summer | Field 2 Field

May 4, 2022May 4, 2022

Market Prices are Still Higher, But How long?

Market Prices are still higher, but for how long? Commodity markets are rarely dull and sometimes are outright wild. One-quarter of the way into 2022, and we’ve seen a lot of upward pressure in several commodities. The curious question is how long is this going to last given multiple outside factors that could bring the higher push to a halt.

Mike Zuzolo is the founder and president of Global Commodity Analytics in Atchison, Kansas. He’s been working in the markets in various positions since November 1995. Zuzolo has seen a lot of ups and downs over the years, and the corn market has been near all-time highs for quite a while.

“We’ve been within reach of the all-time high for corn set in August 2012, at $8.43 3/4,” he said on the phone from Kansas. “You have the Hard Red Wheat drought, you have the E15 blend increase this summer, planting delays that are pressuring a marketplace that’s expecting more acres than what the USDA predicted earlier this year.

“And then you have the soybeans getting support from the vegetable oil market, which is supported by the crude oil market, and that is supported by the biggest feature of all, the war in Ukraine,” Zuzolo added.

Over the past four months, Zuzolo said there are two overarching factors that had the most influence on the corn market prices. One is the idea from the Federal Reserve that the U.S. had transitory inflation. At roughly the same time the Fed began to publicly acknowledge that wasn’t the case, Russia began its attack on Ukraine. He said most people didn’t seem to truly expect that would happen.

He calls these two events “black rhinos.” Those are events the public knew were possible but kind of turned away from, not thinking they would actually happen. “They aren’t like black swans that we didn’t know where out there,” he said. “You didn’t think they would have the impact on the markets that’s happened so far.”

The market prices could potentially feel the impacts of the war in Ukraine for years. Zuzolo, a long-time market observer, says the length of the impact may depend on who “wins” the war and how big it may get before it’s done.

The commodity markets may feel the impact of the war in Ukraine for years to come. (Photo from Hindustantimes.com)

“Does NATO get involved?” he wondered, “It would then go from two countries directly involved with a lot of support from multiple other countries, or does it expand into a NATO and China and Syria and Iran conflict. The regional conflict would have a great chance of blossoming into more of a full-on world war.”

He thinks the trade is beginning to take the potential conflict escalation into account, “and they should.” A recent weekly stocks report of distillate fuels in the U.S., which is mainly heating oil and diesel fuel, showed America’s distillate fuels at their lowest point since 2008.

“All of the sudden, we have a situation where the wheat market is contending with a situation similar to 2008 in terms of drought potential, knocking down yields,” he said. “Now, we have the energy sector also looking like 2008. If you throw the Russia/Ukraine issue on top of that, then yes, you could have something that lasts for quite some time.”

There are a lot of negative features out there that can affect market prices. He said the trade can’t get a handle on what the supply is right now. Folks in the markets don’t know if the demand is being rationed aggressively enough at this point, because they don’t know if the supply has stopped going down yet.

“The Highly Pathogenic Avian Influenza is in 20-something states right now,” Zuzolo said, “we have a hog herd that is shrinking as of the March Hogs and Pigs Report, and we have a cattle herd that is seeing an almost-weekly drop of one-to-three pounds on a dressed basis. I think we’re only four or five pounds above where we were a year ago, and this is in the beginning of what could be one of the worst droughts in cattle country.”

The International Monetary Fund (IMF) recently cut world GDP by almost a full percentage point just since January. While the IMF puts a lot of it at the foot of the war in Ukraine, Zuzolo says it goes back to the supply chain issues. The U.S. couldn’t afford any more problems on the supply side with energy and crude oil than what the country already faced because of COVID-19.

Thinking long term, Zuzolo spoke to the possibility of the U.S. having to ration exports in order to make sure the U.S. had enough food to feed the country. He doesn’t think it will happen in terms of food exports, but it could happen in other sectors.

“In terms of crude oil, we recently lost a lot more barrels of oil than the trade expected,” Zuzolo said. “It wasn’t because of extra strong demand, it was three times more than the trade expected because we were exporting it out the door. If we can’t bring up the rig count here in the United States and start producing more to meet international and domestic demand, it will then be time to start thinking about rationing.”

