Marketing

The following marketing analysis is for the week ending Dec. 24.

CORN — The higher trend in corn continued as March corn finally pushed through the $6.00 per bushel resistance for the first time since July 2021. Corn felt pressure to start the week from the macro side with big energy losses on fears of Omicron repercussions. Dry forecasts for South America were set aside for a day but came back into focus as the holiday-shortened week progressed. A very strong soybean complex paved the way for the rally in corn.

Weekly export sales were as expected for old crop at 38.7 million bushels and very strong for PHYLLIS NYSTROM new crop at 5.3 million bushels. CHS Hedging inC. Total old crop commitments St. Paul stand at 1.55 billion bushels and are running 6 percent behind last year. The U.S. Department of Agriculture is anticipating a 9 percent year-on-year decline in exports. We need to average 25 million bushels of sales per week to hit the USDA’s 2.5 billion bushel export projection. Weekly export inspections were over 1 million metric tons, but we need to average 1.37 mmt per week to hit the USDA’s export outlook, and we haven’t achieved that level in this marketing year.

Weekly ethanol production fell 36,000 barrels per day to 1.05 million bpd; but held above the needed pace to hit the USDA outlook. Ethanol stocks were down 178,000 barrels to 20.7 million barrels and the first decline in five weeks. Weekly gasoline demand fell from 9.472 million bpd to 8.986 million bpd. Gasoline demand over the last four weeks is up 15 percent compared to a year ago. Ethanol margins were slammed 25 cents as they dropped to 88 cents per gallon.

High corn prices in China suggest they will be in the market for corn imports. However, China’s November corn imports were the lowest in nineteen months at 790,000 metric tons and down 35.7 percent lower than November 2020. We haven’t seen China in our corn market for months.

Brazil’s second corn crop or safrinha corn crop is the larger of their corn crops. It is planted after the soybean harvest. Current weather shouldn’t have an impact on the safrinha crop at this time, but it may in the future if La Niña is lengthy. This situation will

corn/change* soybeans/change*

St. Cloud $5.95 +.19 $13.30 +1.00 Madison $5.89 +.15 $13.35 +.95 Redwood Falls $5.98 +.17 $13.39 +.99 Fergus Falls $5.85 +.10 $13.21 +.86 Morris $5.87 +.12 $13.33 +.89 Tracy $5.93 +.13 $13.26 +.98 Average: $5.91 $13.31 Year Ago Average: $3.87 $11.18

Grain prices are effective cash close on Dec. 28. *Cash grain price change represents a two-week period.

be monitored over the next few months for potential problems.

Outlook: While everyone is aware of the issues with South American weather, don’t lose sight of the tensions between Ukraine and Russia and what that could mean to agricultural commodity markets if they come to blows. If Covid and related strain cases continue to increase around the world, economic growth may be slowed. Good demand and positive ethanol crush margins should keep basis levels firm.

The next obstacle for March corn is the $6.16.5 level from July after March corn closed above $6.00 for the first time in six months. The next level of resistance lies near $6.25-$6.33 per bushel. For the week, March corn was 12.5 cents higher at $6.05.75, July rallied 13.25 cents to $6.06, and the December 2022 contract was 7 cents higher at $5.53.5 per bushel.

The markets are not taking any time off for the New Year’s holiday. The markets will be open normal hours on Dec. 31 and Jan. 3.

SOYBEANS – Fireworks were seen in soybeans during the holiday-shortened week and ahead of the January option expiration. On the continuous monthly soybean chart, soybeans are headed for the first higher monthly close since April!

South American weather forecasts for hotter and drier conditions through the end of the year for Argentina and southern Brazil were the driving factor. Their temperatures have surpassed 100 degrees in northern Argentina and southern Brazil.

January soybeans traded through $13.00 per bushel for the first time since Sept. 30. January soybeans topped out for the week at $13.34 per bushel and the March contract traded as high as $13.42.5 per bushel. January and March soybeans soared to their highest prices since August 2021. January meal traded to prices not seen since mid-May when it topped out at $423.60 per ton. This week’s high was $407.80 per ton.

