Grains

USDA Cut Ethanol Demand; USDA Chief Economist Explains Why

Ethanol demand continues to be a question in the new year. As COVID-19 cases continue to rise in the country, some states are still seeing restrictions, which is impacting the number of people on the road. At the same time, ethanol stocks rose to an 8-month high earlier this month. Just how much of a reduction ethanol demand will see in 2021 is still unknown. In the latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA showed corn used for ethanol would be lower this year. The agency said it was based on data through November from the Grain Crushings report, as well as weekly ethanol production data from the Energy Information Administration (EIA). The new USDA Chief Economist Seth Meyer was a guest on U.S. Farm Report and explained USDA’s decision to cut ethanol demand.   “We're looking at corn grind, and we're looking at an ethanol production from EIA, and feel like that number that we have in there [WASDE] is pretty in line with what we're seeing with regard to both the Energy Outlook and where we've seen with grind,” says Meyer. “Folks bring up an issue of how demand and the balance sheet were changed. Well, you're provided with essentially 400 million bushels less supply, and you know, that will ration demand.” Meyer says based on lower supply and the probability of higher prices eating into demand, USDA made other key adjustments in the balance sheet, including 100 million bushels reduction to exports. “You may have to make some adjustments to exports, you take a little bit of it out of stocks, and then you say, what does ethanol look like in regard to corn grind?It may be somewhat less sensitive in terms of its overall demand and other things given underlying policy,” adds Meyer. “So, you're looking at a position coming out of this, where you've got prices back to rationing demand a little bit. Each one of those lines of demand is carefully thought out, in terms of where we're at with that 400-million-bushel smaller supply from the WASDE.”        
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Traders Mull USDA Estimates

Average estimates for next Tuesday's important USDA reports have U.S. corn ending stocks at 1.599 billion bushels, soybeans 0.139 bb, and wheat 0.859 bb. All three would represent a decrease from last month's data. Quarterly Grain Stocks is expected to show corn stocks of 11.951 billion bushels as of December 1, soybeans 2.920 bb, and wheat 1.695 bb. All Winter wheat is expected to be reported at 31.528 million acres, consisting of 22.140 Hard Red, 5.884 Soft Red, and 3.514 million acres of white wheat. All three of the above mentioned reports will be released on Tuesday at 11:00 AM CST. Weekly export sales had corn sales of 748,910 metric tonnes reported, within the 500,000 – 1,000,000 trade expectation. Soybean sales were reported at 116,764 tonnes (36,964 for 2020/21 and 79,800 for 2021/22), below the 200,000 – 700,000 expectation. Wheat export sales of 281,313 tonnes were noted, 275,313 for current crop. That was within the 200,000 – 600,000 trade expectation. Argentina's government said on Thursday it would review a decision to temporarily suspend corn exports after a meeting between the farming minister and the leaders of the country's main agricultural associations. (Reuters) The Buenos Aires Grains Exchange raised their estimate of Argentina's wheat harvest from 16.8 million tonnes to now 17.0. USDA's most recent estimate was 18.0. Through the most recent week of reportable trade (through January 5th), managed money funds were estimated to be buyers of 50,000 corn contracts, 55,000 soybean contracts, and 33,500 wheat contracts. The actual data will be released today at 2:30 in the weekly CFTC Commitments of Traders report. Steer weights fell 8 lbs. in this specific week to 913 lbs. Heifers were down by 8 also in just this one week. That dropped weights from +1.9% year/year to +0.9% for steers. Heifers fell from +1.6% to +0.2%. Weekly beef export sales ran -1,228 for the expired old crop, normal for the last week of the year, and only 9,003 tonnes for new. Pork export sales showed -8,593 for the expired 2020 and 23,268 for 2021. Hog weights from two weeks ago fell 1 lb. to 215 lbs. This dropped weights from +1.9% to +0.9%. Dressed beef values were higher with choice up 0.54 and select up 0.51. The Feeder cattle index is 135.35. Pork cut-out values were up 2.17.  
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Tyson Reports “Misappropriation” Of Funds By Beef Supplier

