LATEST AG NEWS
June 22, 2015
Quick Update: Its wet in the USA, all over the place. The corn crop looks excellent, with the
exception of a few drowned out patches in fields in low spots. Prices are reflecting this. Corn is down, and despite some marketing
strength in the other commodities, these other commodities are experiencing
downward pressure also.
Oil is in
plentiful supply which will keep gasoline prices in check for the rest of the
summer.
FRACKLOG: This
is a new term to describe the number of
“fracked” wells that have been drilled and are 95% complete, waiting only for a
slight uptick in oil prices so that these wells can be completed and their
production brought to market. Don’t
expect world oil prices to make any significant rebound past $60 per barrel as
long as this large volume (3000+) of unfinished wells remain on tap to increase
world oil supply at the slightest price move above $60.
Avian Flu: Big news in the meat/protein industry is the
horrible outbreak of Avian flu on large chicken and turkey farms in the Midwest
USA. The outbreak is ongoing and no one
seems to have a good handle on the eventual effects this outbreak (and
destruction of 30 million chickens SO FAR) will have on prices for the rest of
the meat complex. Short Answer: Prices are going up.
COMMODITIES QUICK
TAKE AWAY
CORN: All systems are GO for a record crop. Too much rain has been a problem, but that
will just serve to carry the crop through the eventual dry spell. New Crop
(December 2015) Corn closed at $3.65 on June 19 and the potential is to
go lower, not higher.
Soybeans: It’s the same story as corn, conditions are
too wet, but no significant damage has been done to the crop. The excess rain will carry the crop through
the coming dry spells. New crop beans
(November 2015) closed at $9.50 on June 19, with no price supporting news in
sight for the near term.
Milk: Milk production in the USA continues
strong. Class III futures (the basic
support price for US Milk) closed with all future months in the $16 range to
end the week. By comparison, these
prices are down $0.50 to $1.00 in the past 30 days, mostly in response to
recent reports of excess world production.
The bright spot remains butter production and prices which both remain
high. This will only continue
especially in view of the recent US Government decision to ban ALL TRANS-FATS
in food produced for consumer production in the USA. These trans-fats are often replaced with
butter.
Live (Slaughter)
Cattle: Prices go up and down, but the
fundamentals remain strong. Numbers are
down, and consumption of beef remains strong. Live cattle futures are all
trading above $1.50 per pound for the next 12 months.
Feeder
Cattle: These prices mirror the fat
cattle prices, with the exception that a decrease in the corn price improves
the profitability of feeding slaughter cattle.
Thus decreases in corn prices are reflected in increasing strength in
Feeder Cattle prices. Feeder cattle
futures are mostly trading in the $2.20 per pound range moving forward, with
the occasional movement down to the $2.10 range.
Dairy Cattle: Prices for day old baby calves have
strengthened in the past 30 days. Day
old bull calves have been above US$500 for several months while baby heifer
calf prices have been in the US$350 range.
For June, both bull and heifer calves are trading in the $600 range.
Open heifer prices are reflecting this, with local reports of $2.30 per pound
for 700 pound dairy heifers. Springers
are strong, although historical highs from the past have not yet been
reached. Cull (slaughter) cow price also
continue very strong.
Do you have
questions, comments, complaints, insults or general discussion?
Please feel free
to contact me professorbrownmicroeconomics@gmail.com