Private estimates for South American soybean and corn production are beginning to decline. Up until now, rain in Argentina and southern Brazil were enough to get by, but we weren’t adding anything to the subsoil. Dryness and heat have increased with reports of aborted pods in Parana, Brazil with some reports that Parana’s soybean yield is already down 12 percent. One private consultant cut their Brazilian soybean production 2 mmt to 142 mmt vs. the USDA’s 144 mmt forecast. For Argentina, the number fell 1 mmt to 49 mmt compared to the USDA’s 49.5 mmt outlook. Northern Brazil is developing in favorable conditions with some early soybean harvest expected in December; but there have also been reports of flooding in northeastern Brazil. If the weather allows early soybean harvest in Mato Grosso, Brazil could begin before the end of the year.

The soymeal market continues to strengthen on a shortage of lysine for feed. Soyoil trade was volatile as was the energy market. Energies affect the soyoil market through biofuel usage. Fears of further lockdowns and restrictions fed into a huge energy sell-off to begin the week before recovering through the end of the week.

Weekly export sales were a marketing-year low at 29.8 million bushels. Total commitments, at 1.5 billion bushels, are down 24 percent from last year when the USDA is forecasting a 9.4 percent yearon-year decline. We need to average 15 million bushels of sales per week to reach the USDA’s 2.05 billion bushel outlook. Weekly export inspections were at the lower end of expectations at 1.7 mmt. Year-to-date soybean inspections are down 22.8 percent.

Outlook: Both January and March soybeans have a string of eight higher closes as of Dec. 23. March soymeal traded to its highest price since mid-May.

South American weather will continue to be the main focus of the market. Into the end of the year, the current forecast is hot and dry for southern Brazil, Argentina and Paraguay. Northeastern Brazil has been receiving decent rain and to an excess in some locations. In Brazil, it is difficult to say to what extent losses in the south may be countered by gains in the north. Early soybean harvest in Brazil is expected to begin before the end of the year.

Other items of interest will be the ongoing tensions between Ukraine and Russia, the lysine shortage, and the world’s reaction to Omicron cases. The high this week in March soybeans was $13.42.5 per bushel. The next upside target for March soybeans is $13.76.25 per bushel, the high in August; but it’s all dependent on Mother Nature.

Merry Christmas and happy New Year!

Weekly price changes in March wheat: Chicago jumped 39.75 to $8.14.75, Kansas City surged 51.5 cents to $8.61.5, and Minneapolis was a dime higher at $10.32.5 per bushel. v

reduced in 2020 and 2021 due to impacts from the Covid pandemic.

The EPA has also been far less lenient with granting the “small refinery exemptions” to gasoline refiners this past year than occurred in some previous years; however, many farmers and investors remain highly concerned about where ethanol production and utilization will fit into future U.S. energy policy. Proposed Federal legislation such as the BBB bill, as well as statewide initiatives such as the “California Fuel Standards,” have put future research and development of biofuels in the forefront of the climate change battle. Most of the emphasis is on new types of biofuels such as renewable diesel which is refined from soybeans and other crops, utilizing a different process than traditional biodiesel. Another initiative is for “sustainable aviation fuel” which might be developed by alterations to the current ethanol production practices. These initiatives have some support from private companies, as well as the Federal government, and may offer some future opportunities for U.S. crop producers.

Trade policy — During the 2020-21 USDA marketing year for corn and soybeans, which ended on September 30, 2021, grain export levels returned to very solid levels compared to recent years. From 2017 to 2019, efforts to reset previous trade agreements with China resulted in serious trade disputes between the United States and China. Numerous tariffs were implemented on many goods and services being imported from China, as well as those being exported by the United States to China — including soybeans, pork, and other agricultural products. The new Phase 1 trade agreement between the United States and China was close to being fully implemented during 2020-21 marketing year. The result was a rebound of soybean exports to China to near “pre-trade war” levels, as well as a surprising increase in corn exports to China. There is concern the recent increased political tensions between the United States and China may lead to renewed trade disruptions between the two countries going forward.