Tyson Foods filed corrected financial results on Monday with the Securities and Exchange Commission for its beef segment for fiscal years 2017 through 2020. The report to the SEC – in Form 8-K – specifies that Tyson is reporting “misappropriation of company funds” by one of its beef suppliers. An internal review of the supplier’s accounts is underway, Tyson said, with assistance of outside advisors. That review determined the supplier made “misrepresentations regarding the number of cattle the supplier purchased on behalf of the company’s beef segment.” Tyson said in the Form 8-K that its live cattle inventory for the year-end fiscal 2020, for instance, was overstated by $285 million, and that the cumulative four-year inventory was overstated by $645 million. However, Tyson’s investigations indicate the resulting losses on their books is isolated to one cattle supplier who represented about 2% of the cattle supplied to Tyson each year from 2017 to 2020. Further, Tyson stated in the Form 8-K the losses do not have a material impact on Tyson’s financial results for the years examined. The internal review is ongoing. Tyson also said in the filing its investigation found “no evidence that the company benefitted from the supplier’s unlawful conduct or that anyone at the company took steps to alter financial statements to hide the transactions resulting from the supplier’s unlawful acts.” Tyson also expects to pursue restitution for losses to date. "The Company anticipates that, despite the corrections to previously issued financial statements, general trends in growth and operating profit metrics will remain unaltered, operating cash flow will be largely unaffected, liquidity will not change and the Company will remain in compliance with all debt covenants," it said. Tyson’s independent registered public accounting firm is PricewaterhouseCoopers LLP. As a publicly traded company, Tyson is required to make quarterly earnings reports to the Securities and Exchange Commission.
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Wheat Acres To Expand For First Time In 8 Years

Farmers will be planting more total wheat acres for 2021, thanks to stronger demand, higher grain prices and good weather conditions. USDA predicts 46 million total acres of wheat will be planted—a 1.7-million-acre increase over the 44.3 million acres of wheat planted in 2020. The increase marks the first expansion of U.S. wheat acres in the past eight years. Winter wheat is the first cash crop that farmers have planted since the agricultural commodity price rally began in late summer. However, the U.S. government will not release a farmer survey specifically on winter wheat plantings until January, reports a Reuters article posted earlier this month. Reuters reports that private analytics firm IHS Markit Agribusiness forecast U.S. winter wheat plantings at 31.5 million acres, up 3.6% from the 30.4 million acres seeded a year ago.
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Mexico shipments surge in second quarter

Shipments of Mexican produce to the U.S. increased at a double-digit rate in the second quarter this year, a transportation report from the U.S. Department of Agriculture reveals. The USDA’s Mexico Transport Cost Indicator Report showed second quarter total reported shipments of fruits and vegetables from Mexico were 2.96 million tons, an 11% increase compared with the second quarter last year. The sum of the top five commodities shipped from Mexico (figured on an annual basis: tomatoes, peppers, cucumbers, avocados and squash) increased by 31,000 tons, or 6%, according to the report. Seedless watermelons shipped to the U.S. in the second quarter topped all fresh produce commodities for the quarter, the report said, with 297,000 tons shipped. Still, that was down 19% than the same quarter last year, according to the USDA.

Truck rates

The USDA report said truck rates for shipments of 501 miles to 1,500 miles from the Arizona border crossings averaged $2.55 per mile, up 1% quarter to quarter, but down 6% compared with the second quarter a year ago. Rates for shipments of 501 miles to 1,500 miles from the Texas border crossings averaged $2.25 per mile, down by 10% quarter to quarter and down by 1% year to year. Diesel fuel prices for border crossings through Texas averaged $2.21 per gallon for the quarter, compared with $2.60 per gallon for crossings through Arizona.  
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China’s Increased Appetite Drives Wheat to Multi-Year Highs, What’s Behind the Developing Demand?

