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WASDE and CPI · 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.
• 0:24
  SPEAKER_01: Today is June 10th, and I've got Jordan Wrecker with us here today from Professional Egg Marketing.
• 0:29
  SPEAKER_01: How's it going, Jordan?
• 0:30
  SPEAKER_00: Good.
• 0:31
  SPEAKER_00: How are you, Mike?
• 0:31
  SPEAKER_01: We're doing pretty good.
• 0:32
  SPEAKER_01: We got through another WASDA report here on the June 10th report, and uh we're gonna talk a little bit about the WASDAY today, and then a little bit about the CPI report and some crop conditions, mainly focused on grains today.
• 0:45
  SPEAKER_01: But how's that sound, Jordan?
• 0:47
  SPEAKER_00: That sounds awesome, Mike.
• 0:49
  SPEAKER_01: Awesome.
• 0:49
  SPEAKER_01: Well, week over week here we had quite a bit of support in the grain markets, up 46 cents on July corn week over week, kind of quietly ran higher there through the week.
• 0:58
  SPEAKER_01: Soybeans up 47 cents higher on the July contract week over week.
• 1:03
  SPEAKER_01: So had some support put into this grain market ahead of the report.
• 1:07
  SPEAKER_01: That always scares me a little bit, Jordan, there, where we trade higher going into the report, especially this time of the year.
• 1:13
  SPEAKER_01: We saw it kind of last year following a similar pattern to what we've seen so far this year.
• 1:18
  SPEAKER_01: February we saw a high on May 7th last year in December corn and then kind of took a little break, found some support before the June report and bounced higher, found a high on June 10th today, actually last year for the summer high, and then we broke lower the rest of the year.
• 1:34
  SPEAKER_01: So I was a little bit worried about that seasonal pattern again this year.
• 1:37
  SPEAKER_01: You know, June puts in more seasonal highs than any other month for December corn.
• 1:42
  SPEAKER_01: So uh people are thinking about some of those things as this June report comes out, but for the majority here, we had some nice support running into this uh report here this week.
• 1:52
  SPEAKER_00: Yeah this let me stop you there, Mike.
• 1:54
  SPEAKER_00: Yeah, this week was pretty volatile, right?
• 1:56
  SPEAKER_00: You know, the past two weeks we you know set a low down there on that July corn, and now the past week and a half we've just kind of been rallying significantly.
• 2:06
  SPEAKER_00: The July-September spread widening out over 40 cents now.
• 2:10
  SPEAKER_01: Spreads were big this week.
• 2:11
  SPEAKER_00: Yes, very large.
• 2:12
  SPEAKER_00: So, you know, you're seeing these spreads kind of widening out and also basis levels um you know exploding really.
• 2:21
  SPEAKER_00: Um these end users are looking for corn today.
• 2:25
  SPEAKER_00: Um it's been pretty quiet on the farmer selling side, right?
• 2:28
  SPEAKER_00: Yeah.
• 2:28
  SPEAKER_00: You know, ahead of planting the market, uh, you know, it just made a new high every week, right?
• 2:33
  SPEAKER_00: Relatively easy for a grain producer to make a sale because you know, he was always just making a sale higher than what he did last week.
• 2:41
  SPEAKER_01: Exactly.
• 2:42
  SPEAKER_00: And then we kind of got to planting, right?
• 2:44
  SPEAKER_00: And planting got drug out, lasted much longer than expected.
• 2:48
  SPEAKER_00: Surprisingly.
• 2:49
  SPEAKER_00: And a board drop.
• 2:51
  SPEAKER_00: So haven't really bought anything since, right?
• 2:54
  SPEAKER_00: And so it feels like some of these end users are kind of getting caught a little bit, a little bit hand to mouth, and needing to come to the market and get some corn bought.
• 3:01
  SPEAKER_00: So um basis levels widening out significantly to try to get some corn.
• 3:07
  SPEAKER_01: Which I mean, also when you start looking at uh at the time of this season here, we saw the on basis levels specifically, um, we didn't build up very many stocks for the uh crude oil and distillates and uh petroleum here, and all of a sudden you see ethanol margins at two dollars a bushel on corn on a lot of these places.
• 3:30
  SPEAKER_01: So all of a sudden now the ethanol plants are getting into it as well alongside of the exporters.
• 3:35
  SPEAKER_01: So it's kind of a perfect storm here for basis.
• 3:38
  SPEAKER_00: Yeah, that's exactly right.
• 3:39
  SPEAKER_00: You know, you look at the ethanol report, they've been running, you know, around that hundred million bushels, 102 or so is what they've been grinding weekly, and then last week I almost they pop up to 108 to go along with all these mills kind of looking for corn, so exactly a perfect storm.
• 3:53
  SPEAKER_00: But you know, the board started rallying a little bit the past week and a half, and now you add on these basis levels and you're back to eight dollar corn pretty much right now, right?
• 4:02
  SPEAKER_00: And I f I feel like the farmer did make some sales now and you're starting to see some grain move a little bit.
• 4:08
  SPEAKER_01: It was like they said, I'm not gonna sell corn until it starts going down.
• 4:12
  SPEAKER_01: And we saw some of that this week, which was weird to see last week like a 70 cent drop or pull back in the corn price, and you see sales still continuing.