Zuzolo said this will have to be a topic of conversation three-to-six months down the line if the war expands and the conflict gets any bigger than it already is. In the meantime, it’s harder than ever to guess what’s ahead in 2022 for the markets.

“I’m gonna stick with what I’ve said recently,” he said. “Because this is a supply cost-push, weather-induced, inflationary move, I still feel the first half of calendar year 2022 is the best time for grain hedgers to get their hedges in place, and yes, I do think they’ll need them. It’s because of the fact that it’s not demand led, and that we are on track for a recession, a greater than 50 percent chance, by the fourth quarter of this year.”

Commodity markets are never dull, are they? (Photo from wikipedia.com)

He says it’s important to get grain hedges in place by the end of June. For the livestock and poultry producer, the second half of 2022 is going to give them a better opportunity to hedge better profit.

“At that point, not only will high market price prices for grains pull down the weights, the HPAI will pull down supply, as will some natural herd reductions. That will all begin to be felt in the market price and the available supplies of market-ready cattle and hogs by the time we get to August and September.

“I still want to hedge the livestock markets, but I don’t think we’re on as big of a timeline as I am on the grains during the first half of the year,” he added.

April 10, 2022April 10, 2022

Anoka’s abandoned amphitheater

An abandoned amphitheater? Who could resist that?!

Anoka was my next stop on the exploration schedule to check out an old, abandoned amphitheater. With a hat tip to Brendon Maness for the tip, Derrick and I jumped in the car for a quick drive north on 169 and literally almost ran into the amphitheater as it’s a sidewalk away from 169 itself. Bet the traffic noise made for an interesting background to the entertainment folks put on there, back in the day?

My first impression of the amphitheater was an obvious one: this thing has been around a LONG time. The structure was put together back in 1914 on the banks of the Rum River in Anoka. The really interesting part to me is its name: the Windego Park Auditorium and Open-Air Theater. At first, I thought it was Wendigo. Do you know what a Wendigo is? I bet you do if you’re a monster movie buff like me.

The abandoned amphitheater in Anoka, Minnesota, was first built in 1914. (photo by Chad Smith)

The old theater is currently listed in the National Register of Historic Places and had to be a great place to watch a program back then. The location on the bank of the Rum River is beautiful.

Anoka’s citizens back then had a notable interest in outdoor entertainment and recreation. Thaddeus P. Giddings, a promoter of music education who’d been organizing community singalongs in the summer of 1913, took over organizing the programs and entertainment at the amphitheater.

Another gentleman named William Gray Purcell designed the amphitheater, and I thought he did a bang-up job. The stage sits on the flat part of the riverbank, and, as you can see in the pictures, the seats are on the sloping hillside. It had room for an audience of up to 1,600 people in its heyday.

At one time, the seating was covered by a colorful retractable awning system designed to protect patrons from the weather. That had to be a must-have during summertime storms and heat waves, am I right? A curved back wall at one time included a box office, entrance doors, and a projection booth, but that part no longer stands.

The orchestra pit was located at the foot of the bleachers. The stage area was off to the left and was nothing more than a flat part of the riverbank. (Photo by Chad Smith)

The theater was used for amateur plays, historical pageants, and other local community musical or meeting events. However, the theater would only thrive as long as Giddings was on hand. Giddings began spending summers at his music camp located in Michigan, and the amphitheater fell into disuse, with the exception of an occasional gathering.

In 1979, Anne Bronken, a University of Minnesota Landscape Architecture Department student, designed a plan to restore the amphitheater. Community organizers patched the concrete and did some cleanup work. A restoration planned as recently as 2010 didn’t happen. Today, the amphitheater has only its seating and orchestra pit left standing, and both are in a deteriorated state.

The view from the amphitheater. The Rum River is in the background and had to make for a fantastic setting to watch a play or concert. (Photo by Chad Smith)

Here’s a link to my Facebook photo album

April 4, 2022April 4, 2022

Soybean Harvest Disappoints South American Farmers

The South American soybean harvest is on the mind of many in the commodity markets this time of year. One expert says the Brazilian soybean harvest was about three-quarters complete, and, as of last week, the results may be a dramatic step down from last year. That could mean extra export opportunities for American soybeans in the months ahead.

