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Chasing $6 Corn: Opportunity or Illusion? · Professional Ag Marketing Podcast

• 0:03
  SPEAKER_00: You're locked in to the Green Market Talk Podcast.
• 0:06
  SPEAKER_00: Fast updates, market movers, and the green news you need right now.
• 0:12
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: All right.
• 0:22
  SPEAKER_01: Today is Friday, July 24th.
• 0:24
  SPEAKER_01: We're going into the close here today, just after one o'clock.
• 0:27
  SPEAKER_01: I've got Jordan here with me.
• 0:28
  SPEAKER_01: Today we're going to talk about the grain markets.
• 0:31
  SPEAKER_01: How's it going, Jordan?
• 0:32
  SPEAKER_02: Good.
• 0:34
  SPEAKER_01: What about that weather?
• 0:36
  SPEAKER_02: Yeah, so it's uh been quite the week here on corn.
• 0:39
  SPEAKER_02: You know, we kind of came in Sunday night, um, trading around that 465 area and um gapped higher and had about a 20 cent rally here this week there on December corn, closing here at around this 486, 487 mark, which when you kind of look at the chart, um you know, we had an 80 cent pullback earlier this summer to now seeing a 60 cent rally from the lows and kind of closing this week right around that uh 78% retracement level, which is right at about 490.
• 1:08
  SPEAKER_02: So um, you know, a pretty good rally to kind of you know recapture some of them highs that we saw earlier in the week, led by you know um a six to ten day, eight to fourteen day forecast that is pretty warm.
• 1:22
  SPEAKER_02: So, you know, as we kind of head into this weekend, you're gonna see you know some temperatures in the mid-90s kind of out here in the west, and you know, that's really kind of fueled a little bit of a fire as you start to see condition scores out in the west deteriorate a little bit, especially in North Dakota and South Dakota is what we're seeing, Mike.
• 1:39
  SPEAKER_01: Yeah, Cade pulled up some of those on the on the map up there.
• 1:43
  SPEAKER_01: So you can see the six to ten was a little bit hot and dry compared to the eight to fourteen day.
• 1:48
  SPEAKER_01: Uh so mainly in the west, which is a little inconvenient because that's where most of the problem is for heat and and drought so far.
• 1:56
  SPEAKER_01: Seems like uh even last night's rains, it was half an inch or so just south of the interstate here, kind of between Sioux Falls and whatnot.
• 2:03
  SPEAKER_01: So still not enough to really give us any uh real relief through the weekend here, anyways, for the folks who did catch some.
• 2:10
  SPEAKER_01: But going forward, anything west of Sioux Falls, basically get to Mitchell.
• 2:14
  SPEAKER_01: Uh hearing pretty nasty stuff, Jordan, for uh some dryness and and poor conditions there.
• 2:20
  SPEAKER_01: But I mean, when you look at who's struggling in this corn belt, you're looking at North Dakota, South Dakota, and Nebraska.
• 2:27
  SPEAKER_01: Uh crop condition scores have decreased a lot over the past two weeks.
• 2:31
  SPEAKER_01: We're dry.
• 2:32
  SPEAKER_01: Uh it's pretty hot out here.
• 2:34
  SPEAKER_01: We don't have much relief in the in the near future either, maybe a chance Sunday night again.
• 2:39
  SPEAKER_01: And then you go over a state to Minnesota, Iowa, and Missouri, and things look actually pretty good for the majority.
• 2:46
  SPEAKER_01: Even the eastern uh Minnesota folks who caught 15 inches some in in a week or two time frame, uh, they actually bounced back pretty good, it looks like, and the crop looks good.
• 2:56
  SPEAKER_01: Iowa looks great for the most part, from what we've heard, and even Missouri.
• 3:00
  SPEAKER_01: Illinois, it sounds like they've got problems uh here and there, but we just don't know how big of a deal it is yet.
