Cash cheese moves higher and futures jump

Cash cheese prices moved higher on Friday and Class III futures jumped in response. Barrels increased 5.75 cents to $1.50 and blocks gained 1.75 cents to $1.60. Those increases really prompted some optimism for Class III traders with December gaining 52 cents, January 51, February 42, March 34 cents and 5 to 30-cent gains from April through December.

Traders had been nervous about that 14-cent differential that developed between blocks and barrels afraid both would go lower in a move to bring the ratio back into line. So, when the margin narrowed to a dime with both going up…futures jumped.

One other note, so far 1054 loads of blocks and 520 loads of barrels have been sold on the CME this year, the largest combined total for any year and we have six weeks left in 2009.

A holiday-shortened week should see more milk available for manufacturing as schools close down for Thanksgiving.

The Class I base for December milk is $13.99, up $1.13 from November.

Strong demand fuels soybean rally: November 20, 2009

Soybeans were higher Friday on strong demand and technical buying. The supply is tight and demand is solid. Gains were limited, however, because of some pressure from the outside markets with the dollar higher and the Dow and crude oil lower.

Corn was lower on the large available supply, and outside market direction. There’s also some harvest pressure with most of the progress in the Western Cornbelt. Even with demand concerns, Mexico bought more than a million tons of corn this week and they plan to get more because of their worst drought in decades. Other export destinations, however are sitting on their hands because of high prices and abundant supplies.

Wheat was lower on profit taking and the higher dollar. Strength in the dollar raises the price of U.S. goods on the export market, limiting competition. It’s anticipated that there will be losses to U.S. winter wheat production because of the late fall harvest, but negative supply and demand fundamentals for wheat are trumping that.

I.C.E. subpoenas Vermont dairy farms

Federal immigration officials served subpoenas to at least five dairy farms in Vermont on Thursday. Kelly Loftus with the Vermont Agency of Agriculture says the farmers have three to four days to provide paperwork to show that any foreign workers at their farms have proper documentation.

John Morton with Immigration and Customs Enforcement (ICE) said his agency is conducting workplace audits on 1,000 businesses around the country which were selected on “investigative leads and intelligence.” Morton says ICE is stepping-up enforcement of immigration employment laws with a focus on employers who hire illegals.

Vermont Senator Patrick Leahy called the crackdown “poorly timed” as dairy farmers are in the midst of a price crisis and now their labor supply is threatened. Leahy says this is an example of a problem with U.S. immigrant labor laws which do not allow workers to stay in the country year-round…something dairy farmers need. Leahy has called Homeland Security Secretary Janet Napolitano to appear before his Senate Judiciary Committee on December 9th to further discuss the situation.

Brazil receives WTO okay for US sanctions

Brazil reportedly has received formal authorization from the World Trade Organization to impose trade sanctions on the US for its support for cotton. According to Reuters, Brazil’s request to impose sanctions in the nine year complaint follows the award by WTO arbitrators in late August to allow Brazil to impose sanctions and is also in response to the US failure to comply with earlier WTO rulings that condemn the subsidies. The award allows Brazil to “cross-retaliate” against other goods, not just cotton – for a total of about 300-Million dollars. Brazil, the second largest cotton exporter after the US – says the illegal US subsidies are harmful and distort international trade. Other developing countries agree. 

Reuters says Brazil, however, isn’t ready to levy sanctions yet because it’s still analyzing U.S. data and that the WTO diplomat for the U.S. has told the dispute body that Washington WILL comply with the ruling and Brazil won’t have to levy any sanctions.

New leadership at Tyson Foods

New leadership for Tyson Foods. Donnie Smith, a vice president in the poultry and prepared foods division is the new president and chief executive officer while Jim Lochner, vice president in the fresh meats division is the new chief operating officer effective immediately.

Smith has been with Tyson since graduating from the University of Tennessee in 1980 with a degree in animal science. Lochner has bachelors and masters degrees in meat and animal science from the University of Wisconsin-Madison. He was with Oscar Mayer then moved to IBP eventually becoming president and CEO. Lochner joined Tyson when the company purchased IBP in 2001.

Read more details from Tyson:

WTO will form dispute panel on COOL

The World Trade Organization will rule on Country of Origin Labeling (COOL) in the United States. Both Canada and Mexico had requested a WTO dispute panel in the matter and in both cases the U.S. exercised its one-time-veto to the request. Canada has now made a second request and the WTO has accepted the request.

Canada contends COOL is an unfair trade barrier because U.S. meat processors have chosen not to use Canadian products rather than label them separately. The U.S. argues consumers have the right to know where their food comes from.

The dispute panel is expected to issue a report later next year. WTO does not have the authority to enforce compliance with its rulings but can authorize trade sanctions against those who do not comply.

