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Outlook Forum · 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.
• 0:24
  SPEAKER_01: Today is February 16th.
• 0:25
  SPEAKER_01: I've got Pat with us here today.
• 0:27
  SPEAKER_01: How's it going, Pat?
• 0:28
  SPEAKER_00: I'm good, Mike.
• 0:29
  SPEAKER_00: How are you today?
• 0:30
  SPEAKER_01: Very good.
• 0:30
  SPEAKER_01: Well, we're going to talk a little bit about the grain markets here this morning, Pat, on a Friday.
• 0:36
  SPEAKER_01: Talk a little bit about the Outlook Forum that we had come out here and and uh some of the numbers they discussed in that.
• 0:42
  SPEAKER_01: But just uh to start things off here, this corn market, March corn at 417 today.
• 0:48
  SPEAKER_01: It's been a heck of a slide here recently, hasn't it, Pat?
• 0:51
  SPEAKER_00: Yeah, what uh and just a slow grind lower here for for quite a while here.
• 0:56
  SPEAKER_00: And I these are these are tough markets to to manage, I know from a real crop producer's perspective.
• 1:03
  SPEAKER_00: We uh keep looking for a little bit of a corrective rally to get caught up on sales here, and we just aren't getting it, are we, Mike?
• 1:10
  SPEAKER_01: Not really.
• 1:11
  SPEAKER_01: And uh the Outlook Forum yesterday, honestly, I it was maybe a little bit better than what I had expected that they would have posted anyways, but it didn't really give us much help here, Pat.
• 1:21
  SPEAKER_01: 91 million planted acres, which out of all the numbers, that one uh maybe could have been a little light compared to the 94.6 we had last year here.
• 1:30
  SPEAKER_01: Uh we realized that the the favored soybean price here could be pulling a few more acres that way in rotation, but it'll be interesting to see what that does.
• 1:39
  SPEAKER_01: And then uh yield at 181, which we pretty much all expected that to be a trend there.
• 1:45
  SPEAKER_01: And then uh you start going into the demand side, Pat, and just talk about some of the things you noticed there.
• 1:52
  SPEAKER_00: Well, a little increase, well, fairly significant increase in the feed uh residual number uh year over year, and and we know that not only domestically, but globally as well, we've got uh declining animal numbers, and so at first glance uh you wonder how you can uh uh increase uh that feed number year over year.
• 2:14
  SPEAKER_00: But uh, you know, as we were uh as we were talking through in our cattle discussion this morning internally, um, you know, there's uh quite a motivation there to add weight to these cattle today, cheaper inputs, cheaper corn, um pretty expensive replacement and uh and a bit of a of a negative basis here too, on top of all of that.
• 2:34
  SPEAKER_00: So just say that about cattle to say this.
• 2:36
  SPEAKER_00: There's there's a motivation there to put a little more weight on on these cattle and and use a little more corn as a result.
• 2:42
  SPEAKER_00: And and uh, you know, as we look out into you know the balance of 2024, that likely is the theme uh domestically here on both cattle and hogs, is that we try to um try to maximize uh our investment in any one critter here and and uh and add some weight with these uh with these cheaper grains.
• 3:01
  SPEAKER_00: And so, yeah, they did uh raise the demand number.
• 3:05
  SPEAKER_00: Um, you know, if you uh that that outlook conference number, Mike, it could have been closer to 3 billion than 2.5 potentially, right?
• 3:13
  SPEAKER_00: And and uh kind of the way that you get there is is uh is uh inching up that ethanol number a bit and uh and raising the feed number some.
• 3:22
  SPEAKER_00: Um probably aggressive enough, but uh I I can see how uh how the folks at the USDA uh how they got there.
• 3:31
  SPEAKER_00: Now, the reality of all of that is is that uh if we're gonna increase those usage numbers, um margin over feed needs to be positive in the livestock sector, right?
• 3:40
  SPEAKER_00: So there's some um some assumption there of uh of cheaper corn prices allowing for that uh additional usage.
• 3:48
  SPEAKER_00: So you got a little bit of uh maybe the tail wagging the dog there just a little bit.
• 3:53
  SPEAKER_01: A little bit.
• 3:54
  SPEAKER_01: Exports 50 million bushels higher, too, so not a whole lot of change year over year for that on the corn side.
• 4:00
  SPEAKER_01: The uh soybean side here, 87.5 million acres, fifty-two bushel yield.
• 4:06
  SPEAKER_01: Uh when it comes to their demand categories, Pat, what did you see out of that?
• 4:11
  SPEAKER_00: Well, I mean, a little increase in the crush number up at 2.4 billion, I think, was uh uh projected for next year.
• 4:20
  SPEAKER_00: You know, that's 200 million a month.
• 4:22
  SPEAKER_00: Uh last month was 185.
• 4:25
  SPEAKER_00: Is that right, uh, Mike?
• 4:26
  SPEAKER_00: In in in the month of January and 189, I think, in December.
• 4:30
  SPEAKER_00: And so um, which make makes sense.
• 4:32
  SPEAKER_00: I mean, we've got a few more plants that are coming online, but we'll we'll need to keep an eye on that too as we go forward here as to whether or not we ramp up that pace.
