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WASDE · 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 May 10th.
• 0:25
  SPEAKER_01: I've got Jeff with us here today.
• 0:26
  SPEAKER_01: And uh before we started the podcast here, Jeff and I asked each other the question of should we have an argument on the podcast for like first time ever today and not agree with one another based upon our feelings about today's Wazday Report a little bit.
• 0:41
  SPEAKER_01: And Jeff said he wasn't in the mood.
• 0:43
  SPEAKER_01: Um okay, we've all heard that before, right?
• 0:46
  SPEAKER_00: Right.
• 0:46
  SPEAKER_00: But wonder where I got that from.
• 0:48
  SPEAKER_01: Yeah, so I I don't know what direction you want to head with this podcast today, Jeff, but let's just go over a quick recap on what the WASDAY report did.
• 0:56
  SPEAKER_01: We're mainly going to talk about that today.
• 0:58
  SPEAKER_01: Uh it was a first glimpse that we had at the 24-25 crop season coming forward.
• 1:04
  SPEAKER_01: So this would be the corn and soybean crops, for example, that you're planting in the ground as we speak, and what kind of yield they're gonna look like, what demand's gonna look like for that crop after it's harvested, things like that.
• 1:17
  SPEAKER_01: So after today's report, the data that we had received from the USDA for the first time, uh really the first update we've had with any educated guess after what we had uh with the Outlook Forum in February, uh, we came in decent on corn compared to what I thought we could have, and I think you'd agree with me on that one.
• 1:36
  SPEAKER_01: 2.1 billion bushel ending stocks, Jeff, not too shabby compared to this could have been.
• 1:43
  SPEAKER_00: Biggest news in my opinion was the old crop demand.
• 1:46
  SPEAKER_00: Bumping that up by a hundred million bushels, Mike.
• 1:50
  SPEAKER_01: Um important to not sleep on that.
• 1:53
  SPEAKER_00: What's that?
• 1:54
  SPEAKER_00: It's important to not sleep on that.
• 1:55
  SPEAKER_00: So it's but you know, I'm I might argue with that a little bit.
• 1:59
  SPEAKER_00: Like it's a little questionable.
• 2:00
  SPEAKER_00: You look at going up 50 million on the ethanol demand, and you know, we tried to do a little bit of math on that this afternoon.
• 2:09
  SPEAKER_00: Um the thing about it is there's not that much time left in the marketing year, right?
• 2:15
  SPEAKER_00: That ends on September 1st.
• 2:17
  SPEAKER_00: So, you know, you've really got to average uh at least 106 million a week on ethanol grind going forward.
• 2:24
  SPEAKER_00: And that's if you don't take any time off for maintenance, which that always happens when you get towards August into September, you're taking time off for maintenance.
• 2:32
  SPEAKER_01: So I think you're kinda still going through maintenance a little bit, even.
• 2:36
  SPEAKER_00: And maybe that's the difference.
• 2:37
  SPEAKER_00: Maybe we took more of it here when the corn was short or when when farmers weren't selling corn.
• 2:43
  SPEAKER_00: We we seem feels like we've done a little bit more maintenance than normal, but I I gotta believe we'll still have some downtime.
• 2:50
  SPEAKER_00: And so you're you're gonna have to do so a lot of 107 uh million bushels a week type of numbers.
• 2:57
  SPEAKER_00: And those are we don't do that very often for very long.
• 3:01
  SPEAKER_00: So it anyway, I I you've got to be careful not to argue with the USDA, always say you can lose a lot of money doing that, Mike.
• 3:08
  SPEAKER_00: But we have some would you agree we've got some pretty high um demand numbers penciled in for old crop and new crop.
• 3:17
  SPEAKER_01: Agreed.
• 3:18
  SPEAKER_01: Uh when you start looking at uh you know exports, I'm fine with them moving that up a little bit, and then a little bit higher next year, that's fine, especially if we have lower prices.
• 3:27
  SPEAKER_01: Uh the ethanol number, pretty much the same now for next year as what we penciled in for old crop here.
• 3:33
  SPEAKER_01: Still a lot at 5.45 billion bushels.
• 3:36
  SPEAKER_01: So you could let that distribute a little bit if you really wanted to.
