm Marketing, says old crop corn and soybeans rebound as well as the wheat market which have absorbed much of the tariff news.

Of course corn and wheat are USMCA compliant and so that leaves those commodities less impacted by tariffs than soybeans which have been hit by China retaliatory measures.

However, she says corn and wheat were also adding weather premium.

Flooding in the Ohio River Valley and mid-South will cause some replant and planting delays, which the corn market can’t afford with the push to plant 95.3 million acres.

Soft red winter wheat area also saw flooding and there was some freeze damage over the weekend in hard red winter wheat fields.

Wheat also saw some short covering as the funds are still largely short all three wheat classes.

Soybeans also saw some short covering off the lows but may still be vulnerable with possible China soybean cancellations of soybeans left unshipped.

Grains are also positioning ahead of Thursday’s WASDE Report with anticipation of lower old crop ending stocks for corn.

Blohm says demand has been strong for old crop corn and she thinks its possible the carryout could come in below the trade estimate of 1.5 billion bu., which would be bullish.

As far as South America crop adjustments, she isn’t expecting many changes by USDA in this report.

Livestock saw triple digit losses with additional fund liquidation despite a recovery off the lows in the stock market.

Blohm says cattle were due for a correction and have seen fund selling with the plunge in the stock market and recessionary fears.

So the lower close despite a recovery in financial markets off the lower was discouraging.

However, she says so far cattle futures are still holding uptrend lines on the charts.

Lean hog futures also ended lower after some early strength as President Trump renewed threats to increase Chinese tariffs another 50% if Beijing did not lower their retaliatory measures.

Cattle Try to Recover But is an Intermediate Top In? Grains Lower Pre-WASDE

Fri, 12 Jul 2024 14:19:24 GMT

Cattle open lower and then try to recover in a week that has seen a correction with plant closure concerns, lower boxed beef values and softer cash, at least in the South.

Scott Varilek, Kooima Kooima Varilek, says if this correction is an intermediate top he doesn’t think the correction will be huge in the futures due to the big discount the futures are holding to the cash, plus the continued tight supplies.

Cash trade was still strong in the North at $198 and $312 dressed. Meanwhile, Southern cash trade has been softer this week at mostly $188, but there have been sales ranging from $185 to $191.

Varilek says the break early in the week may have been tied to the break in boxed beef values.

It was also linked to some disruptions at beef processing plants. Tyson in Dakota City, Nebraska was down on Monday due to a gas leak.

However, Varilek says, “There were some rumors that a Nebraska beef processing plant may have been closing. Even though it wasn’t confirmed that spooked the market and caused part of the the sell off in cattle,” he says.

A spokesman with Nebraska Beef confirmed that they ran full shifts every day during the week of July 8-12.

Mike Weaver, legal counsel for Nebraska Beef says, “Additionally, Nebraska Beef is not closing. Company management has been in the industry for over 60 years and has always operated the business to account for industry cyclicality, and the adverse market conditions that may occur as a result of herd adjustments. The Company is well capitalized, debt-free, and intends to be in the beef industry as long as there is an industry.”

Another negative bird flu story out of the UK was also out ahead of the open but Varilek doesn’t think the market traded it.

Lean hogs see a short covering bounce as they are oversold.

Grains are lower in anticipation of a bearish WASDE, but he says much of it is already priced in after this week’s selloff.

Corn and Soybean Prices Tank After USDA Report Makes Surprising Revisions to Yield

Fri, 12 Jan 2024 19:41:03 GMT

USDA’s final look at crop production for 2023 caught the commodity markets by surprise. The agency increased the final yield estimates for both corn and soybeans, and as a result, prices plummeted on Friday.

The big news in the report was the revisions to yield. USDA raised the national corn yield to 177. 3 bu. per acre in the January report, which is a new national record yield. It’s also a big jump from November, when USDA had the national yield penciled at 174.9 bu. per acre.

USDA also cut harvested acreage, but with the big increase in production, USDA pegs the 2023 corn production figure of 15.34 billion bushels.

The increases to yield and production were larger than what the trade expected, which caused corn prices to sink.

“We got a lot of criticism for our estimate all summer long being too high. And we ended up too low,” says Arlan Suderman of StoneX Group. “This crop, I’m just really impressed with, not just the genetics of it, but farmers with their technology, the seed placement, just the management of it. They are getting better and better at withstanding the stresses and it just makes you wonder how good this crop might have been had we not had the stresses we had.”

(Farm Journal)

USDA also increased demand, which helped offset a portion of the increased yield. USDA increased feed use by 25 million bushels. The agency also increased ethanol use by 50 million bushels.

“Those revisions were pretty much in line with what the trade expected,” says Jim McCormmick of AgMarket.net. “And I guess it’s a good thing because without those upward revisions of demand, this carryout would have really exploded to the upside. And I think the market could’ve had an even worse negative reaction than it’s currently having.”

Surprise in Soybeans

USDA also surprised traders with the increase in the soybean yield estimate. USDA raised it’s soybean yield forecast for the 2023 crop to 50.6 bu per acre, which was up from the 49.9 bu. per acre forecast in November. Soybean production is now pegged at 4.16 billion bushels.

Suderman says these yield increases are something farmers should note, especially with the current debate on how much of an impact weather will have on Brazil’s crop that’s currently in the ground.

“The same genetics we plant here we plant in South America as well, essentially, so we need to look at South America in that same light,” Suderman says. “This crop really did well, especially in eastern Midwest. We saw some really good yields from corn and soybeans this year. And some of that may have been some of the benefits from the smoke coming from the Canadian fires. That’s one of the theories now that was sulfur and some other positive effects were coming from that smoke.”

Cuts to Brazil

After drought impacted Brazil’s crop for much of the growing season, USDA cut its soybean forecast in Brazil to 157 million metric tons. That’s down from the 161 million metric tons forecast in the last report. USDA also trimmed its corn estimate for Brazil by 2 million metric tons.

