Welcome to the new The D&D AG MarketMIX newsletter! This newsletter is exclusively for you - our D&D customers and associates. Our goal is to provide you with a monthly summary of the Ag market reports to keep you updated on relevant, vital news that may impact your business.

Uncertainty Prevails in Milk Markets

Questions continue to mount around global milk supplies as output in Europe starts to show some improvement. On the demand side, recessionary fears and news around China’s pandemic lockdowns are providing little upside. Possible export and USDA business remain wild cards. Prices are likely to decline seasonally into year-end, but probably in an uneven fashion.

Looking forward, it appears producers and their cooperatives are preparing to petition USDA for a Federal Order hearing to consider modifications to various milk pricing formulas. In anticipation, the National Milk Producers Federation board voted in mid-November to back recommendations including returning to the “higher of” Class I mover, discontinuing the use of barrel cheese in price formulas and updating milk component factors.

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US Producers & Their Margins are Under Pressure

As volatility persists over the near term, US producers and their margins are under pressure from rising input costs. Corn is still in the upper end of the price range. Labor is expensive. With higher interest rates, money is more expensive, too. In addition, diesel inventories are nearing historic lows, sending prices higher and threatening to disrupt the flow of fertilizer and fuel to farms. The situation could worsen in the months ahead as seasonal factors and sanctions lead Russia to restrict crude oil flows.

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Grain Stocks are Stacking Up

Freight snarls are also weighing on the transport of fuel and other goods. Mississippi River levels continue to dwindle, hampering barge traffic. And while some shippers are pivoting to rail, strikes could begin as soon as December 4 if a labor deal isn’t reached. Some businesses are opting to move as much product as possible ahead of the deadline.

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As a result, grain stocks in barge- and rail-dependent markets are stacking up. And supplies could continue to mount, based on USDA’s latest World Agricultural Supply and Demand Estimates report. US corn production and yield estimates, along with world ending stocks, were pegged above average pre-report projections. US ending stocks fell within expectations. On the soybean side of the ledger, US production and yield estimates, along with US and world ending stocks, surpassed average forecasts.

Silver Linings

Though the future remains foggy, some silver linings are starting to emerge. Diesel refineries, particularly in the Northeast, are working above capacity to replenish stockpiles. Barge freight rates are easing as harvest wraps up and shipments slow seasonally. And reports suggest demand for US dairy and grains remains relatively strong.

With everything happening in our world today and news reports offering little relief, we need to take time out this upcoming Thanksgiving to pause and reflect on some of the good things that have come our way this past year. At D&D Ingredients, we are grateful for our customers, we appreciate all you do, and we never forget our purpose and goal, to be there for you. 

Have a Happy Thanksgiving!

Protect Your Downside

Given current market conditions, the Ever.Ag Feed Foundations Team recommends putting strategies in place to protect your downside. If you’re locking in high prices, consider buying inexpensive puts underneath. Please contact Jordan Miller or Pat Kahle who can direct your questions to the appropriate advisor to discuss specific strategies.

Jordan Miller: 419-692-3206 ext. 1043

Pat Kahle: 517-260-8295 or P[email protected]

This monthly report is brought to you by Ever.Ag’s Feed Foundations Team. The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. By law we must state the information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.

We appreciate and thank our sponsor partners in this report – CHR HANSEN & VETAGRO.

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