There also continues to be discussions surrounding the possibility of the United States attempting to enter the Trans-Pacific Partnership trade agreement with many Asian countries, including Japan, as well as potential future trade agreements with other countries. In addition, there continues to be modifications in trade relations with Canada and Mexico, which together with China comprise the three largest trade partners for U.S. ag products.

Livestock-related issues — After Jan. 1, 2022, the pork industry will be challenged by the implementation of “Proposition 12” — the California law which will restrict a significant amount of the pork produced in the Midwest and other areas of the United States from being sold in California. Pork producers are also very concerned with outbreak of African swine fever disease in the Dominican Republic and Haiti during the past year, and the potential production and market disruptions that would be caused by an AFS outbreak in the United States.

Many beef producers are concerned with the continuing impacts of the 2021 drought that affected many cow/calf production areas of the country. Beef producers are also quite interested in the Congressional hearings and Department of Justice investigations related to pricing practices within the beef processing industry.

Dairy farmers have seen some improvement in profit levels during the past year. However, the longterm trend in the dairy industry is for continued tight profit margins. This means that it will likely be necessary to continue federal dairy support programs in the future as a financial protection tool for small-to-medium sized dairy operations.

Looking ahead to the next Farm Bill — The current Farm Bill expires on Sept. 30, 2023, so Congressional discussions on the next Farm Bill will likely begin early in 2022. Current issues such as providing adequate an “safety net” for crop and livestock producers, response to climate change, and links to social issues are likely to affect the discussions surrounding the next Farm Bill. Following are some key questions relative to development of the next Farm Bill that will likely enter into the debate:

Will crop insurance continue to be protected as the corner-stone risk management tool for farmers or will there be efforts to create a permanent disaster program similar to the WHIP+ program?

Will crop producers still have annual farm program choices (PLC and ARC-CO) or will commodity farm programs transition back to more of a “pricesupport” program model?

Will climate change, carbon credits, and other carbon sequestration efforts be linked into the commodity title the next Farm Bill, either on a mandatory or voluntary approach?

Will CRP acres be expanded or set-aside acres be added to address carbon sequestration efforts?

How will the proposed funding and program enhancements for EQIP, CSP, and other existing conservation programs listed in the proposed BBB bill be incorporated into the next Farm Bill?

Will there be enhanced risk management tools be added to the Farm Bill for livestock producers?

Will there be other changes to the Nutrition Title of the Farm Bill?

What will be the baseline budget allocation for the various commodity titles in the next Farm Bill?

It should be noted that some policy experts feel that it is highly likely that the current Farm Bill could be extended by one year or more, given the current political divide in Congress on major policy issues.

There are numerous other issues and policy efforts that could impact farm operators and rural communities in 2022 and beyond. Some other key policy issues to be addressed going forward include inflation and rapidly rising farm input costs, labor shortages and immigration policy, rural health care access and costs, expansion of broadband coverage, and infrastructure needs. Obviously, concerns with the Covid pandemic have not gone away, so policies that are enacted at the Federal level, either through legislative action or administrative order, can certainly affect the future of the agriculture industry. Even though farmers and rural communities make up a small percentage of the total U.S. population, the policies that are passed by Congress and implemented by the Federal government targeting the ag industry can have a big impact on the future food supply, energy security and other aspects of life for the entire U.S. population.

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com. v

The University of Minnesota Southern Research and Outreach Center is under new leadership. Jason Stenzel of Waseca accepted the leadership role earlier this month serving as Director of Operations. Stenzel joined the SROC team in 2016 serving as Farm Manager/Maintenance Supervisor.

Under Stenzel’s leadership, the SROC looks forward to continuing strong partnerships with the local ag community that promote multidisciplinary research and outreach programs to enhance agricultural production systems across southern Minnesota.

