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Election Hangover · 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_00: Well, good afternoon, everybody.
• 0:25
  SPEAKER_00: It is November 15th.
• 0:27
  SPEAKER_00: Welcome back to another Professional Egg Marketing Podcast.
• 0:31
  SPEAKER_00: I am your guest host today, Lucas Peters, and in the podcast studio, sitting in the other side of the table today is Mike Minor.
• 0:39
  SPEAKER_00: How are we doing today, Mike?
• 0:41
  SPEAKER_00: Oh, how the tables have turned.
• 0:42
  SPEAKER_00: Yeah, it's a fun little mix-up on Friday here.
• 0:45
  SPEAKER_00: So uh no, we uh got a few different topics to talk about, uh, Mr.
• 0:50
  SPEAKER_00: Minor, and you know, coming off of last week, the big news was, of course, the election and uh continues to grab headlines as different members of the cabinet and the administration comes together.
• 1:02
  SPEAKER_00: Uh, what did you see this week as kind of the election hangover in the markets?
• 1:08
  SPEAKER_01: Well, money flow seemed pretty apparent this week.
• 1:10
  SPEAKER_01: Uh, you look at the soybean market, corn market in particular.
• 1:14
  SPEAKER_01: The the soybean market here really hit a high on last Friday, kind of Sunday night, Monday trade this week.
• 1:21
  SPEAKER_01: And then we traded lower four straight days to kick off the week on the soybeans, on the corn.
• 1:28
  SPEAKER_01: So it is we've struggled on the grain complex in particular to really gather some steam.
• 1:33
  SPEAKER_01: And then, same on the hog side as well here, all of a sudden, you know, we uh kind of ended the week on a poor note.
• 1:39
  SPEAKER_01: We closed December below 80 bucks, so it's been a little bit of weakness there too.
• 1:44
  SPEAKER_01: Cattle were at the bottom end of that uptrend we've been having going on for four years.
• 1:49
  SPEAKER_01: So a little bit of selling off in these egg commodities after a pretty strong week across the board right after the election last week.
• 1:57
  SPEAKER_01: And really, uh, you know, the the stock market now after the post you know Trump excitement, uh we really peaked that market on Monday this week as well.
• 2:08
  SPEAKER_01: We we've almost erased all of the gains that we actually had put on in the SP 500 since he was elected.
• 2:14
  SPEAKER_01: As uh, you know, it kind of sounds like now that maybe we won't have a final rate cut to end the year.
• 2:20
  SPEAKER_01: So money flow has been very interesting um after he really uh kicked things off last week and and we had a change of direction, and and now it looks like uh was it a dead cat bounce or not, Lucas?
• 2:33
  SPEAKER_01: So a very interesting trade action.
• 2:35
  SPEAKER_00: And it's we kind of talked about that last week, right, Mike, of the only constant over the next few weeks is gonna be volatility because there's gonna be a lot of speculation on different names being thrown around for different positions and what that's gonna mean for policy, and then of course, how is the market gonna react?
• 2:52
  SPEAKER_00: Uh, definitely, like you said, seeing it in the grain markets.
• 2:56
  SPEAKER_00: I think since the election results, technically we're a little higher on corn and beans, although last week was good and this week's been kind of uh mediocre and down.
• 3:05
  SPEAKER_00: So uh specifically, let's look at the soybean market and and kind of an interesting market with the soybeans, uh, and you know, all a lot of different reasons for it.
• 3:15
  SPEAKER_00: There's the soy oil uh and the palm oil interaction.
• 3:19
  SPEAKER_00: What are you seeing in that market this week that has has caused uh some interesting things to happen?
• 3:25
  SPEAKER_01: When I started this job, we really didn't talk, you know, back in like 2017, we didn't talk about soybean oil a whole lot at all when it comes to market moving events.
• 3:34
  SPEAKER_01: And yeah, now it's starting to really gain some speed.
• 3:36
  SPEAKER_01: And if you look, uh, you know, soybean oil had a very similar trading pattern to soybeans here very recently, um, as well as palm oil, uh, kind of to really be the backbone of the deal.
• 3:47
  SPEAKER_01: So, you know, last week in our grain wreck, we really talked about how soybean oil's been impacting that soybean market.
• 3:54
  SPEAKER_01: This was another great example of it.
• 3:55
  SPEAKER_01: This week, soybean oil uh was up a little bit to end the week out today, which you know you saw a rebound in soybeans as well.