Michael Cordonnier is an agronomist with Corn and Soybean Advisors, Incorporated, in Hinsdale, Illinois. The Brazil soybean harvest is 75-80 percent complete, and the Safriña, or second-corn crop, is all but completed at 99 percent after getting planted in the optimal window of time.

“I think the weather has been pretty good to allow the second-corn crop to get in the ground,” Cordonnier said while on the phone from his office in Illinois. “It’s off to a good start, but there’s still a long way to go. However, the market seems pretty confident that we’ll see a good-sized Safriña corn crop.”

In fact, he says there’s so much optimism around the potential of the corn crop that it’s pressuring Brazil’s domestic corn prices. There’s even more pressure on their domestic corn prices because the Brazilian real is strengthening when compared to the dollar. He said it’s trading at about 4.7 to the dollar, the strongest it’s been in a year.

“The South American market, at least in Brazil, is very confident that we could see a corn crop that’s 25 million tons larger than last year,” he said. “There is some concern about potential frost late in the season before the crop matures.

“La Niña is still out there,” Cordonnier added, “and it’s going to stay a couple of more months. That generally results in earlier-than-normal frost. Any frost, at all, before the end of June is important for the Safriña crop in Brazil.”

The pace is a lot slower in Argentina, where the South American crop expert says the corn is about ten percent harvested while the soybean crop is less than five percent in the bin. Early yields continue to be disappointing, early on, so he said it remains to be seen what will happen in Argentina.

South American growing areas struggled with a drought that, in some cases, stretched back to 2021 and earlier. He said some of those same areas are starting to see some rainfall. However, many areas are still looking for a consistent drink of water to recharge their soils.

The Brazilian soybean harvest may be disappointing, but the second corn crop is off to a good start, even though there’s a long way to maturity. (Photo from wikipedia)

“There’s still some dryness in east-central Brazil,” he said, “including the corn-producing states of Goias and Minas Gerais. It remains to be seen if the dryness gets resolved, but I’m not optimistic as South America is getting closer to what’s typically a dry season.

“The last summer rains usually occur in early May, so there’s a month or two left in the summer rainy season,” he added. “But it’s getting better.”

Cordonnier predicts a Brazil soybean harvest of 123 million tons, within a narrow range of an upside of 124 and a downside of 120. However, he says farmers are “pretty close” to being done with results in the low 120s. He predicts an Argentine soybean harvest of 39 million tons. “I’m a little bit on the low side,” he said. “But I expect the Buenos Aires Grain Exchange to lower their soybean number as well.

“I expect Brazil’s farmers to produce 112 million tons of corn,” Cordonnier said. “We’ll see what the weather does to and for the Safriña corn crop. In Argentina, I stayed at 49 million tons for their corn harvest, and the Grain Exchange agrees with me as they lowered their prediction to 49 million. I thought they should have been at that number a long time ago.”

His numbers continue to get narrower for both corn and soybeans in each country. The overall South American soybean crop is going to be down by a big number from last year.

“I have the South American soybean harvest at 171.6 million tons compared to 198 million last year,” Cordonnier said. “That’s down about 26 million tons from last year, which is a significant drop. The news is better for the South American corn crop, which I have at 167 million tons, compared to last year’s harvest of 143 million.

“That’s up a good amount from last year,” he added. “That jump happened because the Safriña corn crop was such a disaster in 2021. Corn will be better than last year, and soybeans will be worse than last year: It’s the reverse of what we had last year in South America.”

Does that mean some soybean export opportunities for the U.S. this year? It’s likely, but Cordonnier says the war in Ukraine and its impact on global commodity markets makes it hard to know for sure what’s ahead for the remainder of 2022.

August 4, 2020August 4, 2020

Minnesota sweet corn is ready and waiting

Minnesota sweet corn is one of our biggest summer traditions, right up there with grilling, baseball, and back-to-school commercials.

The freshest Minnesota sweet corn is now available from local growers around the state. The recent heat has led to a great crop of sweet corn and many growers say harvest is going to be fantastic.

