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Stocks and Acreage · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: This is your host, Mike Minor.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is March 28th.
• 0:25
  SPEAKER_01: I've got Pat with us here today.
• 0:26
  SPEAKER_01: How's it going, Pat?
• 0:27
  SPEAKER_00: Good afternoon, Mike.
• 0:29
  SPEAKER_00: I'm doing well.
• 0:29
  SPEAKER_00: How about you?
• 0:30
  SPEAKER_01: Very good.
• 0:31
  SPEAKER_01: Well, we had a couple of uh reports come out today.
• 0:34
  SPEAKER_01: We had a pretty volatile uh week through a lot of these commodities, but uh the grains here cap things off at the end of this week, going into a long holiday with a couple of reports here on uh quarterly stocks and uh perspective plannings pat.
• 0:48
  SPEAKER_01: So where do you want to start with uh these two?
• 0:50
  SPEAKER_00: Well, talk to me about the highlights, uh Mike.
• 0:52
  SPEAKER_00: What stood out to you?
• 0:54
  SPEAKER_01: The big acreage number would be the uh the principal acres were declined 319 million from last year down to 313 million acres for principal plantings this year.
• 1:05
  SPEAKER_01: Uh corn leading the way lower with only 90 million acres, so a a nice four plus million acre reduction from last year and two million acres below the expected estimate pat.
• 1:18
  SPEAKER_01: That one was probably the big mover and shaker uh for these commodities today.
• 1:23
  SPEAKER_01: Uh corn was up uh pretty strong in light of that report after with uh with these reports coming out at 11.
• 1:29
  SPEAKER_01: And uh I would say that corn number was quite large uh uh for a mover and shaker.
• 1:35
  SPEAKER_01: The soybean number came out right at expected at 86.5 million acres, and uh the wheat as well, all wheat acres were uh almost right at expected.
• 1:45
  SPEAKER_01: The that would be the the acreed numbers and then the quarterly stocks report.
• 1:50
  SPEAKER_01: That one there, uh corn came in slightly below expected levels, soybean and wheat numbers came in slightly above, but no major um major differences on the stocks to really probably push things around today, Pat, but we can get into those numbers and and kind of where they derived from, and I think there's some things to pull from those.
• 2:08
  SPEAKER_01: But let's start with acreage here, Pat.
• 2:11
  SPEAKER_01: That 90 million corn acreage acres number, how do you think that sets this corn market up going forward?
• 2:17
  SPEAKER_00: Well, it it um it allows for us to to get back into the uptrend that we started back in in February.
• 2:25
  SPEAKER_00: And so um, you know, I with some beneficial rains that occurred over the weekend last week in the Western Corn Belt, um the the corn market in particular struggled a little bit this week, and and uh um I think this lower acreage number sort of gets us back into its uptrend.
• 2:42
  SPEAKER_00: Um in and and so far, Mike, we've put um put about 25 cents on on corn on new crop off of its lows here, and and uh um again, not incredibly uncommon for us to be rallying a little bit as we go through this time frame.
• 2:58
  SPEAKER_00: And and like I said, I I think this a little bit tighter or smaller acreage number probably allows for us to be a little more interested in what going what goes what's going on as it relates to to weather and soil conditions and potential weather concerns and all of that.
• 3:14
  SPEAKER_01: I you know when I type it into the balance sheet on what that number could mean, if you use a number very similar to what last year's record yield was on corn in the United States, and using the other numbers from the February Outlook report, it basically leaves you in the same exact spot we're ending this year at.
• 3:31
  SPEAKER_01: If you use that s those same numbers, you're at 2.1 billion bushels of ending stocks on corn.
• 3:37
  SPEAKER_01: So it uh you know, any any changes from there, I mean, if you drag yield down or demand picks up a little bit, uh, you know, we could get down below two billion, or if you do end up with a 181 trend line yield, you know, then uh we're gonna grow these ending stocks.
• 3:51
  SPEAKER_01: So very similar position to what we ended this year at.