Wheat futures rallied this week to levels U.S. farmers haven’t seen in six years. According to Pro Farmer, wheat prices jumped Friday on rumors China was shopping for French and U.S. wheat. The added interest from China continues to help major commodity prices, including soybeans and lean hogs, trend higher. The question many want to know is “why is China buying so much from the U.S.?" One University of Nebraska economist says the answer isn't simple. “Clearly, they've been strong buyers in the market,” says Brad Lubben, policy and extension specialist, University of Nebraska “There was hope back in January with a Phase One agreement that purchases were going to go way up. Well, you don't ever fundamentally know from a commitment to buy, whether it translates into actual purchases.” Lubben says COVID-19 slowed China’s appetite, however, as the economy is rebounding, China is returning to the market in a big way. “The rate they're buying now is certainly supportive of the positive market prices, but whether we can determine exactly what their policy is, we'll know after the fact, and we'll assess how much they really bought.” Lubben says China could be buying to help rebuild its domestic reserves, or possibly to feed the growing hog herd in the country as Chinese pork producers try to recover from ASF. He says no matter what the answer is, it won't known until after the fact. “It's always difficult to know what a closed economy system or a state-run economy system is doing,” he says. “It's difficult to know what's happening in the market until we come out after the fact and find out what really happened.” The increased appetite from China is coming at a time when farmers are seeing impressive harvest pace. What seems to be a quick harvest may typically add pressure to commodity prices, however 2020 is proving that’s not always the case. “This is something that shows how marketing works,” says Cory Walters of the University of Nebraska. “It's very random. You can't predict it. And you never know when those things are going to come.” The marketing plans that seemed to pay off this year are the ones who held on to their crop and waited to sell. Walters says that may not be the case next year. “There are always strategies that win,” adds Walters. “But you never know at the beginning of the year what's going to happen; you still have to take that survival point of view.” While Walters thinks these prices should entice more farmers to sell grain, he says leaving some bushels unpriced could help farmers who fear they will miss out on higher prices. Walter says those unpriced bushels will help farmers sell into potential future rallies.
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Put the Crop Mix Puzzle Together Before 2021

Are your crop plans rock solid, immoveable and destined to never change? Or do you respond to market and cost-saving opportunities? When it comes to selecting your crop mix, how flexible are you? “Every field needs to have some type of budget so that at the end you can put all of those fields together to get your operation budget,” says Andrew Phillips, Channel seedsman. “That budget allows you to look at your management scheme and know where you can be more aggressive in savings or more aggressive in input purchases.” If you have flexibility, market opportunities, cost savings and agronomic factors could, and probably should, come into play as you make a game plan for next year’s crop on each field. Examine your situation, understand your budget and make decisions on a field-by-field basis. Balance budgets and markets Take a look at your bottom line—and understand how yield and  profit potential varies by crop. In addition, pay attention to what the markets are doing now and if you can lock in any prices even before seed hits the soil. “I’m in a heavier corn-on-corn area and it’s often hard to break that cycle,” says Adam Mayer, Golden Harvest agronomist. “A lot of times the economics don’t allow that, but this year it looks like the soybean crop could provide good opportunities.” Switching crops comes with new considerations. If you’re switching from continuous corn to soybeans, there could be savings in terms of fungicides and insecticides, though herbicides will likely be the same or slightly higher cost than in corn, Mayer explains. However, if either corn or soybean markets or opportunities seem appealing enough that you repeat the same crop two years in a row, you could see new pressures. Plan for potential for increased insect pressures such as corn rootworm and the potential for higher rates of diseases such Sudden Death Syndrome and Brown Stem Rot. Consider the environment In many cases, the weather and fertility situation in which you find yourself can go hand-in-hand with the agronomic factors that weigh on your crop decision. If you’re low on moisture, you might need to look for seed genetics with moisture flexibility. At the same time, you need to consider disease and trait packages. “Try to build a plan that covers every single base from fertility to seed selection,” says Phillips. “For example, in some areas we know we’re headed into a season that we don’t have adequate soil moisture—you can make revisions based on that.” If you have heavy insect pressures in corn, or high weed pressure in soybeans, be sure to consider those factors when making your rotation decisions. Everything – weather, markets, budget, field history and input prices – all work together to inform your annual crop decision.
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Harvest 2020: Some Homeruns, Some Swing and Miss