• 4:04
  SPEAKER_01: We were up 3.5% after taking off about 7% on the soybean oil complex, and that came off talk of reduced Chinese incentives for used cooking oil.
• 4:14
  SPEAKER_01: And uh, you know, soybean futures kind of followed along today off of that.
• 4:18
  SPEAKER_01: So it keep an eye on that soybean oil uh market, keep an eye on what palm oil futures are doing in Malaysia and Indonesia, and uh they've got an interesting labor situation over there, they've got an interesting um yeah problem with uh their trees getting a little bit old for a production side of things.
• 4:39
  SPEAKER_01: Uh they've also got this problem of just logistically that like 85% of the world's global production on so uh palm oil comes from those two places.
• 4:49
  SPEAKER_01: So it uh it's something worth watching.
• 4:52
  SPEAKER_01: And now with Trump, you know, some of the excitement last week was that, well, if Trump gets in, we're gonna uh stop importing used cooking oil into the western part of the United States.
• 5:02
  SPEAKER_01: And that was initial excitement out of all of this, because we've talked about last week, you know, that replaces ther last year it replaced 13 soybean processing facilities in the US.
• 5:13
  SPEAKER_01: Now this week I feel like that election hangover kind of kicks in, and now we're like, well, maybe China not buying 18% of our soybeans.
• 5:22
  SPEAKER_01: That's not very good either.
• 5:24
  SPEAKER_01: So now we're back to a little bit of a bearish trade, Lucas.
• 5:27
  SPEAKER_00: Yeah, and that palm oil market is interesting.
• 5:30
  SPEAKER_00: Uh one of those markets that I didn't really pay much attention to before, kind of what you comment even on the soybean oil, and how much how a high percentage of that comes from such a very small area.
• 5:41
  SPEAKER_00: And interesting on what how a very small dynamic can affect in a very important market worldwide, and of course, all the other interactions it has with soybeans and and the other things.
• 5:52
  SPEAKER_01: And I don't think that's going away anytime soon.
• 5:54
  SPEAKER_01: That the palm oil impact or soybean oil impact on the soybean market, like that's only gonna get bigger going forward.
• 6:00
  SPEAKER_01: But it's just funny because we never really talked about that like five, ten years ago.
• 6:04
  SPEAKER_01: I mean, even three years ago, it it really wasn't a thing.
• 6:07
  SPEAKER_01: But soon we'll be talking about soybean oil almost as if it's like a ethanol type number for corn.
• 6:13
  SPEAKER_01: You know what I mean?
• 6:14
  SPEAKER_00: Sure.
• 6:14
  SPEAKER_00: Well, I I would think we would because you know, for one, renewable diesel push and uh sustainable aviation fuel.
• 6:21
  SPEAKER_00: There's a lot of different uses for soybean oil, but of course we have all these other competing oils in that market, one being palm, and one where we were talking about the used cooking oil coming in from uh China and affecting that market.
• 6:33
  SPEAKER_01: Now it's almost 25, so continue to watch.
• 6:36
  SPEAKER_01: We've got quite a few plants coming online in the next few months in the United States for uh processing facilities as well.
• 6:42
  SPEAKER_01: So keep an eye on that.
• 6:44
  SPEAKER_01: Some of them had got delayed a little bit further into 26 and whatnot, but uh that uh we are gonna start ramping up some more production on that side of things.
• 6:51
  SPEAKER_00: Definitely.
• 6:52
  SPEAKER_00: So one uh probably one bright spot in the market has been corn demand, Mike.
• 6:57
  SPEAKER_00: What did we uh see on that this week, or what do you want to talk about?
• 7:00
  SPEAKER_01: Yeah, so on uh, you know, the soybean side that has had a very poor balance sheet.
• 7:04
  SPEAKER_01: We haven't really stimulated any demand.
• 7:06
  SPEAKER_01: Um, manage money as we're you know short covering on a lot of different commodities.
• 7:12
  SPEAKER_01: Soybeans haven't really seemed to do that yet.
• 7:15
  SPEAKER_01: We still have 70 or so thousand contracts and manage money shorts still out there on soybeans.
• 7:21
  SPEAKER_01: Um, we just haven't had the demand.
• 7:23
  SPEAKER_01: China hasn't stepped in, uh, crush number hasn't really gotten to the point where uh we're really excited about yet.
• 7:29
  SPEAKER_01: But on the corn side, it's completely different.
