Latest / Professional Ag Marketing Podcast / August WASDE

Transcript

August 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.
• 0:24
  SPEAKER_00: Today is August 12th, and I've got Lucas Peters here today.
• 0:27
  SPEAKER_00: How's it going, Lucas?
• 0:28
  SPEAKER_01: Well, we're doing fantastic on a Friday, Mike.
• 0:30
  SPEAKER_00: Awesome.
• 0:31
  SPEAKER_00: Well don't worry, guys, we're not talking about crop insurance, so you're safe on this one.
• 0:35
  SPEAKER_00: But we are going to talk about the WASD Airport that came out today, and we're going to talk about some of the numbers, how they got there, what they mean, and uh kind of see what impacts this has going forward.
• 0:46
  SPEAKER_00: So we're going to take a deep dive into the WASD Airport today.
• 0:49
  SPEAKER_00: It should be a fun one.
• 0:50
  SPEAKER_00: I I think I'm excited for it at least.
• 0:52
  SPEAKER_00: It depends how stump the chump goes here with your line of questioning, Lucas.
• 0:57
  SPEAKER_01: Well, that's why I'm here, Mike.
• 0:58
  SPEAKER_01: Make it tough on you.
• 0:59
  SPEAKER_00: Well, anyways, uh right after the report came out today, uh, we did see some uh to hop into the numbers here, anyways, we did see a little bit lower number on corn for yield.
• 1:10
  SPEAKER_00: We saw a little bit higher number on soybeans for yield, so we did really tank the soybean market right after the report.
• 1:16
  SPEAKER_00: We pulled that down to about 1415 on the low today after trading at about 1460 uh about 1463 right ahead of the report on soybeans.
• 1:27
  SPEAKER_00: So it really took uh a beaten right after, but we actually closed five cents higher on the day at 1454.
• 1:33
  SPEAKER_00: And then on the December corn, right ahead of the report, we're at 6.30.
• 1:37
  SPEAKER_00: We closed the day at 6.42, so 12 cents higher than where we were right before the report came out.
• 1:43
  SPEAKER_00: So a strong finish compared to what it could have been here today, and uh a decent reaction after the report there.
• 1:49
  SPEAKER_00: But uh what did we see out of the WASDA report, Lucas, that uh you want to talk about here first off?
• 1:55
  SPEAKER_01: Well, I I guess the first thing that came comes to mind, Mike, is uh you know, you were last week driving across the United States taking a look at corn and soybeans and everything in between.
• 2:07
  SPEAKER_01: Uh is the USDA right?
• 2:09
  SPEAKER_01: What do you think?
• 2:11
  SPEAKER_00: Well, when we look back at what our tour did at 176 for the United States and what some of these other average trade estimates have been from Stonex at 176 on theirs, ADM was a little bit higher yet than that.
• 2:25
  SPEAKER_00: You know, mainly all of the expectations were falling just below where the USDA was in July.
• 2:30
  SPEAKER_00: So I think it's pretty close from the information that we have right now.
• 2:34
  SPEAKER_00: There is really only one uh data source that came in lower than this, which was the Grow Intelligence satellite imagery closer to 167.
• 2:43
  SPEAKER_00: So from what we know up until this point, I know that the data was collected a little bit earlier this year.
• 2:49
  SPEAKER_00: So uh, you know, we'd be looking at that uh about the middle of July, I believe it was collected.
• 2:54
  SPEAKER_00: We'll get into that in a minute.
• 2:56
  SPEAKER_00: But I think from what we saw, it no differing opinions.
• 2:59
  SPEAKER_00: I didn't see any states that were way out of whack from what we had for the nine that we went through, anyways.
• 3:04
  SPEAKER_00: But I I would agree that at this time I guess that's as much as it probably can do to take off, or um, you know, doesn't warrant an increase at this point.
• 3:13
  SPEAKER_01: Yeah, no, I I I think you're I think you're right.
