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Grains: Boomtown · 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 June 13th, and you'll all be happy to hear that I've got Lucas Peters back with us again this week.
• 0:30
  SPEAKER_00: How's it going?
• 0:31
  SPEAKER_01: Well, thanks for that warm welcome, Mike.
• 0:33
  SPEAKER_01: Thanks for having me in, and excited to talk about grains on this Friday.
• 0:38
  SPEAKER_00: Well, for Friday the 13th, the grain markets did act a little bit crazy today, didn't they?
• 0:44
  SPEAKER_01: It seemed like it.
• 0:45
  SPEAKER_01: I uh actually it kind of seemed opposite of the way it had been going.
• 0:49
  SPEAKER_01: The livestock uh or the cattle market specifically went the other way, and the grains, especially soybeans, had a nice bump, Mike.
• 0:55
  SPEAKER_00: Yeah, it was a little bit of a backwards day-to-day versus a trend we have been having.
• 1:00
  SPEAKER_00: Uh let's start off with Thursday.
• 1:03
  SPEAKER_00: So yesterday, 24 hours ago, we had a WASDA report, and that WASDA report showed us a 50 million bushel increase on exports on corn on this year's crop.
• 1:14
  SPEAKER_00: And that was it.
• 1:15
  SPEAKER_00: That was the only change on the balance sheet for U.S.
• 1:18
  SPEAKER_00: corn on either year, and then no changes on soybeans at all.
• 1:22
  SPEAKER_00: So that did come in under expectations, which was bullish a little bit.
• 1:27
  SPEAKER_00: Just slightly slightly.
• 1:30
  SPEAKER_00: Now, uh beyond that, it was a very boring report.
• 1:32
  SPEAKER_00: They didn't change anything for South America.
• 1:35
  SPEAKER_00: Global stocks were tightened a little bit, uh, but nonetheless, it wasn't a bearish report.
• 1:41
  SPEAKER_00: Okay.
• 1:41
  SPEAKER_00: And it was slightly friendly.
• 1:43
  SPEAKER_00: So um the report basically had no significant impact on any commodity prices.
• 1:48
  SPEAKER_00: Let's put it that way.
• 1:49
  SPEAKER_00: Uh wheat maybe a little bit of a bullish tilt to it uh on some tighter ending stocks there, but nonetheless, it was a boring report.
• 1:57
  SPEAKER_00: Next month, uh NAS, they'll add in spring wheat and Durham wheat forecasted for production.
• 2:02
  SPEAKER_00: That'll maybe change the wheat one up a little bit.
• 2:04
  SPEAKER_00: We'll also have a June acreage report at the end of this month that they'll use in the next WASDAY.
• 2:10
  SPEAKER_00: So I would uh anticipate the next June uh report here at the end of the month is gonna be very exciting, Lucas.
• 2:17
  SPEAKER_01: Probably much more exciting than the WASDA report was.
• 2:20
  SPEAKER_01: And that's kind of was how should I say that was this a normal kind of June report?
• 2:26
  SPEAKER_01: Expected.
• 2:27
  SPEAKER_01: Like we don't normally look ahead to the middle of June Wazday report like we look ahead to the end of June Acreage Report, correct?
• 2:35
  SPEAKER_01: Yeah.
• 2:36
  SPEAKER_01: And so you're gonna get those planet acres the end of June, and then of course then plugs into the July WASD, which uh potentially uh has a little more market movement than this one did.
• 2:48
  SPEAKER_00: But um it's even tough to you know, you go back in history and say, like, oh, on this day, the WASDI report, we closed up 10 cents or whatever on corn.
• 3:00
  SPEAKER_00: Well, that's not even accurate to follow because half the time it seems like the WASDA report comes out and then this time of the year, anyways, you're just trading weather by the end of the day.
• 3:09
  SPEAKER_00: Yeah.
• 3:09
  SPEAKER_00: So it's like, did that really have that big of an impact on prices that day or not?
• 3:14
  SPEAKER_01: Probably.