This article was submitted by the University of Minnesota. v

MANKATO, Minn. — David Preisler, long-time CEO of the Minnesota Pork Producers Association and Minnesota Pork Board, announced his plans to retire from the organization effective June 1, 2022. Preisler notified the Board of his plans at its Board meeting on Dec. 16. His retirement will mark nearly 28 years leading the Pork association and representing the interests of Minnesota’s family pig farmers. “It has been a privilege to work with some of the country’s best livestock farmers here in Minnesota who are not only excellent farmers but outstanding industry leaders at both the state and national levels,” Preisler said. “Minnesota is the second largest state in pork production (value and number of market pigs raised) and we are fortunate to have a very strong producer-led organization with knowledgeable and committed Board members, a dedicated staff, and strong relationships across the agricultural community and beyond. It has been an honor to serve Minnesota’s pig farmers who are committed to doing what is right for their animals, their people and communities, and the environment. My career has really been about the people, and I have had the joy of working with exceptional staff who also believe in serving farmers. I really feel like I’m stepping away from the organization at the right time and in very good hands.”

John Anderson, a Stearns County pig farmer and current president of the Minnesota Pork Producers Association, commented, “Dave has provided excellent leadership to Minnesota Pork and has effectively represented the interests of pork producers throughout Minnesota and nationally. Over the years, Dave has helped producers navigate the intricacies of government policy, permitting, sustainability, animal wellbeing, and the importance of consumer outreach and engagement. The pork industry has faced difficult situations over Dave’s career and his steady leadership and commitment to Minnesota pig farmers helped see us through the challenging seasons of farming. Minnesota Pork is in a good place today because of Dave Preisler and we wish him the very best in future years.”

Preisler has committed to assisting Minnesota Pork with the transition to a new leader. The Board intends to conduct a search of potential candidates to replace Preisler over the coming months.

This article was submitted by the Minnesota Pork Producers Association. v

supporting the market. Year-to-date, dry whey exports are up 7.4 percent from 2020, with strong demand from China in particular. China’s imports of whey and dry whey products grew more than 30 percent in 2021, and most of these imports are coming from the United States that maintains a price advantage over EU suppliers.”

“Demand is expected to slow in 2022 however due to a declining birth rate in China that will limit demand for infant formulas, as well as low hog prices that will limit demand for feed-grade whey. Class IV prices are drawing support meanwhile from butter which is trading at a two-year high above $2.00 per pound as U.S. prices are trading below international values. Butter exports have helped to draw down stocks from July through October at the fastest pace since 2013,” the Margin Watch concluded. n

Whole milk powder reversed the last Global Dairy Trade auction of 2021, as the weighted average fell 1.5 percent (the first decline since Aug. 3) and followed a gain of 1.4 percent on Dec. 7; 1.9 percent on Nov. 16; and 4.3 percent on Nov. 2. Traders brought 67 million pounds of product to market, down from 68.5 million last time.

Whole milk powder was down 3.3 percent after inching up 0.6 percent on Dec. 7. All other products posted gains, led by lactose — up 3.7 percent after gaining 3.5 percent on Dec. 7.

Butter was up 1 percent after leading the gains last time with a 4.6 percent surge. Anhydrous milkfat inched up 0.9 percent following a 3 percent rise. Skim milk powder was up 0.6 percent after rising 1.3 percent last time, and cheddar cheese inched 0.5 percent higher, following a 1 percent gain last time.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.5891 per pound U.S., up 2.6 cents, after jumping 11.4 cents last time and 8.2 cents the time before that. CME butter closed Dec. 23 at a bargain $2.25. GDT cheddar, at $2.3773 per pound U.S., was up almost a penny and compares to Dec. 23’s CME block cheddar at $1.8725. GDT skim milk powder averaged $1.6986 per pound, up from $1.6877. Whole milk powder averaged $1.7540 per pound, down from $1.8178. CME Grade A nonfat dry milk closed Dec. 23 at $1.67 per pound

StoneX’s Dustin Winston says, “Since whole milk powder carries the bulk of volume in the auction, the decline dragged the index down.” n

The Foreign Agricultural Service’s World Markets and Trade report says, “Despite the logistical challenges posed by the Covid-19 pandemic, U.S. dairy exports are set to record a stellar year led by shipments of skimmed milk powder, cheese and butter. Skimmed milk powder shipments through October have already reached 689,000 tons — accounting for nearly one-third of the $6.4 billion of dairy exports already shipped. For the year, skimmed milk powder exports are forecast to reach a record 887,000 tons, up almost 10 percent over 2020,” according to the report.