• 7:32
  SPEAKER_01: You know, the the corn chart is in a nice uptrend here recently.
• 7:36
  SPEAKER_01: The ethanol uh grind, we've been over 109 million bushels for the last four weeks every week.
• 7:43
  SPEAKER_01: Uh implied gas demands up another percent.
• 7:46
  SPEAKER_01: We've got uh stocks that we're running uh we're grinding a lot of ethanol, and stocks are still really low on ethanol, actually.
• 7:53
  SPEAKER_01: So uh it's been nice to be able to do that and grind through some of this, you know, two billion bushel uh carry out of corn and not really have any repercussions from it on the ethanol side.
• 8:04
  SPEAKER_01: So that's a good sign.
• 8:05
  SPEAKER_01: And then on the export side, it's been really aggressive.
• 8:08
  SPEAKER_01: It's probably more there's more to the story than oh, Mexico and these other countries are just front loading.
• 8:14
  SPEAKER_01: You know, we've seen really good, consistent demand from our corn.
• 8:18
  SPEAKER_01: It looks like the low fours is enough to stimulate demand uh for our product at this point.
• 8:23
  SPEAKER_01: So corn's been in a nice uptrend.
• 8:25
  SPEAKER_01: We've covered all of our short positions here.
• 8:27
  SPEAKER_01: We're actually net long as of last uh Tuesday now.
• 8:31
  SPEAKER_01: So we've got some really good things going on for the corn market, fundamentally.
• 8:35
  SPEAKER_01: We've got some good things going for it, technically from a bullish perspective, I'm saying.
• 8:40
  SPEAKER_01: And then, you know, you look over at the soybean side, it's got neither one of those cases.
• 8:45
  SPEAKER_01: You're uh bouncing up against the top of a downtrend uh, you know, in the 1030s on on uh these front futures, you've got uh a poor fundamental situation, we can't get rid of the soybeans, and we we don't feel a need to really cover up these short positions unless for some reason Argentina's dryness develops into a bigger thing right now, which would be the next real big topic to watch on soybeans.
• 9:09
  SPEAKER_01: So the the grains are kind of separating from themselves a little bit here, and at some point they'll have to come together, and and you know, we'll talk about that by the time spring comes around when it's a little bit more important.
• 9:20
  SPEAKER_01: But uh it those are a few things I'm really watching in the corn and soybean markets right now.
• 9:25
  SPEAKER_00: Yeah, I mean that you bring up a good point of that we'll watch this going forward, but you know, as of now, as you're kind of making your planting decisions for next year by you know deciding what to put on for fertilizer this fall, buying your seed, paying for the seed, your chemical, doing all that input decisions, you know, right now it's leaning pretty heavy corn, and a lot of some of these early acreage numbers coming out have hinted at that, haven't they?
• 9:49
  SPEAKER_01: Yeah, I mean it uh you're probably planting corn if you have a tough decision to make where you could split 50-50.
• 9:56
  SPEAKER_01: You're probably gonna swing more on the corn side.
• 9:59
  SPEAKER_01: So uh that that's always the dangerous discussion.
• 10:02
  SPEAKER_01: I don't think acres sway that much outside of some of the fringe areas like North Dakota, but then it's got to come down to more of, well, did they have the right weather to get into plant corn or not?
• 10:14
  SPEAKER_01: Because if they did, they're probably gonna do it.
• 10:16
  SPEAKER_01: So that's where I lean with more.
• 10:18
  SPEAKER_01: But like the USDA came out last week and said they thought there'd be 92 million acres of uh corn planted next year and 85 million acres of soybeans planted.
• 10:27
  SPEAKER_01: At this point, uh that you're losing a lot of money planting soybeans, and you're probably break-even near these levels on corn.
• 10:33
  SPEAKER_01: Yep.
• 10:34
  SPEAKER_01: So i I thought it was interesting.
• 10:35
  SPEAKER_01: Reuters came out with an article this week, and it was all about how the American farmer is I've got it pulled up here in the podcast studio, but it's a cash-strapped U.S.
• 10:45
  SPEAKER_01: farmers switch to generic crop chemicals in big blow to manufacture in big manufacturers.
• 10:51
  SPEAKER_01: I it it it seems like a given at this point.
• 10:54
  SPEAKER_01: I feel like, isn't it a given that generic chemicals work just fine at this point?
• 10:58
  SPEAKER_01: We've kind of proven it over the last five years, and uh okay, it it just seems irresponsible at this point not to.