• 3:14
  SPEAKER_01: That's a that's a good way to think about it.
• 3:16
  SPEAKER_01: And you know, typically if it does move the market or the market moves a lot on a WASD airport in June, it's probably due to a late planting situation or a drought to display exactly what you said.
• 3:26
  SPEAKER_01: You're trading weather, you're not trading the WAS day typically.
• 3:30
  SPEAKER_00: So this was as expected.
• 3:32
  SPEAKER_00: Now, something that wasn't expected was Thursday night, Israel absolutely bombed the crap out of Iran at nuclear facilities, missile sites, causing significant infrastructure damage, and they killed many top uh generals, things like that as well for personnel.
• 3:49
  SPEAKER_00: It it was a big shakeup.
• 3:51
  SPEAKER_00: Crude oil was up nine dollars at one point on the overnight.
• 3:54
  SPEAKER_00: Uh the SP was down over a hundred points at one point.
• 3:58
  SPEAKER_00: Uh gold was up massively.
• 4:01
  SPEAKER_00: Um what did that do for the corn market today, Lucas?
• 4:05
  SPEAKER_01: Well, it didn't really do anything, did it?
• 4:07
  SPEAKER_00: No, I mean at that point corn was trading red at that point of the night, which is odd.
• 4:11
  SPEAKER_00: Normally, if you would trade things like war and crude oil higher, usually corn and wheat would get bought along with it.
• 4:18
  SPEAKER_00: Now, wheat responded pretty aggressively with it, you know, that that trended up higher.
• 4:23
  SPEAKER_00: But corn really struggled to get out of its own way off that news still.
• 4:26
  SPEAKER_01: And that's the hard part in a well, we just got done talking about a typical or a normal June, right?
• 4:34
  SPEAKER_01: When you're trading weather, and that's usually when we get our new crop rallies this time of year, and all that's that stuff, right?
• 4:40
  SPEAKER_01: We I know one thing we've talked about in the office is the Friday of Father's Day weekend usually is a good time to sell new crop corn, and we haven't been trading or the markets haven't really cared about the weather.
• 4:52
  SPEAKER_01: We talked about this last week.
• 4:53
  SPEAKER_01: There's really not much of a weather story out there.
• 4:56
  SPEAKER_01: The hard part is you get stories like, oh, uh Israel's gonna bomb Iran, and it's just hard to understand how the commodity markets are going to trade that.
• 5:06
  SPEAKER_01: It's much easier for at least from a farmer's perspective to understand, oh, dry forecast for Illinois in July.
• 5:13
  SPEAKER_01: Boy, I bet that's gonna be bullish, the corn market.
• 5:16
  SPEAKER_01: And to your point on on the bombing last night, all this goes on in the overnight markets, and then the corn market's like, nah, shrugs it off.
• 5:23
  SPEAKER_01: Nobody cares.
• 5:25
  SPEAKER_00: No real change there.
• 5:26
  SPEAKER_00: So um it did close a day green.
• 5:29
  SPEAKER_00: I'll give it that.
• 5:30
  SPEAKER_00: It it probably got a lift up from soybeans, which we can discuss next year.
• 5:34
  SPEAKER_00: But uh, since we're on weather, really the drought map improved a little bit across most of the corn belt.
• 5:40
  SPEAKER_00: Eastern Iowa was a little bit of a downgrade, just a little too dry.
• 5:44
  SPEAKER_00: And then the uh last seven days seemed like everybody got some rain kind of, but if you look next seven days, it looks like kind of southeast U.S.
• 5:52
  SPEAKER_00: we're gonna get rains in the Corn Belt, Northwest, we're gonna be pretty dry the next week.
• 5:58
  SPEAKER_01: Uh, I I would say ever the things that I've been looking, maybe yeah, the next week, you're probably right, the next two weeks or uh kind of a little bit more extended forecast, we get into more of this active pattern.
• 6:10
  SPEAKER_01: And and we saw it locally, and I know we've talked about this uh quite a bit for for the last couple of years, of these spotty rains, right?