“Growth is anticipated to moderate in 2022 with exports set to grow by 3 percent to reach 917,000 tons. Global prices of skimmed milk powder have been rebounding recently as a result of lackluster milk production in Oceania and the EU. Skimmed milk powder prices in these regions are currently hovering around $1.60 to $1.65 per pound. While U.S. prices remain competitive, import demand is expected to be tempered as food processors seek more cost-effective substitutes,” the report warned.

“One notable trend is that U.S. global market share of skimmed milk powder among major exporters has been steadily climbing from around 30percent in 2015 and is forecast to reach 41 percent in 2022. Since 2014, the EU has been the dominant supplier. However, this year U.S. exports of skimmed milk powder are expected to surpass EU shipments.”

The reported added, “This trend is likely to persist into next year as U.S. milk production is expected to continue to grow. Exports of other dairy products such as cheese and butter have also posted strong gains this year. In the case of cheese, shipments this year are expected to grow by 16 percent to reach a record 412,000 tons. U.S. butter has also been highly sought after as it is highly competitive in a tight global market. Recent Oceania prices have been around $2.65 per pound while EU prices have been higher. Exports of U.S. butter this year are expected to more than double from last year to reach 60,000 tons. In recent months, global prices for major dairy commodities have been rising rapidly due to strong demand and faltering milk production in key producing countries.”

Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at lkmielke@juno.com. v

The Land Staff Writer Emeritus

OLIVIA, Minn. — Minnesota Commissioner of Agriculture Thom Petersen was a guest speaker at the Minnesota National Farmers Organization annual convention. The event took place at Max’s Grill in Olivia, Minn. on Dec. 4. Appointed Commissioner in 2019, Petersen is a long-time resident of Royalton Township near Pine City, Minn. where he lives on a horse farm. Prior, he was director of government relations for Minnesota Farmers Union — working in both Washington, D. C. and St. Paul.

I was able to chat with Petersen at the Olivia event about farm economy, Minnesota markets and the state’s ongoing battle of the parties in St. Paul.

The Land: Welcome to Minnesota’s Corn Capital. You know this Renville County area quite well?

Petersen: Indeed. This is a highly-productive county blessed with good soils and innovative farmers. I recall two seed companies out here, RBA Seeds and Keltgen Seeds … both were big news makers in the seed industry. And that I suspect spurred the Minnesota Legislature in the early 1990’s to designate Olivia as the “Corn Capital of Minnesota.”

The Land: We’re seeing lots of new wealth in Minnesota agriculture this year. Is this a short-term bump or a continued bonanza?

Petersen: Most of the state is in good shape; but quite a few cattle producers in northwestern Minnesota are still feeling the effects of our draught this season. Many farmers tell me they were pleasantly surprised with yields, high test weight corn and market prices that strengthened — even stayed strong through the harvest season. But we are concerned about input costs. I’m told fertilizer costs pushing into the $300 per acre category. Virtually all other costs also significantly higher … including land rental charges. Hopefully farmers can now enjoy a couple of good years, because a farmer’s financial health is vital to our rural communities also.

The Land: This inevitable … do you think the November 2022 election will be a turning point in the politics of America?

Petersen: I’ve learned to not make predictions because just a couple months can make a huge difference in the political structure of our state — even our country. But what’s great about Minnesota is our people really get engaged in politics, even at the highest level. Best I can say today, Dick, is let’s just see how it plays out. Yes, some change seems inevitable based on political polls aired on the news networks these days.”