• 3:15
  SPEAKER_01: I it sounds silly to say, and it's easy to say USD is wrong, but I think on this one they might be right of what we've seen.
• 3:23
  SPEAKER_01: And uh on the soybean number, you know what I maybe caught guys a little bit off guard on being a little high, but um, you know, you look at that state by state breakdown of where the yield came from.
• 3:36
  SPEAKER_01: A lot of it's down south, which of course we don't see uh every day or very often.
• 3:40
  SPEAKER_01: And you look at this forecast this uh coming up for the end of August looks pretty dang good if you're growing soybeans.
• 3:47
  SPEAKER_01: Um so that might uh might have to be a good thing.
• 3:49
  SPEAKER_00: The soybean one was found as a mild surprise right away, but should I mean we've had good yields so far in August, had some nice rains, and yeah.
• 3:58
  SPEAKER_00: Yeah, and soybeans are made in August.
• 4:00
  SPEAKER_01: So I was reading something on uh Twitter after the report of if you if you do the trend line yield on soybeans uh since our last record was set.
• 4:09
  SPEAKER_01: Yeah.
• 4:10
  SPEAKER_01: That we should be fifty-four bushel or higher for a uh average soybean yield, and we only came in at 51.9.
• 4:17
  SPEAKER_01: So uh anyway, kind of some conc curious uh uh.
• 4:21
  SPEAKER_00: So show me how the USDA got to those numbers.
• 4:23
  SPEAKER_00: What what was their uh survey process?
• 4:26
  SPEAKER_01: Yeah, so you know, we talked a little bit about this on your first day of your crop tour, um, or you talked about it, I should say, and uh on a podcast.
• 4:34
  SPEAKER_01: And you know, the the the nice thing that the USDA does after all these reports, um they they do a stat chat and a uh Zoom kind of interview or breakdown of the report on Twitter.
• 4:46
  SPEAKER_00: And they drop all the info.
• 4:47
  SPEAKER_00: Like if there's something you want to know, they pretty much can tell you how or why or show you.
• 4:51
  SPEAKER_01: As much as we think the USDA is a black box of information that doesn't want to share anything, they are pretty open actually.
• 4:58
  SPEAKER_00: Um you just gotta try to find it.
• 5:00
  SPEAKER_01: Yeah, it's it's that's the hardest part.
• 5:02
  SPEAKER_01: But you know, so when we look at specifically for the uh uh corn soybean yield for this report, um they strictly used operator survey data, meaning they entered they uh they surveyed farmers and asked them what their corn's gonna yield.
• 5:18
  SPEAKER_01: Now they surveyed a lot of farmers, it was fifteen thousand three hundred and fifty uh was a sample size, and the time was July 30th through August 8th.
• 5:27
  SPEAKER_01: Uh so right when you were doing the crop tour is the same time as they were surveying, so it probably stands to reason that's why the yields are pretty similar.
• 5:37
  SPEAKER_01: Um for the uh for the acres, which we haven't talked about, we will in a minute, they resurveyed those July 11th through the 18th with a sample size of 762.
• 5:49
  SPEAKER_01: They did not use any uh actual NAS uh uh objective survey, they call it, or field survey done by uh NAS employees.
• 5:57
  SPEAKER_01: The only crop they did that with on this report uh was the winter wheat.
• 6:02
  SPEAKER_01: Um of course that's being um 80% plus harvested uh at this time.
• 6:08
  SPEAKER_01: And they also used remote uh sensed uh data, essentially satellite imagery, uh taken across the corn belt uh through July 27th.
• 6:18
  SPEAKER_01: Not as necessarily a data point, but more of a uh uh visualization to kind of see uh if their number was correlating uh pretty well.
• 6:27
  SPEAKER_01: So interesting uh data sources, you know.
• 6:30
  SPEAKER_01: Next time around in September, uh they will use field survey data, at least that's what they uh said today, along with a farmer survey.