“Traders were looking for bigger cuts,” McCormick says. “The rhetoric I think was even for bigger cuts and what the average straight guess was. So yeah, it was definitely a little bit disappointing. But time will tell where we’re at. Some of the modeling I’ve seen for the weather is that we are going to turn a little bit warmer and drier here in the middle part of January, and with this latest crop that has been planted, that could cause some problems to that crop and still shrink it. And of course, we still haven’t started planting safrinha corn crops. So the size of that crop is yet to be determined.”

Quarterly Grain Stocks

(Farm Journal)

USDA’s revisions to the 2023 crop production numbers pushed the quarterly grain stock estimates higher and above trade expectations.

Corn stocks are forecast up 13% to 12.2 billion bushels. Soybeans were adjusted down 1% from December to 3 billion bushels.

Wheat supplies on December 1 were forecast to be up 8% from a year ago at 1.41 billion bushels.

Better Yields and Improved Crop Prices Propel Ag Economists' Outlooks for 2024

Wed, 22 Nov 2023 20:26:11 GMT

After two months of a waning outlook on the ag economy, economists’ views took a turn in the November Ag Economists’ Monthly Monitor , a survey of nearly 70 ag economists from across the country.

“The biggest takeaway I see out of the Monthly Monitor this month is we’re seeing a lot more positives than we’ve seen for the last couple of months,” says Scott Brown, the interim director for the Rural and Farm Finance Policy Analysis Center (RaFF) at the University of Missouri, who also helps author the Ag Economists’ Monthly Monitor.

The Ag Economists’ Monthly Monitor is conducted by the University of Missouri and Farm Journal each month, as it’s a way to gauge not only the state of the ag economy but also explore the impacts of policy and trade. Brown says as commodity prices have seen some momentum, outlooks among economists are also shifting more positively for 2024.

“I think when you look at where we are in terms of our estimates for crop prices, and we’re talking about crop prices for harvest next fall at this point, we saw a number of more positive responses, maybe the most positivity since we started our estimates for 2024/2025. As both corn and soybeans continue to move higher, there’s more positive news this month,” Brown adds.

Spike in 2024 Net Farm Income Forecasts

(Farm Journal)

That positivity also boosted net farm income estimates. The November Monthly Monitor asked ag economists to provide their outlook for net farm income in 2024. The survey found ag economists now expect a big spike in net farm income forecasts for the new year.

“Farm income estimates were raised almost $5 billion for 2024, relative to what they would have said in October,” Brown says. “And I think that just resonates as you look at higher estimates of corn prices and higher estimates of soybean prices, things just look a little better than where we were a couple of months ago.”

(Farm Journal)

What’s driving improved outlooks in the farm economy? Economists say commodity prices, including improved yields and harvest picture for some commodities.

Another major factor is South America. When asked what factors will impact crop prices in the next six months, economists say:

South American crop production (including weather impacts on planted acres) and related export sales.
Global dynamics in general, as well as conditions and production in key regions like the Black Sea and China.
U.S. export demand strength and growing crop supplies.
Final U.S. crop size and weather-related impacts.

Weather Worries in South America

The latest USDA report pegged Brazil’s corn production at 129 million metric tons, but according to the Monthly Monitor, that estimate may be too optimistic.

“Our survey of the economist would have suggested 126.5 mmt right now,” Brown says. We did have some answering very near that 129 mmt and others saying 125 mmt. It’s a combination of weather as well as economics, not all that great. That is leading to some lower estimates.”

When asked what’s driving changes in the crop forecasts for Brazil and Argentina? Economists say it’s all about weather, the impacts of El Nino and delayed planting that could eat into the Safrinha corn crop in Brazil. Economists also say Brazil could be looking at fewer soybean acres.

“Uncertain, volatile weather conditions - either too wet or too dry as Brazil transitions from La Nina to El Nino weather patterns,” says one economist when asked what are the factors driving the change in estimates for the Brazilian soybean crop. “Plus, delayed plantings of the 2024 Brazilian Soybean crop with substantial replantings required is hurting production potential.”

Bullish Views on Cattle Continue

While views on crop prices turned more positive in the latest Monthly Monitor, economists are still bullish longer-term on cattle.

“I think folks are more positive still on the cattle side of the equation, despite what’s been the last few weeks of some lower cattle prices,” Brown says. “We are talking about an industry that continues to talk about record or near record, and perhaps in early 2024, we get back to record prices yet again.”

(Farm Journal)

The outlook for pork prices, as well as dairy, continued to see some pressure, but overall, the factors economists think will impact livestock prices over the next six months include:

Weaker demand domestically and globally.
Global economic health, including slowdown/recession in some geographies.

Health of the Farm Economy by Geography

This month’s survey also asked ag economists to rank the health of the farm economy by geography. The strongest region of the country, according to economists survey, is the Midwest.

“I think we ended up with especially better corn yields than anybody would have thought. Maybe soybean yields are not even as bad as some would have suggested. And then again, cattle still being very positive there, Brown says.

(Farm Journal)

According to economists surveyed, there were a multitude of factors that played into how they ranked each geography, including:

Drought and weather
Government policy impacts upon state and metropolitan economic health.
Commodity /crop mix

“Certainly, crop and livestock mix is important,” says one economist in the anonymous survey. “While corn prices are lower the combination of yields and prices were likely profitable for many. But lower prices have come on the heels of very high prices in the last couple of years. Hog and dairy returns are dragging down financial health in the sector regionally. Cattle prices are boosting overall returns in the Plains. But drought has certainly hurt ranchers, including water in the West.

Impact of Interest Rates (Both Positive and Negative)

Economists are still concerned about how interest rates could negatively impact agriculture over the next 12 months, but for the first time, economists now view it as a possible positive over the next year.

When asked, “What do you view as the most negative aspect regarding the outlook of U.S. agriculture?”, the Monthly Monitor shows:

High interest rates, market volatility and a shortage of working capital create a challenging economic climate.
Production challenges range from weather conditions to commodity prices and policy support.
A need for investment into increasing domestic and demand for U.S. products.

