In Friday’s Cattle on Feed report, the USDA said feedlot inventories on March 1st, at 12.0M head, were up 1.6% from a year ago, but down from 12.1M on February 1st. New placements onto feedlots in February were down 1.9% from 2020. Marketings were down 2.4%. Harsh February weather in TX/OK, along with fewer cattle imports, negatively impacted both placements and marketing numbers.
Read MoreThere will be a lot of green pushing up through the ground this Spring and it won’t be plant-based. There is a pent-up tidal wave of spending about to hit America’s businesses that will very quickly make us forget this miserable winter. The consumer savings rate for the 10 months through Jan 2021 averaged 18.4% compared to an average of 6.2% for the 25 YEARS pre-Covid.
Read MoreSoy-oil futures set fresh, 9-year highs of $.5338/lb on Friday. For the 2021/22 crop year, global soybean demand will continue to outstrip supply. China’s feed demand, in an effort to rebuild its ASF-decimated hog herd, will continue to be the main global demand driver. Additionally, recovery from Covid-19 will lead to a jump in global biodiesel usage.
Read MoreIn February’s Agricultural Outlook Forum, the USDA projected record large corn and soybean crops this year totaling 182M acres, with a 1M acre increase in corn and 7M more acres of soybeans. Farmers are very motivated by sky-high prices that are being supported by strong Chinese demand and the tightest stocks-to-use ratio since 2013/14.
Read MoreIn Friday’s Cattle on Feed report, the USDA said feedlot inventories on Feb 1st, at 12.1M head, were 1.5% higher than a year ago. New placements onto feedlots in Jan were up 3.2%. With feed costs elevated, economics favor keeping animals off-feed and on-pasture where possible – so the gain in placements was surprising. But that was Jan. Feb’s focus will be on the brutal winter weather that will result in cattle weight losses and deaths.
Read MoreIn Jan., China booked 2.1 million metric tons (mmt) of U.S. corn for future delivery, the largest corn export deal since 1991. China could buy 15-20mmt of U.S. corn this year. In last week’s WASDE, the USDA raised 2020/21 corn exports by 50M bushels, and increased its 2020/21 corn price forecast from $4.20 to $4.30 per bushel. But that’s just a small step on the path toward higher price forecasts from the USDA over the next few months.
Read MoreAre we at the beginning of another commodity super-cycle? Consider the numbers. In feed grains, corn futures ($5.48/bu) are up 44.1% from a year ago and soymeal ($430.50/ton) is up 49.8%. Poultry prices are still cheap, but how much longer can producers absorb those feed-cost increases? In wheat, Chicago soft futures ($6.41/bu) are up 14.1% and Kansas City hard futures ($6.25/bu) are up 32.0% from a year ago. Soybean oil futures ($.4466/lb) are up 42.6%.
Read MoreIn Friday’s annual cattle inventory report, the USDA said the total U.S. cow herd (beef & dairy) was 93.6M head on Jan 1, down 0.2% from a year ago. Beef cows, at 31.2M head, were down 0.6%. Heifers (breeders), held back for beef cow replacement, were up 0.1%. Cattle numbers have peaked and are transitioning from herd expansion to contraction. The key for 2021 will be the rate of heifer liquidation.
Read MoreIn Friday’s Cattle on Feed report, the USDA said that new placements onto feedlots in December were slightly above a year ago (+0.7%) following 8.9% and 11.0% declines in Nov & Oct, respectively. Feedlot inventories on Jan 1st, at 11.97M head, are roughly at year-ago levels. With feed costs elevated, economics favor keeping animals off-feed and on-pasture where possible. That will tighten the availability of market-ready cattle this coming spring and summer.
Read MoreYear over year milk output increased by 3.0% in November (the biggest jump in 6 years), following large, 2.3% increases in September & October. But that wasn’t nearly enough to keep a cap on cheese prices. On Jan 4, the USDA announced it will purchase an additional $1.5B through the Farmers to Families Food Box Program. CME block cheese prices, which had melted to lows of $1.5775/lb on Dec 22, reacted by surging to 1.9625 (Jan 11), before settling back to $1.83/lb on Friday (Jan 15).