• 3:40
  SPEAKER_01: And then uh the the areas I always struggle with a lot are the feed of residual.
• 3:45
  SPEAKER_01: I feel like that's a slush fund.
• 3:46
  SPEAKER_01: Like that could just go either way for whatever reason.
• 3:49
  SPEAKER_01: But um I I think at the end of the day, looking at where the futures are right now, and given um given the report that we just got, sure, we were a little bit lower on ending stocks than what we had for expectations uh going into this report.
• 4:07
  SPEAKER_01: So we did find a friendly report.
• 4:09
  SPEAKER_01: Like corn up pretty good after the report came out today, had a nice reaction.
• 4:14
  SPEAKER_01: We closed up at the high on the move today.
• 4:16
  SPEAKER_01: Uh December corn closed at 492.
• 4:19
  SPEAKER_01: That was a little bit higher than the 491 and a quarter high we had in on Wednesday.
• 4:24
  SPEAKER_01: Um I wanted really bad though, if we got a positive report.
• 4:29
  SPEAKER_01: I wanted to go take out that gap today.
• 4:31
  SPEAKER_01: That was my goal.
• 4:32
  SPEAKER_01: Like, if you get a positive report, let's go trade five bucks and really get a lot of those shorts out of the way.
• 4:38
  SPEAKER_01: And we didn't even get close to that today, Jason.
• 4:40
  SPEAKER_00: Well, we really struggled to get up to this 492 area if you're staring at the December number there.
• 4:46
  SPEAKER_00: Um I didn't think yeah, it that happened in like the last half hour.
• 4:50
  SPEAKER_00: So I agree.
• 4:52
  SPEAKER_00: I it was a good close.
• 4:53
  SPEAKER_00: Very it was encouraging um from that standpoint, but it's it was tough sledding to get there.
• 5:00
  SPEAKER_00: This thing wasn't just full of tons of energy today.
• 5:04
  SPEAKER_01: At the end of the day, you still need to give the reason the market a reason to be bullish, and that's some major weather problem, you know, somewhere important like Brazil or the United States.
• 5:13
  SPEAKER_01: And today we don't have that.
• 5:14
  SPEAKER_01: In fact, looking at the drought monitor, uh, we're pretty much white across the entire United States now, no red at all where it matters.
• 5:22
  SPEAKER_01: So, um, you know, pictures of eastern Iowa where there's a lot of concern with floods uh with uh fields flooded out and whatnot.
• 5:29
  SPEAKER_01: So um whether or not that's conducive to planting pace, obviously that's gonna struggle to help get wrapped up a little bit here before this next uh planting window.
• 5:37
  SPEAKER_01: But nonetheless, looking majorly forward, um the the corn crop here uh has no reason to not believe in a trend line yield at this point with where we sit.
• 5:49
  SPEAKER_01: So it's gonna take a lot to get this market fired up to give it a reason.
• 5:54
  SPEAKER_01: The uh soybean market I I don't have a ton to say about that.
• 5:59
  SPEAKER_01: Um I I would say the crush number was spectacular that they came out with for this next year.
• 6:05
  SPEAKER_01: I'll give it that, even higher than the outlook, which I thought that was a good number for the outlook back in February.
• 6:11
  SPEAKER_01: Um exports, you know, uh they probably have seen the last couple months of soybean exports, so that probably didn't help.
• 6:19
  SPEAKER_01: Uh that new number.
• 6:20
  SPEAKER_01: Uh you know, seed residual, no major changes uh worth noting in in those by any means.
• 6:27
  SPEAKER_01: They're uh mixed around.
• 6:29
  SPEAKER_01: They lowered seed, raised residual, but nonetheless about the same number.
• 6:33
  SPEAKER_01: So 445 for an ending stocks on soybeans, that's starting to get up there a little bit.
• 6:38
  SPEAKER_01: Um it'll be interesting to see what crushing can do over the next couple years and if 52 is the right yield or not going forward as well.
• 6:46
  SPEAKER_01: But nonetheless, we've got some interesting things to probably talk about in the soybean market coming up the next couple years.
• 6:53
  SPEAKER_00: Well, and the thing about the beans is you know, they don't they don't have uh as strong a relationship to that indie stocks number.
