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WPX & WASDE · 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 involves 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.
• 0:23
  SPEAKER_02: Well, hello everybody.
• 0:25
  SPEAKER_02: This is Lucas Peters filling in for Mike Minor.
• 0:28
  SPEAKER_02: It is Tuesday, June 9th, and we are live from the World Pork Expo in Des Moines, Iowa.
• 0:34
  SPEAKER_02: I got Luke Wells with me.
• 0:36
  SPEAKER_02: Luke, how are we doing today?
• 0:37
  SPEAKER_01: Very good, Lucas.
• 0:38
  SPEAKER_01: Thanks for having me on.
• 0:39
  SPEAKER_02: Yeah, you bet.
• 0:40
  SPEAKER_02: So uh yeah, just kind of wrapping up the week down here at the World Pork Expo.
• 0:44
  SPEAKER_02: Uh really good turnout.
• 0:46
  SPEAKER_02: Uh people through the tent, appreciate all the customers uh and folks stopping by the tent and enjoying some conversations and uh and discussions.
• 0:54
  SPEAKER_02: Uh and I guess let's start there, Luke.
• 0:56
  SPEAKER_02: So, you know, World Pork Expo, the pork uh market hasn't been real great lately, and uh not exactly uh a lot of great news, but uh what are some of the conversations?
• 1:06
  SPEAKER_02: How how are the producers feeling that uh who you talked to this week?
• 1:10
  SPEAKER_01: Yeah, well I'll start with the positives.
• 1:12
  SPEAKER_01: I mean the weather was really nice, Lucas.
• 1:13
  SPEAKER_01: It was 95 or 100 degrees, so we we definitely had that going for us here.
• 1:18
  SPEAKER_01: And a few pop-up rain showers around, those were kind of always welcome.
• 1:22
  SPEAKER_01: But no, you're right.
• 1:24
  SPEAKER_01: We're the the pork industry, it's we we've been in a tough tough spot all year, and it's gotten even a little tougher uh here recently, especially as Prop 12 and and and things like that have kind of came forward here.
• 1:35
  SPEAKER_01: So we you know, but I will say uh uh we had people, this pork industry that we're they're they're a group of innovators, survivors, and fighters.
• 1:44
  SPEAKER_01: Um and uh we had uh you know we had a lot of people show up and and that was a question, honestly.
• 1:49
  SPEAKER_01: I mean, with kind of where we're at and some negative margins.
• 1:53
  SPEAKER_01: And I mean, let's just be real, we don't have a profit on the board until next summer, you know, 12 months out.
• 1:58
  SPEAKER_01: That is a that is a tough, a tough spot our industry's in, right?
• 2:01
  SPEAKER_01: But uh, you know, people are stressed, uh, there's challenges.
• 2:04
  SPEAKER_01: It's it's but it's all about how do we you know how do we figure out how to get through this?
• 2:08
  SPEAKER_01: How do we survive?
• 2:09
  SPEAKER_01: How do we get better?
• 2:10
  SPEAKER_01: How do we innovate?
• 2:11
  SPEAKER_01: So uh, you know, we uh you know we just gotta kind of buckle down and go through that.
• 2:15
  SPEAKER_01: But producers definitely uh they've got a lot on their minds and a lot going on, but uh resilient and and dug in, and uh that's why this is one of the best industries, all of agriculture to work out, right?
• 2:26
  SPEAKER_01: We we figure things out.
• 2:28
  SPEAKER_01: Um But uh yeah, this week cash hogs probably you know kind of a decent story.
• 2:32
  SPEAKER_01: Packer demand is you know is still there,$96 paid, so that market continues to kind of move higher week to week.
• 2:39
  SPEAKER_01: But you know, demand and and issues around Prop 12 uncertainty really reflect on the product.
• 2:44
  SPEAKER_01: And you know, yesterday's product was still kind of stuck around that mid-80s.
• 2:48
  SPEAKER_01: Um, we did rally up to close to 90 early in the week, but uh lost her back in easy come, easy go belly.
