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Grains: Trump Trade · 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 Miner.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Alright, today is July 3rd, going into the July 4th weekend.
• 0:28
  SPEAKER_00: We've got a full day of trade here.
• 0:29
  SPEAKER_00: I've got Pat with us.
• 0:30
  SPEAKER_00: How's it going, Pat?
• 0:31
  SPEAKER_01: It's going really well.
• 0:33
  SPEAKER_01: How are you today, Mike?
• 0:34
  SPEAKER_00: We're doing awesome.
• 0:35
  SPEAKER_00: Well, let's start off with just a little bit of a recap on uh what the trading has done because it's been a little bit more eventful week over week, yet again.
• 0:45
  SPEAKER_00: The last time we kind of did this, it was uh a little bit more down in the dumps for the grain farmers.
• 0:50
  SPEAKER_00: Uh the market was trending lower.
• 0:52
  SPEAKER_00: We just had a big sell-off, and now over the past two days we've found a little bit of support to try to bounce us back to kind of where we were through the entirety of June, Pat, on these corn and soybean futures.
• 1:04
  SPEAKER_00: So, what are a few things that you've seen in this marketplace that gave us a reason to try to add another 20 cents back on this corn market?
• 1:12
  SPEAKER_01: Well, Mike, I mean, I I mean 416 and a half is too cheap for July 1st.
• 1:19
  SPEAKER_01: I think it might be that simple.
• 1:21
  SPEAKER_01: I'm talking about December corn here.
• 1:23
  SPEAKER_01: And, you know, we've talked a lot on this podcast and interacting with our customers and everyone else as it relates to um how the especially new crop corn just really hasn't behaved uh, I guess the way that you normally would.
• 1:39
  SPEAKER_01: And uh, one of the charts or graphs that I was looking at this morning, it described um the month of June as being in the top twenty-fifth percentile or so in terms of moisture, just in in a across a a quite a few different crop reporting districts all across the country.
• 1:57
  SPEAKER_01: And so maybe that's all you need to know about why Deese corn behaved the way that it did in the month of June.
• 2:04
  SPEAKER_01: Um, and we are starting to get, well, less moisture and a little more heat into the intermediate and long-term forecasts, and and uh at this point, or at least this stage of the game in the Western Corn Belt for sure, Northwest Corn Belt for sure, um that doesn't that seems like a good forecast, right?
• 2:22
  SPEAKER_01: But so so we probably don't have anything real um concerning uh uh from a weather perspective, but 416 is awful cheap for July 1st, right?
• 2:36
  SPEAKER_01: So you just go back to that again.
• 2:37
  SPEAKER_01: And so, and so Mike, I I mean I any time that we're talking about the corn and soybean market um in June and July, we're gonna talk about weather.
• 2:46
  SPEAKER_01: And and uh and this year's weather has been better than normal and and the markets have have reacted to that.
• 2:53
  SPEAKER_01: Um what else is going on out there?
• 2:55
  SPEAKER_01: What else might be impacting uh corn and soybean prices these days?
• 2:59
  SPEAKER_00: Well the the timing was convenient that it came along uh with uh Vietnam trade deal, so that that came right in there as well.
• 3:08
  SPEAKER_00: And then the president will be in Iowa today.
• 3:10
  SPEAKER_00: Uh there are some unconfirmed rumors that he's going to announce a Chinese egg purchase purchase package in uh at the Iowa State Fairgrounds tonight at 7 30 is when he's gonna start talking.
• 3:21
  SPEAKER_00: The events at 5.
• 3:23
  SPEAKER_00: So that that's probably helped.
• 3:25
  SPEAKER_00: And I would just mark it up as just we're short covering, going into a three-day weekend, we've got possible trade deals on the horizon.
• 3:34
  SPEAKER_00: The weather's like it's really hard to look back and say there's any problem at all.
• 3:38
  SPEAKER_00: Five, five, five percent of the corn crop is poor to very poor, like virtually nothing in the US.
• 3:43
  SPEAKER_00: So it uh even to get excited about the forecast here, you really gotta use like maybe the euro is a little bit more bullish than the GFS.
• 3:51
  SPEAKER_00: You gotta kind of poke and and and really choose what one to follow.
• 3:54
  SPEAKER_00: So I would just argue it's just short covering, taking a little bit of a short position off going into the weekend just in case something happens, and maybe some buy the room or sell the fact, who knows?