When followed up with, what do you view as the most positive aspect regarding the outlook of U.S. agriculture, economists say:

Economic resiliency of the farm operator, including strong financial positions for some operators and farm income forecasts remaining above the long-term average. Some optimism for stabilizing interest rates.
Promising new demand opportunities, including the expansion of biofuel uses, as well as continued consumer demand.
Improvements in technology and the possibility of better production in 2024.

“The news that we seem to be getting right now is, although inflation is still a problem, maybe less so than we would have thought. So perhaps we’re getting near the end of interest rate increases, I even see some out there suggesting we could get lower interest rates as we get into 2024,” Brown says.

Outlook for Crop Mix in 2024

Economists were also asked to shift their focus to 2024. Economists say the most important factors that could affect 2024 crop plantings/acres in the U.S. are:

Spring 2024 weather conditions and drought concerns.
Corn-soybean price ratio affecting decisions, as well as planting prospects for corn/soybeans/cotton and wheat profitability.
Changes in output prices, higher input costs, crop insurance price levels and 2024 futures prices affecting planting decisions.
South American crop production and demand (domestically and globally) impacting prices.

‘Reckless Spending’ is Putting U.S. Fiscal Health at Risk, Analyst Says

Mon, 07 Aug 2023 16:38:42 GMT

Market analyst Bob Elliott, co-founder and CEO of Unlimited Funds, addressed a less than rosy fiscal outlook for the U.S. with AgriTalk Host Chip Flory on Thursday.

Elliott told Flory the U.S. government balance sheet and financial condition have been deteriorating significantly over the last decade.

“Finally, they’re waking up to that fact, and I don’t think anyone in the markets is really looking at what they have to say,” Elliott said.

“It’s creating a renewed focus on the unsustainable path of the fiscal situation of the United States. And that, I think, is in part what is driving some of the market action we’ve seen in the last couple of days related to the bond market,” he added.

Flory told Elliott one of his concerns is that market analysts are predicting fiscal deterioration over the next three years, which will be concerning to “average” consumers who invest in the stock market and other entities.

“What’s going on?” Flory asked.

Elliott explained that the U.S. government typically borrows more in economic contractions. “It’s called counter cyclical,” he said.

However, the U.S. is in so much debt today that his concern is there will be no financial room to borrow more money if a recession – like the Great Recession in the mid-2000s – occurs again.

Elliott said one notable difference between today and 15 years ago is that the unemployment rate today is at secular lows. “The economy just put up a two and a half percent GDP growth number. You know the economy, while it may not be perfect, it’s doing pretty well,” he said.

Potential For Government Shutdown?
Congress has to pass 12 appropriation bills before the end of this fiscal year, and the clock is ticking. Flory said he’s concerned.

“They got one done, and then they left for August recess. Assuming Congress is going to get 11 more appropriation bills done by the end of September is exceedingly hopeful,” he said. “That’s going to raise the potential for a government shutdown, isn’t it?”

It looks very possible, Elliott said. “There’s some risk, but odds are there will be some last-minute agreement that pushes the issue out into the future,” he said. “Look, we’ve been down this path before and the government shutdown is a real possibility, and I think we’ll just add further focus on the fiscal unsustainability of the U.S.,” he added.

“Congress acts like the country can just go on spending,” Flory said. “Why it that?” he asked.

“They haven’t faced the consequences of spending so recklessly in a good economy,” Elliott said.

He predicted the U.S. consumer will continue to see a rise in interest rates and then “real-world” effects on households and businesses that are faced with borrowing money at those higher rates.

“And that will start to weaken the economy,” Elliott noted. “Too much fiscal stimulation creates rising interest rates, which creates a challenge for businesses and households. And eventually, people will come to realize, you know, that isn’t necessarily a good and acceptable path for their legislators to pursue.”

The conversation on AgriTalk is available here:

Where Did China's Population Go, And What Does It Mean For China's Historically Strong Export Demand?

Fri, 20 Jan 2023 14:54:42 GMT

Estimating the reality of China’s population , demand and other economic figures seems to be a growing challenge for economists across the globe. This week, China threw out a bit of a surprise , acknowledging the country’s population is declining. Officials in China say the population now sits at 1.4 billion.

While analysts say China is at least acknowledging the population problem, some estimates point to China’s population dwindling from 1 billion by 2050 to 494 million by 2100.The issue is China’s one-child policy, a practice which ended in 2016.

Just last week, China’s government said nearly 60,000 people have died after contracting COVID-19 since abandoning its zero-COVID policy on Dec. 7, 2022.

Is the population decline acknowledgement going far enough? And does it have a direct correlation in the drop in Chinese demand for U.S. agricultural products? It’s a question economists could debate for years.

“The demand from China certainly is a problem,” says John Payne of hEDGEpoint Global Markets . “I don’t know if demographics in China are correct. The reports we get out of there you have to take with a grain of salt. So, this week, to see them finally admit to that, you just wonder if that’s baked in the cake or not.”

As reported on AgWeb, every day, China must feed 20% of the global population. With so many people, it makes China a demand powerhouse, and today, China is not only the world’s biggest consumer of agriculture goods, but according to AgWeb, it is the biggest in history. And China’s lack of demand from the U.S. this marketing year is what’s alarming to Jim McCormick of AgMarket.net today.

“Right now, the biggest demand concern is China,” says McCormick of AgMarket.net . “I mean, there’s a lot of trade anticipating China will eventually come to our market and start buying corn. But the reality is they haven’t. They’ve been buying a lot of corn from Brazil, at this point in time.”

Do Fundamentals Even Matter to the Commodity Markets? A Key Lesson From 2022

Tue, 03 Jan 2023 20:29:26 GMT

As the new year brings fresh market action, volatility continues to be the main theme to enter the new year. The main market trends continue to dominate the markets to kick off 2023, and analysts say that’s why there are some keys lessons to keep in mind from 2022.