• 2:55
  SPEAKER_01: This morning's uh midday report was a bit higher on the cutout, but uh we'll see kind of what sticks.
• 3:01
  SPEAKER_01: But that'll be the next things uh moving forward, and you know, July 2nd is coming pretty quick.
• 3:06
  SPEAKER_01: Uh that'll be here before we know it.
• 3:08
  SPEAKER_01: We'll know a little bit more about our corn crop come, you know, July 2nd.
• 3:11
  SPEAKER_01: But uh, you know, producers in general, again, like Lucas said, I'm really glad and we appreciate them all coming and not just producers, but but our friends and allied industry too.
• 3:21
  SPEAKER_01: But it's uh, you know, we got to stay in a defensive, defensive mindset, you know, and and probably all of egg, right?
• 3:26
  SPEAKER_01: You'll talk a little bit about corn here.
• 3:27
  SPEAKER_01: We're just things are changing and we need to all be a little more on the defensive here, I'd say, Lucas.
• 3:32
  SPEAKER_02: Yeah, that's right.
• 3:33
  SPEAKER_02: You know, and and you know, I haven't been involved in the uh pork industry as many years as you have, Luke, but I was kind of wondering what the overall mood of the show would be.
• 3:42
  SPEAKER_02: Uh and the attendance, right?
• 3:43
  SPEAKER_02: Like like it we haven't had a lot of good news in the pork industry of late.
• 3:47
  SPEAKER_02: Uh, but overall, like you said, this is a pretty resilient bunch.
• 3:50
  SPEAKER_02: Um, very, you know, positive outlook, and and I guess that's probably uh the farming mentality overall.
• 3:57
  SPEAKER_02: If you get caught up in the short-term bad news, you probably wouldn't be in it for the long haul.
• 4:01
  SPEAKER_02: And uh it was good to hear that a lot of our customers and and prospects and folks in the industries are in it for the long haul, and we look forward to that.
• 4:08
  SPEAKER_02: Um so yeah, kind of a good good show at World Pork Expo.
• 4:12
  SPEAKER_02: Look forward to seeing everybody again next year.
• 4:14
  SPEAKER_02: Uh of course, while we're down here and and on a Friday about an hour ago, uh we had the uh June Wazday report come out.
• 4:22
  SPEAKER_02: Um, a bit of a yawner uh as a report goes, that you know, the markets didn't react really big, and and when we can start looking at the information in it, uh not a uh lot of changes, you know, new crop side, they really didn't they didn't change any yield or acres or anything like that.
• 4:39
  SPEAKER_02: Of course, we got our acreage report, you know, big report coming up at the end of the month.
• 4:43
  SPEAKER_02: Um, but what are some other uh takeaways that uh you saw in the WASDA report, uh Luke?
• 4:49
  SPEAKER_01: Yeah, I I think you mentioned on that not a lot of changes to the numbers.
• 4:52
  SPEAKER_01: We we did pick up a little bit um you know on on uh old crop carry out, like stocks coming in on the balance sheet and and a little changes on the demand structure.
• 5:01
  SPEAKER_01: But we you know I think oversimplified, obviously we we came out in Brazil, had really big crops to help us.
• 5:07
  SPEAKER_01: Um we did get um you know our crop in, you know, especially corn at 92 million acres.
• 5:13
  SPEAKER_01: So we're we're set.
• 5:14
  SPEAKER_01: But uh the market has been and will continue to be hyper focused on weather, right?
• 5:19
  SPEAKER_01: We we need to catch some rains here mid and later June for sure, and and it's you know, we're we're gonna trade weather and until it rains or doesn't rain.
• 5:28
  SPEAKER_01: But uh and then you know that does change every day, but what current kind of sediment they they have kind of friendlied up a little bit weather pattern here in the next couple weeks, haven't they, Lucas?
• 5:36
  SPEAKER_01: I I know you study these weather maps really closely.
• 5:39
  SPEAKER_02: Well, I don't know if I study them, but uh uh you know that it you look at the Wadzay report, not a lot of good or not uh not a lot of big information, not a lot of big news, and we didn't really expect it going in.
