Dairy
Margins were mixed since the middle of August – improving in Q3 and Q4 while deteriorating in Q1 and Q2 2011. Milk prices in each of these respective periods have moved in different directions, with nearby futures trading higher while deferred futures declined. Spot prices have been firm as milk volumes remain at seasonally low levels and manufacturing milk supplies remain tight approaching the Labor Day holiday. Current cheese and butter are scarce, and manufacturers are drawing from inventory. At the same time, the 2010-11 production season is getting under way in New Zealand and Australia, and farmers there are optimistic for a strong start to the year. Expectations… Get the Complete Report »

Beef
Production margins were mixed over the past two weeks—improving in nearby Q3 and Q4 while deteriorating in Q1 and Q2 2011. Live cattle prices have rose sharply, benefiting nearby margins where input costs are already fixed on feed expenses and feeder cattle. Q4 margins likewise have firmed as the gains in live cattle have more than offset the rising cost of feed which is still a variable. The corn market is moving higher due to concerns that yields will suffer from the dry finish to the growing season. Early harvest results have been disappointing, although it is too early to draw any firm conclusions. Out in 2011 where all components of the profit margin remain variable, feeder cattle prices have gained on live cattle prices at the same time that feed costs are rising. This explains the deteriorating forward… Get the Complete Report »

Corn
New-crop margins have improved over the last two weeks, as advances in the futures market have offset a slight decline in basis. The market is getting its first taste of yields from Southern and Delta states, and thus far, output has been disappointing regarding yields. The market has begun to build premium into the market, believing that NASS’ yield estimate of 165.0 bushels per acre will be the highest estimate for this crop year. Further bullish sentiment is in the market, amid profitable livestock and ethanol prices. Cattle prices are pushing record highs, and the hog sector has maintained higher prices since the spring. The ethanol sector also has potential long-term bullish factors, as there is debate on switching from a 10% blend to a 12% or 15% blend. With tensions high in Washington… Get the Complete Report »

Soybean
Margins have improved for the nearby crop over the past two weeks as slightly lower futures prices have been offset by a large jump in basis bids. Soybean conditions typically deteriorate from August into the end of September. The current soybean crop is rated at 64% good-to-excellent, lower than last year’s crop rating, but well above the 10-year average of 56%. Current weather forecasts have improved the chances of rain, as the crop finishes its most important stage of yield development. The market remains on edge that conditions during August have been very dry across a large area of the Midwest, which may lead to a lower yield forecast from NASS in upcoming reports. Foreign demand for soybeans remains robust, as China continues to import record amounts of soybeans from the U.S…. Get the Complete Report »

Wheat
Margins have improved as the market has found support at higher levels. The recent sharp rally has given way to consolidation, as weather concerns in Eastern Europe have abated a bit. There remains concern however in Northern and Western Europe, as excess rain is threatening the quality of the wheat crop. Dry conditions in Australia likewise need to be monitored in key growing regions. Still, the focus remains in Eastern Europe which is in the midst of the worst drought in 100 years and soil moisture is badly needed in order to sow the winter crop. U.S. wheat had been uncompetitive against Canadian and French wheat until recently. The market is now pricing in incremental… Get the Complete Report »

Dairy
Margins deteriorated sharply over the past two weeks with the exception of the spot period in Q3. Higher feed costs were the main culprit behind the reduced margins, although deferred milk prices are also lower based on CME Class III futures–particularly 2011 contracts. Nearby values have held up as export demand remains strong while milk production has been compromised by very hot summer weather. Weakness in deferred contracts is likely due to expectations of a large spring flush in Oceania reducing U.S. exports in 2011. Meanwhile, the USDA’s August WASDE report indicated lower ending stocks for corn… Get the Complete Report »