• 6:18
  SPEAKER_01: The the haves and have nots uh really there's a big difference even in local areas, and we're kind of seeing that.
• 6:25
  SPEAKER_01: Um, and I know this is a very local story, but you know, this week Laverne had right about an inch of rain, and uh talking to a customer that's 20 miles northwest of Laverne had one tenth.
• 6:37
  SPEAKER_01: Uh, like that he's begging for rain.
• 6:40
  SPEAKER_01: Laverne, we're sitting good.
• 6:42
  SPEAKER_01: And then I just got done talking to a customer up in northeast South Dakota that had a lot of his fields flooded out in a four-inch downpour here uh this morning.
• 6:50
  SPEAKER_01: So I think in this active pattern that's gonna set up kind of across the northern uh or upper Midwest and going into across Minnesota, southern Wisconsin, and hitting that northern Illinois, which has been kind of dry.
• 7:05
  SPEAKER_01: I know they've picked up some rain.
• 7:06
  SPEAKER_01: Uh, it's going to be interesting to see the haves and have nots come out of that.
• 7:11
  SPEAKER_01: Uh, we're gonna have areas that get way too much, and we're gonna have areas that miss it, and that will really depend on how those areas have been in you know the last few weeks on whether that's gonna be uh good or poor for crop development.
• 7:23
  SPEAKER_00: Well, when weather starts the year out somewhat extreme, it seems like that extreme continues one way or another, whether it's too much rain in the beginning and then not enough rain towards the end.
• 7:32
  SPEAKER_00: So uh weather will start to take hold here on these markets.
• 7:36
  SPEAKER_00: But the big news today when it came to corn or soybean prices, it was soybean oil.
• 7:40
  SPEAKER_00: Uh the big story on Thursday night was with Iran or with Israel's attack on Iran.
• 7:46
  SPEAKER_00: Uh you did see crude oil pop, and that with that, soybean oil popped as well a little bit.
• 7:50
  SPEAKER_00: However, at the open at 830 uh this morning, soybean oil locked limit limit higher pretty much immediately.
• 7:58
  SPEAKER_00: And uh a headline came out saying that Trump planned a biofuel quota boost and he wanted to crimp the uh foreign supplies, basically was what he talked about.
• 8:08
  SPEAKER_00: So the the plan that they had come out with was the biomass diesel quota is reported to be 3.35 billion gallons for 2025, 5.61 for 26, and 5.86 billion for 27.
• 8:24
  SPEAKER_00: So that 5.61 is the number that usually has been referred to as the benchmark that they've been discussing.
• 8:31
  SPEAKER_00: Uh that was supposed to be what 4.25 was the rumor like uh two or three weeks ago.
• 8:38
  SPEAKER_00: So the markets went way down because it wasn't what they asked for, which was like 5.5.
• 8:42
  SPEAKER_00: And now today's news was actually above our requested uh amount.
• 8:47
  SPEAKER_00: That was closer to like five point something.
• 8:50
  SPEAKER_00: Yep.
• 8:51
  SPEAKER_00: So um that was bullish news for soybean oil and soybeans.
• 8:55
  SPEAKER_00: Soybeans closed today up like 27 cents.
• 8:58
  SPEAKER_00: Uh soybean oil was up three locked limit across all the months.
• 9:02
  SPEAKER_00: Um the EPA is also looking to uh slash RINs for imported feed stocks by 50%.
• 9:09
  SPEAKER_00: That was significant because those accounted for more than 45% of the production last year.
• 9:15
  SPEAKER_00: And then uh they're also doing some rents on a per gallon basis for diesel here going forward, rather than uh some of the things Biden administration put through with electric vehicles.
• 9:25
  SPEAKER_01: Yeah, so this I mean this news is well great for the soybean market, obviously, and the guys growing soybeans.
• 9:31
  SPEAKER_01: Um but it was really interesting and really positive for biofuels and grain producers and kind of set the tone of Trump's uh favor or plan for biofuels, right?