• 5:50
  SPEAKER_02: Um, you know, kind of dropping that demand in the old crop, and that's kind of carry into that new crop balance sheet.
• 5:56
  SPEAKER_02: Um, you know, corn getting to 2.2 billion bushels, that's a pretty big number.
• 6:01
  SPEAKER_02: And like you said, uh it doesn't look like anybody really got you know that many prevent plant acres.
• 6:08
  SPEAKER_02: We're gonna get the crop, the crop is planted, right?
• 6:10
  SPEAKER_02: And and it's probably closer to 92 million is is where my head is at.
• 6:14
  SPEAKER_02: Um so we're gonna have a lot of bushels, uh, even if the yield would drop, right?
• 6:19
  SPEAKER_02: So, you know, we get caught up on this national yield and in 180 bushel.
• 6:23
  SPEAKER_02: Well, there's no way we're gonna get there.
• 6:25
  SPEAKER_02: Yeah, that's probably true, but with the amount of acres we got planted uh and the in and the demand going down a little bit, we aren't gonna need a big yield to still carry in a pretty big number into the the balance sheet.
• 6:39
  SPEAKER_02: So uh just something to keep in mind as you look, you know, we look out our back door, and maybe we are missing some rains, right?
• 6:45
  SPEAKER_02: Like uh depending on where you're at, the showers in the corn belt, uh well, the overall corn belt uh has been real spotty as of late.
• 6:53
  SPEAKER_02: Temperatures have been above normal.
• 6:55
  SPEAKER_02: Uh you look at the crop heat unit-wise, where we've been pushing heat units because of the sunny, uh warm weather.
• 7:01
  SPEAKER_02: We're about a week ahead uh in a lot of areas as far as crop development.
• 7:06
  SPEAKER_02: Uh so now we're starting to get into that stage where the crop, at least the corn crop, is really going to start using a lot of water.
• 7:13
  SPEAKER_02: And all along we've been looking at these long-range forecasts, right?
• 7:17
  SPEAKER_02: That it's supposed to start raining, and that's still holding true.
• 7:20
  SPEAKER_02: Uh you start looking at that 8 to 14 day forecast, and we're looking at uh normal to above normal precipitation across a lot of the corn belt.
• 7:29
  SPEAKER_02: And I think that's really what's stopping the market from really taking off, right?
• 7:34
  SPEAKER_02: Because otherwise you'd go through you know two weeks in Illinois with no rain, that would spark a big jump in the corn market typically during growing season.
• 7:42
  SPEAKER_02: Um, you know, you look, let's say that's supposed to start raining, the El Nino pattern coming in.
• 7:47
  SPEAKER_02: Um those are gonna have to hold true though, because we aren't getting any rain to recharge subsoil moisture.
• 7:53
  SPEAKER_02: Uh so even though you know it's kind of a big contradicting story, we drought monitor comes out, most of Iowa is in some sort of drought, um, but nobody really got that excited because it is supposed to start raining.
• 8:06
  SPEAKER_02: And in this new term they're using now, flash drought, right?
• 8:09
  SPEAKER_02: Uh, you know, it's a flash drought in parts of Iowa and Illinois and Indiana.
• 8:13
  SPEAKER_02: Uh well, flash droughts I guess are better than long-term droughts because it looks like it could go away if these forecasts hold true.
• 8:20
  SPEAKER_02: Of course, forecasts don't always hold true, so I guess that's why uh we have to keep watching the markets and keep managing risks and uh not get caught up in one feeling or the other.
• 8:30
  SPEAKER_02: Uh so I would just encourage everybody, uh, corn, beans, or anything, you know, we're trading a weather market the way it looks until we get some other news.
• 8:38
  SPEAKER_02: Uh if you see an opportunity, take it.
• 8:40
  SPEAKER_02: Would you agree with that, Luke?
• 8:42
  SPEAKER_01: Yeah, absolutely.
• 8:42
  SPEAKER_01: And I mean, this is the time of year uh when it is typically when we should be making some new crop sales, right?
