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A Risky Stocks Report · 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 involve 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.
• 0:24
  SPEAKER_00: Today is September 30th, and I've got Lucas Peters with us here today.
• 0:28
  SPEAKER_00: How's it going, Lucas?
• 0:29
  SPEAKER_00: I'm doing great today, Mike.
• 0:31
  SPEAKER_00: Awesome.
• 0:32
  SPEAKER_00: Well, we've got some fun things to talk about.
• 0:34
  SPEAKER_00: We're going to start off with uh a weekly report here.
• 0:36
  SPEAKER_00: We had a stocks report on grains.
• 0:39
  SPEAKER_00: We're going to talk about that a little bit.
• 0:40
  SPEAKER_00: We're going to talk about some harvest progress as well, and then we're going to talk about some uh price averaging uh that's going to be going on over the month of October here.
• 0:49
  SPEAKER_00: Just a little crop insurance update.
• 0:51
  SPEAKER_00: We promise it won't be too long.
• 0:54
  SPEAKER_01: Well, it can be if you want it to, Mike.
• 0:56
  SPEAKER_00: I think we're good today.
• 0:57
  SPEAKER_00: Well, we did see uh some interesting market action here over the past few trading sessions.
• 1:03
  SPEAKER_00: Really, the the soybean market's gonna be the big talker here today.
• 1:07
  SPEAKER_00: Week over week, we did see the soybean market uh escape quite rapidly from our eyes as we saw the uh November contract trade 46 cents lower week over week, or today 61 cents lower week over week on the on the soybeans here.
• 1:25
  SPEAKER_00: So a really rough week for the grain markets, rough week for the the livestock markets as well.
• 1:31
  SPEAKER_00: Cattle got beat up a little bit.
• 1:33
  SPEAKER_00: Uh on the lean hog side, we thought we were gonna see some help today after uh a friendly hogs and pigs report yesterday.
• 1:41
  SPEAKER_00: Only got about half a buck back on that December contract.
• 1:45
  SPEAKER_00: So we really didn't see the rally that we would have liked to have seen across many of these commodities today.
• 1:50
  SPEAKER_00: After the report here, we uh to sum it up, uh overall we did see a friendly corn report that traded corn back up to 696 on the December corn here.
• 2:02
  SPEAKER_00: Uh that was our new high for this move, anyways.
• 2:05
  SPEAKER_00: A quick recovery to the top end of the trading range.
• 2:08
  SPEAKER_00: But the soybean market today, as previously mentioned, we lost 46 cents on that to 1364, right down to the bottom end of uh support.
• 2:17
  SPEAKER_00: If we get much lower than that, Lucas, it's gonna start to scare me a whole lot depending on where this next Sunday, Monday close uh kind of ends up here after the report.
• 2:28
  SPEAKER_00: So a little bit of a recap, I would argue that we saw some important highlights from the quarterly stocks report.
• 2:34
  SPEAKER_00: Quite a bit of action compared to what we normally get out of this.
• 2:38
  SPEAKER_00: Uh we saw huge use in the fourth quarter for corn.
• 2:42
  SPEAKER_00: We used almost three billion bushels, so that was a very nice bump that we saw, and it kind of proved me wrong.
• 2:49
  SPEAKER_00: Uh uh going into this, anyways.
• 2:51
  SPEAKER_00: I've been genuinely worried about usage.
• 2:54
  SPEAKER_00: We've seen a smaller cattle herd.
• 2:57
  SPEAKER_00: We saw another bearish week of U.S.
• 3:00
  SPEAKER_00: ethanol output.
• 3:01
  SPEAKER_00: We see a strong dollar, which is limiting any attractiveness for exports for any of these grains or uh meats.
• 3:09
  SPEAKER_00: So it NAS proved me wrong, I guess again for now, with uh some really nice usage numbers out of the US DA here for uh for the United States.
• 3:19
  SPEAKER_00: That was a major talking point, I think, out of it that we really saw surprise this corn market today and get a bump higher.
• 3:27
  SPEAKER_00: So we did see stocks come in a little bit lower than what they were expected to, uh closer to the 1.37 type level for ending stocks on corn.