Both Chip Nellinger of Blue Reef Agri-Marketing and Arlan Suderman of StoneX Group reflected on how the markets performed in 2022, and according to Suderman, there are three main things the market taught us last year.

“First of all, we saw geopolitical realignment across the globe,” says Suderman. “And that had to do with China and with Russia, most specifically with Russia, but now China aligning with Russia. And so, who you do business with depends on who you’re friends with a net changes, freight increases – the cost of freight - it decreases the efficiencies of the market and created a lot of anxiety in countries became less comfortable with just-in-time supplies.”

Suderman says as a result, we started to see some countries hoard commodity supplies during the first half of the year, which spurred the run-up in market prices. That also created a tremendous amount of volatility. However, 2022 produced another key lesson in the markets, one in which could carry into 2023.

“And then a third thing is, it was the year of the algos, which totally changed how we use the derivatives markets. Traditional specs stepped aside from the market, especially in the wheat market and some of the others, as well as we saw overall volume spike, but open interest go to multi year lows long term lows,” says Suderman. “So, the market price, the derivatives market, was primarily driven by the algos, which really changed the behavior, the market and the way we approached the market.”

Algos, which is an abbreviated term for algorithmic trading, is also referred to as automated trading and black-box trading. This method of trading is done by a computer program that follows a defined set of instructions - or an algorithm - to place a trade. The trades happen quicker than what can be done by a human trader.

Nellinger has a different take on the overall market action. He says even with the algos having a strong hold of the market, 2022 reminded us fundamentals still matter.

“I think one thing that we learned this year is the market still work, they still are going to, you know, respond to supply and demand and demand fundamentals,” says Nellinger. “They may become inefficient at times because of the algos and the massive amount of money flowing in and out of our markets, but that provides opportunity at times to both on the upside and the downside.”

Related Story: Jerry Gulke: 2022 Was a Year for the Ages, What Awaits in 2023?

Nellinger points out the markets still can overreact to both sides of the market, but he says it’s all in response to the fundamentals.

“We’ve seen that, you know, across the board on corn, beans and wheat at different times of the year,” adds Nellinger. “We’ve seen the market respond to tightening supplies and increasing demand. That is going to be there going forward. It’s been the bellwether to our markets and what makes them function in the past. And in spite of a lot of algo money and speculative money coming in and out of our markets at times, the fundamentals still matter.”

AgDay TV Markets Now: John Payne Discusses the Weather Rally in Soybeans and What Drives Markets to Start 2023

Chip Flory: The Big Grain Market Movers for 2023

The Rest of the Story: Pre-Report Bullet Points to Ponder

Thu, 22 Sep 2022 02:38:26 GMT

The media comments this weekend still had the familiar thread that in the final analysis—regardless of what the acreage survey report states on Thursday—acres planted to corn will likely rise and soybeans fall by the time we know for sure in October. That’s when the 578 reports are finally collected. Given the safety of the USDA Outlook Forum numbers of 90-90, most of the private guesses are huddled around those numbers, with advice to be prepared ahead of time for a surprise but neglecting to state what that surprise might be.

The market is grudgingly discounting a few estimates under 90 at 89.0 mil-ac of corn and above 90 of 91.2 soybeans with a likely increase in spring wheat of 400,000 acres. I say grudgingly because few actually perform a survey of their own nor do they understand or account for the “unintended consequences” of the last three years of poor economic conditions that were only mitigated by record yields.

Informa is reportedly out with an expectation of 88.9 million acres of corn and 91.5 million acres of soybeans, doing so with basically an unchanged estimate for Iowa and an actual increase in corn acres for Nebraska, which makes their estimate highly suspect. But one has to consider that they try to estimate what NASS will say, not necessarily what the end result is going to be.

We (Gulke Group) don’t publicly release client surveys, as we feel them to be proprietary and often have been more accurate than those publicly released. That’s especially true if there is a significant departure from what otherwise might be normal circumstances. Given that focus as a backdrop, I would expect a surprise, and have prepared accordingly.

Conventional wisdom suggests that based on last year’s acreage of near equality in corn and soybeans, we don’t have much room to increase soybeans at the expense of corn. At least without treading dangerously of bean-on-bean production (two years of planting same crop on same land). That conclusion doesn’t consider that two to three years of beans on beans, while not conventional, has happened. It’s also likely to happen again in some areas, especially those areas north of the mail corn belt.

Furthermore, there are states whose corn acreage still exceeds soybeans by a significant amount. A good exercise is to examine that for yourself. If you or your broker has trouble assessing the facts or understanding the implication, contact me and I’ll give some hint, after the report is out of course.

My Top Producer April column (the last until summer) should be released on Agweb this week and explores some realistic facts that may indirectly affect acreage decisions and help keep what we hear on Thursday from changing, barring a weather influence. The following is an excerpt from the column worth contemplating and is based on personal calculations about 30 days or so ago.

While my calculations are debatable, rest assured the non-ag producing speculators or analysts haven’t attempted to understand something only someone in the trenches can relate to. Thus my thoughts that the unusual economic scenarios we find ourselves in make a surprise possible.

Rude Awakening. Based on a per 1,000-acre corn scenario, my seed company makes $93,000, my fertilizer guy makes $73,000 and my landlord makes $250,000 ($250 per acre), while I invest roughly $650,000 in corn for the privilege of making $28,000. Whereas, I invest $574,000 in soybeans and make $90,000. Odds are the machinery manufacturer does better than I do. A 5,000- or even 10,000-acre farmer increases disposable income, and might argue he can produce his way out of a problem by getting 110% of actual production history. But, in this environment, high leverage, production risk, wide basis and sub-$4-cash corn can bring down an operation in a year or two. We are in a year where the risk is the highest it has been in decades because low prices have deteriorated operating cash.

