Latest / Professional Ag Marketing Podcast / Shootin' the Breeze

Transcript

Shootin' the Breeze · 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 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.
• 0:24
  SPEAKER_01: Today is December 23rd, 2022, and this is Lucas Peters filling in for Mike Minor, who is a little under the weather today.
• 0:32
  SPEAKER_01: And we have Pat Von Tirsch in the podcast room with us today.
• 0:36
  SPEAKER_01: How's it going, Pat?
• 0:38
  SPEAKER_02: It's going well, but speaking of weather, it's uh visibility is a little challenging here today, Lucas.
• 0:45
  SPEAKER_01: Yeah, it's very glad to be in the office today and not outside at the moment.
• 0:49
  SPEAKER_01: Uh that is as for sure.
• 0:51
  SPEAKER_01: Imagine many of our listeners feeling the same way.
• 0:53
  SPEAKER_01: Uh well was low, zero temps, high winds, uh roads are closed.
• 0:58
  SPEAKER_01: Hopefully we can warm up and uh listen to the podcast uh that we have for you today.
• 1:03
  SPEAKER_02: Yeah, and and uh just a special shout out to every all of the challenges associated with travel today, especially uh you know, all of our producers that are that are fighting this weather and taking care of uh of livestock and and uh needing to move around.
• 1:20
  SPEAKER_02: And so um we appreciate the extra effort.
• 1:23
  SPEAKER_02: Uh everyone does.
• 1:24
  SPEAKER_02: And and uh, you know, Lucas, I we were talking this morning on our team call about you know other weather events that have impacted uh movement, and and it's hard to remember, you know, a time where you know that's an example on a from a you know we lost uh uh just about a half a day's harvest yesterday on on hog slaughter, and we're gonna lose mostly all today.
• 1:47
  SPEAKER_02: There's not gonna be much that gets done at all.
• 1:49
  SPEAKER_02: And and that is uh significant, noteworthy enough.
• 1:52
  SPEAKER_02: Those sort of things don't happen very often, but uh for that to happen in front of you know a scheduled three-day weekend, which is uh uh three-day weekend scheduled twice in a row here, and so the uh the impact of this weather event is going to uh I think linger quite a ways into January.
• 2:13
  SPEAKER_02: It's gonna take a while to uh uh recover and get everything back to normal.
• 2:17
  SPEAKER_02: And uh that's true all the way through the chains from uh feed delivery all the way through to to product product delivery to retail stores.
• 2:25
  SPEAKER_02: And so there have been a lot of conversation with producers uh uh yesterday and today about what impact that might have on the markets.
• 2:33
  SPEAKER_02: And you know, I think it's uh that's as good a topic as any to to uh to talk through here today and on this uh on this Friday before Christmas.
• 2:42
  SPEAKER_01: Yeah, that sounds good.
• 2:43
  SPEAKER_01: Let's uh take a little closer look at this topic of weather causing a bunch of cancellation uh at the plants.
• 2:49
  SPEAKER_01: Uh how long is this actually going to linger uh as we look forward here into the uh next couple months?
• 2:56
  SPEAKER_02: Yeah, so I think uh um you know next week's uh uh harvest plans or you know schedules loadings out will mostly be wrapped around trying to keep barns current in terms of movement and and uh and you know we're still gonna still gonna have some weight gain here.
• 3:12
  SPEAKER_02: So we've seen you know nice nice support uh uh to to product trade uh this week on both beef and and pork complex.
• 3:22
  SPEAKER_02: Uh uh, but eventually I think that's gonna put a little bit more pork on the market here in the month of January as as we as we see some more more as we see weights go up, more than what they seasonally would uh as we go through this holiday stretch.
• 3:34
  SPEAKER_02: And so what I anticipate uh you know this will linger into uh uh the middle of January or so perhaps behind uh as as it relates to uh trying to clean up this issue.
• 3:44
  SPEAKER_01: Yeah, it's kind of crazy uh when you think about this week's storm and uh on the heels of last week's storm, um, that it's gonna affect the meat markets over the the next month or so.
• 3:55
  SPEAKER_02: Yeah, exactly.
• 3:56
  SPEAKER_02: And and it's and it's pretty unique.
• 3:57
  SPEAKER_02: And again, it's it's uh um you know it's it's been a while since we've lost this much time, and then to lose it in front of the holiday is is certainly unique, no question about it.