The Land: Let’s talk about hemp, still being touted as a new crop industry here in Minnesota. Here in Olivia we have a company (Seehausen Brothers) striving to finance the building of a hemp processing facility. What’s your take on the status of the hemp industry in Minnesota?

Petersen: We have about 400 farmers with some hemp acres this year. Because of limited processing and marketing however, there’s been little increase in the past couple of years. We’ve got to get more processing going. It’s not bigger companies getting involved; it’s younger start-ups. But startups are tough. Get some processing going and I think we’ll see hemp emerge as a nice new niche crop. We’re talking about 5,000 acres currently.

The Land: Are there any cattle on your own farming operation?

Petersen: Not anymore … just horses now. But I’m thinking about buying some cattle. I was working on one of my fence lines yesterday and was inspired to possibly buy some feeders next year. I’m about one hour north of the Cities in Pine City.

The Land: So with grain markets strong, more corn for your operation next year?

Petersen: We’re on the ‘corn line’ north to Duluth. Since I bought my first land 30 years ago, genetics have boosted corn’s durability considerably. And that’s making corn a more attractive crop — even for us more northern growers with shorter seasons. But I do know export shipments out of the Duluth harbor often include lots of corn. And that’s good for all producers. So maybe some more corn for us in 2022.

The Land: Any policy issue in this legislative session on your agenda?

Petersen: Yes, we’re still trying to expand our local meat processing capabilities. You’ll recall a couple years back some meat processing facilities got shut down because of Covid-19 impact and regulations. Yes, some producers had to slaughter their own animals because processing facilities were shut down. Farmers here today telling me of up to a year-long delay to get their own animals processed at their local locker plant. So more expansion is definitely needed.

We’re also working to expand E-15 marketing across the state. E-15 sales will set a record this year. Yes, this helps bolster corn prices, but also ethanol fuel emissions produce cleaner air. And that’s why I think E-15 fuels eventually will become the new standard at Minnesota fuel pumps. It’s a slow process, but it might organically happen because we’ve got smart consumers. As they tune into the environmental bonuses of ethanol fuels, plus cheaper pump prices too, E-15 will become stronger across Minnesota.

Also, water quality issues are a constant. Because of our 10,000 lakes legacy we have WACO — the Wetlands Conservation Act — so Minnesota already has wetlands regulations. So we’re less concerned about national wetland Issues again being discussed. Common sense so farmers can farm while still protecting the environment is our thinking here at the Commissioner’s office.

The Land: The Minnesota Senate has removed a couple of department heads and has not ruled out more. How comfortable is the Commissioner’s chair these days?HHh

Petersen: My appointment started three years ago. It’s gone by fast, but is most interesting work … including this pandemic crisis; the wettest year in 2019; and then now this droughty 2021 season. But Minnesota is an agricultural powerhouse. We’re known and respected amongst other major farm states. It’s an honor to be the Ag Commissioner in this state.”

Appointed by Gov. Tim Waltz in 2019, Petersen makes it a point to travel almost every county in Minnesota each year to fully understand how these policies affect farmers’ daily lives.

To learn more about the Minnesota Department of Agriculture, visit www.mda.state.mn. v

ST. MICHAEL, Minn, — The Minnesota Association of Townships recently announced its 2022 Scholarship Program, which will award up to five $2,000 scholarships to high school juniors. All students currently enrolled in 11th grade and attending a Minnesota public, private, or parochial school, or a home-study program, are eligible to apply for this program.

Since its inception in 2001, the MAT Scholarship Program has had over 2100 submissions and 92 winners.

Applicants should submit a written essay using critical thinking on the topic of promoting township government by May 1. Winners will be chosen by an independent panel of judges and will be notified midAugust 2022. They will also be invited to attend MAT’s annual conference in St. Cloud, Minn. in October.

For more information and application details, call the MAT offices at 1-800-228-0296 or visit www. mntownships.org.

This article was submitted by the Minnesota Association of Townships. v