• 4:05
  SPEAKER_00: But uh a few things I did notice just from a chart perspective, too.
• 4:09
  SPEAKER_00: Like uh these corn, we're getting pretty close again, bouncing right up to some uh moving averages, some pretty strong resistance.
• 4:16
  SPEAKER_00: You know, the old high we had there was 447 on this last run.
• 4:20
  SPEAKER_00: So once you get around this this area to maybe another five ten cents, we're gonna have some resistance to kind of break through on corn here, I think, Pat, for the time being.
• 4:30
  SPEAKER_00: We're gonna need new news, it looks like, to make that happen.
• 4:32
  SPEAKER_01: Yeah, agreed.
• 4:33
  SPEAKER_01: And I and so uh on the demand front, it it that is worth noting that that uh you know we could or can get a deal done with China, and and this happened the last go-around too.
• 4:45
  SPEAKER_01: We had a we had a trade war uh during Trump's first administration until he had a trade deal.
• 4:50
  SPEAKER_01: And and so I think also these markets are are uh uh thinking about that as well as as a possibility and looking for some optimism, just like we are as we're s as we're talking through all of these things.
• 5:03
  SPEAKER_01: And so um uh and maybe just go back to 416 is pretty cheap for for the first of July.
• 5:10
  SPEAKER_01: And and uh and and the other thing that you mentioned there, just maybe some short covering going into the long weekend.
• 5:17
  SPEAKER_01: Um we did and we did finish up a quarter here and started a new month as well this week.
• 5:22
  SPEAKER_01: And so there might be some some freshening of positions, taking on uh or willing to take some new positions, that sort of thing, uh after the the first of July here as well.
• 5:32
  SPEAKER_01: Um on the swabing side of things, uh similar discussion as it relates to the potential, as it relates to a trade deal um with China and perhaps lead with, and some unconfirmed rumors of some export sales that that uh have maybe started to take place this week in China, which we have virtually nothing on for new crap.
• 5:52
  SPEAKER_00: Oh my goodness.
• 5:53
  SPEAKER_00: It's I mean, we've been waiting on that.
• 5:54
  SPEAKER_00: And I'm surprised the market hasn't been more pessimistic about not seeing anything on that front yet.
• 5:59
  SPEAKER_01: Yeah, exactly right, exactly right.
• 6:01
  SPEAKER_01: And then the and then back to corn for a second, but that second corn crop down in Brazil also appears to be getting bigger as we go, right?
• 6:09
  SPEAKER_00: Yeah.
• 6:09
  SPEAKER_00: They've had some really good weather, pushed harvest back a little bit, but massive crop in Brazil there.
• 6:14
  SPEAKER_00: So uh but yeah, the soybean market, I mean, we talked mostly about the corn, but uh I'd say soybeans here could uh could be a big mover and shaker if China decides to do something there.
• 6:24
  SPEAKER_00: So uh other final thoughts that come to my mind here, Pat, like the SP 500's up 50 points again today, new record highs.
• 6:32
  SPEAKER_00: I mean, a lot of JP Morgan's and folks like that were thinking maybe we got back to 6,500 by the end of the year.
• 6:39
  SPEAKER_00: We're 150 points off that.
• 6:41
  SPEAKER_00: So, like it we've made really good rounds that just put a little bit more risk on here.
• 6:46
  SPEAKER_00: You know, it it seems like the trade has been okay to push back into the stock market.
• 6:51
  SPEAKER_00: Maybe they're buying some grains back, uh livestock they're still I mean, they're still up there near a record position on those two.
• 6:58
  SPEAKER_00: Um it doesn't seem like a lot of money is too scared at this current time frame, Pat, which April would have been peak scare here recently, I would argue, around Liberation Day and everything going on with trade.
• 7:11
  SPEAKER_00: So it seems like at this point uh the markets come a little bit numb to it and uh they're they're putting some money back on the table at least.
• 7:21
  SPEAKER_01: Yeah, exactly.
• 7:22
  SPEAKER_01: Um just uh a little bit of an update on interest rates um and market and those sorts of things.
• 7:29
  SPEAKER_01: The US economy added 147,000 jobs in June, um, in line with expectations, uh, but uh in line with the 12-month trend, but above market expectations.
• 7:41
  SPEAKER_01: Uh um unemployment rate dipped a little bit, 4.1 percent.
