Local Corn and Soybean Price Index
THE LAND, MARCH 2, 2012
34 A
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
$6.29
$12.54
$12 $ 9 $ 6 $ $ 3
$6.76
$13.01
$ 0
$6.21 $6.34 $6.42 $6.31 $6.16 $6.29
+.09 +.15 +.21 +.17 +.13 +.12
$12.60 $12.59 $12.57 $12.59 $12.36 $12.50
+.40 +.60 +.56 +.57 +.52 +.53
average corn average corn year prior Mar'11
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan'12
Feb
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Grain prices are effective cash close on Feb. 28. 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 Outlook
Livestock Angles
Grain Angles
Weather talk creeping in
One market on fire; one smoldering
USDA economist: Everything’s roses
The following market analysis is for the week ending Feb. 24. CORN — After yet another Monday holiday, corn was relatively quiet this week with demand providing underlying support and the expectation of a big increase in acreage from the U.S. Department of Agriculture Outlook Forum keeping the lid on the upside. March corn traded entirely within last week’s range, while the December contract traded to five-week lows. There was significant cornbean spreading early in the week, one day favoring sell corn/buy beans, and the next just the opposite. The USDA released PHYLLIS NYSTROM non-survey based 10-year balance Country Hedging sheets at their annual Outlook St. Paul Conference on Feb. 24. The survey based 2012-13 Prospective Plantings report will be released on March 31. The conference’s 2012 corn acreage forecast was 94 million acres, up 2.1 percent from this year’s 91.9 million planted acres and unchanged from the baseline projection. If realized, this will be the biggest corn acreage planted in over 70 years. Using their 164-bushel-per-acre yield estimate (based on a 1990-2010 trendline), production would total 14.27 billion bushels. The 164 bu./acre yield would be the second-highest yield in U.S. history. For that to happen, we will need nearly ideal weather. Corn used for ethanol is forecast to drop 50 million bushels next year to 4.95 billion bushels. Ending stocks for 2012-13 were projected at 1.616 billion bushels, over double this year’s expected carryout. The average farm-gate price for next year was pegged at $5 per bushel. This is much lower than this year’s latest projection of $5.80 to $6.60 per bushel.
The livestock markets are quite the interesting markets these days. One of the markets has been on fire, while the other seems to be content to just smolder. This brings to mind that there might be some major changes in the weeks and months ahead in the livestock industry. The firestorm has been in the cattle market which has continued to make new alltime highs in price on a seemingly regular basis. The most common reason given for the strength has been the reduced numbers of cattle. This may have been the catalyst to get the market moving to the higher prices, but the most prominent reason since the first of the year has been the influx of JOE TEALE speculative money infused into Broker the futures market. Great Plains Commodity Price discovery has not been a Afton, Minn. function of the current fundamentals, but rather the movement in the futures prices that have dictated the price paid in the cash market. The heavy concentration of this speculative money has been to the long side of the market and has overwhelmed the trade into believing that the only direction is up for cattle prices. This is reminiscent of other markets that have moved to extreme levels which are labeled bubble markets. The problem with bubbles is they tend to burst when over-inflated. The fundamentals are a concern at this juncture as packers have been forced to pay higher prices for live inventory, the beef cutouts have not kept up with the costs of the raw product and the profit margin for the packer has disappeared. Because the beef cutout has moved higher the domestic demand for beef has shrunk accordingly. A typical “Catch-22.” On Feb. 24 the U.S. Department of Agriculture released the Monthly Cattle on Feed Report. The See TEALE, pg. 35A
On Feb. 22 and 23, the U.S. Department of Agriculture held their annual Agricultural Forum. The USDA’s top economist, Joseph Glauber, described a strong farm economy with bright prospects of the next year. He said, “2011 was a very good year for much of U.S. agriculture; we saw record prices for many commodities, record agricultural exports and record farm income. Not surprising, record prices have prompted record production for many commodities and as we saw over the last half of 2011, prices for grains, oilseeds and cotton have come down, reflecting strong production levels.” The USDA projected a 14.27 billion bushel corn crop from 94 TOM NEHER million acres planted. This would AgStar VP & Team Leader be a record that’s enough to — Grain Industry replenish stocks. If this were to Rochester, Minn. occur it would put downward pressure on prices. The USDA is predicting farmers will receive an average price of $5 per bushel in the 2012-13 crop year. This price is the average cash price received at the farm gate. Soybean production is projected 6 percent higher at 3.25 billion bushels due to increased harvested acreage and yield. Planting will be 75 million acres, but the average yield is projected at 43.9 bushels an acre, up 2.4 percent from 2011. Soybean farm prices are expected to drop slightly to an average of $11.50 per bushel. Wheat production in 2012 is expected to increase more than 8 percent to 2.165 billion bushels due to a hike in acreage and yield. The national average wheat yield is projected at 44.5 bushels per acre, up 0.8 bushels from 2011. The stocks-to-use ratio for 2012-13 is projected at 44 percent. The 2012-13 farm prices for all wheat are projected at $6.30 a bushel.
See NYSTROM, pg. 35A
See NEHER, pg. 35A
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.