• 4:06
  SPEAKER_01: Yeah, and as we move off uh the livestock side and start looking uh how the storm and cold weather will affect the crop side, uh, one of the crops out out there in the ground right now is the winter wheat crop.
• 4:18
  SPEAKER_01: Uh a lot of these areas from South Dakota uh south into the key winter wheat growing areas didn't have a lot of snowpack uh before this cold weather hits, uh of course, which brings the thought of winter kill.
• 4:30
  SPEAKER_01: So how are the wheat markets reacting?
• 4:34
  SPEAKER_02: Yeah, well, Kansas City wheat in particular is uh is up over over a dime here as we uh as we uh do this recording, and and uh certainly some big question marks about about what uh potential productivity impact uh uh that uh this this uh colder than normal event can have in the plain states.
• 4:56
  SPEAKER_02: And so that market is is trying to build a little bit of of weather premium in as a result.
• 5:01
  SPEAKER_02: And and frankly, you know, we're we're higher on corn and soybeans too because of weather.
• 5:07
  SPEAKER_02: Uh for corn and soybeans, it is more to do with Argentina weather and and the continued uh challenges down there as it relates to just I guess breaking that weather pattern, Lucas.
• 5:18
  SPEAKER_02: And you know, they they've been drying Argentina for you know all the way throughout their growing season here.
• 5:24
  SPEAKER_02: And and so, you know, over the last 10 days they've had a couple breaks in that and and have received a little bit more moisture, but and there's a little bit forecasted for next week too.
• 5:35
  SPEAKER_02: But all in all, it's a it's a net drying pattern that continues to persist down there, and and that's the reason for uh a relatively significant rally, particularly in the meal and oil to bean product markets.
• 5:48
  SPEAKER_02: Um, but it's also providing support to both the soybean and the corn complexes.
• 5:54
  SPEAKER_01: Yeah, you talk about that challenging weather and the La Nina pattern we've uh been in the last couple years uh here in the U.S.
• 6:01
  SPEAKER_01: and around the world, it's created some challenging uh weather conditions, and now maybe uh we're seeing some signs as that La Nina starting to break down a little and uh perhaps a switch to El Nino coming uh early uh 20 uh 23 or into the spring.
• 6:16
  SPEAKER_01: Um as we look at that, how does that uh affect the Brazil crop and uh the farmers uh up here in the United States?
• 6:24
  SPEAKER_02: Yeah, good question.
• 6:25
  SPEAKER_02: And I just I mean, I the uh um the La Nina type weather pattern has uh created some challenges, uh like you said, for two years in some pretty important growing regions uh all across the globe.
• 6:39
  SPEAKER_02: And that's the primary reason why we've seen these elevated prices.
• 6:43
  SPEAKER_02: I you know, we were just looking at and talking about a continuous corn nearby corn chart here before we started this podcast, Lucas.
• 6:50
  SPEAKER_02: And you know, we got up over five bucks uh uh it'll be two years ago in January.
• 6:55
  SPEAKER_02: It was the first time we've been over five bucks since uh uh you know early spring of twenty fourteen.
• 7:01
  SPEAKER_02: Uh so that's a pretty good stretch there of of uh of uh lower prices, we're all keenly aware of, of course.
• 7:09
  SPEAKER_02: But uh you know, we've got a two-year stretch here now where where we haven't broken back under five bucks and and uh and again primarily because of of uh uh below trend line yield events and some in some pretty important growing regions across the globe.
• 7:25
  SPEAKER_02: And so, you know, we've been we we talked about this more than once on this podcast and and around, but uh uh what happens in Brazil this year isn't only important because of what impact that the size of that crop might have on global trade and the global balance sheet.
• 7:42
  SPEAKER_02: But in addition to that, I think it's a pretty good indicator of of uh whether or not we're breaking out of this La Nina type weather pattern.
• 7:51
  SPEAKER_02: And so keeping a watchful eye on that, see what's gonna happen here as we go.
• 7:55
  SPEAKER_02: But so far, you know, Brazil's been pretty good uh weather-wise at this point, anticipating or expecting a trend to above trend crop in that uh growing region.
• 8:06
  SPEAKER_02: Um Argentina is the is the lagger there, but uh maybe not quite as significant as an indicator as it relates to um these uh longer-term weather patterns that we're discussing here now.