• 3:40
  SPEAKER_00: Uh that was expected to be closer to that level around 1.5 plus here going into this.
• 3:48
  SPEAKER_00: So that was uh somewhat friendly out of uh out of the corn market.
• 3:52
  SPEAKER_00: The soybean market actually found a few more soybeans, 274 million versus 242 million expected.
• 3:59
  SPEAKER_00: What we saw on the soybean side was a little bit larger crop last year than what they had expected, so they revised last year's crops higher, and then uh moving forward here, they are expecting uh to have a little bit more difficulty uh with the crush numbers as well.
• 4:18
  SPEAKER_00: So when we start to talk about the impact of this report going forward and which one's gonna win, right?
• 4:24
  SPEAKER_00: Because corn went to the top end of the trading range, soybeans went to the bottom end of the trading range, those two are fighting against each other again.
• 4:31
  SPEAKER_00: So we're gonna have to talk about which surprise is bigger and which surprise matters a little bit more here, the smaller corn number or the larger soybean number.
• 4:42
  SPEAKER_00: And I think going forward here, it's probably uh with the trend of direction that we're going, it's gonna be pretty easy, in my opinion, to try to get this market to ration corn.
• 4:52
  SPEAKER_00: Uh the soybean market, for us to increase demand again to make up those bushels, we're probably gonna have to turn crush back up because the US dollar isn't helping us much today on the export market, and Brazil looks like they're off to a pretty decent start here, and that's not helping at the end of the week.
• 5:08
  SPEAKER_00: So when I start to talk about this week's activities, some of the stuff going on, uh, those were some of my main talking points on the report.
• 5:15
  SPEAKER_00: Other than that, we did see uh outside market influence, which we've talked about a lot lately, have uh major impact again.
• 5:24
  SPEAKER_00: Uh really took a turn to the downside on the equities this week.
• 5:27
  SPEAKER_00: Uh, commodity prices fell apart right along with it.
• 5:30
  SPEAKER_00: So there is gonna be some uh some fund management positions moving around here as they try to figure out uh where to stick some money.
• 5:39
  SPEAKER_00: Uh for an example, if a fund's trying to uh designate, you know, 60% of their funds towards stocks, 30% towards bonds, and 10% commodities, uh, more of their riskier investments, we gotta remember that stocks aren't the only ones getting beat up right now.
• 5:54
  SPEAKER_00: Ma our generation, both you and I, believe it or not, have never seen a bond decrease this strong before.
• 6:00
  SPEAKER_00: And that's supposed to be kind of the safe haven aspect.
• 6:03
  SPEAKER_00: So when you start to look at a lot of these uh portfolios and you start to see the stocks take a hit majorly, you start to see the bonds take a hit majorly, maybe it's not as much fun to play in the commodity market anymore, especially if inflation's starting to slow or stop, which we're gonna see here in October again, uh, as we mainly look at rent and food categories, which should be the only two categories really leading to more inflation.
• 6:30
  SPEAKER_00: The rent number, gonna be hard to stop it.
• 6:32
  SPEAKER_00: Everything going on between uh interest rates moving higher to keep people that are renting still in rental agreements, and then uh interest rates moving higher will also move rental rates higher.
• 6:44
  SPEAKER_00: So that one will be very hard for the Fed to stop or the government here.
• 6:49
  SPEAKER_00: The food is one that they probably could control going forward.
• 6:53
  SPEAKER_00: All they gotta basically do is start to say, you know, well, we've got a high US dollar, we discourage some exports on the way out.
• 7:00
  SPEAKER_00: It starts to become a lot easier to control food prices uh for the government than it does some of these other inflationary categories that they're worried about.
• 7:09
  SPEAKER_00: So a few things to keep in mind going forward here as we start to see some of these funds pull out of commodities.
• 7:15
  SPEAKER_00: Um, but that's pretty much all I had on the reports here today.
• 7:18
  SPEAKER_00: What do you think about harvest progress here as we start to get into that a little bit, Lucas?
• 7:23
  SPEAKER_01: Yeah, uh kind of uh boy, you had some good thoughts there, Mike.