Beef
Margins again improved significantly since the end of July, particularly in nearby Q3 where costs are already fixed. Sharply higher cattle prices have more than offset a similar rise in feed costs with corn up as well over the past two weeks. In addition, fed cattle values have outpaced those of feeder cattle prices, improving profitability in deferred periods where both values remain variable to the forward profit margin. Beef prices remain supported on strong export demand. Total US beef shipments in June were 204.5 million pounds, 17.8% higher than a year ago and the highest monthly beef export volume since August 2008. Corn prices meanwhile have found support recently from a strong rally in wheat prices brought on by a catastrophic drought in Russia… Get the Complete Report »

Corn
New-crop margins have improved over the last two weeks, as advances in the futures market have offset a slight decline in basis. NASS reported its first estimate of yields for this year’s crop at 165.0 bushels/acre which would represent a new all-time record. The market, however reacted positively to the news, as the world situation has dominated a potential domestic surplus. USDA increased exports by 100 million bushels to 2.050 billion bushels, reflecting the recent increase in the pace of sales. At present, U.S. corn is the cheapest global feed grain, and this helps explain the increase in USDA’s export projection from last month. The recent pace of weekly sales would seem to confirm this, and exports may rise further in coming reports… Get the Complete Report »

Soybean
Margins improved based on a higher futures market, although new-crop basis is significantly weaker compared to old-crop basis, reflecting a discount of $0.73 relative to spot delivery levels. NASS reported its first estimate of yields for the 2010/2011 crop at 44.0 bushels/acre, matching last year’s record. Ending stocks for the 2010/11 crop year were left unchanged at 360 million bushels despite lower beginning stocks carried in from the current marketing year. These lower carry-in stocks, coupled with an increase in the crush by 5 million bushels, an increase in exports by 65 million bushels, and residual usage up 3 million bushels… Get the Complete Report »

Wheat
Margins on the nearby contract have deteriorated over the last two weeks, as the futures are near the same level while the basis has weakened. Deferred margins, however, have deteriorated significantly. World wheat production was lowered by 15.3 million tons, with the majority of the reduction coming from the Former Soviet Union, where production is forecast down 13.41 million tons from last month. Russia, Kazakhstan and Ukraine have all put bans on exports. In turn, USDA raised U.S. exports by 200 million bushels from last month, due to the export restrictions out of Eastern Europe. Global ending stocks are 174.8 million tons… Get the Complete Report »

Dairy
Margins deteriorated since the middle of July, particularly in Q1 2011 where milk prices have been soft relative to a firming trend in feed costs. Despite beneficial growing conditions across the Midwest and historically high crop condition ratings, corn and soybean meal prices have been moving higher recently in sympathy with a sharp increase in wheat prices brought on by production problems overseas. Milk values have been supported in nearby contracts with strong export demand, although uncertainties over further herd reductions and the outlook for a recovery in Oceania production appear to be weighing on deferred contracts. According to the USDA’s Foreign Agricultural Service, U.S. dairy exports… Get the Complete Report »

Beef
Production margins continued to improve in all periods, with firm cattle prices against relatively stable corn prices supporting most of the improvement. In deferred periods, variable feeder cattle costs cut into the margin improvement somewhat, as feeder values have been rising along with fat cattle prices, although not to the same extent. Weather has been quite favorable for corn as the crop moves through pollination, and crop condition ratings remain at historically high levels, although prices have firmed recently after a sharp rally in wheat due to production problems in Europe and the FSU. USDA reported monthly Cattle-On-Feed at 10.07 million head, up 3.3% from last year, and the second straight month that inventories have been larger… Get the Complete Report »

Corn
New-crop margins have deteriorated slightly over the last two weeks, but generally have maintained gains seen earlier this month. The trade remains concerned over the June 30 stocks and acreage surprises USDA reported, forcing weather conditions to be the driver of price direction. Crop conditions remain favorable for the developing crop, with 72% of the crop rated in good-excellent condition. Favorable weather is currently forecast through the key pollination period. The European wheat situation remains another driver of price advances for corn, as the market is pricing in a switch in demand for feed wheat to corn. This has yet to occur. Exports have surpassed USDA’s estimate of 1.950 billion bushel… Get the Complete Report »