Read MoreIt’s been a wild year for soy-oil. CBOT futures prices, which started 2020 at $.3497/lb, plunged by 28.5% to a 14-yr low of $.2499 on 3/16/20. The soy-oil drop (due to biodiesel demand) was strongly affected by the historic collapse in crude oil futures, which dropped from $61.18 per barrel on 1/2/20 to negative numbers for a brief period in April. But soy-oil has come roaring back, closing at a 6-year high of $.4439/lb on Wednesday – up 77.6% from the March low.
Read MoreThe tone for commodities in 2021 will undoubtedly be set by higher feed prices. In just 5 months, corn & soymeal have both soared from multi-year lows to 6-year highs. Corn futures, which were $3.08 per bushel in August, have jumped by 58% to $4.87. Soymeal is up 55%, rising from $280 per short ton to $434 over the same period. China is the driving force in world feed demand, as it scrambles to rebuild its hog herd in the wake of ASF losses.
Read MoreDear Santa: We know how tough it was to overcome those workshop slowdowns and supply chain disruptions this year. Awesome job! But there are a few post-holiday tidbits to discuss. For starters, sorry for the misunderstanding. That was Giuliani, not “your” Rudolph, that was supposed to be on the naughty list. And, speaking of the naughty list, could you let McConnell & Pelosi know exactly what they need to do to get off of it?
Read MoreIn Friday’s Cattle on Feed report, the USDA said that new placements onto feedlots in Nov. were down 8.9% from a year ago, following an 11.0% decline in Oct. feedlot inventories at 12.04M head have declined to year ago levels. With feed costs elevated, economics favor keeping animals off-feed where possible. Covid uncertainty is making planning difficult.
Read MoreIn Thursday’s WASDE, the USDA left its 2020/21 U.S. corn supply and use outlook unchanged from last month. Corn exports for 2020/21 are forecast to be a record-high 2.65B bushels. The corn price forecast remains at $4.00 per bushel, the highest since 2013. Corn futures, which were $3.08 as recently as Aug, have climbed steadily to $4.24 per bushel.
Read MoreForeign demand and Covid-related processing disruptions have combined to deplete pork supplies. Third-quarter U.S. pork exports were up 7.4% (from 2019) at 1.6B pounds, with China up 43.3% (384M lbs) - edging out Mexico to become the top U.S. pork customer. Hams were not able to build up in cold storage this past summer due to labor issues. Cold storage pork supplies on November 1st were down 27% from a year ago, their lowest for this time of year since 2004.
Read MoreIn the month of November, the CME block cheese market plummeted from $2.78 to $1.68 per pound, while the barrel market dropped from $2.53 to $1.42. Cheese prices during 2020 plummeted to $1.00 per pound (4/15) in response to reduced Covid foodservice usage, then soared to $3.00 (7/13) on sharp demand for the USDA Farmers to Families Food Box program.
Read MoreIn Friday’s Cattle on Feed report, the USDA said that new placements onto feedlots in October were down 11.0% from a year ago, following 4 straight months of strong placement increases. But despite the drop in placements, feedlot inventories – at 11.97M head - were 1.3% above a year ago, 2.2% above a month ago, and the highest Nov. 1st on record. The report should be neutral to mildly bullish for cattle prices.
Read MoreChina has huge feed needs to rebuild its ASF-decimated hog herd, and has been a big buyer of U.S. corn and soybeans. In last week’s WASDE, the USDA increased its 2020/21 corn export forecast from 2.33B to 2.65B, 49% above 2019/20 levels. The USDA also lowered corn yield from 178.4 to 175.8 bushels per acre. The export & yield changes helped sink projected 2020/21 ending stocks from 2.17B to 1.70B bushels.
Read MoreThe ink isn’t dry yet, but it’s certainly not too early to speculate on how a Biden presidency could affect commodity markets for 2021. For starters, a potential thawing of trade relations with China could support corn, wheat, and soybean prices. China is rebuilding its ASF-decimated hog herd and is already a big buyer of U.S. corn and soybeans. The Chinese are also big buyers of U.S. pork. These numbers are likely to increase in 2021.
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