It’s all hands on deck across the Midwest as farmers race to gather crops before bad weather descends and crop integrity deteriorates. Yield reports and crop conditions are coming in all over the board, with weather, planting dates and other factors coming into play. “It’s definitely a case of the ‘haves’ and ‘have nots,’ and everything in between,” says Ken Ferrie, Farm Journal Field Agronomist. “Many guys are harvesting drought damaged crops where the beans and the corn died prematurity. With corn, moisture tells the story.” Drought areas that died early are coming in at 18% with the rest of the field around 25%, he says. And if there are replant spots in that same field, they’re coming in at 35%. It’s a nightmare for anyone trying to manage corn driers. Corn yields are every bit as variable as moisture content. Ferrie is hearing reports from drought-stricken farmers that range from 120 to 170 bu. per acre and non-moisture stressed fields showing major swings from 120 to 270 across the field for a whole-field average around 200, 210 bu. per acre. “Early soybeans that died have wide swings as well,” Ferries as. “Field averages are as low as 25 bu. up to the mid-50s. Areas that picked up August rains are seeing big dividends there, with bean yields from the 70s to the 80s and corn yields in the 250 to 300 bu. range.” The big corn yields are coming from the fields you’d expect—the ones with picture perfect finishes, green from top to bottom and bright colored ears. Ferrie says this will be a learning year for sure. “We’ll see some interesting differences between bean maturities and planting dates when this is all done,” he says. “This year is a good example of why you don’t put all your eggs in one basket—you never know what Mother Nature will throw at you.” In terms of field conditions, he is still seeing and getting reports of Tar Spot, corn rootworm resistance—even in fields planted with traited products and crown rot. Just because it’s harvest, doesn’t mean you shouldn’t be out scouting and taking notes for next year. Mind harvest loss Two kernels per square foot is one bushel lost, and four soybeans per square foot is a bushel lost.  Check every field and every hybrid or variety as grain size changes and conditions change. “A good target to shoot for is less than 2% loss in corn and less than 3% loss in the beans,” Ferrie says. “Check loss when you swing hard like they are in fields in dry areas. If there’s a 100 bu. swing in the corn, stop and check harvest loss. We might have to readjust strippers and speed in those areas.”
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Bayer Resolves More Roundup Cases, Judge Keeps Pause On Litigation

Attorneys for Bayer AG and consumers suing the company over allegations its Roundup weed killer caused cancer told a judge on Thursday they are continuing to resolve thousands more cases, improving prospects for its $11 billion deal to end the litigation. The hearing was a contrast to the contentious tone among the parties last month that raised concerns the framework deal might unravel. Ken Feinberg, who is mediating talks, said his "optimism knows no bounds," and that he expected the next set of cases scheduled for trial to soon settle. U.S. District Judge Vince Chhabria in San Francisco kept a stay on litigation until Nov. 2 and asked the parties for a status update at that time. The parties have binding deals to resolve about 45,000 of the 125,000 filed and unfiled claims, according to attorneys involved. Settlements have been reached with each of the lawyers who took cases to trial. Bayer, which acquired Roundup with its purchase of Monsanto for $63 billion in 2018, agreed in June to pay around $11 billion to settle the lawsuits, which have pummeled the company's share price. Bayer's stock closed down 1% on Thursday at 54.41 euros. Shares have slumped from a high of around 73 euros since the June settlement announcement. Chhabria had questioned the fairness of the settlement plan, which proposed using an independent scientific panel to assess whether glyphosate-based weed killers such as Roundup caused cancer. Days later, Bayer said it would revise that part of the proposal. Bayer has said Roundup is safe and important to farmers who use the herbicide in combination with the company's genetically modified seeds. In 2015, the World Health Organization's cancer research arm determined the herbicide to be a "probable carcinogen." U.S. and the European regulators have determined glyphosate to be non-carcinogenic.
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ASF Numbers in Germany Grow; U.S. Hog Futures Rise

U.S. hog futures rose on Tuesday after more cases of African swine fever (ASF) were discovered in wild boars in Germany. Government officials in Germany warn more cases of ASF in wild boars are to be expected because they move in groups and the virus is easily transmitted. Europe’s largest pork producer reported its first outbreak of ASF in a wild boar on Sept. 9. The total is up to 32 since the first case was discovered. To date, the cases have been located close to the first one in the east German state of Brandenburg. Nine cases were confirmed in Brandenburg on Sept. 23 and three more cases on Sept. 24, Reuters reports. “Prices for weaner piglets in Germany have fallen sharply in past weeks following the discovery of ASF in the country,” AgDay’s Clinton Griffiths reports. Christine McCracken, executive director – animal protein for Rabobank, said in the short run, the announcement gave a little life to the market. “For the U.S., for example, we might pick up some of that,” McCracken said on AgDay TV. “The challenge though, is that there are lot of other European countries, Denmark or Spain, that process a lot of the same product that Germany does.” Other European countries may be a better fit than imports from the Americas. “It doesn't mean we can't see a benefit. It’s still a global meat block. You have to think about when somebody loses, somebody else gains. But it's probably not the huge opportunity that the market initially thought," McCracken explains.
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