Soybean
Margins have improved over the past two weeks, as spillover support from the wheat market has buoyed prices. Other than the wheat market, soybean prices have been trading mainly off of weather forecasts. Recently, excess rains have slowed interior movement on the Mississippi, causing Gulf basis to soar. With an already tight old-crop balance sheet, the new-crop production will be critical. Crop conditions remain favorable for the developing crop, with 67% of the crop in good-excellent condition. Crush margins have improved further over the period, with the July crush report indicating crushers… Get the Complete Report »

Wheat
Margins have improved moderately, as the advances in the futures market has been partially offset by a weaker basis. Supply issues from Eastern Europe
continue to be the talk of the trade, and ideas that Russia will cease exports due to domestic tightness have been circulating. Russian harvest is currently up to 21 MMT and the trade projects a total crop of 48-52 MMT, nearly a 20% reduction from last year’s crop of 61.8 MMT. The U.S. market continues to price in an increase in export demand and has finally started to show up in weekly sales. U.S. wheat prices are relatively highly priced as compared to other countries at present. Domestic stocks remain at ample levels historically, with current… Get the Complete Report »

Dairy
Margins margins deteriorated since the end of June, particularly in deferred periods, as feed costs have soared while milk prices have remained relatively flat. The corn market has moved sharply higher since the June 30 stocks and acreage reports from the USDA that led to a tighter balance sheet in the latest July WASDE released on Friday. Soybean meal prices have also moved sharply higher, as stronger domestic demand in livestock feed rations was cited as the principal reason for an increased crush estimate in both the old-crop and new-crop soybean balance sheets. Milk’s strength meanwhile has been muted, with only the nearby August contract gaining in price recently. The forward price curve previously… Get the Complete Report »

Beef
Margins production margins improved sharply in Q3 and Q4 while improving only marginally in Q1 and Q2 2011. Nearby margins in Q3 improved as a function of rising live cattle prices against what are now completely fixed costs of both feeder cattle and corn. Q4 margins improved to a lesser extent as corn remains variable and has increased sharply with live cattle prices against a fixed feeder cattle expense. Deferred margins in 2011 incorporate completely variable elements, and generally the rise in live cattle as a revenue has been matched by increasing costs of both feeder cattle and corn. From a historical standpoint, margins are at or below average, and Q2 2011 margins remain negative. This should discourage feeder cattle purchases this fall, and thus limit the strength in October and November futures contracts unless this margin relationship… Get the Complete Report »

Corn
New-crop margins improved significantly over the past two weeks, as futures prices have surged following the June 30 reports from the USDA. The tighter balance sheet projected in the July WASDE was a direct function of lower acreage and tighter stocks reflected in those two reports, and renewed risk premium has been put back into the market as a result. Although growing conditions have remained favorable with 73% of the crop rated in good-excellent condition, the trade is on the alert for adverse weather that could potentially threaten yields. Several forecasts show the potential for a “La Niña” event to occur in the Midwest; that is, a period of warmer and drier than normal conditions. Yields are currently forecast at trendline levels, although this could change considerably based upon weather as the crop moves through pollination… Get the Complete Report »

Soybean
Crop margins have improved dramatically over the past two weeks, as a direct result of a much firmer basis and an extended rally in futures prices. Weather concerns have driven this market higher during the period. Old-crop tightness has traders worried about the weather and yield outlook for new-crop production, with reports of high pressure ridging bringing the potential for excessive heat across the Central U.S. General crop conditions are above average for this time of year, but do tend to decline heading through the pod-fill stage of development into harvest. If the excessive heat is realized and persists, that could stress the crop and diminish yields. USDA currently projects an increase in harvested acres from last year, with yields at 42.9 bushels per acre compared to 44 bushels per acre in 2009. The threat… Get the Complete Report »