• 8:47
  SPEAKER_01: And so we are looking at that.
• 8:49
  SPEAKER_01: We we'd like to give it a chance for weather to kick in and get our flat price just a little bit higher.
• 8:54
  SPEAKER_01: Uh, but we have been doing some option windows, protect cost of production, defend, give yourself some room to the upside.
• 9:00
  SPEAKER_01: It's just this is the type of time of year we should probably be making a little sale each week, and you know, hopefully each sale each week's higher.
• 9:07
  SPEAKER_01: But you know, we do materialize and grow this crop, and you know, you mentioned that two two carryout.
• 9:12
  SPEAKER_01: That it's gonna be pretty hard to have 530 board corn with a carry-out like that, right?
• 9:16
  SPEAKER_01: So definitely, definitely some downside price risk on the you know on the grains.
• 9:21
  SPEAKER_01: And you know, with that kind of switching gears a little, I think just the other interesting topic, uh, you know, being uh in the i complex is just is is is cattle.
• 9:29
  SPEAKER_01: Yeah, and especially the story is is cash cattle.
• 9:33
  SPEAKER_01: We had cattle.
• 9:34
  SPEAKER_01: I I 193 was the top I heard in the north.
• 9:36
  SPEAKER_01: I don't maybe it seems like you talk to somebody you always hear a higher number, right?
• 9:40
  SPEAKER_02: But everybody got a little higher than the other guy, right?
• 9:42
  SPEAKER_01: No, but uh tremendous strength in cash cattle, tremendous strength in in choice cutout, really responding.
• 9:49
  SPEAKER_01: Um what was choice up like 18 higher just this week alone?
• 9:53
  SPEAKER_01: Um so we're we're really getting up there.
• 9:55
  SPEAKER_01: Um we're really getting, you know, beef has always been expensive to pork and and poultry, but those spreads are are really getting out there now.
• 10:03
  SPEAKER_01: And you know, so you have all this kind of going and you got the futures market this week, live cattle actually taking a little break, right?
• 10:10
  SPEAKER_01: Um, and I guess the point with that is sometimes you know, high prices can you cure high prices, and we're just especially on this cattle complex, we're we're up here to where a little bit of demand destruction and just sheer availability of product is uh is a concern.
• 10:23
  SPEAKER_01: But uh yeah, it's kind of you know something to keep note of, and you know that's gonna make an effect it as beef gets tighter through this thing.
• 10:30
  SPEAKER_01: That you know, we were pretty negative on the hogs, right?
• 10:33
  SPEAKER_01: But that is potentially a little bit of a tail headwind maybe for the or tailwind for the hogs pushing us, is you know, it is getting harder and harder.
• 10:41
  SPEAKER_01: You can you know, talking to some friends, we can you know feed our family with a pork loin for 15 bucks or less, and you know, we're maybe I don't even think we can buy a T mode for 15 bucks per person, right?
• 10:52
  SPEAKER_01: Exactly.
• 10:52
  SPEAKER_01: Just a lot of different dynamics going around in in all those spaces.
• 10:56
  SPEAKER_01: So um again, I just might you know thank you for everybody we saw at World Pork Expo.
• 11:01
  SPEAKER_01: If you're anyone involved in the in the pork industry and you didn't make it this year, I would say put it on your radar for next year.
• 11:07
  SPEAKER_01: And uh, you know, other than that, I'll pass it over to Lucas for some final comments, and I think we're ready to wrap.
• 11:12
  SPEAKER_02: Yep, nope.
• 11:13
  SPEAKER_02: Thanks, Luke, for uh your insights there.
• 11:15
  SPEAKER_02: Thanks for everybody for uh stopping by the World Pork Expo Tent, and look forward to to seeing you next year and of course helping you out every week in between.
• 11:23
  SPEAKER_02: So have a good weekend.
• 11:24
  SPEAKER_00: And thank you to all our listeners.
• 11:26
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 11:30
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:35
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 11:41
  SPEAKER_00: See you next time.