Pages Navigation Menu

North Mountain Ag Services

Blog

Keep up with the latest at North Mountain Ag and stay informed with the latest updates.

North Mountain Ag Comments June 24, 2019

Posted by on Jun 24, 2019 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG COMMENTS

Lean hog futures are under pressure as traders question whether short term US demand for fresh pork will keep up with domestic supplies. With industry hopes of increased exports becoming dimmer as global eyes are on the middle east, we are viewing live hog prices in the fourth quarter of 2019 being vulnerable.

Corn field reports indicate that the crop is 2-3 weeks behind schedule in key US growing regions. While the coming weeks will determine the extent of yield impacts in key areas, it is fair to assume that earlier yield expectations will not be met this season.

Soybean values, despite adequate global supplies, have moderate support as US producers strive to catch up despite weather concerns. The unknown in the global market right now is what Asian animal feed demand will look like as this year’s crop progresses.

Feeder cattle prices have declined 3% this past week as buyers have reservations about fourth quarter feed prices. As yards are working on 6 month projections, grain prices will have a significant impact on the ample feeder supplies being put on feed. Live cattle futures continue to trend lower, and we expect new lows on the horizon.

Nearby milk futures are trading at $16.38 at the beginning of today’s session. Deferred contracts are sluggish.

Wheat is riding on the back of corn values, trending higher this past week.

As always, please call us for customized strategies that maximize your opportunities to protect and manage profit margin.
Brian Yingling (717) 585-9772

North Mountain Ag Comments December 20, 2018

Posted by on Dec 20, 2018 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG COMMENTS
December 20, 2018

  • Lean hog are seeking direction as production expectations point to large pork supplies. Traders are selling the market based on continued worries regarding US export opportunities. Trade reports indicate that ASF could be more prevalent in Asia than earlier thought, leading to a glimmer of optimism for world consumption in early 2019.

 

  • Corn futures are flat to slightly stronger as US harvest is only slightly behind the historical average. There are mold and toxin issues in many areas, resulting in firm basis projections for end users.

 

  • Soybean delivered prices are under pressure as weather continues to point to potential high South American yields in 2019. Soybean meal basis continues to weaken, although at a slower pace than the rest of the soy complex.

 

  • Feeder cattle prices are currently trading 8% higher over last year, although the lack of opportunities to forward price at profitable levels would tend to indicate that the current strength is based on nearby availability.

 

  • Nearby milk futures are trading at $13.74 at the beginning of this today’s session. Deferred contracts are sluggish, with 2019 offerings averaging $15.82.

 

  • Wheat quality will be watched very closely over the next month. Current yield reports are pushing prices lower, with nearby wheat trading in a window around $5.24 per bushel.

 

As always, please call us for customized strategies that maximize your opportunities to protect and manage profit margin.

Brian Yingling (717) 585-9772

North Mountain Ag Comments

Posted by on Jul 9, 2018 in Blog, Uncategorized, Weekly Updates | 0 comments

NORTH MOUNTAIN AG COMMENTS

July 9, 2018

 

  • Lean hog futures are under pressure from reports of over production in China along with concerns over US tariffs.  Fourth quarter futures continue to be at risk with domestic production projected to be above the historical average.

 

  • Corn futures have struggled as Asian demand has waned recently and US crop conditions are good to excellent in key areas.  Local PA basis has been softer, although we notice some regional mills have not updated their basis offerings this week.

 

  • Soybean delivered prices are under pressure as weather continues to point to potential high US yields in 2018.  Soybean meal continues to weaken, although at a slower pace than the rest of the soy complex.

 

  • Feeder cattle prices are currently trading 8% higher over last year, although the lack of opportunities to forward price at profitable levels would tend to indicate that the current strength is based on nearby availability.

 

  • Nearby milk futures are trading at $14.17 at the beginning of this week’s session.  Deferred contracts are showing very little strength, with 2019 offerings averaging $15.63.

 

  • Wheat quality will be watched very closely over the next month.  Current yield projections are pushing prices lower, with nearby wheat trading in a window around $5.06 per bushel.

 

As always, please call us for customized strategies that maximize your opportunities to protect and manage profit margin.

  • Brian Yingling  (717) 585-9772

North Mountain Ag Comments

Posted by on Dec 7, 2017 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG COMMENTS

December 7, 2017

  • Lean hogs were softer in yesterday’s trading session as traders questioned recent gains in second quarter 2018 contracts.
  • Corn futures have struggled to rally in the face of strong Brazilian exports.
  • South American soybean crop expectations are being reduced base on La Nina’s weather pattern.  Despite the weather, there are still large global supplies relative to a year ago.
  • Our clients trading grain futures will be happy to note that margin requires for corn have been reduced by $100 per contract.
  • USDA has reduced the milk price forecast for 2018.  This is tough news considering the fact that Class III milk futures for 2018 are currently struggling to trade beyond the $14-$15 range.
  • Marketing managers are reporting that wheat sales are below expectations.  Traders certainly appear to be reluctant to buy wheat, as futures prices limp along this week.