Wheat
Crop margins have improved dramatically over the past two weeks, as a direct result of the futures rallying over a dollar per bushel basis the nearby contract. Supply disruptions have been the principal driver of this price advance. The worry is two-fold. Forecasts call for excessive rains to fall over Eastern Europe that will potentially cause quality concerns. Canada’s crop is also down sharply this past month due to excessive rainfall. At the same time, drought continues in Russia and Kazakhstan and the lack of rain in this region will continue to reduce their spring wheat crop estimates. This has caused world end users to secure additional U.S. wheat. Domestic fundamentals are not nearly as bullish. USDA revised ending stocks higher in the July WASDE due to a larger crop forecast based on higher harvested acreage and an increased yield, although an increased export forecast offset some of the impact of a larger supply… Get the Complete Report »

Dairy
Margins deteriorated over the past two weeks, particularly in nearby periods as milk has experienced a significant selloff while feed costs have generally held steady. Cheese and milk supplies appear to be on the rise, and heavy offers coming into the cheese pit appear to be weighing on the Class III futures market. The CWT announced its 10th round of herd retirements this summer to deal with the mounting supply issue, although it is unclear how many bids will be received as well as the price level of those bids. On a positive note, soybean meal prices are under pressure as demand continues to slow with ideas that the U.S. will harvest a massive crop this fall and face stiff competition… Get the Complete Report »

Beef
Margins deteriorated since the middle of May as cattle prices are firmly in retreat. While the fundamentals remain generally supportive for the beef market heading into the prime demand period of the summer grilling season, there was a feeling the market got ahead of itself and prices were due for a pullback. The latest Cattle on Feed report from the USDA showed total feedlot inventories with 1000 head or more as of May 1 were 10.453 million head, 3.4% smaller than last year and down 5.7% from the 5-year average. In addition, stocks of beef in cold storage continued to decline with a rapid depletion of fat beef trimmings inventories noted. Boneless beef stocks… Get the Complete Report »

Corn
Crop margins held relatively steady over the past two weeks as the market has generally been moving sideways since the middle of May. Crop condition and progress reports continue to suggest the potential for above-average yields this season. As of May 23, 93% of the crop had been planted with 71% emerged, compared to 87% planted and 55% emerged the week before. Both figures remain above the year-ago comparison of 80% and 50% respectively for the third week of May, as well as the 5-year average for this date at 89% and 62%, respectively. In addition, 71% of the crop was rated in good-excellent condition, up 4% from the previous week. The large jump in both emergence and crop condition… Get the Complete Report »

Soybean
Crop margins deteriorated slightly since the middle of May, as futures prices have remained under pressure from lower demand and favorable new-crop planting conditions. The USDA reported 53% of the crop planted as of May 23 with 24% emerged, compared to 38% planted last week and 13% emerged. While both figures are above the year-ago comparison at 44% and 15%, respectively, the planting progress trails the five-year average for the third week of May at 57% although the emergence is in line with the five-year average at 23%. The USDA has yet to report on crop condition ratings, although the first report should be released this coming week. Demand continues to slow down as weekly sales and shipments indicate that China has turned… Get the Complete Report »

Wheat
Crop margins continued to deteriorate since the middle of May as the market remains under pressure from weak demand and good new-crop progress reports. The USDA reported that 63% of the winter wheat crop is now heading, up from 52% last week. The latest figure compares to 66% last year and the five-year average of 68% for the third week of May. In addition, 66% of the crop was reported in good-excellent condition, unchanged from last week and well above both last year and the five-year average of 45% for this point in the season. Meanwhile, demand continues to be lackluster with export sales and inspections running at the low end of market expectations. Increased competition is even being noted in this hemisphere from suppliers in Europe and the Black Sea. Although new-crop margins for wheat to be harvested this summer are abysmal… Get the Complete Report »

Dairy
Margins continued to improve since the end of April as milk prices generally held steady while feed prices were in retreat. The USDA released their May supply/demand report this week, including the first estimates of the 2010/11 marketing year. The forecasts revealed expectations for ending stocks to build in both corn and soybeans in particular, which will lead to lower average farm prices year-over-year. While the growing season is still young and much can change, early indications are promising on the supply side with fast planting and favorable weather. At the same time, the USDA’s milk forecast revealed expectations for higher prices next year due to improved demand and tighter supplies… Get the Complete Report »