• 8:19
  SPEAKER_01: Yeah, and you know, the other thing I wonder about is this trend.
• 8:22
  SPEAKER_01: Uh, you know, we've been kind of on a couple weeks, snowstorms uh coming up here into the Dakotas, Nebraska, um, Iowa, getting some more moisture.
• 8:31
  SPEAKER_01: I don't know.
• 8:31
  SPEAKER_01: Are we starting to see that pattern uh break down a little bit?
• 8:35
  SPEAKER_01: Um, you know, perhaps we're gonna get more into a better uh growing season, better growing conditions here as we go into 2023.
• 8:42
  SPEAKER_01: Uh and you talk about that corn being above$5 here for quite a while.
• 8:47
  SPEAKER_01: Of course, we're never sure how long that's gonna stay up there.
• 8:50
  SPEAKER_01: Um, you know, as we reach the end of the year for a grain farmer, you probably got some fertilizer bought, chemical bought, seed bought.
• 8:57
  SPEAKER_01: A lot of those expenses are already locked in uh and spent for 2023.
• 9:03
  SPEAKER_01: You know, it's starting to think about how we can protect uh the profit that uh is still there uh with these uh current grain prices.
• 9:10
  SPEAKER_01: Of course, crop insurance is part of that.
• 9:12
  SPEAKER_01: We'll uh start looking at the crop insurance side as we turn to 2023, but you know, crop insurance is just part of it.
• 9:18
  SPEAKER_01: Uh we also have got to get some uh grain priced, right, Pat?
• 9:22
  SPEAKER_02: Yeah, exactly.
• 9:22
  SPEAKER_02: It's a that's a great point.
• 9:24
  SPEAKER_02: And I it's uh a couple weeks ago our our theme of uh of uh some messages that we were sending out was uh uh was the the theme of of the the fear of complacency or the the ease of complacency and it's it's pretty uh it's pretty easy to get comfortable with these elevated uh grain prices as being the new norm and and uh we've kind of settled into uh uh to a higher trading range here.
• 9:51
  SPEAKER_02: And that's a little bit of a of a of a dangerous uh situation to get yourself into when you start uh, as you mentioned, Lucas, you know, booking fertilizer, locking up rent longer term, all of those sorts of things, and and then just hoping or assuming that we're gonna be able to see some of these elevated higher prices.
• 10:09
  SPEAKER_02: And so there's an awful lot of marketing tools that are available to us um and uh in combinations of crop insurance and risk management tools that that we can use on the exchange to um to give ourselves the opportunity to uh keep some upside open, but uh still hedge ourselves against some sort of a change here, especially as you're booking input.
• 10:33
  SPEAKER_02: So, you know, please don't hesitate to to give us a call on that.
• 10:36
  SPEAKER_02: Be happy to discuss through some strategies with you on ways to to manage both risk and opportunity.
• 10:43
  SPEAKER_01: Yeah, that sounds real great, Pat.
• 10:44
  SPEAKER_01: Uh that's what the team here at ProAg uh was put together to do and does really well.
• 10:48
  SPEAKER_01: Uh, we'd be happy to talk to anyone about that.
• 10:50
  SPEAKER_01: Uh so as we wrap up here a couple days before Christmas, um, you know, we got some really bad weather out there, we got roads closed, no travel advised.
• 10:59
  SPEAKER_01: Uh, you know, those guys that uh procrastinated uh for buying Christmas presents might really be in a bind.
• 11:05
  SPEAKER_01: Uh did you get all your presents bought uh already, Pat?
• 11:08
  SPEAKER_02: I got uh I got my Christmas shopping done, but I I did just uh it's funny that you say that because someone just mentioned that to me that I was visiting with a half hour or so ago.
• 11:17
  SPEAKER_02: Is now I have an excuse for so Merry Christmas to everyone.
• 11:23
  SPEAKER_02: It's uh it's uh this is uh a great time of year to to reflect on everything that we have to be thankful for, and and those of us at Pro Ag are are truly thankful for our um opportunity and pleasure to to engage with with all of you.
• 11:39
  SPEAKER_02: So thank you for that.
• 11:40
  SPEAKER_02: Have a great Christmas and uh enjoy time with your family.
• 11:44
  SPEAKER_00: And thank you to all our listeners.
• 11:46
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 11:50
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:55
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 12:01
  SPEAKER_00: See you next time.