• 3:06
  SPEAKER_01: So they're a little bit back from crop condition scores for what they could.
• 3:10
  SPEAKER_01: And then the surrounding states, you look at like Indiana and Ohio, they're pretty normal crop conditions.
• 3:15
  SPEAKER_01: Uh Michigan and Wisconsin, those are okay crop conditions, a little bit better than normal.
• 3:20
  SPEAKER_01: So it's mainly a Western Corn Belt problem with the weather so far.
• 3:24
  SPEAKER_01: And if we looked out, you know, using different yield scenarios today, if you would say what's a corn yield today with the weather we've had, a lot of folks are 187, 188, 189 estimates.
• 3:36
  SPEAKER_01: But by the time you factor in the 15-day forecast, it pulls it all the way to like a 182.
• 3:41
  SPEAKER_01: And even beyond that, if you look at a 45-day forecast, it's in the 170s, 175.
• 3:47
  SPEAKER_01: So we'll see.
• 3:48
  SPEAKER_01: Obviously, the further out you get in that forecast, the less reliable it gets.
• 3:52
  SPEAKER_01: But so far here, this week's strength, a lot of it has come from this weather situation showing a poor basically week to two-week forecast, I'd say, in this corn market.
• 4:03
  SPEAKER_02: Yeah, so I think you know, you summarized it really well there.
• 4:06
  SPEAKER_02: And, you know, as we move forward, these private estimates are going to kind of start showing their weekly numbers.
• 4:12
  SPEAKER_02: And this week, you know, we did see a lot coming kind of coming around that 188 type area.
• 4:17
  SPEAKER_02: And, you know, as you look forward, like you said, you know, uh, with the forecast, you could see it drop here a little bit.
• 4:23
  SPEAKER_02: But, you know, we're kind of through pollination.
• 4:26
  SPEAKER_02: Um, you know, you're you're starting to see black silks.
• 4:29
  SPEAKER_02: And right now, it really feels like this yield's probably going to be around this 182 to 186 range.
• 4:36
  SPEAKER_02: Um, the West has some problems, like you mentioned, but you know, the the middle of the Midwest, and as you kind of look east, it they look pretty good.
• 4:44
  SPEAKER_02: You know, you're kind of talking about Illinois there, you know, having a little bit of problems, and and their problems early on was too much moisture.
• 4:51
  SPEAKER_02: So this little dry stretch has kind of been a welcome for them, is what we're hearing.
• 4:55
  SPEAKER_02: So um, you know, right now I think we're gonna kind of hang in this 182 to 186 range, and you know, honestly, um, you know, kind of around this uh 80% retracement has been a pretty good area for a lot of these grain farmers to kind of reward this market, is what what we're seeing.
• 5:14
  SPEAKER_02: Um and it's gonna be tougher to kind of pull yield down, you know, over these next few weeks, especially looking at you know these forward forecasting.
• 5:24
  SPEAKER_02: So we were talking about an 8 to 14 day forecast there on Sunday night being you know pretty hot and dry.
• 5:30
  SPEAKER_02: And now as you kind of move past that and start to look at you know the eight to fourteen day out further from here, it's got much more relief into it, more normal type temperatures, and you're starting to bring bring some rain in there.
• 5:44
  SPEAKER_02: And you know, to your point, this um you know, past 24 hours, we've seen some rainfall kind of come through, and that's hitting you know some of these drier areas like Nebraska, right?
• 5:55
  SPEAKER_02: Um, you know, I I took a trip down to Omaha this week, and you know, the crop looks phenomenal all the way down there, right?
• 6:02
  SPEAKER_02: And um talking to some some guys uh you know kind of driving through Nebraska this morning and and they're getting rain.
• 6:08
  SPEAKER_02: So so so you know that area kind of seems to be shrinking.
• 6:13
  SPEAKER_02: That's a little bit of a problem, but it's definitely a problem, right?