If dealing with the uncertainty of weather wasn’t enough, I found it equally concerning of the appointment of Larry Kudlow to the administration. Out of archives I found an interview I did on CNBC 10 years ago on the subject of “subsidizing rich farmers,” in which Larry Kudlow was also interviewed. You may recall the backdrop back then of new folks that know little regarding Ag policies were concerned that we were burning corn for fuel (ethanol) while some were going without food.

Take time to listen to the interview, especially Kudlow’s views on farmers and ag: https://youtu.be/RVGq4ZgxtjQ .

If it were up to CNBC, soybeans would already have capitulated on negative vibes of being the target of China’s retaliation. But fortunately for us, South American supplies will not be as available as most global buyers thought just two to three months ago.

Meats, on the other hand, look to be the most vulnerable as pork prices are at or below cost of production in China. Beef has also seen growth globally and is vulnerable. Depending on exports to keep prices afloat, especially when tied to the 800-lb. Gorilla of China, makes a minor cut in actual or expectations of an export cutback or retaliation that much more tenuous especially in a time of total meat expansion.

If the USDA was kicking the decision can down the road in the February Annual Outlook meeting, they will have the facts to update their perspective including being able to blame the U.S. farmer for his planning intentions.

In addition, the stocks-in-all positions will give us more information on how much was used, how much is left and who is holding it. Especially important is how on-farm stocks compare to off-farm. If the producer is holding a lot of on-farm corn stocks, it is unlikely he will move those stocks until more certainty of U.S. acreage and new-crop potential.

The average analyst still believing we like planting corn for the fun of it. Perhaps there will be another eye-opening event, as there was both here in the U.S. last year and in Canada, where farmers in both countries opted for the least-cost decision.

Good Marketing,

Jerry Gulke

Learn more about the Gulke Group and upcoming events at www.gulkegroup.com

Contact them at 480-285-4745 or 707-365-0601

Contact Jerry directly by emailing comments and questions to info@gulkegroup.com .

MARKET WATCH: Grains Slump, Hogs for the Win on Wednesday

Wed, 18 May 2022 21:38:41 GMT

IN-DEPTH MARKET ANALYSIS: Wednesday was a risk-off day in the agricultural commodity markets. Everything was in the red except hogs with spillover from the selloff in the equity sector after Fed Chair Jerome Powell made hawkish comments about the economy and interest rates. However, the grain markets were very overbought, especially in wheat after the run up to new highs. Michelle Rook talked to Chip Nellinger with Blue Reef Agri-Marketing to get the full analysis.

Bulls Still Have a Little Kick Left in Them

Thu, 17 Feb 2022 16:28:11 GMT

Things were looking just a bit glum by the close in the grain and soy markets yesterday, but hope springs eternal, and a few buyers have emerged again this morning. I am hard-pressed to come up with much rationale for the strength, outside of the fact that short-term indicators have slipped into an oversold position, so just how far this strength can carry is debatable. Little has changed with the South American weather outlook, and with Russia supposedly pulling troops back from the border with Ukraine, there would appear to be less incentive for a risk premium.

Overall, we have seen little at this point to suggest bulls are interesting in giving up control of these markets, and I doubt they really will for another six weeks or so, but that does not necessarily mean we will be extending into higher ground either. Between now and the Prospective Planted release on the 31st of March, we could be confronted with little more than sideways congestion, with neither bulls nor bears able to maintain control for long.

China would appear to be very intent on putting the world on notice that they intend to be importing fewer beans in the years ahead. Last week they reiterated the goal of increasing domestic bean production by 40% by 2025. Today, stories have been circulating that they believe they can cut domestic usage by almost 100 MMT per year via changes in livestock rations. While short on details as to exactly how this will be accomplished, they did mention relying more on amino acids and alternative grains in hog diets and increasing forage in the diets of ruminants. At first blush, this would come across as just so much hot air, but when you consider the fact that post-African swine fever, the hog industry in China has become much more commercial and, by extension, more efficient, it is not difficult to believe improvements in feed conversion could be substantial.

We have witnessed reversals in the macros as well this morning. Energies and metal are higher, financial instruments are flat, and equities and the dollar are weak.

Why Brazil Meat Scam Didn't Open Doors to U.S. Beef

Fri, 20 Nov 2020 05:48:27 GMT

Exports for both beef and pork have been flexing their muscles in the market, and DuWayne Bosse of Bolt Marketing says that’s because of high consumer confidence coupled with a strong Dow.

After the Brazilian meat scandal, there were high hopes that China might open a door to U.S. beef, but Bosse explains why that didn’t happen.

Watch Bosse discuss why he’s nervous about the cattle market short-term on AgDay above.

Profit Briefing: Bad News for Pork, Good News For Cattle

Fri, 20 Nov 2020 05:48:27 GMT

During the Pro Farmer Profit Briefing, Chip Flory and Brian Grete discuss the low lean hog and cash lean hog index and the contract highs in the futures cash market in cattle.

Watch the Pro Farmer Profit Briefing every Friday on AgDay.

Is Pork Demand Related To The Winter Olympics?

Thu, 19 Nov 2020 03:31:06 GMT

The 2018 Winter Olympics will begin February 9 in Pyeongchang, South Korea and athletes are preparing to be on the global stage.

Pork producers are preparing too, but in a different way. According to Steve Georgy, vice president of Allendale, Inc., demand to South Korea has increased 21 percent compared to where the picture was in 2017, but it’s not solely because of the Olympic Games.

On AgDay , he said there’s bird flu issues that are increasing demand. In one week, more than 800,000 birds were culled. Russia is having some of the same problems.

“This may have more of a bigger impact than we know right now, so be careful of that with these principles,” said Georgy.

Georgy thinks the hog market is showing signs of inflation, and it’s something that can’t be sustained throughout 2018. He suggests that producers should be protected moving forward and leave the upside open.

“We do need to be careful right now,” he said.

Watch his full comments on AgDay above.