• 11:05
  SPEAKER_01: I don't I don't understand it.
• 11:08
  SPEAKER_01: Did we have to get into a tough financial position to prove that or what?
• 11:12
  SPEAKER_00: Well, definitely not.
• 11:13
  SPEAKER_00: I I would say having a little experience in that industry, the generic market has always been pretty strong.
• 11:19
  SPEAKER_00: The of course the uh the big boys, the main manufacturers play games with incentives and tying it in with seed programs and everything else.
• 11:28
  SPEAKER_00: Uh but yeah, it it that is an interesting article article to come out in 2024, because pretty sure that would have been the case back in like uh 2009 and 10 coming off of uh the ethanol boom of oh my gosh, how are we gonna pay for this?
• 11:44
  SPEAKER_00: So let's use generics.
• 11:46
  SPEAKER_00: But uh no, into interesting stuff.
• 11:48
  SPEAKER_00: I uh you know, since I'm up in the studio, Mike, I do have to talk a little bit insurance.
• 11:53
  SPEAKER_00: That's that's part of the rules of having Lucas in the studio.
• 11:56
  SPEAKER_00: I made it 11 minutes, guys.
• 11:58
  SPEAKER_00: The the one thing that uh I want to tell everybody, remind our guys, it's and it doesn't hit a big section of our market, but uh the pasture, rangeland, and forage insurance.
• 12:08
  SPEAKER_00: So this is specifically for your pasture and hay ground or alfalfa ground.
• 12:12
  SPEAKER_00: Uh, this policy has a sales closing date of December 1st, uh December 2nd this year, since the first is falls on a Sunday, but it's gonna fall right on Thanksgiving weekend.
• 12:23
  SPEAKER_00: So we kind of got essentially a week and a half to get these policies written.
• 12:26
  SPEAKER_00: If you haven't looked at using this policy on your pasture, uh it's a really it's it's been a good, successful program to protect a crop that is pretty important for a lot of guys, because of course if you don't have grass, you gotta feed them hay or feed them something.
• 12:41
  SPEAKER_00: Um, and you can use this program to protect against lack of rainfall.
• 12:45
  SPEAKER_00: Okay, that's the only thing it protects.
• 12:47
  SPEAKER_00: It measures uh it uses a satellite imagery and NOAA data uh to measure rainfall in a 12 by 12 mile grid in our area.
• 12:55
  SPEAKER_00: Um, and if the rainfall doesn't hit that uh a benchmark line, then you get paid on your insurance.
• 13:02
  SPEAKER_00: And we've had some pretty good success with it covering uh some of these dry spells the last few years.
• 13:07
  SPEAKER_00: Uh we are in a in a pretty significant dry time right now.
• 13:12
  SPEAKER_00: Um if you're worried about that continuing into early 2025 or the growing season of 2025, uh you could definitely come in and check out that PRF, that pasture rangeland forage product.
• 13:23
  SPEAKER_00: Be happy to run some quotes for you uh and check it out.
• 13:26
  SPEAKER_00: So that's uh my little plug for PRF.
• 13:29
  SPEAKER_00: Uh try to get that done in the next week and a half.
• 13:32
  SPEAKER_00: Uh Mike, any closing comments?
• 13:34
  SPEAKER_01: Uh, you know, cash market-wise, uh we should continue to watch the next couple weeks.
• 13:40
  SPEAKER_01: Thanksgiving's coming up, and we really like the time frame.
• 13:43
  SPEAKER_01: Thanksgiving to Christmas, you know, New Year's, that stretch of we should really be moving some, particularly cash, soybeans taking advantage of good basis levels there.
• 13:53
  SPEAKER_01: And then we've started to see some appreciation in the cash corn market as well.
• 13:57
  SPEAKER_01: So continue to try to walk some of those bushels off the farm in the cash market as well, especially where you know, basis has been incredibly strong in northwest Iowa and southwest Minnesota, Lucas.
• 14:09
  SPEAKER_00: Yeah, that sounds like pretty good advice, Mike.
• 14:11
  SPEAKER_00: Thanks for uh joining me today in the uh podcast studios, and have a good weekend.
• 14:16
  SPEAKER_01: Thank you.
• 14:16
  SPEAKER_00: And thank you to all our listeners.
• 14:18
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 14:21
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 14:27
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 14:33
  SPEAKER_01: See you next time.