• 7:00
  SPEAKER_00: Um and so it's a it's much more of a global market is part of the reason for that.
• 7:05
  SPEAKER_00: But yeah, a lot of moving parts there.
• 7:07
  SPEAKER_00: That was my reaction to 445's getting up there, it's it's comfortable.
• 7:12
  SPEAKER_00: Um, I don't think it's so high or so burdensome, Mike, that it will exclude us from summer rallies.
• 7:20
  SPEAKER_00: I think you know, we'll get the weather going on here and there.
• 7:24
  SPEAKER_00: Um, maybe some delayed planting, maybe not.
• 7:27
  SPEAKER_00: We'll see once, but um, I think we can still rally that bean market off some weather events as we go into this summer.
• 7:33
  SPEAKER_00: And that's the other thing, you know.
• 7:35
  SPEAKER_00: I I'm gonna really ask producers to focus on the corn.
• 7:39
  SPEAKER_00: And I think you are too, Mike, uh, over the next couple weeks here, especially if we can get some foul through next week off this report, which might be kind of difficult because we will get some planning progress into most of the corn belt.
• 7:55
  SPEAKER_00: Mike, I'll let you hit on that here in a minute.
• 7:57
  SPEAKER_01: But um I see and I kind of looked at it from the eye point of view of we got a good report and we rallied the corn market up now the first week of May.
• 8:08
  SPEAKER_01: I view it as like it's gonna be pretty hot tough to keep this train rolling, I guess, without any good news.
• 8:14
  SPEAKER_01: That's the way I looked at it.
• 8:16
  SPEAKER_00: I think Monday will be a big day for that exact same that reason.
• 8:20
  SPEAKER_00: Are you gonna attract some buy interest into this marketplace, which we commented on?
• 8:25
  SPEAKER_00: We did not see much of that today.
• 8:28
  SPEAKER_00: Um, I think that's gonna be a big deal.
• 8:30
  SPEAKER_00: You know, Sunday night open, who who knows, right?
• 8:34
  SPEAKER_00: But I think when you get into midday Monday or so is gonna really start to give us some clue.
• 8:40
  SPEAKER_00: Hey, are we gonna see some foul through um into next week, or is this just a one-day wonder type of a thing?
• 8:46
  SPEAKER_01: Well, the one thing that will help us is the the wheat market, fantastic day, fantastic report out of the wheat.
• 8:53
  SPEAKER_01: Uh Kansas City was up 21, Chicago up 26 by the end of the day.
• 8:58
  SPEAKER_01: If you look at that aspect, the wheat market's probably covered all their short position net short positions at this point.
• 9:04
  SPEAKER_01: The corn market still has 218,000 contracts net short.
• 9:08
  SPEAKER_01: So for whatever reason the the corn market sees what wheat is doing and says, you know what, if wheat's going up, I better eliminate some of those uh risk potentials in the corn market as well.
• 9:18
  SPEAKER_01: That that could give us that little pop early next week or something.
• 9:22
  SPEAKER_01: But uh that's uh very hopeful thinking, I think, for the grain producers in the room, Jeff.
• 9:28
  SPEAKER_00: So what are you thinking about uh going over the weekend, Mike?
• 9:31
  SPEAKER_00: What are you encouraging if we're if I'm a grain farmer?
• 9:34
  SPEAKER_00: What am I thinking about this weekend?
• 9:36
  SPEAKER_01: Well, the wrap-up one last thing on the WASDA the the definition of insanity is getting the same thing over and over again and expecting different results.
• 9:46
  SPEAKER_01: And we saw that again with the Brazil soybean number out of the United States.
• 9:50
  SPEAKER_01: They only dropped that to 154 million metric tons of production.
• 9:54
  SPEAKER_01: Uh so that was only down one million metric tons uh from the last report, and they were still hoping for for 152.
• 10:02
  SPEAKER_01: So uh the USDA still uh has struggling to lower that in any substantial way.
• 10:09
  SPEAKER_01: Um I would say that uh looking forward, it's very important for grain producers to take a look at the calendar and just say we had a we had a friendly report, we had a bullish reaction to the report in the corn market, uh, we had a rally up to the top end of the trend line of where we've been trading.
