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Grains: Corn Rally · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the egg 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 involve 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_00: Today is August 29th.
• 0:25
  SPEAKER_00: I've got Pat with us today.
• 0:26
  SPEAKER_00: How's it going, Pat?
• 0:27
  SPEAKER_00: I'm doing well.
• 0:28
  SPEAKER_00: How are you, Mike?
• 0:30
  SPEAKER_00: Not too bad.
• 0:30
  SPEAKER_00: It was a really eventful Friday for us.
• 0:33
  SPEAKER_00: The grain market's trying to go into a long weekend with a little bit of short covering Pat on the corn side specifically.
• 0:40
  SPEAKER_00: What do you think about today's activity?
• 0:41
  SPEAKER_01: Talk to me about uh what we're hearing as it relates to market action.
• 0:46
  SPEAKER_00: Most of what I saw from market action here today, we saw December corn up over 420 for the first time in quite some time, close a day up 10 cents, so it was a really big breakout past uh this last Monday's highs.
• 0:59
  SPEAKER_00: And uh from what I saw, there was a lot of short covering going into a three-day weekend here with no trade on Monday.
• 1:05
  SPEAKER_00: The futures have some concerns about the dryness maybe out east, maybe shrinking the crop a little bit there, and just not wanting to really get caught with any short positions ahead of any trade deals that may get done uh ahead of uh, you know, China talks potentially going forward or uh some of these other markets at least, Pat.
• 1:24
  SPEAKER_00: So yeah, going into the weekend, they they uh mainly had focus on that.
• 1:29
  SPEAKER_00: The soybeans they had already covered the majority of their shorts actually last week.
• 1:32
  SPEAKER_00: They were a little bit on the long side, and uh the soybean oil was holding soybeans back through most of today's trade, but it it tried to close higher at the end of the day.
• 1:42
  SPEAKER_01: So 28 cents or so off of our lows that were established around uh the August uh USDA report, middle of August there.
• 1:54
  SPEAKER_01: So it's 28 cents off of our lows, closed on highs of the day, as you mentioned, and you can get some wonky trade on the Friday before Labor Day, long weekend, all of that stuff.
• 2:05
  SPEAKER_01: It's um it's interesting that we're still trading weather here going into Labor Day.
• 2:10
  SPEAKER_01: The market's sort of acting like like when you say things like evening up of positions or or light volume trade over you know, going into a long weekend uh and trading weather, that's usually kind of back in the old days.
• 2:22
  SPEAKER_01: We talk about that over the 4th of July weekend, right?
• 2:24
  SPEAKER_01: So it is kind of interesting, I think, that we're um um building, developing, perhaps creating uh a bit of a weather scare concern very late season, but there's also some reasons to support that observation, right?
• 2:42
  SPEAKER_01: Do you want to talk through with our listeners, Mike, about um some of the things that we've um that we've seen here, just like how is the weather in the month of August compared to uh you know prior to some of the some of the things that we've been looking at internally?
• 2:57
  SPEAKER_00: Yeah, so uh one of the main things here, if you look in the eastern corn belt, we've had uh really dry weather for specifically like Ohio, Indiana through that stretch.
• 3:06
  SPEAKER_00: Some s some districts in that area actually the driest we've had in the last 133 years.
• 3:12
  SPEAKER_00: So it's not finishing that strong in the east.
• 3:15
  SPEAKER_00: In the western corn belt, we've had quite a bit of rain, and normally that would equate to a really good soybean crop in in the month of August that we would attribute good August weather to.
• 3:27
  SPEAKER_00: We did see last year though how important August weather is just for finishing out the crop.
• 3:32
  SPEAKER_00: You know, last year never really had any rain in the month of August at all, and we took quite a bit off of this crop in the end in a very fast harvest pace.
• 3:40
  SPEAKER_00: This time around, it seems very normal from a crop development perspective, especially locally.
• 3:45
  SPEAKER_00: Starting a lot of silage after the uh after the Labor Day weekend is is very normal seasonally, and a lot of disease problems locally, southern rust, things like that.
• 3:56
  SPEAKER_00: But basically at this point, locally, it seems like that's all I've heard with really holding crop potential back until you go north of us, then just too much water in spots.
• 4:05
  SPEAKER_00: But otherwise, locally, we look probably about as good as anybody condition-wise right here.
• 4:10
  SPEAKER_00: Eastern Corn Belt just getting a little bit too dry, Pat.
• 4:13
  SPEAKER_00: So both things can be true.
• 4:14
  SPEAKER_01: Like the crop um could have been 188.8 on August 12th, or whatever, you know, the the uh uh USDA uh collected the information for their WASDI report, and the crop could be 185 today, right?
• 4:29
  SPEAKER_01: Both statements could be true, and to your point, we're we've had plenty of crop reporting districts, um, and really parts of Iowa too would have been, you know, uh the 90th driest out of 133 years, maybe not the driest, like you referenced there, but there's a good portion, more than half the corn belt did dry out in the month of August.
• 4:51
  SPEAKER_01: And so um, you know, Pro Farmer uh alluded to that a little bit last week.
• 4:57
  SPEAKER_01: Their state by state yields would have been 186 and they printed a 183 or something like that, with with some sort of an observation as it relates to um, I guess now technically we're talking about, well, we counted the kernels and we came up with a 186 or a 188, and now we're making you know some judgment or guess on on density or test weight and or you know how how how far out we're filling out the tip of the ear, those sorts of things.
