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Corn Opportunities and Outside Market Influence · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the ag 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_02: Good afternoon, everyone.
• 0:25
  SPEAKER_02: This is Pat Von Turs with Professional Ag Marketing, filling in for Mike Minor this afternoon and our weekly uh green market uh um podcast.
• 0:35
  SPEAKER_02: And and so as we wrap up the week here, Jeff, I thought maybe it'd be a good idea for you and I just to kind of talk about things just a a little bit.
• 0:43
  SPEAKER_02: And and so, you know, one of the I guess items of note here, I'm pulling up the December corn chart, and you know, we traded up to that five dollar area and and uh and kind of failed there the last uh two trading sessions, but a pretty good rally.
• 1:01
  SPEAKER_02: I mean, I uh on September 19th, down at the bottom end of this range, uh down in that 475 area, and and uh have rallied up to the five dollar area.
• 1:11
  SPEAKER_02: Do you have much comments here on on why we put uh a little bit of strength in the corn market this week?
• 1:17
  SPEAKER_00: Well, I think uh for the most part, you know, I I think we're kind of moving maybe beyond the uh balance sheet and yields and things like that just a little bit um and starting to, you know, I wouldn't say we're necessarily moving into new fundamentals for the week because there wasn't all that um anything super exciting going on.
• 1:38
  SPEAKER_00: You know, most of that rally was experienced um by the the situation in the Black Sea where we had a ship that uh had some interaction with one of the underwater mines, of course.
• 1:49
  SPEAKER_00: That was Thursday and we're up 12 there.
• 1:52
  SPEAKER_00: Um you know, but I think you look at this corn market in our mines, Pat, we've talked about this quite a bit.
• 1:59
  SPEAKER_00: It definitely seems like it's range bound, right?
• 2:02
  SPEAKER_00: And uh, you know, you get up to this five dollar mark.
• 2:06
  SPEAKER_00: Of course, there's some psychological reasons why it's a little bit tough to push beyond there.
• 2:11
  SPEAKER_00: Um you look technically, you look, you know, maybe you gotta get up to 508, maybe 510.
• 2:19
  SPEAKER_00: Um, I personally think even that looks to be a long ways away, but uh it's possible you could push up into that area, and then like you just said, you described the bottom end of the range in that 475.
• 2:30
  SPEAKER_00: So I I don't know.
• 2:32
  SPEAKER_00: I I think my message this week, um, especially from a row crop producer's standpoint, I think you gotta look hard at this five dollar to five ten range, don't you?
• 2:43
  SPEAKER_00: Yeah, I think right, exactly.
• 2:45
  SPEAKER_02: I I think so, especially on some bushels that are that maybe get maybe forced you know into town here.
• 2:51
  SPEAKER_02: Um good merchandising uh discussion this afternoon internally on our team and and uh you know even up here where we were in the northwest corn belt where uh you know the situation was quite tight going into harvest as it relates to physical corn stocks.
• 3:09
  SPEAKER_02: We we're we're starting to to see some widening of basis levels here and and and more or less a a pretty open forecast here for the next next couple weeks.
• 3:20
  SPEAKER_02: So I think your observation is spot on as it relates to a again a real crop producer that might want to to move a little bit of grain here at harvest time uh exercising on a board rally and uh and a little bit of an upfront uh uh basis premium is is is certainly worth considering.
• 3:39
  SPEAKER_02: And then the other part that I would I think is important to mention here, Jeff, is in and is is that you know our from a row crop producer's perspective, our risk profile is changing as we go through this month, right?
• 3:54
  SPEAKER_02: And uh um crop insurance you're talking about.
• 3:57
  SPEAKER_02: Exactly right.
• 3:57
  SPEAKER_02: We're starting to get our fall price established here.
• 4:00
  SPEAKER_02: And so if you had some um, I guess sense of security, you know, that that we had uh um that we had some minimums protected in terms of gross uh revenue uh because of of crop insurance, that's slowly changing here as we go through the month of October, is one point.
• 4:20
  SPEAKER_02: The other point that I would make is is an obvious one, which is um when we talk about cash flow and and targets and budgets and all of those important things as it relates to green marketing decisions, we're always dividing that gross per acre number by some budgeted yield, right, Jeff?
• 4:38
  SPEAKER_02: And that's the other thing that's that was an unknown that's becoming a known this month.