• 6:38
  SPEAKER_01: So we'll maybe get a little more objective number.
• 6:41
  SPEAKER_01: Um, and of course, you know, a lot happens to the crop in a month, too.
• 6:44
  SPEAKER_01: So we'll we'll definitely see what happens uh next next report day.
• 6:49
  SPEAKER_00: So what's the next question?
• 6:50
  SPEAKER_01: Yeah, so I guess the the biggest question is we got a number now, and it's not a projection, it's a USDA number.
• 6:58
  SPEAKER_01: So where does it go from here?
• 7:00
  SPEAKER_00: So I'm staring at the six to ten day forecast because one of the big things here is gonna be how the crop can finish out, specifically the soybeans we talked, soybean yields are made in August, and really the eastern corn belts near normal pre-sip levels the next six to ten days, a little bit below for the northwest, but it's been worse.
• 7:17
  SPEAKER_00: And then the six to ten day temp outlook is actually a little bit cooler in the eastern corn belt, and then it's uh pretty much near normal for Iowa, and then maybe just a smidge hotter for the northwest here.
• 7:29
  SPEAKER_00: So uh northwest probably not gonna get a heck of a lot better, but hey, we just need to keep catching a couple of these rains.
• 7:36
  SPEAKER_00: The uh the dew and cool nights are sure helping as well uh here real recently, but historically when we look back, the USDA is half a bushel high on the last ten years on corn yields in August versus the final corn yield of the year.
• 7:54
  SPEAKER_00: Now, a few of those years like 2020 was a really big mishap.
• 7:58
  SPEAKER_00: We uh missed the mark by about ten bushels.
• 8:01
  SPEAKER_00: The USDA posted a 181 in August, the crop came in at 171 at the end of the year, so that skewed that data just a little bit because uh we were off about 10 high in the August report where we did finalize that crop year out, which that year is a good testimony to, you know, they're pretty close normally, as long as you don't get a deratio in the second week of August that wipes half of Iowa's corn.
• 8:25
  SPEAKER_01: Yeah, across the heart of the corn belt on August 11th.
• 8:28
  SPEAKER_00: Yeah.
• 8:28
  SPEAKER_00: So I would argue within half, you know, half or one bushel from here.
• 8:32
  SPEAKER_00: They're typically not much further out than that.
• 8:35
  SPEAKER_00: So that's what the history would suggest.
• 8:37
  SPEAKER_00: So I think they're uh looking forward, barring any abnormal weather, which it doesn't appear we have that going forward as of now.
• 8:44
  SPEAKER_00: Uh uh, we're gonna stick pretty close to this uh point here, which I don't think impacts the balance sheets too greatly either.
• 8:51
  SPEAKER_00: I think we saw today that we were able to show this report, show a lower corn yield, and the market was able to absorb it quite easily and kind of react to it.
• 9:01
  SPEAKER_00: The uh report also did take some demand out of the categories there on the U.S.
• 9:05
  SPEAKER_00: balance sheet to kind of help uh keep that ending stocks number uh relatively closer to 10% stocks to use ratio or 1.38 billion bushels close to where the estimate was.
• 9:16
  SPEAKER_00: So that kept things in perspective, and I think if you're half a bushel or a bushel from either way on this uh on this final number, I think the market can kind of take it.
• 9:26
  SPEAKER_00: I I don't think it'll be much surprised.
• 9:29
  SPEAKER_01: Yep, sounds good.
• 9:30
  SPEAKER_01: Well uh you know, another part that I know we had talked about uh quite a bit coming into this report was the uh resurvey of acres.
• 9:38
  SPEAKER_01: Um it's in the in South Dakota, North Dakota, and Minnesota um since when the acres report came out June 30th.
• 9:45
  SPEAKER_01: Um and when the time that survey was taken uh was very wet up there and planting was slow.