• 7:28
  SPEAKER_01: Uh some thought-provoking uh items.
• 7:30
  SPEAKER_01: I gotta I gotta think about that over the weekend.
• 7:33
  SPEAKER_01: We can talk about that one next week.
• 7:34
  SPEAKER_01: But you know, harvest progress uh um, you know, locally and around our area.
• 7:39
  SPEAKER_01: It seems like soybean harvest has started in earnest uh pretty much everywhere.
• 7:44
  SPEAKER_01: Maybe as you go east of Laverne down I-90, it's uh well, probably a little more rain, little healthier crops, uh not quite as far along, but uh around Laverne, combine's rolling hard over in South Dakota.
• 7:56
  SPEAKER_01: Of course, they're they've been going uh probably a few more days than uh around here.
• 8:01
  SPEAKER_01: Um you know, a few early cornfields came out, but it kind of seems like everybody switched to to beans.
• 8:07
  SPEAKER_01: Um so what are you hearing on yields, Mike?
• 8:09
  SPEAKER_01: What's what's everybody telling you?
• 8:10
  SPEAKER_00: So the one I want to start with is Western Illinois, eastern Iowa, eastern Minnesota.
• 8:18
  SPEAKER_00: That route that we took on the crop tour that we said was near record yields through that area looks like that was true.
• 8:26
  SPEAKER_00: Hearing fantastic corn and soybean yields out of those areas, no major problems.
• 8:31
  SPEAKER_00: Uh hearing fantastic crops.
• 8:33
  SPEAKER_00: So that one's an easy one to sum up right away.
• 8:35
  SPEAKER_01: Yeah, like like a guy in the office yesterday who farms over in eastern Iowa, like the first field they combine or in the neighborhood uh average like 290 plus.
• 8:45
  SPEAKER_01: Like, like, yeah, they they nailed it.
• 8:48
  SPEAKER_01: Yep, yep.
• 8:49
  SPEAKER_00: You move west of that, it starts to get more fun.
• 8:54
  SPEAKER_00: It it is very extremely variable.
• 8:58
  SPEAKER_00: And soil type, even within fields, they've talked about the major differences.
• 9:03
  SPEAKER_00: When you start talking about a field doing 20 bushel to 220 bushel, that's gonna be hard to narrow down.
• 9:10
  SPEAKER_00: So everyone in the Western Corn Belt, uh bad is bad in Nebraska, you know, some of these other areas, Southeast South Dakota, we know how bad bad is, but when you start to mix in some of those areas with better crops, it's gonna be really hard to judge how good they are.
• 9:25
  SPEAKER_00: And from what we've heard so far, like for um for Sioux Falls, a little bit north, we're talking 10 off normal on soybean yields.
• 9:35
  SPEAKER_00: And I think not just not from a percentage aspect, but 10 bushel, the better fields that normally average 75 are doing 65.
• 9:43
  SPEAKER_00: Yep.
• 9:44
  SPEAKER_00: The the fields that normally do 50 are doing 40.
• 9:48
  SPEAKER_00: Yep.
• 9:48
  SPEAKER_00: And I think that's just because the better fields held in a little bit longer.
• 9:51
  SPEAKER_00: You get an average field here or there, but there are some poor stuff that are dragging those averages down for that area specifically.
• 9:58
  SPEAKER_01: Yeah, and and on soybean yields specifically, like it seems like last week when we were talking to guys, you know, they first they're just diving into soybeans, and it was kind of like, okay, we're we're in the field uh of early beans, right?
• 10:12
  SPEAKER_01: Or the light field that gets mature faster, so that's where you start, and that's kind of where everybody starts, and everybody's like, well, I guess they weren't too bad.
• 10:20
  SPEAKER_01: Uh, and if this is my worst field, well, I'll feel better.
• 10:24
  SPEAKER_01: Now that harvest has progressed for a few more days, uh, I know kind of the the theme in in pockets, like you said, Mike, it's highly variable.
• 10:34
  SPEAKER_01: Uh, but there are probably more pockets where guys are generally disappointed that they that the yield on beans is not as high as they were hoping.
