Latest / Professional Ag Marketing Podcast / 5 Years of Bull

Transcript

5 Years of Bull · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Today is March 12th.
• 0:25
  SPEAKER_00: I've got Nick Bork here with us today.
• 0:27
  SPEAKER_00: How's it going, Nick?
• 0:27
  SPEAKER_01: Good.
• 0:28
  SPEAKER_01: How are you, Mike?
• 0:29
  SPEAKER_00: We are fantastic.
• 0:30
  SPEAKER_00: I'll tell you what, it's been a wild ride here.
• 0:33
  SPEAKER_00: We've had a lot of uncertainty throughout these markets, so today I'm going to talk a little bit about that, and then we're going to talk about the WASD Airport, adding to that uncertainty or confirming some of it, let's say, in yesterday's report, and then we're going to talk about the bull cycle and gattle a little bit.
• 0:48
  SPEAKER_00: How's that sound?
• 0:49
  SPEAKER_01: That sounds great.
• 0:50
  SPEAKER_00: Alright, well, let's get started here.
• 0:52
  SPEAKER_00: The uncertainty that we've seen unfold here.
• 0:54
  SPEAKER_00: There's been a uh really, if you watch and look at money flow recently, the funds have been telling us something.
• 1:02
  SPEAKER_00: And it was something that we can take from the fund activity is that they've been taking risk off the table.
• 1:09
  SPEAKER_00: And I think this is something farmers need to ask themselves as well as other industries and investment uh funds continue to take risk out and take risk off the table in their investments.
• 1:21
  SPEAKER_00: How can farmers in our industry do that as well?
• 1:24
  SPEAKER_00: Um, so that's a question worth asking here going forward as we start to plant our next year's crop and grow our next calf is uh, you know, at this time of the year, it's important to realize uh when we need to take on risk and when we don't need to add risk to our operations.
• 1:41
  SPEAKER_00: And other industries right now are are for sure taking a risk-off type approach.
• 1:46
  SPEAKER_00: And I think that's something to start off with, Nick, that's worth mentioning for uh just kind of risk tolerance and and seeing still uh wild land rents coming out and some things like that that um you know we don't want to get too stretched thin on here, Nick.
• 2:01
  SPEAKER_00: But nonetheless, the S ⁇ P 500 actually getting a green day today on Wednesday.
• 2:07
  SPEAKER_00: We had an inflation report come out this morning that was a little bit softer than expected.
• 2:11
  SPEAKER_00: So the report has caught quite a bit of green here.
• 2:14
  SPEAKER_00: Looks like we're headed towards a decent close for the first time in quite a while here.
• 2:19
  SPEAKER_00: So if we got two days in a row, that would be pretty much a first time since the middle of February that we've had back-to-back closes higher on the stock market.
• 2:26
  SPEAKER_00: Uh, we've seen about a 10% retracement, which we normally would have about one 10% setback annually in the stock market.
• 2:35
  SPEAKER_00: We'd have 5% setbacks about three times in the stock market normally, and then once every three and a half years, we normally get that 10% setback to be 20% or more that it grows into.
• 2:47
  SPEAKER_00: So that's kind of the question we're asking right now.
• 2:49
  SPEAKER_00: A lot of funds have ran towards the sidelines, and there were a lot of funds already on the sidelines, Nick.
• 2:55
  SPEAKER_00: Now, at what point do they try to jump back in?
• 2:58
  SPEAKER_00: Uh, one, it's been just a lot of fear that has taken over the markets, uh, fear about what the tariff situation will do to our economy.
• 3:06
  SPEAKER_00: And uh with that fear, money has been leaving uh a lot of these investments.
• 3:10
  SPEAKER_00: So that's kind of a general trend here.
• 3:12
  SPEAKER_00: The corn market as well here, Nick, we've seen the uh the corn pullback again today.
• 3:18
  SPEAKER_00: We had December down to 448.
• 3:20
  SPEAKER_00: We're done in the crop insurance uh averaging time frame now, and and with that being the case, we are uh headed towards those old lows that we put in here a couple weeks ago, uh, I guess only about a week ago, actually, on the corn market.
• 3:34
  SPEAKER_00: Uh something to watch there at 441 on the December corn.
• 3:38
  SPEAKER_00: We're we're just continuing to struggle to find a bull reason for this uh market to really uh add more longs back on in these grain markets, Nick.
• 3:46
  SPEAKER_00: And yesterday we didn't get a reason for that.
• 3:48
  SPEAKER_00: The Wazir Port came out very neutral and uh didn't not give the bulls anything to really bite on.
• 3:55
  SPEAKER_00: Uh other than that, we saw world global stocks on soybeans actually shrink just immensely uh on their verse expectations, and that was on higher consumption.
• 4:06
  SPEAKER_00: But really, other than that, South America left their production numbers the same, pr basically unchanged.
• 4:12
  SPEAKER_00: And then uh as well as the U.S.