• 4:43
  SPEAKER_02: And so as you get uh as you get into the field um and we got a better definition of of uh what your your production's going to be this year, it starts to make it easier to make some decisions.
• 4:55
  SPEAKER_02: And so um just just from a risk management perspective, I think it's that's an important component uh for for corn producers to be to be considering here.
• 5:05
  SPEAKER_00: Let's jump into basis real quick, Pat, and then we better maybe move on to some other um interesting items here on the markets this week.
• 5:13
  SPEAKER_00: But um that's that's a obviously a hot button um topic here, uh you know, from both an end user's perspective as well as the row crop farmer.
• 5:22
  SPEAKER_00: Um we've seen some extreme positive basis in many parts of the corn belt um throughout the last 12 months.
• 5:29
  SPEAKER_00: Um what's your thoughts going forward?
• 5:31
  SPEAKER_00: Is this a whole different animal?
• 5:33
  SPEAKER_00: Is this do you revert back to the old days on basis?
• 5:37
  SPEAKER_00: Or uh what's your what's your thoughts as far as you know, big picture, not just the next week or two?
• 5:43
  SPEAKER_02: Yeah, gotcha.
• 5:45
  SPEAKER_02: We're projected for for ending stocks to to elevate uh up into that 15% stocks to use uh racial range, uh over two billion bushels.
• 5:56
  SPEAKER_02: Uh and and so I I think that that should uh create uh something closer to what we would have budgeted, you know, for basis levels um uh a couple years ago already now.
• 6:08
  SPEAKER_02: Uh that since we've been running a tighter balance sheet for an extended period of time.
• 6:13
  SPEAKER_02: Um and and so that would that would be the expectation.
• 6:16
  SPEAKER_02: The the other point that I would just make as it relates to that is the is that we um that last year at least we had a f uh some fairly significant volatility from one region to another, uh small crop in the western Corn Belt, a decent size crop in mid-belt or eastern belt.
• 6:34
  SPEAKER_02: And so um it does appear as though we're leveling that out just a little bit this year as well.
• 6:41
  SPEAKER_02: I mean, I do think that we've got a uh a little bit more consistency across the belt.
• 6:46
  SPEAKER_02: Um and then we just mentioned for Northwest Corn Belt, a fairly uh, you know, parts of South Dakota uh ended up with some pretty good moisture all the way through here.
• 6:56
  SPEAKER_02: And uh, you know, we are seeing some wider basis levels out there.
• 6:59
  SPEAKER_02: So that that's gonna end up having uh a bit of a positive impact um or a wider uh basis level impact as we kind of move into Northwest Corn Belt, Northwest Iowa, that sort of thing.
• 7:11
  SPEAKER_00: So outside markets, um obviously a big deal this week.
• 7:16
  SPEAKER_00: We had a lot of crazy things going on.
• 7:18
  SPEAKER_00: Let's just run through some of the some of the items that took place.
• 7:22
  SPEAKER_00: I mean, starting uh maybe at the end of the story here, be the jobs report this morning, just very robust.
• 7:28
  SPEAKER_00: Um, we continue to really knock it out of the park as far as the um numbers related to the U.S.
• 7:35
  SPEAKER_00: economy goes.
• 7:36
  SPEAKER_00: A little 300 and some odd thousand um jobs being added here for the month.
• 7:42
  SPEAKER_00: Um just you know, you think back here six months ago and you you think big picture about the stimulus and the soft landing uh that we're all going for um as far as the economy goes, and you know, we've jacked up the interest rates and the expectation, at least in my mind, you know, probably 30 to 60 days ago, is that it was working.
• 8:04
  SPEAKER_00: The economy was cooling off, and and we were gonna talk about maybe steady to lower interest rates in the end of 2023 and into 2024.
• 8:13
  SPEAKER_00: Um, and you look at some of these charts on job uh creation and and unemployment, and it's becomes fairly evident in my mind at least that uh we're we're rolling pretty hard again, and that's obviously changing people's thoughts on what interest rates are gonna look like in the next 12 months.
• 8:31
  SPEAKER_00: But just to review a few of the markets here, you know, the the Dow Jones, obviously everybody watches that pretty close.
• 8:36
  SPEAKER_00: We're about we're five percent off of uh in the last two weeks here, so that's been trimming um much lower.
• 8:44
  SPEAKER_00: And then obviously the big one this week would be the oil market.