• 9:51
  SPEAKER_01: Um and having uh drove through uh a lot of that area on the crop tour myself, it looks like there's a lot more soybean acres, uh at least where I was, but uh surprise, surprise, the they didn't find them, did they, Mike?
• 10:07
  SPEAKER_00: No, they actually lowered soybean acres and corn acres in this report, which I think was a surprise to many here.
• 10:13
  SPEAKER_00: So uh that was a little bit interesting.
• 10:15
  SPEAKER_00: Other than that point, I don't know what to really say about it.
• 10:18
  SPEAKER_00: It was a hundred thousand acres on corn, right?
• 10:20
  SPEAKER_00: And three hundred thousand on soybeans.
• 10:22
  SPEAKER_01: So it wasn't major changes, at least, but uh it wasn't yeah, made not not major changes for the end of the uh end of the numbers or when you roll it all up.
• 10:31
  SPEAKER_01: It was probably more of a just a surprise that we we had kind of talked internally of uh three to five hundred thousand more acres and they come up on soybeans and they come back at three hundred thousand less acres.
• 10:43
  SPEAKER_01: That's just more of a a kind of surprise.
• 10:46
  SPEAKER_01: Um and so uh outside of the yield, and you kind of hit on it before, was there any other big takeaways or surprises in the report uh that you want to mention?
• 10:56
  SPEAKER_00: I mean, overall, I think it was mostly a bearish report, and we saw that right after uh the report came out.
• 11:01
  SPEAKER_00: We saw corn and soybean prices slip a little bit.
• 11:04
  SPEAKER_00: They closed well, so I think that they're probably already done trading at the at this point.
• 11:09
  SPEAKER_00: But yeah, the US you raised yields, the the world 22, 23 soybean ending stocks were higher than expected.
• 11:16
  SPEAKER_00: The uh USDA lowered the 22 corn yield here for the United States uh more than expected, but they did raise the 21 and 22 carry out, so beginning stocks did go up going into this next year.
• 11:29
  SPEAKER_00: So they think we're gonna end up with a few more bushels of corn laying around at the end of the summer uh than previously recorded before.
• 11:37
  SPEAKER_00: And then the USDA did increase Russia 22 uh wheat crop and exports as well.
• 11:43
  SPEAKER_00: So after um having some a lot of questions between, you know, are they gonna plant any wheat out there in those countries or are we gonna uh what's harvest gonna look like?
• 11:53
  SPEAKER_00: They did finally start to export some grain out of those regions regions here lately, um, specifically out of the uh Ukraine region.
• 12:01
  SPEAKER_00: So they did raise the wheat crop and exports there out of them.
• 12:04
  SPEAKER_00: So that was one major thing people had been following.
• 12:07
  SPEAKER_00: But the USDA has been pretty slow to react with uh with all of that news through this process, because it's just a a very zero-sum game.
• 12:14
  SPEAKER_00: I mean, it it's either zero or all of it, it seems like.
• 12:17
  SPEAKER_00: So it it excuse the balance sheet so much.
• 12:20
  SPEAKER_00: Um yeah, futures probably overreacted a little bit right away, but um probably a little bit more range bound now.
• 12:26
  SPEAKER_00: So it was a little bit more boring report than what some can be at this time of the year.
• 12:30
  SPEAKER_00: A lot of numbers changed just a little bit, but nothing majorly threw us off, I don't think.
• 12:35
  SPEAKER_01: So we we kind of digested this report really quickly, it seemed.
• 12:40
  SPEAKER_01: And so now we're back trading weather forecasts?
• 12:42
  SPEAKER_00: Just for a little bit.
• 12:43
  SPEAKER_00: I don't think you trade weather forever.
• 12:45
  SPEAKER_00: Um, but I I have a really hard time seeing what funds are gonna do here going forward and get too excited about it.
• 12:52
  SPEAKER_00: If we have a 175 or a 176 corn yield, I I don't know how the funds get the corn market too excited to upside and say, you know what, now is the time to buy into these commodities again after they pretty much got out in a pretty strong way.
