THE LAND
S E C T I O N
B
October 14, 2011..
Cash Grain Markets corn/change* Dover Edgerton Jackson Janesville Cannon Falls Sleepy Eye Average: Year Ago Average:
soybeans/change*
$15
average soybeans average soybeans year prior
$5.64
$11.11
$12 $ 9 $ 6 $ $ 3
$4.38
$10.50
$ 0
$5.50 $5.71 $5.89 $5.64 $5.51 $5.60
-.78 -.47 -.15 -.44 -.42 -.40
$10.90 $11.21 $11.38 $11.10 $10.96 $11.08
-1.24 -.59 -.37 -.70 -.56 -.62
THE LAND, OCTOBER 14, 2011
Local Corn and Soybean Price Index
1 B
average corn average corn year prior Oct'10
Nov
Dec
Jan'11
Feb
Mar
Apr
May
June
July
Aug
Sep
Grain prices are effective cash close on Oct. 10. The price index chart compares an average of most recently reported local cash prices with the same average for a year ago. *Cash grain price change represents a two-week period.
Grain Angles
Macroeconomics can’t be ignored
Retailers resist higher prices
Harvest conditions ‘tremendous’
The following market analysis is for the week ending Oct. 7. CORN — After a spike lower to start the week, corn finally managed to find some buyer interest when December corn futures traded under $6 last week for the first time since July. Informa Economics updated their crop estimate at midweek which also lent a supportive air to the market. With all the reports of betterthan-expected yields, the trade was expecting Informa to keep the yield at 150 bushels per acre or higher. While their fresh yield fore- PHYLLIS NYSTROM cast of 149.5 bu./acre is still higher Country Hedging than the last U.S. Department of St. Paul Agriculture estimate of 148.1 bu./acre, it was a drop from their 151.0 bu./acre September figure. Informa Economics crop production number is 12.519 billion bushels. Macroeconomic influences couldn’t be ignored this week either. The pendulum was first swinging to the negative side on renewed concerns about European bank stability and Greece’s ability to make their debt payments. This pushed the U.S. dollar higher. As the week progressed, the news took a more positive slant as statements came out that the European Central Bank would hold interest rates at unchanged. This halted the dollar’s upswing. The U.S. non-farm payroll additions for September were friendly at 103,000 when only 60,000 were expected. The August number was also revised up from zero to 57,000 jobs added. The September
The livestock markets have continued to show strength as we moved into October. Most of the strength has been developed in the futures market which has led packers to pay higher for live inventory. This has been most true in the cattle market which has seen speculative buying pushing futures way out ahead of the current cash prices. This activity has been led by the commodity hedge and index funds moving large amounts of money into this market as a hedge against inflation. The true fundamentals would indicate not quite as bullish a sceJOE TEALE nario as what is being presented Broker by the influx of these funds. Great Plains Commodity Afton For example this has forced the packers to push for higher beef cutouts to try to keep their margins at a positive basis. Because of this the retailers are resisting the higher prices and the volume in the boxed beef trade is slowing once again as we move toward the $185 per hundredweight level basis choice. With competitive meats at much lower cost to the retailer and consumer, the emphasis is turning away from beef to the other meats. With the continuing economic struggles worldwide, much higher food costs would not appear to be able to be sustained in the long run. Therefore, cattle prices may be restricted in how far they can advance in the future from current levels. Producers should take advantage of the current strength in the market and at least protect some inventory. The hog market has been helped to some degree, as
The unseasonably warm, dry fall has given us tremendous harvest conditions. The speed of harvest has been a real blessing, given the late planting of this crop. Earlier in the growing season, there was concern of high drying cost. Fortunately this has not been a problem and has saved a great deal of time in the harvesting process. The early frost has not proven to have damaged the crops as many feared. There are some pockets that were especially late in planting that are reporting some “green” beans. Yet, to date this has not been widespread. For TOM NEHER those challenged with these con- AgStar VP Agribusiness ditions, one will want to be cog& Grain Specialist nizant of the grain grading and Rochester discount schedules at the point of sale. One must be careful not to co-mingle “green” beans with beans unaffected by the early frost. This could cause significant financial consequences, due to discounts. As we fill on-farm storage, we must remember that this is another business enterprise that must be managed in a professional manner. There are opportunities to fatten margins with proper managing and merchandising. With these opportunities, there are also risks involved with mismanagement. There is nothing like letting a bin of grain go out of condition, to provide a steep “tuition” bill from the marketplace. Attention to details, such as “pulling the centers” out of the bins to remove the “fines,” to allow for proper air circulation throughout the bin can pay big dividends. Fall tillage could be a challenge with the dry con-
See NYSTROM, pg. 2B
See TEALE, pg. 2B
See NEHER, pg. 2B
Information in the above columns is the writer’s opinion. It is no way guaranteed and should not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk.
“Where Farm and Family Meet”
Livestock Angles
<< www.TheLandOnline.com >>
Grain Outlook