Lower Prices Curing Low Prices in Hog Market

Thu, 19 Nov 2020 03:31:03 GMT

Hook space is growing along with the current pork herd, and pork prices have been feeling pressure.

According to Craig Van Dyke of Top Third Ag Marketing’s risk management team, demand is starting to pick up in the midst of lower prices.. Roughly this time last year, he said the hog market found a bottom, similar to what producers are experiencing now.

“We’re moving toward the right direction to the upside,” he said.

New processing plants in Iowa and Michigan that came online last month are slowly ramping up production. VanDyke says if these facilities are at full capacity, he’s not sure if there will be enough demand to turn prices.

“Maybe there’s a few different factors that grow foreign demand, but ultimately, that’s where we need to see it come from,” said VanDyke. “If not, we’ve got a big concern considering supply.”

Hear his thoughts on domestic demand on AgDay above.

Rabobank Says U.S. Pork Industry to See Ongoing Growth

Thu, 19 Nov 2020 03:31:03 GMT

Over the past decade the U.S. hog and pork industry has gone from lagging production with tight margins to a production recovery phase. The industry is vibrant and growing. In a new report from the RaboResearch Food and & Agribusiness group, analysts look at the growth of the pork industry and the factors determining growth.

Rabobank’s analysis shows the U.S. pork industry could grow by 11% from 2017 to 2025, supported by increased production efficiency and additional processing capacity. These factors have the potential to improve margins along pork supply chains.

“Exports are necessary for future expansion but are not guaranteed,” notes Sterling Liddell, RaboResearch Food & Agribusiness, Global Data Analyst, in a Rabobank news release. “Mexico continues to grow its sow inventories and slaughter plants, making it only a matter of time before Mexico boosts domestic production.”

The report finds that during this transition period in the pork sector, exports, efficiency and slaughter capacity will be the determining factors between stagnancy and expansion.

“The economics of tight profit margins are expected to continue driving more efficiency gains in both key variables, as swine producers seek to optimize returns from feeding and spread fixed costs over more total pounds per female,” the report said.

In the long term, the U.S. sow herd is projected to decrease by 6.3% from 2016 to 2025, the authors wrote.

“This reduction is needed to balance the increased production capacity gained through more pigs per sow, and the 5.5% growth in carcass weight,” they wrote.

Domestic Consumption and Exports
The authors believe “demand will benefit from slight growth in consumption per capita, population growth, and steadily higher exports to trading partners.” It’s steady, but with more pork on the market, it’s puts added pressure on exports.

“Geopolitical issues affect the global pork trade,” explains Justin Sherrard, RaboResearch Food & Agribusiness, Global Animal Protein Strategist. “Specifically, U.S. pork meat exports to certain markets such as Mexico and China are likely to face domestic competition as production in those countries is expected to increase.”

Not to mention the unknowns attached to the future of the North American Free Trade Agreement.

“The U.S. pork industry’s growing reliance on exports has important implications: it introduces volatility to the market and highlights the ongoing need to improve competitive positioning in the key export markets of Mexico and North Asia,” the authors said.

Rabobank says it is critical for producers to understand supply, demand and the potential for increased market volatility.

Weakening Dollar Playing Strong Role In Meat Markets

Thu, 19 Nov 2020 03:30:59 GMT

The U.S. dollar has been losing some strength, which is making the U.S. more competitive in the export market with Brazil and Argentina. These individual country relationships are what drives this competitiveness, according to Alan Brugler, president of Brugler Marketing & Management, LLC.

“We are at a technical support point, and we expect that some of the shorts to take some money off the table,” said Brugler.

This weaker dollar will be playing into the wheat and meat markets, two places where the dollar has its biggest impact.

According to Arlan Suderman, chef commodities economist for INTL FCStone, this was reflected in USDA’s latest meat export report.

“Demand has been supportive,” said Suderman. “We’re starting to find an area where demand is starting to support.”

Hear their full thoughts as well as Don Roose, founder of U.S. Commodities, on protein markets on U.S. Farm Report above.

Rising Incomes Increase Pork Demand, Can It Hold?

Thu, 19 Nov 2020 03:30:59 GMT

Two new pork processing plants came online the beginning of the month in Coldwater, Mich. and Sioux City, Ia. That relieved some of the pressure on the producer end, but now the question is if there’s enough demand on the processed side.

Arlan Suderman, chief commodities economist for INTL FCStone, says domestic demand will continue to grow, and around the world.

Hear his full thoughts on AgDay above.

Be Careful Taking Risks in Second Half of 2017 in Hogs

Thu, 19 Nov 2020 03:30:51 GMT

Hog prices in 2017 have been fairly impressive, and strong consumer demand is keeping the lean hog market strong.

According to Bob Utterback, president and CEO of Utterback Marketing Services , the big factor to watch in the pork picture are the corn market and currencies.

“We’re aiming into a time period where the market, especially the October and December contract, has really precarious risk in front of it,” Utterback told U.S. Farm Report host Tyne Morgan on AgDay. “We have to be very defensive because seasonally, just like the corn highs in July, the hog market has highs in June, July.”

Hear why Utterback thinks the hog market is and isn’t in uncharted waters, as well as his thoughts with the new processing plants coming online on AgDay above.

Two Things Causing Hog and Pig Expansion in U.S.

Thu, 19 Nov 2020 03:30:44 GMT

Last month, the USDA released its first quarterly Hogs and Pigs report in 2017, breaking four records in the first quarter of the year. During the March through may 2017 quarter, producers plan on 3 million sows farrowing.

To reflect the projected growth, three pork processing plants in Sioux City, Ia.; Coldwater, Mich.; and Mason City, Ia. are expected to go online this year or in 2018 .

Bryan Doherty , senior market advisor for Stewart-Peterson , told host of U.S. Farm Report Tyne Morgan two things are driving the expansion.

“The increased packer capacity [is] part of it, but it’s the cheap grain,” he said. “This is a window of time when you look at the relative price of corn to where it’s been the last decade, this is cheap for hog producers to buy and buy long-term feed.”