• 10:44
  SPEAKER_01: Uh you know, last week there were some guys in South Dakota I was talking to of, well, we thought our beans were going to yield the same as our corn.
• 10:51
  SPEAKER_01: And now that they're about done with soybean harvest, they said that wasn't even close.
• 10:55
  SPEAKER_01: That they that their soybeans are about 10 bushel off of what they thought.
• 10:59
  SPEAKER_01: Um, you know, there there are some exceptions.
• 11:02
  SPEAKER_01: That's the the variability that to speak to of if you caught a uh little extra shot of rain, had a little more hog manure in your history, you know, you're gonna hear 55, 60, 65 bushel beans.
• 11:14
  SPEAKER_01: But last year that seemed to be the rule.
• 11:17
  SPEAKER_01: This year it is definitely the exception on soybean harvest anyway.
• 11:21
  SPEAKER_01: Uh, corn yields, I I don't know, generally have been pretty surprising uh to the to the plus side for the early stuff coming off.
• 11:30
  SPEAKER_00: Um just pretty early on corn.
• 11:32
  SPEAKER_01: Pretty early, and that's you know, it and it might be our same uh logic of you know, the fields that have come off are the drier ones, right?
• 11:41
  SPEAKER_01: Or uh the the local mill needed some corn, so we went and found the driest corn we had had, and the well, the yields are pretty good for that early corn.
• 11:50
  SPEAKER_01: Uh hopefully uh we get surprised late.
• 11:52
  SPEAKER_01: I know some of the plant health on on corn locally is still pretty good.
• 11:56
  SPEAKER_01: You get out on the edges, and of course the plants are dying, burning down.
• 11:59
  SPEAKER_01: Uh that's not gonna help yield.
• 12:01
  SPEAKER_01: Uh we did get our first frost uh kind of spread through the area, and even some places got a little colder than even I'd say frost.
• 12:10
  SPEAKER_00: Um, did that kill like the top, very top of the soybean?
• 12:14
  SPEAKER_00: Yeah.
• 12:15
  SPEAKER_01: Yeah, like on the soybeans, uh, I mean, there were some replant beans and maybe some super late ones that might have got uh nipped a little early, but you're gonna see a few leaves burned off.
• 12:27
  SPEAKER_01: Uh unfortunately, like uh uh a few of the guys would hope for a killing frost on beans because we've still got a lot of green stems and things, but I don't think the frost hurt anybody.
• 12:37
  SPEAKER_01: I mean, really it's the last week of September.
• 12:39
  SPEAKER_01: If you haven't had a frost yet, that's it's kind of normal, right?
• 12:43
  SPEAKER_01: And killing freeze, you gotta be into that first week of October, 5th, 7th, 10th of October for our listening area before the average uh killing frost does not look like that's coming next week.
• 12:55
  SPEAKER_01: Uh at least in the forecast that I've seen, we uh are still gonna hold some pretty good temperatures up there.
• 13:01
  SPEAKER_01: So uh yeah, overall harvest, like you said, Mike.
• 13:04
  SPEAKER_01: I think in uh where you so thought the crops were the best, they're the best.
• 13:09
  SPEAKER_01: And where we thought they were gonna be variable, well, they are variable.
• 13:12
  SPEAKER_00: And those variable areas probably trended a little bit worse in August than I was originally hoping for.
• 13:18
  SPEAKER_00: Uh specifically, then the soybeans I've been a little bit more disappointed with than I thought.
• 13:24
  SPEAKER_00: Uh corn seems to be holding in still a little bit, but you go east of Laverne, I think you're seeing average yields for the most part.
• 13:32
  SPEAKER_00: Um if you go west of Laverne, then a spotty north.
• 13:36
  SPEAKER_01: I think that's right on.
• 13:37
  SPEAKER_01: And and of course, if your uh soybean yields are a little disappointing, you're probably thinking about your uh crop insurance and turning in a claim.
• 13:45
  SPEAKER_01: So uh did want to hit on that a little bit, Mike.
• 13:48
  SPEAKER_01: Uh uh first off, uh, we're going to start setting the uh harvest price for our corn and soybeans starting on Monday.