Beef
Margins are at or just slightly above breakeven through the first quarter of 2011, as feeder cattle prices remain very high relative to fat cattle prices, although both markets were down significantly Friday. On a positive note, corn prices are also in retreat in response to liquidation and uncertainty over import demand from China, who purchased corn in significant volume from the U.S. this past week for the first time in years. Meanwhile the USDA released their first balance sheet for the 2010/11 marketing year, showing marginal growth… Get the Complete Report »

Corn
Crop margins have been steady to lower since the end of April, with both old-crop and new-crop basis weakening and slightly lower futures prices as well. Corn futures continue to chop around as the market is pulled between bullish Chinese import news and bearish new-crop supply considerations. The USDA released their first balance sheet for the 2010/11 marketing year this week, and projected new-crop corn production of 13.37 billion bushels, up 260 million bushels from last year with ending stocks projected to increase 80 million bushels from the current year… Get the Complete Report »

Soybean
Crop margins deteriorated since the end of April, as futures prices have dropped while basis likewise weakened. It has become more evident that China’s buying program for U.S. soybeans has ended for the current crop year, although export projections have increased given the strong year-to-date pace of sales and shipments. Meanwhile, the USDA released their May supply/demand report this week, including the first projections for the 2010/11 crop year. Highlighting that balance sheet is an ending stocks estimate of 365 million bushels, up 175 million from the current year with the stocks/use ratio expected to more than double to 11.6%. This is due to the fact that demand… Get the Complete Report »

Wheat
Crop margins deteriorated over the past two weeks as futures prices declined while basis weakened as well. Although not much has changed in the market, the outlook continues to be bearish given enormous supply relative to demand. The USDA released their May crop report this week, including the first balance sheet for the 2010/11 marketing year. Although production is forecast down 173 million bushels from last year while demand is forecast up 68 million bushels, new-crop ending stocks are still forecast 47 million bushels higher than 2009/10 given the huge ending stocks this year that will be carried forward. World ending stocks are likewise forecast to increase almost 5 million… Get the Complete Report »

Dairy
Margins improved slightly since the middle of the month as an increase in milk prices more than offset higher soybean meal costs while corn held steady. March dairy cattle slaughter was the highest based on year-over-year comparisons since 2000. It also was the largest monthly slaughter since June 2009 on a month-to-month comparison. The January-March slaughter pace has bucked the recent trend showing a gradual increase as opposed to a steady decline in the first quarter. Meanwhile, corn planting is off to its fastest start since 2004, with a near-record pace of 50% planted as of the third week of April. This bodes well for yields as well as the potential for higher… Get the Complete Report »

Beef
With the exception of the spot Q2 period, beef margins improved since the middle of April and remain at very high historical percentiles over the past 5 years. The outlook for new-crop corn appears very promising as planting progress is off to its fastest start since 2004, with nearly ideal spring weather boding well for the possibility of both higher corn acreage relative to the March planting intentions as well as above-average yields. Meanwhile, the latest USDA Cattle on Feed report showed that March placements were substantially smaller than expected, with sharply lower placement weights relative to both last year and the 5-year average reflecting… Get the Complete Report »

Corn
Crop margins were mixed since the middle of April, with old-crop margins improving slightly while new-crop margins deteriorated. Old-crop basis strengthened as producers have been busy in the fields planting corn with little cash movement in the country taking place. The USDA indicated that 50% of the nation’s corn crop had been seeded as of April 25th – double the 10-year average and the fastest progress since 2004. This bodes well for both above-trendline yields and higher corn acreage relative to the March planting intentions, as there is a historical precedent for each in years of quick seeding. The market also received confirmation this week of China buying U.S. corn which has helped to support prices, although large scale purchases… Get the Complete Report »

