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Grains: Derecho Blows · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_01: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: This is your host, Mike Minor.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is August 1st.
• 0:25
  SPEAKER_01: I've got Jaden here with us today.
• 0:26
  SPEAKER_01: We're going to talk about the grain markets.
• 0:28
  SPEAKER_01: How's it going, Jaden?
• 0:29
  SPEAKER_01: It's going good, Mike.
• 0:30
  SPEAKER_01: How about yourself?
• 0:31
  SPEAKER_01: Not too bad.
• 0:32
  SPEAKER_01: Let's talk about one of the hotter topics on the grain markets here right now this week.
• 0:37
  SPEAKER_01: Uh last couple, actually, which would be basis, if you look out there, uh, it looks like the elevators, the end users, are all to the point now where the crop looks good enough.
• 0:48
  SPEAKER_01: The chance of killing it is a little bit less.
• 0:51
  SPEAKER_01: The prices are low, so you would think that would help stimulate some better basis levels to try to buy some of that crop uh into their elevator.
• 0:59
  SPEAKER_01: However, with a lack of export business out of our area here and going forward, it sure looks like a lot of corn and soybeans are going to be stuck in this western corn belt, to say the least, this harvest.
• 1:12
  SPEAKER_01: And with massive crops uh on the on the horizon here, at least it sure appears to be before harvest at this point.
• 1:19
  SPEAKER_01: End users are very unworried, uh less uh less worried about getting uh getting crops into their elevators here this fall.
• 1:28
  SPEAKER_01: So a lot of basis weakening has been occurring towards Wentworth area there, that ethanol plant in South Dakota in the eastern part.
• 1:35
  SPEAKER_01: They weaken up 10 cents on new crop corn basis uh here in the past two weeks.
• 1:40
  SPEAKER_01: Locally, on the soybean basis side, if you look at like Fairmont CHS, they weakened up to 70 under for harvest delivery.
• 1:48
  SPEAKER_01: So very weak basis levels for harvest looks like it's coming up.
• 1:53
  SPEAKER_01: So if you know you have bushels that you need to sell at harvest time, uh try to jump on somebody that hasn't quite weakened up yet.
• 2:01
  SPEAKER_01: I have noticed on, and that'd be on both corn and soybeans for anything you have to deliver at fall, especially with a bigger crop coming.
• 2:08
  SPEAKER_01: Now, if I look at old crop, it's a little bit different because some people are in the boat that, alright, I've got enough to get to new crop, or we're getting pretty close, so I can wreck my bid, but there are a few folks out there who just need a little bit more, and they've been pushing a little bit harder yet.
• 2:23
  SPEAKER_01: So if you can catch some of those areas with some decent basis levels, we're waving that flag before the checkered one next time around.
• 2:30
  SPEAKER_01: It seems like we've got one last hurrah here in some of these areas to sell old crop corn at a decent basis level yet, Jaden.
• 2:37
  SPEAKER_01: So that's where we're gonna start the podcast off on basis, anyways.
• 2:41
  SPEAKER_01: But let's go over to some to what the corn market's been doing here.
• 2:44
  SPEAKER_01: It's been a pretty quiet week, not a whole lot going on when it comes to price action, activity, news headlines to really shake some things up.
• 2:52
  SPEAKER_01: There's been a lot of trade deals lately that have been either in talks or been signed, but mostly with countries we knew that was gonna happen with, not really uh unexpected countries, at least like a Japan or South Korea.
• 3:04
  SPEAKER_01: Like we knew something was gonna get done with them, we weren't too worried, neither was the markets.
• 3:09
  SPEAKER_01: So, from that perspective, not a lot of impact on these grain markets here so far with any of the trade activity activity that has been done.
• 3:17
  SPEAKER_01: But Jaden, I want to ask you something.
• 3:20
  SPEAKER_01: When I look at this corn market or this soybean market, and one of the most frequently answered asked questions of me here this week is we've sold off a lot, but how low can we really go?
• 3:32
  SPEAKER_01: Now, this is an impossible question to answer because we don't know what's gonna happen, but just tell me what history suggests.