As always, please call us for customized strategies that maximize your opportunities to protect and manage profit margin.

  • Brian Yingling  (717) 585-9772

Risk Management Comments March 27, 2017

Posted by on Mar 27, 2017 in Blog, Weekly Updates | 0 comments

RISK MANAGEMENT COMMENTS

March 27, 2017

 

Lean Hogs

Over the last six weeks, fourth quarter 17 lean hog futures have consistently run into resistance despite worries over belly inventory figures.  When you consider pork supplies looming over the industry with USDA projections of 2017 pork production at 25.6 billion pounds, it is understandable why investors are hesitant to express optimism.  Coverage through February 2018 looks attractive right now for producers that are managing their grain basis purchase targets in tandem with hog marketings.

Dairy

Despite concerns over the past three weeks regarding export sales, March milk futures are trading around $16.  Strong butter and cheese sales are supporting the market and providing optimism that with current trends, milk prices may average $2 more per cwt over last year.  On the supply side of the equation, USDA continues to forecast 2017 milk supplies being 2.1% over last year, despite cow numbers being lower.

Beef

Current cold storage figures have created some concerns for cattle traders, but our view is a bit more optimistic.  Cattle on feed numbers are stable, and domestic consumption has been strong.  We believe it is important to keep in mind that fluctuations in cold storage numbers should be kept in perspective.  With less than 2% of beef supplies, and largely secondary cuts, cold storage numbers should not drive the market.

Grains

Corn basis in PA remains higher than the historical average in PA, and nearby futures have found support in light of growers’ planning for 2017.  Last year corn acreage was only 4 million higher than beans.  As growers focus on soybean costs fitting their budgets better than corn, there could be significant strength that finds its way into corn futures in the coming months.

 

As always, please call us for specific pricing targets that maximize your opportunities to protect and manage profit margin.

–         Brian Yingling

WEEKLY UPDATE APRIL 20, 2015

Posted by on Apr 20, 2015 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG SERVICES WEEKLY UPDATE

April 20, 2015

Will Hog Producers Lock in 2015 Profits?

Hog producer profitability has been a popular topic that past week as the onset of warmer weather points to grilling season and much-anticipated increases in pork prices.  With a historically strong market in 2014, and speculation concerning industry expansion in 2015, it is worth taking a moment to think about targets for covering 2015 fourth quarter market hogs.

As in every conversation we have in regards to hedging livestock, we want to start by taking a look at input costs.  Grain stock numbers tell us that with current stocks, this year will likely require planting of corn to be on time with fair weather conditions to keep end users on track to purchase fall 2015 corn below $4 per bushel.  While soybean planting intentions are not necessarily as high as some of us anticipated, the logistical picture for this year looks very much improved over 2014.  Commitments on railcars have increased significantly in the US, and basis is expected to reflect the improvement.

Factoring in these assumptions on grains, it is now time for hog producers to take the opportunity to begin covering hog marketing in September and October of this year with the October 15 lean hog contract.  Currently trading at $70.82, the opportunity to begin locking in $1.38/live cwt in profit exists for client base.  With the December 15 lean hog contract trading at $67.87, our clients now have the opportunity to begin locking in break-even prices for November and December marketing intentions.

With US export opportunities currently looking bleak, we are advising producers to cover market risk in the anticipation of cash hog prices being at risk to drop from current levels by $6 to $8 per carcass cwt by the end of the calendar year.  Combining export concerns with current US live hog expansion, it will be important to also focus on the first quarter of 2016 when the May and June 2015 lean hog contracts expire and investors begin to roll positions.

It will be critical this summer for hog producers to focus on historical profitability expectations and not fall victim to unrealistic cash hog price expectations.  While risk managers has gotten used to covering lean hogs at contract prices over $90, it is important to focus on managing exposure to an environment of soft global pork demand and increasing domestic inventory.

 

As always, please call us for specific pricing targets that maximize your opportunities to protect and manage profit margin.

  • Brian Yingling

NORTH MOUNTAIN UPDATE FEBRUARY 9, 2015

Posted by on Feb 9, 2015 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG SERVICES WEEKLY UPDATE

February 9, 2015

Milk Margins Struggle

This past year dairy producers benefited from strong Chinese export demand.  The slowing of the Chinese economy serves as a good reason to question how much demand there will be in Asia for US dairy products in 2015.  Inventory reports in China indicate that large amounts of dried milk have been stored during 2014, only strengthening the argument that US exports face challenges.