• 6:16
  SPEAKER_02: And you know, you kind of you know look to Iowa, Minnesota, and you know, look at how well it they are sitting with moisture and how good is that crop gonna be.
• 6:26
  SPEAKER_02: You know, we've seen it here locally last year when we were kind of the garden area, right?
• 6:31
  SPEAKER_02: I mean, those hybrids really flexed into some really, really nice yields.
• 6:34
  SPEAKER_02: So um I I think you know this is an area that you know needs to kind of be rewarded as you kind of look at what what the market is doing, right?
• 6:42
  SPEAKER_02: Now locally that gets a little tough, but um nationally, it sure seems like uh there's a pretty good crop out there.
• 6:49
  SPEAKER_02: And one thing I wanted to kind of point out is you know the USDA is kind of changing some of the ways they look at yield, right?
• 6:56
  SPEAKER_02: You know, we looked at that pretty hard there uh last year, Mike.
• 7:00
  SPEAKER_02: And um it seems like um some of these you know forecasted um yields is how the USDA is gonna look at look at their yields going forward.
• 7:11
  SPEAKER_02: So, you know, they're definitely something you want to kind of be monitoring.
• 7:15
  SPEAKER_01: Yeah, I'll be keeping an eye on the satellite imagery a lot here this year.
• 7:18
  SPEAKER_01: That was a really good way to track yield last year, it looked like, and uh, I know they're gonna weight it heavier upon that going forward here.
• 7:26
  SPEAKER_01: Uh it seems like the futures, if you look at a calendar and look at how futures are trading alone, it really tells the whole story.
• 7:33
  SPEAKER_01: And that just being that corn's been about 20, 25 cents off the old highs here still.
• 7:39
  SPEAKER_01: Uh, corn is basically telling us it's being drug up by a few different things, wheat, which we'll get to, and soybeans.
• 7:46
  SPEAKER_01: And it's saying we're kind of through pollination.
• 7:49
  SPEAKER_01: We might have some problems in the Western corn belt, but it's getting to be the time of the year where it's going to be difficult to trade too much weather going forward.
• 7:56
  SPEAKER_01: The soybean side, we're putting new record high prices in for these contracts.
• 8:01
  SPEAKER_01: So putting in new highs, we still have August weather ahead of us, which could be a problem.
• 8:06
  SPEAKER_01: I feel like that really tells a story.
• 8:09
  SPEAKER_01: If we get a cool or wet or forecast in the month of August at all for these soybeans, I think the markets are really going to reflect that quickly.
• 8:17
  SPEAKER_01: Yeah, Sunday night will be huge, like we've talked about here going into this next week.
• 8:23
  SPEAKER_01: I would say there's four items, if I had to sum it up.
• 8:26
  SPEAKER_01: There's weather, which has been the main driving influence, and then there's two wars which we've been trading now again.
• 8:32
  SPEAKER_01: The Russia-Ukraine war, which is uh old flame, so to say, that we've been talking about, and then the Iran situation, which we're still talking about as well.
• 8:40
  SPEAKER_01: And then the last but not least, we're trading the China buying as well.
• 8:45
  SPEAKER_01: China's supposedly poking around on a little bit of corn.
• 8:48
  SPEAKER_01: Maybe they'll buy some at some point here, especially if they want to hit their target for next year.
• 8:51
  SPEAKER_01: They'll have to do something on corn, but at this point they haven't yet.
• 8:55
  SPEAKER_01: So on the two war fronts here, what we've seen is Brent WTI or Brent oil traded over$100 this week for the first time in quite some time since May, I believe.
• 9:06
  SPEAKER_01: And we've seen a pretty good rally in that market.
• 9:09
  SPEAKER_01: And I feel like the funds are adjusting for this.
• 9:11
  SPEAKER_01: You know, crude oil backed off a little bit today after that big rally, wheat backed off pretty hard today after their big rally, cattle were back higher again today, equities were back higher again today.
• 9:23
  SPEAKER_01: So the funds are kind of trading all that stuff again.