• 3:54
  SPEAKER_00: Yeah, so so the point is I suppose that's a good good perspective there.
• 3:58
  SPEAKER_00: Thank you for that.
• 3:58
  SPEAKER_00: I would just say that um this in and of itself isn't a story on corn.
• 4:03
  SPEAKER_00: Yeah.
• 4:03
  SPEAKER_00: And we probably still don't really have a story on corn, um, but it's the you know, it it's the it's the preface or something, right?
• 4:11
  SPEAKER_00: Like it gives you a chance to have a story on corn.
• 4:13
  SPEAKER_01: Because you're gonna use 90 million now in the May report and probably June as well, as long as you don't have any big weather changes barring that number.
• 4:21
  SPEAKER_01: So it it sets you up for that uh for the next couple months for sure here.
• 4:25
  SPEAKER_00: And then we were down four or five percent from a year ago, correct?
• 4:29
  SPEAKER_00: Yep, yep, and and so why don't you talk a little bit about what sort of led led us there?
• 4:33
  SPEAKER_00: How do we how do we lose corn acres?
• 4:35
  SPEAKER_01: The big one when you start to look at the the numbers on uh what states lost corn acres, Minnesota kind of leads away at eight percent.
• 4:43
  SPEAKER_01: We lost seven hundred thousand acres there out of Minnesota.
• 4:47
  SPEAKER_01: Other than that one in particular state, you're looking at all fringe acres for the most part, like uh Iowa, Illinois was down like two percent, but uh mainly anything over five percent loss, you were looking at North Dakota or uh Missouri, some more fringe acres, I guess, from the United States out of that corn number.
• 5:07
  SPEAKER_01: So that's the first thing uh I I really noticed was where they came from and uh I guess pat on acres uh for that ninety million.
• 5:16
  SPEAKER_00: Right.
• 5:17
  SPEAKER_00: And and uh we lost those acres in the fringe areas uh and and where did they go to?
• 5:23
  SPEAKER_00: What's gonna get planted there instead?
• 5:25
  SPEAKER_01: So i you know, in those fringe areas it it's kind of hard to tell because it your principal acres did go down six million.
• 5:32
  SPEAKER_01: So I mean it really didn't go into anything rather than yeah, hayland, I mean, would be a category you could put it into maybe uh um yeah, maybe something like CRP or something along those lines.
• 5:45
  SPEAKER_01: Um otherwise, I mean soybean acres at sitting at 86.5 million.
• 5:50
  SPEAKER_01: Uh it's that that was right at expectations, basically.
• 5:54
  SPEAKER_01: I um comparing it to last year's 83 million, I mean we did have a couple million acres go over into soybeans compared to last year, but um otherwise I I don't see where the acres really went to, Pat, because even cotton was ten point seven, uh so that really wasn't a change.
• 6:11
  SPEAKER_01: Uh wheat acres was over forty-seven million still, which I was a little surprised by.
• 6:16
  SPEAKER_01: I I thought maybe the the wheat number would have been down a little bit with lower spring wheat acres, because really today uh nobody's influenced heavily to plant wheat in the United States with where corn and soybean numbers are, especially in a state like North Dakota, where you know they probably look like they got decent soybean planting conditions and higher prices relative to where wheat is.
• 6:36
  SPEAKER_01: Um yeah, they were favoring more canola and maybe food grade beans and things like that.
• 6:41
  SPEAKER_00: Gotcha.
• 6:42
  SPEAKER_00: So so uh on the bean side of things, how do how does that balance sheet uh shape up with uh a couple three million more acres?
• 6:49
  SPEAKER_01: Well, the good news is on soybeans that you're looking at a uh demand number that should be higher year over year.
• 6:55
  SPEAKER_01: You're looking at increased crushings, maybe a little bit higher exports coming into this next year.
• 7:01
  SPEAKER_01: So really you're holding uh ending stocks right around that uh 300 million bushel mark if you have yield around a 51 bushel mark, which you you could be a little higher than that, yes, but last year was about 50 and a half.