• 3:39
  SPEAKER_00: Yeah, Mike, history suggests, I mean, we in the corn market we put a low kind of on the end of August.
• 3:44
  SPEAKER_00: Last year we put a low in August 26 at 386 and a half, and so far this year we put a low in July around 407 and a half, and it it seems like the market doesn't know whether they want to go below that.
• 3:56
  SPEAKER_00: Like, are we really gonna do this?
• 3:58
  SPEAKER_00: Are we gonna go take out that low?
• 3:59
  SPEAKER_00: But seasonally in the month of August for corn and soybeans both we like to uh trend downwards in the in the markets.
• 4:06
  SPEAKER_01: So we're at 414 on the de futures right now.
• 4:10
  SPEAKER_01: Uh we had a low there, that 407 type area, uh, just uh uh a little ways ago into July here.
• 4:17
  SPEAKER_01: So that's take that out or not.
• 4:20
  SPEAKER_01: Uh probably crop condition-wise, nothing's changed majorly uh in that fundamental standpoint.
• 4:26
  SPEAKER_01: But one of the things I want to talk about is the last time we had high in February was 1982.
• 4:32
  SPEAKER_01: Now that's a very rare thing because we've had a high in February this year as well, on February 20th in that corn market.
• 4:39
  SPEAKER_01: Going back to 1982, uh, that year we had a low in August in the corn market.
• 4:44
  SPEAKER_01: So I will be uh watching this market ever so closely as we approach uh harvest here going forward.
• 4:51
  SPEAKER_01: And it's pretty likely that when you have and are talking about a massive corn yield right off the bat, like we did this year, with above a 181 uh trend line yield, and then immediately we start talking about 183, 185, 187 type, even a 190 yield that you saw some people throw out there.
• 5:09
  SPEAKER_01: When you start talking about it that early in the game, it seems like you'll like to put a low in earlier in this corn market.
• 5:16
  SPEAKER_01: So I am going to be interested to see with an earlier high this year, are we gonna put in an earlier low than maybe even the end of August?
• 5:22
  SPEAKER_01: But typically in a big crop year, we will put a low in before harvest.
• 5:26
  SPEAKER_01: So I'm gonna be watching that closely, Jaden, uh as we approach those levels.
• 5:30
  SPEAKER_01: Anything else we want to talk about, about where uh low levels are, history or uh or this corn market?
• 5:37
  SPEAKER_00: Uh no, Mike.
• 5:38
  SPEAKER_00: I I just like I want to bring up, you know, some weather here.
• 5:41
  SPEAKER_00: Uh looking at you know the biggest corn producing state of Iowa, I think something that's really interesting is I ran some precip ranked maps, and they are the they've had the fourth wettest out of the last 133 years for the month of July.
• 5:56
  SPEAKER_00: The fourth wettest.
• 5:57
  SPEAKER_00: And uh I I get rain makes grain, but at some point when when does too much rain uh affect the yields?
• 6:04
  SPEAKER_00: I mean, if you look at last year here, um we we had uh the the 40th wettest uh July ever in in uh Iowa, but obviously in August we did we didn't really uh receive a lot of rain in those areas, and I I just want folks to know that the month of August is is important in in filling out those kernels, and I think that's important to keep in mind uh going forward.
• 6:28
  SPEAKER_01: Definitely we're gonna get a better look at that stretch there through Iowa, and especially with some of the weather volatility we've had.
• 6:34
  SPEAKER_01: We had a ratio come through.
• 6:36
  SPEAKER_01: It ended up being smaller than what I thought it was gonna be.
• 6:39
  SPEAKER_01: I was really worried.
• 6:40
  SPEAKER_01: I told everyone and their dog the last few weeks to do basis contracts for fall.
• 6:44
  SPEAKER_01: Then I'm like, oh great, we're gonna get 100 mile an hour winds through all Iowa here this week.
• 6:48
  SPEAKER_01: So I was really concerned about that.
• 6:50
  SPEAKER_01: But sounds like most people fared okay.
• 6:53
  SPEAKER_01: I know there's some few silos down here and there, and a few cornfields there, here and there, but for stretching all the way from us here, just south of us in Beersford having buildings and things blown down there, all the way over to like Cedar Rapids, they had 100 mile-an-hour winds too.