EPA ag advisor on climate change legislation

The agriculture counselor to EPA administrator Lisa Jackson says new revenue streams for producers are among the various climate change legislation directions taking shape, although legislation is not likely to pass this year. Larry Elworth told Brownfield at the NAFB Convention last week that the impact of climate change on agriculture due to shifts in related weather conditions and the issue of energy independence are important considerations. And Elworth says that whether other countries address climate change should not be a factor in whether the United States does. “Those are things that in the United States we can continue to take leadership on, irrespective of what the rest of the world has done. The United States has taken leadership on economic development and on fighting terrorism – and all of those. Our responsibility and our opportunities to take action – and bring the rest of the world along with us in that situation – because of our leadership has been a key to our policies,” Elworth says.

In less than a month international negotiators will be at the table in Copenhagen for UN-sponsored talks with a goal of reducing global greenhouse gas emissions. The Obama administration wanted climate change legislation passed in the U.S. before then.

This week, Senate leadership announced that debate on climate change legislation this year is being crowded out by health care, financial regulation reform and other measures and likely won’t be taken up next year.

The American Farm Bureau Federation and other ag groups applaud the decision.

U.S. Environmental Protection Agency (EPA)

AUDIO: Larry Elworth, agriculture counselor to EPA Administrator, at Trade Talk during 2009 NAFB Convention (11 min., MP3)

Cattle on feed up one percent

The number of cattle on feed in the U.S. on November 1st –eleven-point-one million head—is up one percent from a year earlier. 

The monthly cattle on feed report also shows placements into feedlots during October were one percent above 2008, while marketings were three percent less than one year ago, but Brownfield analyst David Kohli doesn’t give a lot of weight to the marketings number.  

“I don’t put a lot into that number for one good reason–that these numbers just aren’t up in the feedlots and so the marketings couldn’t have been any higher,” says Kohli, “so that’s not a big negative for me.”    

In fact, Kohli says the report may result in a neutral to bullish open Monday for cattle futures. 

Nebraska’s on feed numbers were up four percent; Colorado up eight percent; South Dakota up three percent; and, Iowa up 11 percent.

Tom Steever also contributed to this story.

AUDIO: David Kohli (2 min MP3)

Lean hog contracts close sharply higher

Live cattle settled 12 to 40 points higher on the Chicago Mercantile Exchange. There was some forward positioning ahead of the weekend and the release of the monthly cattle on feed report. The report looks generally neutral, though October placements did turn out to be somewhat smaller than expected. On feed and placements were both up 1%, marketing’s down 3%. December was 27 points higher at 83.95, and February was up 5 at 85.42. Boxed beef cutout values were steady to weak on moderate demand and moderate to heavy offerings. Choice beef was down .43 at 139.18, and select was .10 lower at 131.97.

Feeder cattle ended the session 20 to 110 higher on front month discounts to the feeder cattle index along with bull spreads and buy stops. Lower corn values leant additional support to the deferred issues. January was up 85 points at 92.67 and March was up 72 at 93.57.

Feeder cattle receipts at Missouri auctions this week totaled 20,811 head. Compared to last week, feeder steers and heifers were steady to 3.00 lower. Demand and supply was moderate to light. Receipts this week were curtailed by extremely wet and muddy conditions. Feeder steers medium and large 1, 761 head averaging 578 pounds at 95.65 per hundredweight. 460 heifers averaging 577 pounds brought 85.94.

The weekly cattle slaughter is estimated at 631,000 head, 6,000 more than last week but 5,000 fewer than last year. Cattle country was very quiet and trading appeared to be wrapped up for the week. Some cattle in the South could be carried over into next week. On the other hand, judging by slaughter numbers feedlots appear to be very current. In the Midwest direct markets this week cattle on a live basis traded from 80.00 to 84.00, and dressed at 130.00. High Plains direct markets traded from 83.00 to 84.00.

 Iowa/Minnesota barrows and gilts closed .21 lower at 51.29 on a carcass basis; the West was up .29 at 51.62, and the east was .46 higher at 50.17. Missouri direct base carcass meat price is steady from 47.00 to 48.00. This week’s slaughter is estimated at 2,322,000 head, 32,000 more than last week, and 46,000 less than last year; it will be interesting to see how wholesale demand handles the extra tonnage early next week. Saturday slaughter plans have slowly improved and should now total 163,000 head.

Lean hogs settled 42 to 162 points higher as traders reacted to the sharp losses on Thursday. Traders seemed to be trading paper ahead of the weekend according to Rick Kment at DTN. December was up 1.62 points at 57.60, and Febr4uary finished 110 higher at 64.37. Pork trading was slow with light to moderate demand and mostly light offerings. Pork carcass cutout value was 1.27 higher at 158.21.

Bellies finished higher on spillover support from the live pit. February was up 5 points at 87.12.

Large MN dairy buys farmland in Nebraska

One of Minnesota’s largest dairy producers has reportedly acquired almost 24-hundred acres of farmland in north-central Nebraska.  That according to a report in the Lincoln Journal-Star.

The land, located in Holt County, was purchased at auction earlier this month at a cost of more than 12 million dollars.  It includes 16 parcels, all served by center-pivot irrigation units, that had been owned by an area feedlot.

The Journal-Star connects the sale to the Fehr family from west-central Minnesota.  It says the family has ownership in several Minnesota dairy operations that milk thousands of cows a day.  A company spokesman declined to comment on their intentions for the Nebraska property.

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