• 9:26
  SPEAKER_01: And so the the Rush-Ukraine situation, which felt like they traded the wheat market pretty hard this week.
• 9:34
  SPEAKER_01: You had news of you know, the rally was fueled really by these rise in tensions between Russia and Ukraine as Russia they targeted their ports and military infrastructure in the Ukraine's like Odessa region.
• 9:48
  SPEAKER_01: And that ongoing conflict has made freight insurance increasably increasingly difficult to obtain for them.
• 9:55
  SPEAKER_01: And they've been supposedly trying to reroute some of their export shipments, about a quarter of them.
• 10:01
  SPEAKER_01: Uh now it sounds like they're going to try today uh to keep some of that flow more normal for exports, and that really pulled prices back.
• 10:10
  SPEAKER_01: The European prices were down about 45 cents uh today, the Matif wheat there.
• 10:16
  SPEAKER_01: So our prices seem to follow that pretty quickly.
• 10:19
  SPEAKER_01: So you've traded a few different items.
• 10:21
  SPEAKER_01: You traded your weather, you traded wheat, uh, you trade on the Russia-Ukraine situation, you traded the Iran situation on oil.
• 10:30
  SPEAKER_01: Uh, you've had a few different things kind of impacting this market.
• 10:33
  SPEAKER_01: But in my opinion, it feels like without weather, if you gave this thing a cool, wet forecast, I don't think the other three have enough ammo to really keep prices where they're at today for these grain markets.
• 10:45
  SPEAKER_01: So I wanted to get your take on that.
• 10:47
  SPEAKER_02: Yeah, and I think that's exactly right.
• 10:49
  SPEAKER_02: And today is a very good example of that, right?
• 10:51
  SPEAKER_02: I mean, we wanted to open the overnight up two and a half to three cents there last night.
• 10:55
  SPEAKER_02: We come in this morning and you know, see uh wheat down uh you know 45 cents there on the European market, and that really pulled corn down.
• 11:03
  SPEAKER_02: I mean, wanted to be down ten cents or so.
• 11:06
  SPEAKER_02: And you know, so looking at that to me, you kind of look at you know, the forecast kind of changed to a little bit cooler, a little bit wetter, and um that's what kind of pulled it lower, right?
• 11:19
  SPEAKER_02: So you didn't have the the wheat market out there holding it up, and the forecast got a little wetter, and boom, we took ten cents off of it.
• 11:26
  SPEAKER_02: And you know, you look at the chart, we gapped higher, so there is a gap there at 465 that needs to be filled up here at some point.
• 11:32
  SPEAKER_01: Same uh soybeans about 1204 to 1207 there, so I'm kind of keeping an eye on any big pullbacks for that area as well.
• 11:39
  SPEAKER_01: So any final thoughts for our listeners on the grain market here this week?
• 11:43
  SPEAKER_02: Yeah, I think you said it a couple times there, Mike.
• 11:45
  SPEAKER_02: You know, Sunday night is gonna be definitely interesting to see what kind of happens here on the forecast going forward.
• 11:51
  SPEAKER_02: And um, you know, we will definitely want to kind of keep an eye on China, right?
• 11:55
  SPEAKER_02: I mean, we've seen them make a couple big sales here over the past two weeks, and that definitely really kind of helped lift that that uh soybean market.
• 12:03
  SPEAKER_02: And as you kind of work forward, August weather is gonna matter a lot here this year on soybeans.
• 12:09
  SPEAKER_01: For sure.
• 12:09
  SPEAKER_01: All right.
• 12:09
  SPEAKER_01: Well, thank you for your time, Jordan.
• 12:11
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• 12:13
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• 12:19
  SPEAKER_01: Please reach out, hit the subscribe button, and uh have a great weekend.
• 12:22
  SPEAKER_01: Thank you, Jordan.
• 12:23
  SPEAKER_02: Thanks, Mike.