Watch Doherty discuss milk prices and markets with Dan O’Bryan of Top Third Ag Marketing on U.S. Farm Report above.

Hogs and Pigs Report Preview

Thu, 19 Nov 2020 03:30:40 GMT

The USDA’s quarterly Hogs and Pigs report is due out Thursday.

Don Roose, founder of U.S. Commodities , has a preview of the report on AgDay above.

Lack of Selling Could Come Back to Haunt Farmers

Thu, 19 Nov 2020 03:28:49 GMT

Farmers are holding tightly onto new crop corn and soybean supplies in hopes of higher prices returning in a post-harvest rally, but the herd mentality to marketing could come back to haunt farmers later, Jerry Gulke, president of the Gulke Group, said on Farm Journal Radio’s Weekend Market Report.

“The thing to do last year was to not sell grain at harvest and hold it into the post-harvest, and in November we made the highs,” Gulke said. “But this year, everybody knows that that’s the thing to do, which bothers me a little because the majority are seldom right in total. They can move markets for a while, but I am concerned that everybody out there is going to store for higher prices. Whether we can get those higher prices like we did last year or not, I don’t know.”

Amidst the lack of farmer selling and dearth of news, corn and soybean prices traded in a narrow range this week. December corn ended 2 ½ cents higher on the week at $3.82 ¼/bu., and November soybeans were 11¾ cents lower at $8.83¾/bu. Chicago wheat, meanwhile, rallied 31½ cents to finish the week at $5.22/bu., amidst production concerns in Australia and the Black Sea region.

Listen to his full comments here:

For U.S. corn and soybean farmers concerned with marketing recently harvested fall crops, Gulke said, many remained focused on potential rallies that could be sparked by weather issues in South America.

“If we get into a dry spell in Brazil that’s worse than what we’ve had, I can’t help but believe that some of the reason we’re at $8.82, or in that area, and not at $8 would be concern for South American beans,” Gulke said. “If that gets worse, then you could put a dollar on beans pretty easily.”

Hoping for a major fall rally in the row crops would be a tall order given the current supply situation in the U.S., Gulke added, stressing that South America will be the wild card in corn and soybean prices in the 30 to 60 days.

Selling some now and holding some later, he said, will help farmers mitigate risk.

“We need to remain flexible,” he said. “That’s why I kind of like to hold some in my bin.”

Headline Risk April 28, 2014

Thu, 19 Nov 2020 03:26:25 GMT

The goal of Headline Risk is to identify the markets most vulnerable to be influenced by headline-making news. And, of course, to identify the news that might influence price action in the corn, soybean, wheat, cattle and hog markets.

Each potential headline includes a rating from 1 to 10. Each potential headline starts with a 5 rating, meaning the market is used to seeing news on the topic, but is still paying attention to development of the event. If a potential headline is given a 5 rating, it means it will take a “major happening” in the event to have an influence on price action this week. A 5 rating means a market is likely to have a neutral reaction to news from the event this week. A potential headline with a 10 rating means I am extremely confident the event will not only have an influence on price action, I am also extremely confident it will have a bullish impact on price action A potential headline with a 7 rating means the story is likely to influence price action and I believe it is likely to have at least a short-term bullish impact on prices. A potential headline with a 1 rating means I am extremely confident the event will not only have an influence on price action, I am also extremely confident it will have a bearish impact on price action. A potential headline with a 3 rating means the story is likely to influence price action and I believe it is likely to have at least a short-term bearish impact on prices.

Headlines that have the potential to impact CORN trade this week --

Ukraine-Russia conflict -- headline risk rating of 7. The rating is up from last week’s rating of 6. The conflict intensified over the weekend and the U.S. and the European Union are ramping up sanctions against the Russia. (Pro Farmer Today subscribers should see “First Thing Today” for more details.) Here’s the risk as I see it this week: The markets seem to be underestimating the level the conflict reached over the weekend. As more in the market realize what’s happening and how it might impact availability of exportable corn from the Black Sea region this year, it should at least help limit selling pressure in corn futures this week. Corn planting progress -- headline risk rating of 6. The rating is up from 3 last week -- which was a miss on the risk assessment. Planting progress last week failed to beat trade expectations, giving the corn market a source of support into the end of the week. The outlook for today’s USDA Crop Progress Report is a mixed bag. Some expect corn planting progress to be as high at 25% for the U.S. - others see corn planting progress as low as 15% in the week ended April 27. I like a range of 17% to 20%, which I think would be viewed as slightly friendly for prices. Corn demand -- headline risk rating of 6. The rating is down from 7 last week. Export inspections of corn in the week ended April 24 should be solid. But, after last week’s huge loadings it will be difficult to get a an inspections tally strong enough to be viewed as price friendly. Still, corn inspections should not bring pressure to prices later this morning. Weather -- short-term headline risk rating of 6; long-term headline risk rating of 3. That does not mean the weather will be good... it just means the bulk of this week’s rains and the cold temperatures over the next two weeks have already been factored into prices. For this week I’m sticking with a slightly bullish lean on the weather based on the likelihood that extended forecasts will keep below-normal temperatures in the outlook. Conversely, when the National Weather Service 6- to 10-day and 8- to 14-day outlooks begin to work “more normal” conditions into expectations, that will likely result in selling pressure on corn futures -- even if the forecast comes out when it’s cold and raining over the entire Corn Belt! The market is looking out as far as possible at the weather... and solid indications that this spring’s weather will finally “straighten out” could be a big-time negative on corn prices. (And guys... the weather will straighten out at some point.)