• 5:21
  SPEAKER_01: And those are all good discussions, good observations.
• 5:24
  SPEAKER_01: And frankly, you know, we kind of agree, right?
• 5:27
  SPEAKER_01: Like we we think the best number to use on the balance sheet today is something like 185, not 188 or 189.
• 5:34
  SPEAKER_01: And we also do believe that um um that usage number that was uh uh printed in in that uh August report um maybe can get comfortable with the export side of things, maybe can get comfortable with the ethanol side of things, leaning really heavy on the residual part of the feed residual category to get comfortable with that increase in usage, um, given animal numbers um here in the U.S.
• 5:57
  SPEAKER_01: And so all of those things, when you start to think and talk about a 185 national yield, probably got to take two or three hundred million out of the uh um usage number, and you're still sitting around with an ending stocks number in that two to two point one billion, around 13% stocks to use ratio.
• 6:15
  SPEAKER_01: Um, yeah, some you know, corn in 420 maybe makes some sense, and that's where we closed at today.
• 6:22
  SPEAKER_01: So corn is 28 cents off of its lows.
• 6:24
  SPEAKER_01: Just for fun here, kind of just looking from a technical perspective, if we go back to last February, look at the high that was traded there, the lows so far that were established there in the middle of August, a 50% retracement from you know from that range is in the 435 area, 15 cents or so higher from where we've seen today.
• 6:44
  SPEAKER_01: Yep, maybe, right?
• 6:45
  SPEAKER_01: We'll see what kind of follow-through that we get next week and who the heck knows what can happen next sort of thing.
• 6:50
  SPEAKER_00: But if there's a gap right there, too, 430 on D's.
• 6:54
  SPEAKER_00: Yeah.
• 6:55
  SPEAKER_01: Yeah.
• 6:55
  SPEAKER_01: Yeah.
• 6:56
  SPEAKER_01: A little one from a while ago.
• 6:57
  SPEAKER_01: That's but but possibly a good point.
• 6:59
  SPEAKER_01: That's a spot too that uh another reason for the technicians to maybe make some sense with.
• 7:04
  SPEAKER_01: And so um, so we'll see what what happens here.
• 7:08
  SPEAKER_01: Um I do know, or at least I think I know in the east here, or in the west here at least, that that um you know, this type of a of a rebound uh um certainly should should it is it is uh getting some consideration um you know for the clients that we interact with and and uh and certainly provides for the opportunity for consideration for others as well.
• 7:30
  SPEAKER_01: And so um, you know, look, this uh you know volatility is still awake, alive just a little bit here.
• 7:37
  SPEAKER_01: It's not like it has been the last couple three years, Mike, but boy, there sure are still some real nice opportunities here.
• 7:43
  SPEAKER_01: Real nice opportunities to to to merchandise your way into profitability, some nice opportunities to consider all of the different factors that are that are available, not that are happening today in this market, not the least of which is the questioning of this crop size, the questioning of acres, the quest questioning of usage, what's going to happen next as it relates to Trump and trade and tariffs.
• 8:08
  SPEAKER_01: Um a lot of discussion this week from others about you know um pontificating and complaining about you know USDA data being released, accurate, inaccurate, a lot of discussions this week from others pontificating and complaining about you know high input costs in in spite of the break in in the futures market here.
• 8:29
  SPEAKER_01: And and Mike, I just I I just wanted to wrap up today's podcast with this observation.
• 8:35
  SPEAKER_01: While the set of circumstances that we're discussing today are unique and new to this particular year and and and crop and all of that stuff, the fact that these things are happening, that we have an influence of government programs and and and and an influence of trade as it relates to um interacting with other countries and um some question uncertainty as it relates to supply and some concern question about basis levels and spreads and all those things, those things are not new, and these are not unique to this year, and we've been through this before.
• 9:12
  SPEAKER_01: And so I would just say that you know instead of of of lamenting about what what has happened up till this point, let's look through the windshield and and uh heck of a lot bigger than the rearview mirror, right?
• 9:26
  SPEAKER_01: And and uh let's see what opportunities are in front of us here and recognize what stage of the cycle that we're in.
• 9:33
  SPEAKER_01: And and if a person can can uh um maybe uh kind of look through all these different dynamics that are happening today with that sort of perspective, it might help us make decisions.
• 9:43
  SPEAKER_01: And so, you know, we look forward to that opportunity.
• 9:45
  SPEAKER_01: We look forward to the opportunity to interact with our clients and our and and others in terms of of walking through and working through all the different tools that are available for us in order to make the best decisions that we can for their operation.
• 9:58
  SPEAKER_01: And so as we wrap up uh, you know, today's podcast, Mike, I just uh first of all wish everyone uh a safe and and wonderful, great holiday, Labor Day weekend here.
• 10:09
  SPEAKER_01: Um let's trade weather, let's uh let's create some opportunities in this market that uh you know that we can can figure out a way to lean into some profitability here with what appears to be a pretty good size underlying crop.
• 10:23
  SPEAKER_01: So with that, thank you everyone and uh have a great weekend.
• 10:26
  SPEAKER_00: Thank you, Pat.
• 10:28
  SPEAKER_00: This podcast is also brought to you by ProAg Power Grains, the all in one grain marketing tool tied directly to your brokerage account.
• 10:35
  SPEAKER_00: Track cash, futures, and options all in one place, compare your cost of production with others, use what if tools to build your marketing plan, and get to work with uh wonderful people at professional ag marketing on developing the right risk management strategy for your operation.