• 4:40
  SPEAKER_00: And so that's probably just to uh again, just the the the theme of these numbers, right, is is uh the production side we get, and and uh um there could be some mix and acres there when this thing's all said and done, but uh the production side we get um and you know the USDA you know made an attempt to try to inch that those demand numbers up on both corn and soybeans to try to try to make those ending stocks numbers not look any more burdensome than what they already do.
• 5:09
  SPEAKER_00: And I and and that unfortunately, again from a real crop producer's perspective, needs to is is the unfortunate theme here, is is that uh pretty comfortable balance sheets.
• 5:19
  SPEAKER_00: Uh we're reminded again as these numbers come out today.
• 5:23
  SPEAKER_00: The last thing I just mentioned as it relates to that, Mike, is is uh about a million more bean acres, maybe a million or so less corn acres than than average trade guess.
• 5:33
  SPEAKER_00: Um that kind of falls in line with uh the corn versus bean relationship and likely will be a a more uh uh popular, uh prominent discussion as we you know wrap up uh the month of Feb here and get into March and start talking about acreage and intentions and and all of those sorts of things.
• 5:54
  SPEAKER_01: A tough spot here for a lot of uh row crop farmers is that they're walking into this uh you know end of winter type time frame, beginning of spring here after the hard decline in prices.
• 6:08
  SPEAKER_01: I know uh we're gonna be talking on a series here on this podcast about crop insurance decisions here coming up soon, with that averaging period coming to an end here, being halfway through this month.
• 6:19
  SPEAKER_01: So uh we have a lot of decisions, I think, that'll start to be made again here on uh row crops coming up at the uh middle of March.
• 6:27
  SPEAKER_01: And uh one of those is gonna end up being sales here, especially Pat, for a lot of uh grain farmers looking at the corn that's left in their bins, which is a very hefty amount still or going into even next year, as well as a lot of people uh have yet to market a good chunk of their crop going into next year.
• 6:46
  SPEAKER_01: Do you have any comments on the the state of uh where we're currently sitting at in this corn market and uh kind of a few ways to tackle this?
• 6:54
  SPEAKER_00: Yeah, I appreciate the question.
• 6:56
  SPEAKER_00: And and first of all, I'm looking forward to uh you and Lucas Peters from our office uh uh uh presenting that series starting next week on Tuesday, and and and and and really diving deep into the different alternatives and tools that are available to us outside of what's going on the Chicago Board of Trade.
• 7:17
  SPEAKER_00: And I'm reminded, as I sort of think about that from a bit more of a historical perspective, is in terms of how much that's changed through the years, Mike, in terms of uh you know, when you think about you know managing the risk and opportunity on our farms, um there is a real nice hybrid approach available to us.
• 7:39
  SPEAKER_00: Some the combination of you know exchange traded products, uh cash-based tools to market grain, and and uh you know, coupled with the different products that are uh that that are offered and and uh through the through through RMA and and then and and then some of those private insurance products that that that some some of the the um insurance companies offer as well.
• 8:04
  SPEAKER_00: And so we have a whole host of products and tools available to us to help us manage risk.
• 8:11
  SPEAKER_00: And this is a this is a concerning time, right?
• 8:13
  SPEAKER_00: This is a uh you know, when we get this, you know, I'm I'm looking at the at the March corn chart as we speak here, and and uh as we as we're going into harvest, uh uh well at the it you know, as we're going into harvest last year, we're we're we're you know that March contract is is trading at 510 and uh um down to 417 today.
• 8:34
  SPEAKER_00: Like we've we've lost almost a dollar um from from the 20th of October.
• 8:39
  SPEAKER_00: And and so that's a that's a hard time of year to see a break.
• 8:43
  SPEAKER_00: And and uh, you know, if we look at that from the peak, it's almost two bucks from the summertime here.
• 8:49
  SPEAKER_00: So so a very concerning time um from a revenue perspective for for row crop producers.
• 8:55
  SPEAKER_00: Um that's the bad news.
• 8:56
  SPEAKER_00: The good news is that we have a lot of tools available to us to uh um help make uh uh to be able to make the best decisions we can for our operation.
• 9:05
  SPEAKER_00: And so again, looking forward to uh uh Mike and Lucas uh uh spending time on on some details as it relates to the to the crop insurance side of those decisions.
• 9:18
  SPEAKER_00: And uh perhaps Mike uh next Friday or the Friday after you and I can kind of wrap a bundle around all of that and uh and talk about how to integrate that into some of our risk strategies.
• 9:29
  SPEAKER_01: Definitely.
• 9:30
  SPEAKER_01: All right, any final thoughts for anything here, Pat, today?
• 9:34
  SPEAKER_01: I uh that's about all I got, I think.
• 9:36
  SPEAKER_00: Yeah, no, it sounds good.
• 9:37
  SPEAKER_00: Appreciate uh everyone taking the time.
• 9:38
  SPEAKER_00: Have a great weekend and uh talk to you next week.
• 9:42
  SPEAKER_01: Thank you.
• 9:42
  SPEAKER_01: And thank you to all our listeners.
• 9:44
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 9:48
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 9:53
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 9:59
  SPEAKER_01: See you next time.