Russia’s troubles with the EU and their embargo on shipments of EU milk and cheese are also a clear challenge for dairy farmers in various parts of the world.  With Asian and Eastern European demand forecasted to be soft this year, it is easy to wonder how many destinations exist for US milk in the coming months.

One bright spot in 2015 is the relief in feed costs that have resulted from the 2014 harvest.  We are recommending that our dairy clients price their milk for 2015 delivery at $19 per cwt or higher.  If Class III milk futures are being used as a hedge, target $16.50 as an average for the year.  When considering the upcoming demand challenges, we do not believe that 2014 milk price levels will be realized again this year.

 

Lean Hog Pricing

Lean hog futures have been under a great deal of pressure as reports of herd expansion and improved health give traders reason to be bearish.  High cattle cash prices have continued to support cattle futures.  We expect cattle prices to be a support for the hog market, with summer lean hog contracts being supported by higher demand.  Softer grain basis in Pennsylvania is a key piece to hog margin management this month.  Please consider giving us a call to assist in managing margins for your fourth quarter 2015 hogs.

As always, please call us for specific pricing targets that maximize your opportunities to protect and manage profit margin.

  • Brian Yingling

WEEKLY UPDATE JULY 28, 2014

Posted by on Jul 28, 2014 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG SERVICES WEEKLY UPDATE

July 28, 2014

Agricultural News:

  • Corn crop looks promising
  • Soybean crop progress and supply
  • Dairy profitability
  • Pork prices and demand expectations

Market Updates:

  • USDA is rating 76% of the US corn crop as being “Good to Excellent”. At this time last year, only 67% of the crop was ranked at this level. For livestock producers, this is welcome news that offers optimism for continued profitability through the first quarter of 2015. With the potential for prices to further weaken at harvest, grain producers are wise to consider covering a portion of their crop.
  • As early concerns over US moisture have leveled off in the trading pit, the soy complex continues to show signs of softening. Barge availability has increased over the past two weeks for shipments of soybean meal from South America. Alternative protein supplies, while tight, have not proven to be as tight as some reports indicated. As a result, pressure from global demand has not been strong enough for speculative buyers to risk moving the futures market higher in the near term. The big question for soybean meal will be animal feed usage expectations for the fourth quarter of 2014. If broiler and hog production are both higher, history tells us that the December 2014 soybean meal contract may continue to trade in its current range. For new crop beans, we are recommending that producers cover their pricing risk with put options. Despite strong demand from China, world stocks will be higher in 2015 and the market will be impacted by supply.
  • For everyone who lost money milking cows in 2011 and 2012, the brighter days continue to brighten. With milk futures currently trading at $21.52, the opportunity to lock in profitable sales remains through December 2014. Cheese and butter demand is firm, despite increased US production over the past six months. Overall milk processing numbers are strong, with primary processors continuing to report strong seasonal volume.
  • This past week’s bearish movement across the lean hog contracts was a reaction to frozen stock inventory numbers being larger than what some analysts expected. While this was a report-specific movement, there a number of items to keep in mind when protecting nearby hog production. Lean hog futures trading volume points to traders’ expectations that fourth quarter 2014 values will level off. Upon trading in the area of $105, lean hog prices have continued to stall and trade in a “topping” pattern. While feed costs are softening with lower regional corn basis levels and new crop wheat, it will be critical for pay attention to market hog numbers in November and December. While higher carcass weights are currently keeping marketable pounds at levels above expectations, the real test for the market will be the number of live hogs being sold during the last two months of the year.

 

  • Key risk management points:   It is our recommendation that our grain clients have 25% of their corn and bean production covered by the end of this month. Hog production should now be 100% covered through September, with production during the months of October through December being at least 50% covered. We are continuing to recommend that our hog clients sell the December contract with a layered approach from $101 to $106. Profit margins are at historical highs right now in healthy herds, and now is the time to capitalize on available margin. We do not recommend adding to soybean meal coverage this time. As always, please call for specific targets and recommendations.

 

WEEKLY UPDATE APRIL 2, 2104

Posted by on Apr 2, 2014 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG SERVICES WEEKLY UPDATE

April 2, 2014

Agricultural News:

  • Corn prospective plantings lower than expected
  • Soybean pricing and the global picture
  • Dairy prices and farm income
  • Pork prices, will they ever soften?