• 13:58
  SPEAKER_01: Uh so during the month of October, we average uh the December corn future uh closes for uh corn and the November uh futures uh closes for soybeans.
• 14:10
  SPEAKER_01: Uh in February we set this projected price of corn was$590, soybeans were$14.33.
• 14:16
  SPEAKER_01: Uh you know, as we sit at the close today, corn is$677, uh, soybeans$1364 after that uh nice little down day there, Mike, that you uh hit on earlier.
• 14:27
  SPEAKER_01: Um so you know we'll average it uh uh starting on Monday, we'll wrap up October 31st, actually, is the the last Monday of October.
• 14:37
  SPEAKER_01: Uh and so if we would hold, you know, just for argument's sake, where let's say we're gonna hold uh flat from where we are today.
• 14:45
  SPEAKER_01: Um in corn would be about a 15% increase in price.
• 14:50
  SPEAKER_01: Uh so if you were gonna have a loss on crop insurance, you'd need to have a bushel loss uh based off your APH times your coverage level.
• 14:58
  SPEAKER_01: Uh for soybeans, we got about a 5% decrease in price after today.
• 15:03
  SPEAKER_01: So if that trend continues, uh all of your APH's uh or your guarantees uh are essentially gonna go up about 5%.
• 15:12
  SPEAKER_01: So essentially, if it's if you bought an 80% policy, now it's like you got an 85% policy because it takes more bushels at the lower price to meet your guarantees.
• 15:22
  SPEAKER_01: So uh if you uh are at all close as you're combining uh close to those trigger yields of where you're guarantee, please talk to your crop insurance agent, turn in a claim.
• 15:32
  SPEAKER_01: Uh, it is much easier to withdraw a claim than uh add one that's too late.
• 15:37
  SPEAKER_01: Of course, uh it is September 30th, so that is the uh sales closing date for margin protection for 2023, also winter week coverage uh over in South Dakota.
• 15:49
  SPEAKER_01: Um, you know, we saw uh a lot of questions, some interest.
• 15:53
  SPEAKER_01: Uh ultimately on the margin, we didn't uh have as much sales as as in the past, or guys uh uh as soon as they asked the premium, their interest level really uh waned.
• 16:04
  SPEAKER_01: And uh, you know, the margin protection offered some good price protection.
• 16:07
  SPEAKER_01: They're using 611 for a corn price, 1356 for soybean price.
• 16:12
  SPEAKER_01: Uh looking forward to 2023 there yet.
• 16:14
  SPEAKER_01: But the volatility factor at 26% on corn uh just drove the premium up uh significantly, uh, where we saw uh quite a bit of decreased interest in that.
• 16:25
  SPEAKER_01: So uh that's uh a little bit of an insurance update for you.
• 16:28
  SPEAKER_01: Uh we'll start averaging that price for our spring crops on Monday, and we'll keep you up to date on where that's tracking uh for the 2022 crop here through October.
• 16:39
  SPEAKER_01: Uh Mike, what what are you looking forward to this weekend?
• 16:42
  SPEAKER_00: Well, I am looking forward to see uh how harvest progress is progressing.
• 16:46
  SPEAKER_00: Last Monday, we had 8% combined on corn versus uh somewhere around an average of about uh 14 or uh 12% on Monday versus 14% average on corn.
• 16:58
  SPEAKER_00: And then soybeans, we were eight percent harvested versus 13% normally.
• 17:03
  SPEAKER_00: So a little bit behind normal harvest progress.
• 17:06
  SPEAKER_00: I'm interested to see how much gets caught up over this past week and this weekend.
• 17:11
  SPEAKER_00: Looking forward to some combining and hearing what you guys have to say about your yields as well.
• 17:15
  SPEAKER_00: Please comment and send us in some results and pictures.
• 17:19
  SPEAKER_00: Uh, we look forward to interacting with you.
• 17:21
  SPEAKER_00: Thanks, Lucas.
• 17:23
  SPEAKER_00: And thank you to all our listeners.
• 17:25
  SPEAKER_00: Please reach out to us from our website at professionalagmarketing.com or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 17:36
  SPEAKER_00: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.