• 7:14
  SPEAKER_01: So uh keeping a somewhat trendline yield on that, I think soybeans are uh a little bit easier to get uh ending stocks lower on going into this next year, especially with where demand has been running with awesome crush numbers.
• 7:27
  SPEAKER_01: Uh that balance sheet should be set up okay still with that 86.5 million acres expected.
• 7:33
  SPEAKER_01: And you know, it would have been in a lot uglier of a position.
• 7:36
  SPEAKER_01: I think if you were around that 88 million, that would have got uh that put would have put that balance sheet into a really rough spot.
• 7:43
  SPEAKER_01: Otherwise, I mean anything 87 and below was a pretty comfortable number for this soybean balance sheet, Pat.
• 7:50
  SPEAKER_01: And I in general, I think going forward, this this soybean balance sheet could be in a little bit more vulnerable of a position just with a little bit less ending stocks.
• 8:00
  SPEAKER_01: We're ramping up uh ways to use soybeans globally, especially especially in the United States here.
• 8:06
  SPEAKER_01: Uh we'll just see what that export number actually does uh with uh exports running a little bit behind last year's pace yet, and uh Brazil really taking the reins on that.
• 8:16
  SPEAKER_00: Interesting.
• 8:16
  SPEAKER_00: And then as we look at that stocks number just a bit, um um this one jumps out to me one billion bushels more corn on hand March 1st of this year versus uh uh versus a year ago, and almost literally all of it's on the farm today.
• 8:32
  SPEAKER_00: And so um pretty amazing that uh um first of all a buildup of stocks by a billion bushels year over year with subpar weather a year ago.
• 8:42
  SPEAKER_00: Um so just a reminder of um the the record crop that was harvested in spite of uh droughty conditions and a good portion of the corn belt.
• 8:51
  SPEAKER_00: But on top of all of that, um the excess is is uh it appears as it relates to the survey and on farm storage, and uh and so you know something that's been talked a lot about this winter, but uh um certainly an issue as we go forward here and something to keep an eye on as it relates to uh basis levels and spreads and and all of those things as it relates to merchandising.
• 9:16
  SPEAKER_00: There's going to be a much different scenario this year as we work through the last half of this old crop marketing year with uh um with a a a record amount or at least a significant amount of of stocks on hand um in in on farm storage.
• 9:32
  SPEAKER_01: There's a lot of corn to move from the farmers' hands to the elevator by the end of this year.
• 9:37
  SPEAKER_00: That's right.
• 9:37
  SPEAKER_01: Definitely.
• 9:38
  SPEAKER_01: Any other final thoughts on the uh grain markets here after the other?
• 9:41
  SPEAKER_00: No, I just I just would just wrap up with what I tried to start with there, which is um you know, over the last seven days since our last podcast, we had what would be termed uh beneficial moisture throughout the Western Corn Belt and some of its most uh critical dry areas.
• 9:58
  SPEAKER_00: Uh so so that's I guess bearish, and the market tried to react to that a little bit.
• 10:03
  SPEAKER_00: And then and then we uh uh get a little bit of a bullish uh uh figure on these acres numbers on corn.
• 10:09
  SPEAKER_00: So I don't know if we canceled each other out week uh over the week, Mike, on those two things.
• 10:13
  SPEAKER_00: It's really early to talk about weather, and and this isn't a final acreage planted number, it's uh it's a it's an initial estimate.
• 10:21
  SPEAKER_00: But nonetheless, for this time of year, um those two do cancel each other out to some extent.
• 10:27
  SPEAKER_00: And what it what it seems like it will do now going forward is is allow for that uptrend to kind of remain intact here and and try to build a little bit of of weather risk premium into this market as we as we get into the growing season.
• 10:41
  SPEAKER_01: All right.
• 10:41
  SPEAKER_01: Well, thank you for your time, Pat.
• 10:42
  SPEAKER_01: Thank you.
• 10:43
  SPEAKER_01: And thank you to all our listeners.
• 10:45
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 10:48
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:54
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 11:00
  SPEAKER_01: See you next time.