• 8:47
  SPEAKER_00: We ran that thing up to where we were on the high, about 92 bucks.
• 8:52
  SPEAKER_00: I'm looking at the December chart here, finishing today at 81.
• 8:57
  SPEAKER_00: So I always get my it always takes me a few minutes to get my head clear on this subject, Pat.
• 9:03
  SPEAKER_00: So I'm gonna see if you can stumble through it with us.
• 9:05
  SPEAKER_00: We've got excellent economy.
• 9:08
  SPEAKER_00: We've got a lower Dow Jones, and then of course, oil um getting a bunch of pressure here this week.
• 9:14
  SPEAKER_00: Um what's the what's the general scoop on the on the topic here?
• 9:20
  SPEAKER_02: Yeah, uh the the great experiment, right?
• 9:22
  SPEAKER_02: Uh uh all kinds of uh uh of of money pushed into the economy uh during COVID, post-COVID, and then um the expected uh reaction once this economy opens back up of significant inflation as a result of uh available money supply.
• 9:42
  SPEAKER_02: I just say that as a quick reminder of of of uh of everything that got us up until this point.
• 9:48
  SPEAKER_02: Since then, the Fed has has done this job of trying to slow down inflation without without significantly breaking this economy into a recession, soft landing versus hard landing is the is the is the what we keep talking about, right?
• 10:05
  SPEAKER_02: And and evidently uh when crude oil is trading up around 90 bucks to a hundred bucks, evidently when equities were on their their their continued meteoritic rise until this break that you just described, Jeff, evidently when cattle are approaching two hundred bucks, evidently all of those markets were trading a soft landing.
• 10:27
  SPEAKER_00: Sure.
• 10:28
  SPEAKER_02: Because this week when when these jobs reports came out and reminded uh per all of us or the marketplace that uh the Fed's intervention up until this point, tightening money supply and uh raising interest rates um wasn't quite doing its job as it relates to slowing down the economy enough to getting it getting inflation to a point where it's manageable.
• 10:55
  SPEAKER_02: And so now it improves or increases the probability of the Fed either needing to hold these elevated rates longer or raise them again.
• 11:06
  SPEAKER_02: And so I think that that um that prospect uh threatened the markets to a point where they believe that perhaps the probability of a soft landing is lower or there or the probability of a of a hard landing is is higher, that sort of a thing.
• 11:21
  SPEAKER_02: And so um I that's what we're trading this week, and I and it's a pretty good reminder that that um uh especially that cattle complex you know is trading at some levels that we all get it, 4% less beef, 5% less beef, Australia's in the same spot we are, Brazil mayor is in the same spot we are.
• 11:39
  SPEAKER_02: We have you know less global protein available um you know across other species as well, and and and all of that.
• 11:45
  SPEAKER_02: And so there's reasons supply side to be bullish, but from some of these uh um um record type levels that we're trading at, uh it gets a little interesting when when the markets get worried about uh a quick slowdown in economic activity.
• 12:02
  SPEAKER_00: For sure.
• 12:04
  SPEAKER_00: Well, thank you for that.
• 12:05
  SPEAKER_00: Um I suppose we should give our listeners a quick update on what Mr.
• 12:08
  SPEAKER_00: Miner's up to this week.
• 12:10
  SPEAKER_00: Pat, he still works here, correct?
• 12:12
  SPEAKER_02: He does, he does still work here indeed.
• 12:14
  SPEAKER_02: That's good.
• 12:15
  SPEAKER_00: That's good.
• 12:15
  SPEAKER_00: The other good news is they're they are letting him reproduce yet.
• 12:19
  SPEAKER_00: So uh him and his wife Liz welcomed home a baby boy early in the week, and they've been at home getting settled, and hopefully we'll have them back in the saddle again uh next week.
• 12:30
  SPEAKER_02: That's awesome.
• 12:31
  SPEAKER_02: That's great.
• 12:32
  SPEAKER_02: So thanks everyone.
• 12:33
  SPEAKER_02: Thanks for your time.
• 12:34
  SPEAKER_02: Appreciate it.
• 12:34
  SPEAKER_02: Anytime when you got any questions, give us a call.
• 12:37
  SPEAKER_01: And thank you to all our listeners.
• 12:39
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 12:43
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 12:48
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 12:54
  SPEAKER_01: See you next time.