Here’s a way to combine a couple big Midwest summer traditions, both sweet corn and grilling.

“Our sweet corn looks fantastic!” said Brian Schiltgen, of Schiltgen Farms in Afton, Minnesota.

The season starts in late July and continues through early September. Veteran farmers often plant in stages so they can offer fresh corn throughout the second half of summer.

Eating this summertime favorite just after it has been picked ensures the best flavor. As time passes after harvest, the sugars in the corn convert to starch and the sweet flavor diminishes.

You’ll find the freshest sweet corn in the state when you buy directly from a Minnesota farmer. Locally grown corn is often available at farmers’ markets, farm stands, and as well as at retailers who feature local produce.

The Minnesota Grown director is a great place to find sweet corn, farmers markets, and everything in between. (Photo from minnesotagrown.com)

Be sure to call ahead or look up a farm or farmers’ market online to confirm any adjustments due to COVID-19. Best practices include wearing a mask, social distancing, and washing hands frequently when you visit a farm or farmers’ market.

The Minnesota Grown Directory is available in print and online, and is a great resource for finding local farmers or farmers’ markets. The 2020 Directory includes 91 sweet corn growers and 195 farmers’ markets. Free, printed copies of the Directory may be ordered online or by calling 1-651-201-6469.

August 2, 2018

Rushford MN man literally stumbles on bison history

A funny thing happened to Dawson Dahl of Rushford during a family trip to the beach. It was a typical summer day and the family decided to go swimming. While walking through the sand, Dahl accidentally stubbed his toe. That painful moment led to a very interesting discovery for him and the rest of the family.

“It was a hot day and we went down to the Point, which is what we call the spot where the crick and the River meet,” he recalled. “We were swimming while my mom sat on the bank and read a book. After getting out of the water, I stubbed my toe on something. I wanted to rip it out of there so no one else would get hurt. I didn’t know it at the time, but I stubbed my toe on the horn of a big Bison skull.”

Dahl grew more interested as he kept digging and saw that his find was something large. As he worked it out of the ground, his mom noticed all the digging and wanted to know what it was too. After finally working it free, Dahl said his mom wasn’t too thrilled by what he’d found.

“She kept saying ‘throw it away’ but I wasn’t going to,” he recalled. “I said ‘I’m keeping this thing.’ It was heavy. After we cleaned the sand out, I’m sure it was lighter. We took it home and hosed it off. We didn’t polish it or anything like that, but we sure did clean a lot of sand out of it.”

As some folks might imagine, he said it was obviously quite a shock to pull a full-sized, complete Bison skull out of the ground. Dahl dug to the point that he could yank the horn with both hands and finally pulled it up out of its resting place. His first reaction?

“Wow, what is this,” he said. “I literally sat there for a few seconds trying to figure out what it was that I had just pulled out of the creek.

“We live pretty close to the creek, so I just carried it home, and then we got it hosed off and cleaned up,” he recalled. “After that, we stuck it in a wheelbarrow and I guess it sat there for six months. Then, we got the idea to bring it to the family White Elephant gift exchange at Christmas.”

Dahl said he actually wanted to hang the skull on the wall, but his mom wasn’t really high on the idea. So, when Christmas rolled around, the Dahls wrapped it up in a box and decided to give it as a surprise gift to a family member. So, which extended family member got the ‘gift?’

“Of all people, my grandmother picked it out,” he said with a smile that was almost visible during a phone conversation. “She’s really not into that type of thing. She unwrapped the big box and opened the lid, jumped back in her chair and yelled. Everyone wanted to know what it was. She started laughing and said she wasn’t going to touch it.

“My great-uncle Larry walked in, saw what it was, and grabbed it by both horns to pull it up out of the box,” he added. “The whole room just exploded in surprise. He’s into that kind of thing and took it home from the family get-together. I’m pretty sure he actually had someone look at it and tell him the skull was actually from the 1800s.”

The skull actually has a hole in it near the brain and figured that’s where hunters shot and killed the bison. The people who dated the skull figured that the Point is where the skull had been buried before eventually working its way back to the surface, where Dahl literally bumped into it.

“It was absolutely perfect timing,” he said.