• 9:44
  SPEAKER_01: Uh you know, it he's always said how he loves the farmers, but then when it came down to it in the past, he's always kind of sided with his oil buddies.
• 9:52
  SPEAKER_01: Small refiner exemptions.
• 9:54
  SPEAKER_01: Exactly.
• 9:54
  SPEAKER_01: So now he comes out and pushes a an aggressive biofuels number uh that everybody seemed to like, and I would say not everybody expected, and obviously that's what the the markets reacted uh here today on the soybeans and soybean oil.
• 10:09
  SPEAKER_01: Um and but the other part of that, and you talked about it, Mike, is uh also uh kind of trying to put some teeth into the amount of credits they can use if they're using um uh the the imported used cooking oil, right?
• 10:24
  SPEAKER_01: Because that has eaten up a lot of the market for biofuels, specifically the market that soybean oil would be used for uh for blending.
• 10:34
  SPEAKER_01: And so now I was reading a few things that uh, you know, from a refiner standpoint, they're gonna have to track what source of oil they're using in order to get some of these tax breaks and credits and and things going forward.
• 10:46
  SPEAKER_01: So a very interesting uh stance coming out, a positive stance, you know, uh in in favor of the grain farmer, uh in favor of biofuels.
• 10:56
  SPEAKER_01: Um the one warning, of course, is uh this is this is all great, but it's far from being written in stone, right?
• 11:04
  SPEAKER_01: And so I uh I don't want to get on a soapbox, but you know, I I I'm active in the corn soybean board here locally, uh on the on a representative on the Minnesota State soybean board, and I would say this is a great time to be active in your associations.
• 11:22
  SPEAKER_01: I know they've gotten a bad name, uh uh, or some people have different feelings on associations, but this is where your money gets put to work to pay lobbyists to go in Washington and get things pushed through.
• 11:35
  SPEAKER_01: You have an EPA and a president that seem to have sent something out today, uh, a little bit of a uh a headline grab, but some positive news that they're for biofuels.
• 11:47
  SPEAKER_01: They want to try to eliminate, not eliminate, reduce the amount of uh imported oil coming in used for uh this for uh biodiesel and uh different uh uh renewable diesel products.
• 12:00
  SPEAKER_01: This is a time to support those organizations to make sure this gets written down and followed uh going forward.
• 12:06
  SPEAKER_01: So I'll get off my soapbox on that, but it was uh positive news and really uh really a good opportunity here going forward to build on uh for the strength of biofuels.
• 12:17
  SPEAKER_01: I do want to say one thing that I know last year we talked a lot about sustainable aviation uh fuel and that being kind of the leader going forward.
• 12:25
  SPEAKER_01: They didn't put a specific number around that, um, but it was kind of tied into a research bucket uh as far as the amount of gallons wanting to use.
• 12:35
  SPEAKER_01: So it looks like they're kicking the can down the road on that.
• 12:38
  SPEAKER_00: That's specifically made with corn, right?
• 12:40
  SPEAKER_00: Well, it's corn and soybean.
• 12:42
  SPEAKER_00: I mean it's a little bit of both, but ethanol, the like one of the big plants by us that was going to be built ethanol is for that specific.
• 12:51
  SPEAKER_01: The SAF is primarily would be an ethanol source for blending, but it can be made from soybeans and and all that.
• 12:57
  SPEAKER_01: But just in the general field of biofuels, um, that is that's something that I was interested in.
• 13:03
  SPEAKER_01: Like it actually seemed realistic.
• 13:05
  SPEAKER_01: You know, some of these numbers put out uh by the Biden or earlier just seemed unrealistic.
• 13:11
  SPEAKER_00: Delta's Minnesota program, that whole big thing by 2030.
• 13:15
  SPEAKER_00: Yeah.
• 13:16
  SPEAKER_01: And so by uh cutting it, maybe isn't great news, but it's just the the number seemed realistic to me.
• 13:24
  SPEAKER_00: One of the things that jumped out to me right away was you kind of touched on it there, that is more corn-based side, and with ethanol in his last administration, it was ethanol versus big oil.