• 4:14
  SPEAKER_00: balance sheets, those did not change at all on corner soybeans.
• 4:17
  SPEAKER_00: Soybeans, they just flipped two categories, added three to one, and added uh took three away from another.
• 4:22
  SPEAKER_00: So virtually no no changes on the U.S.
• 4:25
  SPEAKER_00: balance sheets.
• 4:26
  SPEAKER_00: So that uh that uncertainty getting past the Wazder port, it failed to really provide the Bulls anything they could chew on.
• 4:33
  SPEAKER_00: So uh we have uh responded to in today's trade at least with some weakness, but that was more stemming from some tariff news that we continue to get here out of uh battling with Canada back and forth, and now the EU today, I think was the big one uh as well with uh new tariff news between the United States and the European Union.
• 4:52
  SPEAKER_00: So that's kind of uh the gist of what's been going on in this market here really recently, Nick, I think from tariffs from a WASD report that came out yesterday, which we can quickly cover with the lack of information there or changes, and uh just where money flow's been headed uh really recently.
• 5:10
  SPEAKER_00: But uh talking about that, tell me about the cattle market, what stage of this cycle we're in, and and how how that market's been tracking here over a handful of years now.
• 5:20
  SPEAKER_01: Yeah, certainly, Mike, as we've seen a sell-off in in in a lot of these markets with tariff news, the cattle market now feels like it's kind of gotten over that um that initial reaction of fear and so forth, and it it's really recovered well.
• 5:35
  SPEAKER_01: And in fact, like you stated, Mike, the the uh the deferreds are really performing well relative to the front months.
• 5:43
  SPEAKER_01: Um in April here will be the will be five years of the bull cycle that we've experienced in cattle.
• 5:50
  SPEAKER_01: And so if the cattle market futures aft actually come to fruition there in in late 2025 as they suggest today, you know, that will kind of make history in the cattle market, right?
• 6:03
  SPEAKER_01: That the that the bull sack cycle actually lasted longer than five years.
• 6:07
  SPEAKER_00: That is a crazy statistic, actually.
• 6:09
  SPEAKER_01: It for surely is, yeah.
• 6:11
  SPEAKER_01: And it, you know, it it um I think it warrants us taking a look at all that, right, to to lay off some risk, just as you're saying.
• 6:18
  SPEAKER_01: Um it also is really interesting, like you pointed out this week, uh the the other than today, the financial sector is really, you know, sold off here like 10%, and and crude oil also trading um you know relatively low for what we've pe seen the past few years.
• 6:37
  SPEAKER_01: And the cattle market really has has diverged from both those markets, right?
• 6:42
  SPEAKER_01: That so you so two big sell-off days in the Dow this week and the cattle market was moving higher.
• 6:48
  SPEAKER_00: Um that was odd to see.
• 6:50
  SPEAKER_01: Yeah, very interesting.
• 6:51
  SPEAKER_01: And and I think that um, you know, it just is the the tariff deal as that continues to to look more and more long-lasting, that is uh that's you know that that that's problematic with beef imports.
• 7:04
  SPEAKER_01: And we're gonna need some beef imports yet to hold our supply levels where they are.
• 7:09
  SPEAKER_01: And so far, the you know, the we're everybody's pretty optimistic that we're gonna be able to hold the this choice market and this beef demand.
• 7:17
  SPEAKER_01: But certainly, as Trump suggested, you know, it's very possible we have a recession here yet um looming and and maybe already in one, right?
• 7:25
  SPEAKER_01: And uh, and and so it's it's really interesting that the cattle market still wants to stay friendly in light of all that, too, that you know, that we can hold our domestic demand together yet.
• 7:38
  SPEAKER_01: So uh as we look at that, you know, we continue to to be uh you know pretty hedged up on on even on incoming cattle.
• 7:46
  SPEAKER_01: Um the the the like I said before, for the bull cycle to last that deep into 25 and potentially even into 26 would make history.
• 7:56
  SPEAKER_00: Alright.
• 7:57
  SPEAKER_00: Well, that was some fascinating stuff on the cattle market.
• 8:00
  SPEAKER_00: Something we're gonna watch going forward, especially at these levels here.
• 8:04
  SPEAKER_00: Uh continue to watch the separation from those front months to those back months.
• 8:08
  SPEAKER_00: Watch for cattle being green on those odd days where the stock market is off quite a bit.
• 8:13
  SPEAKER_00: Uh that inverse uh correlation is quite odd to see historically.
• 8:17
  SPEAKER_00: So thank you for your time today, Nick.
• 8:19
  SPEAKER_00: I appreciate it.
• 8:20
  SPEAKER_00: Uh, can't wait for you to come on next time.
• 8:22
  SPEAKER_01: Yeah, thank you, Mike.
• 8:23
  SPEAKER_00: And thank you to all our listeners.
• 8:25
  SPEAKER_00: Please reach out to us at professional eggmarketing.com.
• 8:28
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 8:34
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 8:40
  SPEAKER_00: See you next time.