Soybean
Crop margins improved marginally since the middle of April, although futures prices haven’t changed much over the past two weeks. The rally seems to have paused as demand is slowing down while spring weather has been ideal for planting this season. Old-crop basis strengthened somewhat as producers have been busy in the field and not marketing their crops. China’s imports continue to suggest that the USDA is too low on their soybean export forecast for the year as well as their forecast for Chinese imports from all sources. There is also concern that cold weather in northeastern China may reduce soybean plantings there by 7.9%. New-crop margins are now slightly above breakeven, although old-crop margins remain negative… Get the Complete Report »

Wheat
Crop margins improved slightly since the middle of the month, with new-crop margins now back above breakeven. Wheat futures have generally been trending higher since the beginning of the month as prices have firmed in the Black Sea region while speculative short-covering has been a feature recently. From a fundamental standpoint, the outlook remains bearish as winter wheat conditions are about 20 points above normal for this time of year while both U.S. domestic and global stocks are historically large. Spring wheat planting is also well ahead of its normal progress for this time of year, as weather has been nearly ideal. Basis was essentially unchanged over the past two weeks, having minimal impact on either old-crop or new-crop margins. Given the new variable storage rates that have gone… Get the Complete Report »

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Dairy
Margins deteriorated since the end of March, particularly in nearby periods as the milk market has come under renewed pressure. Following a brief rally during the early part of the month, CME Class III milk futures dropped sharply over the past week. The run up in prices apparently chased away cheese buyers, despite export sales that have been steadily improving for milk powders, whey proteins, cheese, butterfat and lactose. The USDA’s monthly supply/demand report confirmed higher corn ending stocks due to lower feed demand, as well as larger soybean crops in South America. Despite this however, both corn and soybean meal prices are higher now compared to the… Get the Complete Report »

Beef
Margins deteriorated over the past two weeks by $1.25 to $2.00/cwt., although from a historical standpoint, profit margins are still quite high between the 80th and 90th percentile on a 5-year basis. This means that profitability has only been higher for these spot and forward periods less than 10-20% of the time looking back on history. Much of the recent setback in profit margin stems from the fact that corn prices have firmed since the end of March, while feeder cattle prices have gained at a faster rate than fat cattle prices. Despite the fact that the USDA recently raised corn ending stocks in their monthly supply/demand report and the weather looks very favorable for spring fieldwork and planting… Get the Complete Report »

Corn
Crop margins improved slightly over the past two weeks, primarily due to a recovery in futures prices as the market has been trading higher since the release of the planting intentions and quarterly stocks report at the end of March. Ironically, those two reports were somewhat bearish in that they indicated higher stocks and thus lower domestic demand than what the market had previously assumed as well as an acreage base up over 2 million from last year. On top of that, spring weather across the Corn Belt has been nearly ideal for fieldwork and early planting thus far, which historically has led to even higher corn acreage than the March planting intentions. Corn futures are up almost 20 cents since the end… Get the Complete Report »

Soybean
Crop margins improved nearly 30 cents since the end of March due to higher futures prices with basis unchanged over the past two weeks. From a fundamental standpoint, not much has changed as ending stocks were left at 190 million bushels in the April supply/demand report despite higher stocks indicated as of March 1 which lowered residual usage. This was offset however by a higher export forecast and there are indications that China’s imports will be even larger than what the USDA is currently carrying. Despite higher production estimates out of both Brazil and Argentina, it appears that China is ready to revalue the yuan which will increase their purchasing power of U.S. products… Get the Complete Report »

Wheat
Crop margins improved slightly since the end of March as futures prices have recovered somewhat from new contract lows scored early this month. While the USDA’s April supply/demand report was not exactly bullish, ending stocks were reduced 51 million bushels to 950 million due to a higher export forecast. World wheat stocks declined nearly 1 million tons from March as well, following lower production forecasts in Canada, Australia and Russia. Offsetting this somewhat, EU production was raised slightly, although the USDA did note… Get the Complete Report »