• 13:36
  SPEAKER_00: Yep.
• 13:36
  SPEAKER_00: This time around it's a little different, and it's easier for Trump to fully support the renewable diesel campaign because I think crude oil or big oil is more intertwined and owned in the renewable diesel space.
• 13:51
  SPEAKER_00: They have more incentive, I think, to make that go forward.
• 13:55
  SPEAKER_00: I think that's the big difference because it's not so much of butting heads between ethanol and big oil.
• 14:00
  SPEAKER_00: Now it's more of a combined effort, and I think it was a lot easier for Trump to put his weight behind this one this time.
• 14:06
  SPEAKER_01: Yep.
• 14:06
  SPEAKER_01: I that that's an excellent observation, and I would agree with that, Mike.
• 14:10
  SPEAKER_00: So hopefully we'll get more news out of that one going forward in the future.
• 14:14
  SPEAKER_00: Nothing really on small refiner exemptions out of this news that I saw at least on it, which is still a huge concern, and we've been hearing more about lately, so keep an eye on that.
• 14:23
  SPEAKER_00: Otherwise, the markets showed immense volatility in this final trading session today, and hopefully that continues, I guess, going forward.
• 14:32
  SPEAKER_00: It's always scary when we get markets to move a lot, but it also creates opportunities.
• 14:37
  SPEAKER_00: And you know, a 25 cent, 27 cent jump higher on soybeans at the middle of June typically is something you should probably look at as a risk management strategy, at least.
• 14:46
  SPEAKER_00: Uh, especially if there's not a lot of soybeans covered up until this point for many producers, if you underbought crop insurance.
• 14:52
  SPEAKER_00: These are things all to weigh when uh when looking at what should we do next, anyway.
• 14:58
  SPEAKER_01: So yeah, well, just uh government policy action.
• 15:01
  SPEAKER_00: We've got a lot of fun left ahead of us, don't we?
• 15:04
  SPEAKER_01: Uh, one fun thing that did come out today, Mike, and I'll just close on this.
• 15:07
  SPEAKER_01: Um, we uh the 2024 final county yields came out for your ECO coverage, SCO coverage, margin protection coverage, and we've talked a lot about those on the podcast uh over the last couple of years.
• 15:21
  SPEAKER_01: Uh was a pretty big proponent of them in 2025, and I would a little bit more in 2024.
• 15:27
  SPEAKER_01: And what we saw locally is you know, we we knew the yields weren't fantastic in a lot of areas last year, and that's showing up in these yields.
• 15:36
  SPEAKER_01: Uh so it has been a fun day for the crop insurance agent side of me, Mike, to uh that doesn't always happen.
• 15:42
  SPEAKER_01: Yeah, to so you're texting and calling a few people that uh you know that ECO coverage that we bought uh uh over about a year and almost a half ago uh is actually paying off and and working well for it was really good, bad news.
• 15:57
  SPEAKER_01: Yeah, there you go.
• 15:58
  SPEAKER_01: There you go.
• 15:59
  SPEAKER_01: Well, we already knew the bad news from the yield.
• 16:01
  SPEAKER_01: Now we're getting the good news from the check there.
• 16:03
  SPEAKER_00: It seemed like they undershot yields or it was on the lower side of expectations for a lot of counties, southwest Minnesota specifically.
• 16:10
  SPEAKER_01: It's sp that's a good point from my uh estimate.
• 16:14
  SPEAKER_01: It uh every one of them has been a little bit lower than where I thought they'd show show up, and that's helping uh those claims be a little larger.
• 16:20
  SPEAKER_00: A lot of max payments out there.
• 16:22
  SPEAKER_00: All right, thank you for your time today, Lucas.
• 16:24
  SPEAKER_00: We'll see you next time.
• 16:24
  SPEAKER_00: Sounds good.
• 16:25
  SPEAKER_00: And thank you to all our listeners.
• 16:27
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 16:31
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 16:36
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 16:42
  SPEAKER_00: See you next time.