• 13:05
  SPEAKER_00: Got back in ahead of this report to see if the USDA was gonna adjust a little bit lower or not, but no major changes yet.
• 13:12
  SPEAKER_00: And uh we'll take more of a macroeconomic perspective here for a moment, just like the grain markets will, I think, too.
• 13:19
  SPEAKER_00: You're gonna trade things like crude oil a lot more, uh, what you think the global economy is gonna do.
• 13:24
  SPEAKER_00: And you'll focus on that a little bit more over the next couple weeks, too, to get a glimpse of what the the money flow is gonna do here going forward.
• 13:31
  SPEAKER_01: Well, and definitely we saw that in cotton, right?
• 13:33
  SPEAKER_01: Cotton uh day for that.
• 13:35
  SPEAKER_01: Yeah, very uh bare or a bullish report, uh very uh not a very good crop coming in the south there on the cotton.
• 13:42
  SPEAKER_01: Um and of course, next week is the Pro Farmer Tour, the more publicized tour.
• 13:48
  SPEAKER_01: Um so we'll see where they come out at.
• 13:50
  SPEAKER_01: Uh I would guess it's gonna be lower because they like to uh get their farmers jacked up.
• 13:55
  SPEAKER_00: I think typically they're like a bushel lower than what the USDA final was.
• 13:59
  SPEAKER_01: Yep, yep.
• 13:59
  SPEAKER_01: So that always gets a lot of uh people talking and pitchers on social media, so we'll definitely be watching that uh too.
• 14:05
  SPEAKER_01: Anything else you're looking forward to next week?
• 14:07
  SPEAKER_00: Dakota Fest Tuesday, Wednesday, Thursday.
• 14:10
  SPEAKER_00: We'll have a booth there, so please come uh and see us there as well.
• 14:14
  SPEAKER_00: And then at that same event, uh we were asked there for the Dakota Fest to help put on a commodity market discussion there on August 17th on Wednesday at 1 p.m.
• 14:24
  SPEAKER_00: as a part of their program schedule in the Reeves building.
• 14:27
  SPEAKER_00: So please come listen in on that.
• 14:28
  SPEAKER_00: We're gonna be talking with a few folk uh in that as well from American Ag Network.
• 14:33
  SPEAKER_00: It'll be a fun time.
• 14:34
  SPEAKER_00: And uh yeah, how about uh some other events coming on, Luke?
• 14:38
  SPEAKER_01: Yeah, so uh one thing we do want to say, if you are close by to Laverne, Minnesota next Saturday, August 20th, uh we uh we do the big community does a big egg day celebration uh for uh all involved in agriculture or anybody who just wants to support agriculture, and that'll happen at the Take 16 Brewery on Main Street uh in Laverne, Minnesota.
• 15:00
  SPEAKER_01: And that event kicks off at 5 p.m.
• 15:02
  SPEAKER_01: and it'll go uh well into the uh early uh night, I guess.
• 15:06
  SPEAKER_01: Uh but it's a definitely a family affair.
• 15:08
  SPEAKER_01: They got a uh inflatables, and there'll be lots of uh people and vendors down there.
• 15:14
  SPEAKER_01: I think the cattlemen are grilling uh hamburgers, the pork guys are grilling some pork loin, and and we'll be down there as well, hanging out and uh mingling around.
• 15:23
  SPEAKER_01: So stop by, say hi, have a cold beer, and and have some fun next Saturday, August 20th.
• 15:28
  SPEAKER_00: Yeah, great event to bring the family to, and a lot of people end up showing up to that, so you will not be alone.
• 15:33
  SPEAKER_00: But thank you, Lucas, for coming on the show today.
• 15:36
  SPEAKER_00: And thank you to all our listeners.
• 15:38
  SPEAKER_00: Please reach out to us from our website at professionaleggmarketing.com or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 15:49
  SPEAKER_00: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.