• 7:45
  SPEAKER_01: Um, and uh we've seen just a a little bit of of wage growth as well, uh 3.7 percent uh higher year over year.
• 7:54
  SPEAKER_01: And so, Mike, I uh um you know we keep talking internally here about how the the US economy is doing sneaky good for the for the average quote unquote consumer, right?
• 8:07
  SPEAKER_01: I mean we're you know we are experiencing some some inflation as it relates to to wage growth.
• 8:13
  SPEAKER_01: Um we are experiencing um a little better retail economic activity, which I would argue is good for commodities.
• 8:23
  SPEAKER_01: And so um and so I appreciate your your perspective or your observation as it relates to you know how the S ⁇ P is performing here and and uh for those that have have stayed long in that market, um they've uh uh recognized some real nice rewards in that uh you know since uh the the current administration election, all those sorts of things.
• 8:44
  SPEAKER_01: But um, and so maybe, maybe this uh kind of sneaky good consumer uh economic activity here in the U.S.
• 8:51
  SPEAKER_01: And I would also add Mexico into that discussion.
• 8:54
  SPEAKER_01: It seems as though there would be some similar sort of sentiment there.
• 8:58
  SPEAKER_01: Um it does seem as though that there is at least this building base for just a little bit of a of additional commodity demand, which could help us with money flow.
• 9:07
  SPEAKER_01: And so, and so again, we're from 416 D's corn on July 1 for uh a little bit of a theme here.
• 9:16
  SPEAKER_01: I think we can think of a few reasons why you could at least put 20 cents on it, and then to your point about uh you know the next level of of uh resistance here up around that 447, 450 area, and then see what happens from there sort of a thing.
• 9:30
  SPEAKER_01: And so so there's some potential here, but it's the same kind of potential, frankly, that we've been that we've been talking about like during the whole growing season.
• 9:38
  SPEAKER_01: You usually expect something, and and uh maybe this is the start of something, and maybe this is just a a corrective little rally here.
• 9:46
  SPEAKER_01: But nonetheless, I would think for most of our our rook crop producers, the spot that we're in today, at least as it relates to new crop marketing, is a spot that you just say, you know what?
• 9:57
  SPEAKER_01: We still have the spring price up at 472 or you know, uh higher than 470 for you know for an average during during uh uh or for you know spring price, and and and so you know, we've got a pretty good groundwork laid as it relates to some revenue guarantees here.
• 10:14
  SPEAKER_01: Um perhaps we're in a position where you know some combination of of revenue assurance coupled with the prospect for bushels, perhaps uh and uh and a little bit of a corrective rally maybe is enough to uh kind of just set it off to the side and and enjoy a long uh holiday weekend, right?
• 10:33
  SPEAKER_00: Yeah, I'd say the other thing with m risk management would be basis.
• 10:38
  SPEAKER_00: A lot of talk internally just about, you know, if we do get a sizable rally here, watch out.
• 10:43
  SPEAKER_00: Uh maybe basis could weaken a little bit.
• 10:45
  SPEAKER_00: So a lot of questions about, hey, I'm cleaning out the bottom of the bin, what do I do with some old crop?
• 10:51
  SPEAKER_00: That's something that uh, you know, from if futures do really take off, you could see that basis try to take half of it back or something like that.
• 10:57
  SPEAKER_01: Yeah, for sure.
• 10:58
  SPEAKER_01: You and uh Jaden have some really good thoughts on that.
• 11:01
  SPEAKER_01: Would uh encourage anybody that has uh has uh wants to talk through strategy as it relates to to cash marketing, uh uh managing spreads, basis, and opportunity to to give us a call.
• 11:13
  SPEAKER_00: All right.
• 11:13
  SPEAKER_00: Well, happy Fourth of July, everyone.
• 11:15
  SPEAKER_00: Thanks for joining the show today, Pat.
• 11:17
  SPEAKER_00: And maybe next week we'll have some even more exciting things to talk about.
• 11:21
  SPEAKER_00: Sounds good.
• 11:21
  SPEAKER_00: Thank you, Mike.
• 11:22
  SPEAKER_00: And thank you to all our listeners.
• 11:24
  SPEAKER_00: Please reach out to us at professional eggmarketing.com.
• 11:28
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:33
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 11:39
  SPEAKER_00: See ya next time.