Outlook Briefs
Corn Market Overview. After posting a very nice post harvest rally that peaked at $2.32 on the March futures contract, prices have fallen heavily during January and as we approach the end of the month have returned to the low $2.00 area. Higher than expected stocks and rumors of dissatisfaction with corn shipments to Japan tied to the Star-link gene has spooked traders. The sell off has prices breaking below the support line and we may well see a test of season lows just under the $2.00 level. Prices should rally into March to induce corn acres in the face of very high fuel and nitrogen prices that have some farmers eyeing more soybeans rather than corn. (George Shumaker)
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Wheat Market Situation. New crop July wheat futures remain within the wide band of price movement between roughly $2.85 on the down side and $3.10 on the top. Strong fundamental factors underlie the market with fewer planted acres and declining yet still large carry in stocks. Price rallied nicely to the top of the band but during the last week of January have fallen back. We should be hearing concerns over winter kill that should spark a rally once again. If it comes, farmers need to look at it as a pricing opportunity. (George Shumaker)
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Soybean Market. Soybean prices continue to slide in the face of the large U.S. crop now in the bin and a looming near record crop nearing completion in South America. World oilseed supplies are swamping the strong demand for the crop pressuring prices for the entire complex. U.S. farmers are expected to increase acreage again this year so finding reasons to mount a rally will be difficult. We often see some price improvement into March. Use it to clean out the bins. (George Shumaker)
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Dairy Outlook. U.S. dairy cow numbers are up, slightly at 9.2 million head, compared to last year. Also, milk replacement heifers total 4.05 million head, up 1% from 2000. USDA reports 2.54 million milk replacement heifers are expected to calve this year.
With the higher cow number excessive supply is depressing farm milk prices. National Milk Producers has proposed a creative solution. National Milk Producers Federation, is floating a supply management idea that could give dairy producers thinking about exiting the business an extra incentive to do so. They propose a 12-15 month moratorium on capital gains taxes for producers selling out. To alleviate concerns that the majority of these cows could end up in other herds, cattle would have to be tested and certified to be Johne's free before they could be sold for dairy. The first challenge, of course, would be ensuring the cattle were tested. The second would be convincing cattlemen that animals culled for beef wouldn't disrupt cattle markets. (Bill Thomas)
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Beef Cow Numbers Declined Again in 2000. The latest count of cattle and calves across the country shows that the US cow herd continued to decline last year. This was not unexpected as heifer slaughter was very high last year and the herd cannot grow until producers start retaining some of those heifers in the herd. This will likely happen in 2001. While herd growth will ultimately mean more beef on the market, the results will not be felt for several years. In the meantime, fewer heifers on the market will actually tend to shrink the beef supply as the heifers held for replacement will not be sent to feedlots to end up on the consumers plate. The beginning of a new cycle in which the cow herd increases is usually the very top 2 to 3 years of calf prices. So the next few years should be good to Georgia cow/calf producers as long as we get a little rain to grow some forage.
As of January 1 the total number of cows and calves in the US was down 1% from the previous year or about the same number as in the early 1990's. Brood cow numbers were also down 1% but the desire of cattlemen to regrow their herds can be found in the fact they held 2% more beef cow replacement than on Jan. 1 of 2000. The effects of last years drought and the cold winter can be found in Georgia's numbers as total Georgia cattle and calves stood at about 1.27 million head or 3% less than last year. Beef cow numbers were down only 1% or 700,000 head. Apparently Georgia cattlemen are doing exactly what they need to do in light of low feed supplies and the good calf price outlook - holding cows and letting every thing else go. (John McKissick)
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