Headlines that have the potential to impact SOYBEAN trade this week --

Corn planting progress -- headline risk rating of 4. The rating is down from 6 last week when I expected corn planting progress to beat trade expectations. The reason I’m moving corn planting progress from a potential positive for soybean prices to a likely negative impact on bean prices is because I expect more talk this week that slower-than-normal corn plantings could force some acres over to soybeans. November soybean futures came within a penny of $12.50 overnight, giving more incentive to move some acres over to soybeans. Soybean planting progress -- headline risk rating of 5. Rating is unchanged from last week. Traders will pay close attention to Monday afternoon’s Weekly Crop Progress Report, but it would take planting progress well ahead of the five-year average to generate a negative price reaction. That’s not going to happen. Even 0% soybean planting progress wouldn’t be considered price positive... not yet, anyway. Soybean trade -- headline risk rating of 6. The risk rating is up from 3 last week. As expected, the latest chapter in the soybean trade story was written last week with talk of soybean and soybean meal imports into the U.S. weighing on prices early last week. Adding to pressure was uncertainty over how the detainment of three officials at the Chinese office of a Japanese grain shipping firm would impact Chinese soybean supplies. This week, the “negative risk” surrounding trade issues seems to have been replaced with optimism (at least to start the week) that China will be back to buy more beans later this summer. They will... there’s no doubt about that. And even if there is confirmation of additional imports of soybeans into the U.S., I think the market has a better understanding now that it won’t have much impact on the Supply & Demand balance sheet this year.

Headlines that have the potential to impact WHEAT trade this week --

Crop Condition Ratings -- headline risk rating of 7. The rating is unchanged from last week. However, last week’s headline risk was overrated at 7 -- the Weekly Crop Condition Report did show the HRW crop deteriorated further, but it wasn’t enough to bring much support to prices. That should change this week after the Southern Plains once again missed out on weekend rains and dust storms were more common that rain clouds. A dust storm has to put a crop-observer in a tough state of mind if they were out yesterday taking a look at crop conditions. Weather -- headline risk rating of 3. The rating is unchanged from last week. Again, it’s not that the weather is positive for crop development, especially for the hard red winter wheat crop. But, the soft red crop is in very good condition and the cooler temps will keep the crop slowly building yield. But, the risk is that the Southern Plains does get a much-needed rain at some point this week. If it happens, that would likely pull the rug out from under wheat prices. HRW wheat tour -- headline risk rating of 6. New entry for wheat this week. The annual hard red winter wheat tour run by the Wheat Quality Council is this week. Tomorrow is the first day in the field and they’ll be in some good wheat. We’ll also get some observations of conditions from Nebraska and Colorado, which could offset some of the good-crop observations in from northeastern Kansas. Day two of the tour gets into western Kansas, where the wheat is in really tough condition. The area saw dust storms over the weekend and more high winds are possible when the scouts are in western Kansas. (Can you imagine the number of dust-storm pictures that would hit Twitter if that happens?) We’ll also get observations out of Texas and Oklahoma on Wednesday. Day three is a short day for the Tour, but it will likely be a mixed bag of conditions as the scouts make their way back east and end up in Kansas City on Thursday.

Headlines that have the potential to impact HOG trade this week --

PEDV -- headline risk rating of 4. Risk rating is unchanged from last week. Porcine Epidemic Diarrhea virus (PEDV) is an “old” story in the hog market that is still developing. The disease is now under the mandatory reporting program, which should make it easier to figure out how many cases are confirmed in the country in the weeks, months and years ahead. However, the pace of new cases of PEDV has slowed dramatically as temperatures have warmed up, meaning many traders believe the industry is getting the disease under control. It’s not - Mother Nature is slowing the spread. Still, the slowing pace is what gives this event a very slight negative influence on the market this week. Slaughter pace -- headline risk rating of 6. Rating is unchanged from last week. The risk is the industry has underestimated the impact of PEDV on hog supplies. Traders will watch the slaughter pace closely this week as the calendar inches closer to what is expected to be the peak-influence period of PEDV on hog supplies starting in late July. Pork demand -- headline risk rating of 3. Rating is unchanged from last week. Pork movement slowed last week (as expected) and at least another week of “slow” movement should be expected, likely weighing on lean hog futures this week.

Headlines that have the potential to impact CATTLE trade this week --

Packer profits -- headline risk rating of 4. Rating is unchanged from last week. Packer margins improved last week, but not enough to support cattle bids. Slaughter pace -- headline risk of 5. New entry this week. I just don’t think the slaughter pace can surprise the market this week, neither coming in low enough to support prices or high enough to weigh on prices. Beef demand -- headline risk rating of 6. Traders simply do not expect strong beef demand... and because they don’t expect strong demand, even resilient demand should be enough to help support live cattle prices this week as retailers start to gear up for the grilling season. However, the weather outlook calling for below-normal temps could be enough to push back stronger spring demand for whole-muscle cuts deeper into May.

Headlines that have the potential to impact all commodities trade this week --

May 2 Employment Report -- headline risk rating of 4. Trade expectations will be available later this week. However, better weather in April should result in non-farm payroll growth of close to 200,000, which may be better than some expect, but it’s still not good enough to signal the job market is back on its feet and expanding at a fast enough pace to indicate stronger consumer demand for higher-priced food items.

Market Analysis

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Cattle Try to Recover But is an Intermediate Top In? Grains Lower Pre-WASDE

Corn and Soybean Prices Tank After USDA Report Makes Surprising Revisions to Yield

Surprise in Soybeans

Cuts to Brazil

Quarterly Grain Stocks

Better Yields and Improved Crop Prices Propel Ag Economists' Outlooks for 2024

Spike in 2024 Net Farm Income Forecasts

Weather Worries in South America

Bullish Views on Cattle Continue

Health of the Farm Economy by Geography

Impact of Interest Rates (Both Positive and Negative)

Outlook for Crop Mix in 2024

‘Reckless Spending’ is Putting U.S. Fiscal Health at Risk, Analyst Says

Where Did China's Population Go, And What Does It Mean For China's Historically Strong Export Demand?

Read More: Future Shock: U.S. Agriculture Sleeping on China’s Historic Population Crash

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Headline Risk April 28, 2014