By Carrie Muehling
NORMAL – Grain markets were a bit firmer to begin the week after some profit taking last week.
“This week here we’re going to be looking at the crop report coming at us. Ideas are the numbers will be somewhat unchanged. Maybe just a little lower bean carryout estimate on ideas that these bean sales continue to be strong,” said Curt Kimmel, commodity broker with Bates Commodities in Normal.
Tuesday’s USDA crop report numbers will likely drive movement this week, although expectations are that corn and soybean numbers will be largely unchanged. Soybean sales continue to be strong and shipments are going out. That could change as harvest continues in the Southern Hemisphere and beans become more available on the world market. There are a few dry pockets in Brazil but the South American crop is mostly in good shape.
The acreage trend in the U.S. could lean towards a few more soybean acres this year than last year when farmers go back to the fields this spring.
Lower gasoline prices have been a relief for consumers and Kimmel encouraged farmers to lock in some supply as other input costs have not offered savings anywhere just yet.
“Basically compared to where we’ve been here over the last few years, we’ve got about a 50 percent off discount on the retail level, so that’s welcome to those who are buyers. The input costs for producers on fuel needs when you look at what the other inputs have been running when they’re out here this spring, there has not been a whole lot of savings other than fuel,” said Kimmel.
A few times this winter gasoline was cheaper than ethanol and there was some concern about ethanol demand slipping, but cheaper gas has also increased consumption overall.
Volatility continues in the livestock market.
“It reminds me of the old pork belly days, especially in this cattle complex. It seems everybody is going all the same direction all at once, sometimes. We’ve seen some very volatile moves. Feeders we’ve seen some limit moves,” said Kimmel.
Longer term, producers are starting to rebuild livestock numbers. They are also feeding to heavier weights. Domestic consumption is down a bit and exports are slowing a bit, which has created a sell-off. Bullish enthusiasm left the pork sector due to a slight increase in production. The PED virus did not affect herds this winter in the same way as last year. The currency situation has increased imports into the U.S. from Mexico and other places. Kimmel said the meat sector is in a cooling pattern and may trade sideways for a bit in the short term. However, long term he is bullish on livestock and believes meat consumption in the U.S. and abroad will be a bright spot comparable to the ethanol surge experienced over the last five to 10 years.
Carrie Muehling can be reached at [email protected].