• 7:07
  SPEAKER_01: So uh to see it go that far, it seems like I sure haven't heard a lot of damage, at least through continual areas, very spotty.
• 7:15
  SPEAKER_01: So I thought that was interesting this time around with that weather pattern.
• 7:18
  SPEAKER_01: So we're gonna get a little bit of a chance to look at some crops here over the next week on our pro egg crop tour.
• 7:24
  SPEAKER_01: We are leaving on Sunday.
• 7:26
  SPEAKER_01: We're gonna have a five-day trip across the United States, Jaden and I, and this will be my tenth year.
• 7:31
  SPEAKER_01: So we'll have another great look at about the same tour again this year.
• 7:35
  SPEAKER_01: Uh yeah, so continue to uh to listen to our podcast, go on our website, look through some of the calculators there to pick uh you can put in like each state what you expect them to yield and how that impacts the overall corn yield.
• 7:47
  SPEAKER_01: So that's gonna be exciting as well.
• 7:49
  SPEAKER_01: Um I wanted to touch on to the uh soybean market.
• 7:54
  SPEAKER_01: Uh we are probably experiencing a little bit weaker prices in the soybeans than the corn.
• 8:00
  SPEAKER_01: We got down today again to 986 on that low.
• 8:04
  SPEAKER_01: So that would be a new low on this soybean market on the on the move.
• 8:09
  SPEAKER_01: Um, there were some lower levels here if you look on soybeans going all the way back towards like uh April, we got down to 971.
• 8:16
  SPEAKER_01: Going all the way back to December, we got down to 961.
• 8:20
  SPEAKER_01: Uh continue to keep that in mind because last year we did put a low in a little bit earlier than corner on the 16th, there I believe.
• 8:28
  SPEAKER_01: We got down to like 957.
• 8:30
  SPEAKER_01: So yeah, maybe watch that soybean market.
• 8:32
  SPEAKER_01: But I feel like this week it finally tipped over there pretty, pretty strong.
• 8:36
  SPEAKER_01: We just haven't seen any China business.
• 8:38
  SPEAKER_01: No China buying going forward, Jaden.
• 8:40
  SPEAKER_01: Uh, do you got a whole lot else on soybean sell-off besides that being a main reason why?
• 8:44
  SPEAKER_00: Yeah, I think another reason.
• 8:46
  SPEAKER_00: Um we the reason we kind of made the rally in the past week or two, we had some really good strength in bean oil, and and the last couple of days we've we've sold off in that market by two or three bucks there.
• 8:58
  SPEAKER_00: So that that's probably another reason why too, Mike.
• 9:00
  SPEAKER_00: A massive point.
• 9:01
  SPEAKER_01: That bean oil market's been a direct uh a direct impact to that soybean price for sure.
• 9:07
  SPEAKER_01: Soybean crush margins have been absolutely fantastic.
• 9:11
  SPEAKER_01: So I continue to keep an eye on that industry going forward.
• 9:14
  SPEAKER_01: Some major openings, I believe uh AGP in Nebraska there.
• 9:18
  SPEAKER_01: That plant opened up this week.
• 9:20
  SPEAKER_01: That's gonna consume about 15% of their entire soybean crop.
• 9:24
  SPEAKER_01: So a massive plant there that's gonna be opening.
• 9:26
  SPEAKER_01: You are really starting to turn on some of these processors that are gonna make a difference in our balance sheet.
• 9:32
  SPEAKER_01: So thank you for your time today, Jaden.
• 9:34
  SPEAKER_01: Continue to follow us.
• 9:35
  SPEAKER_01: We're gonna have a plethora of uh podcasts going forward the next week.
• 9:39
  SPEAKER_01: Follow our tour on Twitter or X, follow our tour on our website there on the crop tour page.
• 9:45
  SPEAKER_01: We got some really cool charts, really cool things to follow and tools to interact with.
• 9:49
  SPEAKER_01: Thanks for your time.
• 9:50
  SPEAKER_01: And thank you to all our listeners.
• 9:52
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 9:56
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:01
  SPEAKER_01: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 10:07
  SPEAKER_01: See you next time.