Market Updates:

  • This week’s USDA report was bullish for corn futures, with the prospect plantings forecast at 91.7 million acres, which would represent a 4% reduction from 2013.  With corn stocks running close to 30% higher than last year, grain farmers continue to hold on to last year’s crop.  Futures traders have been reluctant to enter into the market, and trading volume is much lighter than last year at this time.
  • Soybeans were a different story in the USDA Prospective Plantings Report.  The forecast is for plantings to increase over 6% from last year.  With soy and protein prices remaining firm this month, speculators in the market expect to see potentially higher planting numbers, which may temper some of the bullish trading the market has experienced over the past year.  From a global perspective, transportation remains a difficult issue.  Barge allocations continue to be very tight for product from South America.
  • With milk futures trading higher than $20 through the summer, dairy producers continue to recover from the losses realized in 2011 and 2012.  There is reason to be optimistic for dairy farm income with 2014 input costs being very manageable with current profitability available in the market.  This spring is an excellent time for producers to forward price their product and commit to purchasing feedstuffs prior to the seasonal volatility that could occur in the grain and hay markets this summer.
  • It is easy to wonder if lean hog prices will ever soften.  Cash hog bids over the past two weeks have consistently traded to meet and exceed futures values.  With packers continuing to remain profitable based on availability of product and the corresponding primal values, there is no reason to believe prices will fall apart in the near term.  However, it is important to observe the spreads in the market and note that April lean hogs and June lean hogs are trading together.  This is a historical sign that traders believe the market is over-bought and are hesitant to take larger long (purchase) positions.  In addition, volume in the deferred futures contracts is light relative to summer contracts.  This week’s Hog and Pigs Report did not reflect the reduction in hog availability that many expected with the widespread health issues in the industry.  While this week’s report should have encouraged selling in the market, the strength this week raises the question of whether or not traders have put much faith in USDA’s numbers.

 

Key risk management points:   We are recommending that hog producers have 75% of their summer production hedged with the June and July 2014 contracts at this time.  We are targeting $102-$105 in the October contract as a point for continuing to hedge the fourth quarter.  We continue to strongly recommend that producers do not stay open to the market with their hogs.  The margin available when current input costs are considered is very attractive from a historical perspective.  We have issued a recommendation for livestock producers to cover 35% of PA corn basis feed needs for the second quarter at $0.23 over the CBOT.  We do not recommend adding to soybean meal coverage this time.  As always, please call for specific targets and recommendations.

WEEKLY UPDATE FEBRUARY 28, 2014

Posted by on Feb 28, 2014 in Blog, Weekly Updates | 0 comments

NORTH MOUNTAIN AG SERVICES WEEKLY UPDATE

February 28, 2014

Agricultural News:

  • Corn prices slightly stronger
  • Soybean pricing and protein values
  • Cattle supplies- what does the short term look like?
  • Pork pricing, cash vs. cutout

Market Updates:

  • Corn basis across much of the eastern US has been strong this past week as grain producers inventory product in the face of futures prices that have been essentially flat.  It is our expectation that this will continue into early March as producers continue to make marketing decisions based on forecasted returns that were much higher than what the corn market is currently offering.
  • While reports of large South American soybean supplies continue, transportation remains a significant concern for product reaching the US.  Sugar continues to draw upon the limited resources to move bulk product in a timely manner.  With high protein values in numerous markets, prices are being buoyed by strong consumer demand.
  • This week’s USDA numbers indicate that there are 10.76 million cattle on feedlots, which was 1.2% higher than early estimates.  The live cattle futures market barely even noticed the report.  With packers paying historically high prices for slaughter animals, retailers and consumers are willingly paying higher prices. In the near term, it appears that the average consumer will continue to pay higher prices at the retail level, but the foodservice sector is not as clear.  With a very cold winter and lower revenue numbers, it is likely that many restaurants will be unable to change their published pricing.  The next question- will foodservice portion sizes get even smaller?
  • Dairy producers are continuing to enjoy extremely bullish milk prices.  The March 2014 contract has traded as high as $22.29 this week.  We are working with our clients on locking in a portion of spring and summer sales and taking advantage of the current margin that is available.
  • What causes lean hog futures to trade limit up?  PED speculation, robust cattle prices, fears of slaughter shortages, and consumers cooking pork at home during snow storms go a long way to support the market.  With loins trading at $1.12, bellies over $1.47, and hams over $0.84, producers can expect packers to bid aggressively on live market hogs.  With the gap closing between cash and futures earlier this week, expect the gap to continue to close.  This is an EXCELLENT time for hog producers to continue to hedge their summer production and begin hedging the fall.

 

Key risk management points:   We are recommending that hog producers have 50% of their summer production hedged with the June and July 2014 contracts at this time.  We are targeting $94 in the October contract as a starting point for hedging the fourth quarter.  We DO NOT recommend that producers stay open to the market with their hogs.  The margin available when current input costs are considered is very attractive from a historical perspective.  We have issued a recommendation for livestock producers to cover 25% of PA corn basis feed needs for the second quarter at $0.29 over the CBOT.  We do not recommend adding to soybean meal coverage this time.  As always, please call for specific targets and recommendations.

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.