• 10:28
  SPEAKER_01: And uh, you know, it's that's just what you do at this time of the year.
• 10:32
  SPEAKER_01: So I think it's a very, very hard look, especially on uh some old crop here.
• 10:37
  SPEAKER_01: You know, you get much more of a rally, I think basis gets killed.
• 10:39
  SPEAKER_01: So I think uh whatever you got going on in the bin, I think uh first priority there.
• 10:45
  SPEAKER_01: And then uh and then we really start to look at 24 and even 25.
• 10:49
  SPEAKER_01: I mean, you're out there poking at five bucks for December 25 corn.
• 10:54
  SPEAKER_01: Uh if you want to spread your risk out a little bit and your positions, 498 there at the close doesn't look too bad either, Jeff.
• 11:00
  SPEAKER_00: I agree.
• 11:01
  SPEAKER_00: It's all stuff to be taking a hard look at.
• 11:03
  SPEAKER_00: I know we're gonna get busy again next week, um, hopefully, but definitely gotta take some time to be thinking about the marketing side of the business.
• 11:12
  SPEAKER_01: Did this report change our opinions on uh either what the market can do this summer or market direction, Jeff?
• 11:19
  SPEAKER_00: Well, I think from an end user standpoint, as I we flip over the coin, look at it from that perspective, um, it in my mind it it ratcheted it ratcheted up the the price range possibilities, if that can make sense for us.
• 11:35
  SPEAKER_00: So, I mean, we definitely had our hearts set on uh corn being sub-4, you know, getting to the get into this fall at one point as we went into this spring, right?
• 11:44
  SPEAKER_00: And we've slowly chipped away, in my opinion, uh, at the possibilities of that taking place.
• 11:50
  SPEAKER_00: You know, one, I do not think we're gonna add a bunch of acres to this corn crop anymore.
• 11:54
  SPEAKER_00: Um, that we got the WASD report today that was fairly friendly from a bull um from a bigger picture standpoint.
• 12:02
  SPEAKER_00: Um, see if we get some follow-through on that.
• 12:04
  SPEAKER_00: But what it did do, I think even four and a quarter, like on the December futures, looks like a ways away right now to me.
• 12:13
  SPEAKER_00: Um, we might have to get it in our in our heads from an end user perspective that you know owning some of that new crop corn from four and a quarter to four fifty might be the right answer.
• 12:26
  SPEAKER_00: Um it's a little bit uh a little bit of a discouragement, I guess, but um I think we have to start looking at the reality and at the base of it all.
• 12:36
  SPEAKER_00: I I just don't think we have the acres for super cheap corn as you go into next winter, Mike.
• 12:42
  SPEAKER_01: So let's say we covered about 125,000 contracts on corn on this short position, Jeff.
• 12:50
  SPEAKER_01: If you look at the rally we've put on a 50 cents since we've covered those shorts, uh with 218,000 left, if you cover another hundred and twenty-five, hundred and fifty thousand shorts, you know, maybe that gets you into that uh December corn position around five forty-ish.
• 13:10
  SPEAKER_01: Gonna be pretty tough to get up and above that off some short covering.
• 13:15
  SPEAKER_00: Oh, yeah, for sure.
• 13:16
  SPEAKER_00: And I don't maybe the funds that you're talking about will be interested in going long.
• 13:20
  SPEAKER_00: I'm sure some will.
• 13:21
  SPEAKER_00: They usually do like a little bit.
• 13:22
  SPEAKER_01: If they cover them all, they they usually don't stop right at zero by any me by any means.
• 13:27
  SPEAKER_01: So a couple of the things I'm looking at when it comes to what could this corn market potentially do if it got some good reasons to do such things.
• 13:36
  SPEAKER_00: Sounds good.
• 13:37
  SPEAKER_01: All right.
• 13:37
  SPEAKER_01: Well, thank you for your time, Jeff.
• 13:39
  SPEAKER_01: I appreciate it.
• 13:40
  SPEAKER_01: And thank you to all our listeners.
• 13:41
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 13:45
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 13:50
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 13:56
  SPEAKER_01: See you next time.