Outlook

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Partners & Friends,

I attended a farm marketing/economic outlook meeting a couple of weeks ago, here are my Cliff notes from it:

Gulke 7/2022
Ukraine:
-war is going to last a long time
-commodity prices will be strong the next 1-2 years at least
-demand not reduced globally
-Russia is not crippled by sanctions
-Ukraine production is down 30% this year, and estimated to be down 50% in 2023

Fertilizer:
-global fertilizer markets are controlled by few key players
-ammonia prices have more upside than downside
-US phosphate mining industry is mature and end is probably 10-15 years away
-prices are probably at lowest period of year during summer fill
-sanctions are not having much effect on Russian economy; the world needs what they have

Weather:
-warmer and drier the rest of summer
-Europe is warm and somewhat dry
-Australia is having a good crop season
-Russia and Ukraine are having decent weather
-China is wet
-Canada is having a good season
-Brazil is looking average

Economy:
-we are in a recession that started last year
-business profits are non-existent
-inflation is real, world is curing it quickly; Christmas merch way overstocked
-winners are agriculture, automobiles, chips, and defense
-losers are housing and consumer goods
-Europe is sending 80 billion/mth to Russia last month for energy

Gulke Presentation:
-Dow Jones and NASDAQ turning lower—collapse?
-the dollar is making new highs
-soy stock-to-use ratio is tight, will depend on Brazil crop and how high prices move
-corn is trading close to value for expected size of 2022 crop

Wallace:
-sell $5, $550 puts
-Tyson profits $600/hd last year
-US raises as much chicken/year as beef and pork combined

It is hard to believe that summer is already winding down, with school starting in a couple weeks. We are trying to get our construction projects completed so we may begin preparing for harvest. Our summer help will be gone very soon. It is now time to mow the roadsides and waterways; we prefer to wait until late summer to allow wildlife the opportunity to use cover until new hatchlings are able to protect themselves (certainly not because we are too lazy to get it done earlier 🙃). Hay is ready for the third cutting, but finding a weather window between the myriad of pop-up showers and rain predictions (and goat showing schedule) is hindering our ability to do so. We continue to tend to the crops and will spray some check strips of different products next week. It is still felt that this corn crop has quite good potential, and that beans will be at least average if rain and cool temperatures continue.

Ukraine is shipping grain—loaded ships are leaving ports almost daily. China is stirred-up and threatening retaliation for the Pelosi visit. Commodity prices are weakening as the outlook for good yields increases. Most areas seem to be getting some rain.

The family is good. Phyllis and I will be celebrating our 45th anniversary on the 21st. Goat showing is doing quite well. The state fair goat show is next week. 

Fall Prices:

Corn—5.91

Soybeans—13.83

Enjoy what is left of summer!

Steve