• 4:21
  SPEAKER_01: That was interesting to see compared to normal, and uh that kind of helped base us out a little bit too, with maybe a little bit of slowing there, but not nearly as much as normal.
• 4:29
  SPEAKER_01: But back to the WASDAerport today, the USDA failed to make any huge changes enough to really excite the Bulls or the Bears here.
• 4:37
  SPEAKER_01: Um, they did drop U.S.
• 4:38
  SPEAKER_01: corn exports and they did increase U.S.
• 4:41
  SPEAKER_01: soybean exports.
• 4:42
  SPEAKER_01: Neither one of those two things I would say was out of the norm compared to what we've been seeing, Jordan.
• 4:48
  SPEAKER_01: Uh high US dollar has made us maybe a little bit less competitive on the corn side.
• 4:52
  SPEAKER_01: We've also added a lot of news lately about Ukraine maybe having more corn around than they were supposed to.
• 4:58
  SPEAKER_01: We saw that out of today's report.
• 5:00
  SPEAKER_01: They moved that to 25 million metric tons compared to the 19 last month.
• 5:04
  SPEAKER_01: And uh some of those news were the items, you know, maybe they haven't taken into account yet that we're gonna probably have lower Black Sea wheat and corn exports in general on the USDA, but they're probably gonna slow play that going forward yet.
• 5:18
  SPEAKER_01: So I'd say from the corn side, not too many surprises.
• 5:21
  SPEAKER_01: Soybean side, we've been really competitive lately on the world stage for soybean exports after Brazil had a short crop this year.
• 5:29
  SPEAKER_01: We've seen a lot of interest from China as of late with their crush margins uh kind of in the black pretty well.
• 5:36
  SPEAKER_01: And they've been searching all over both the United States, Argentina, Brazil.
• 5:40
  SPEAKER_01: They've been active buyers over the past week or so, and uh that showed up in this report as well.
• 5:45
  SPEAKER_01: And then um, yeah, going forward here, you know, it's that time of the year managed funds probably liquidating a little bit of their longs due to the big losses in both equities and commodities here really recently.
• 5:56
  SPEAKER_01: So um keep that in mind because we still have huge long positions net on the managed money funds in both corn, wheat, soybeans, not quite as big, but still pretty big.
• 6:07
  SPEAKER_01: So something to keep in mind at this time of the year, right?
• 6:10
  SPEAKER_01: Because you've got to incentivize a managed money fund long to get into the market now when you've got we're in the middle of June before the acreage report, and so seasonally, like we just got done talking about, it's hard to go long in June, right?
• 6:26
  SPEAKER_01: It's usually a good time to sell, and we're above seven dollars.
• 6:30
  SPEAKER_00: Yeah, that's exactly right.
• 6:32
  SPEAKER_00: Yep.
• 6:32
  SPEAKER_01: Tough to encourage new buyers in that market.
• 6:35
  SPEAKER_01: Yep.
• 6:35
  SPEAKER_01: So some key topics now, but we're back to trading U.S.
• 6:39
  SPEAKER_01: summer weather, and uh, what do you know about kind of summer weather looking forward in crop conditions, Jordan?
• 6:44
  SPEAKER_01: With uh next week, I think we're supposed to increase crop ratings like a percent or two.
• 6:49
  SPEAKER_00: Yeah, I think that's exactly right.
• 6:51
  SPEAKER_00: You know, this um WASD report that you were just kind of talking about was relatively quiet, right?
• 6:57
  SPEAKER_00: Wasn't uh anything too unexpected, and now we'll just kind of go right back to trading weather like we were this week, trading that hot, dry forecast over the next two weeks.
• 7:05
  SPEAKER_00: Um earlier this week, you know, the USCA did come out with condition scores like you were saying at 73% good to excellent versus a five-year average at 70, a little bit better than expected, and overall this crop looks really, really good.
• 7:18
  SPEAKER_00: You know, you got a couple black eyes there in North Dakota and northern Minnesota, but you know, Illinois at 81% good to excellent, Iowa at 86%, and Indiana at 76.
• 7:29
  SPEAKER_00: I mean, normally this time of year, those states are running, you know, mid sixties, low seventies, so I mean they're just kind of hitting it out of the park.
• 7:38
  SPEAKER_00: Um so yeah, I mean it's it's not too often that you can say that the overall Midwest, the majority of the Midwest, the the largest grain producing states, all look really, really good.
• 7:51
  SPEAKER_00: Um and with you know, a little bit of heat this next week, they're actually probably gonna look even better.
• 7:57
  SPEAKER_00: Just like you're saying, you know, probably a 1% increase or maybe even a little bit more.
• 8:01
  SPEAKER_00: So um I think we got a little problem there in North Dakota and northern Minnesota, but overall we might actually be adding on to this crop with how good the rest of the larger producing states are looking today.
• 8:14
  SPEAKER_01: Yeah, like you can see in this week's grain recommendation, if you're not on that list, uh you can please reach out to us and get on it.
• 8:21
  SPEAKER_01: You can see that east of basically Nebraska, it's all white on the drought map.
• 8:25
  SPEAKER_01: And then uh we are gonna kind of shy away from a little bit of the rainfall this next week, gonna be below normal precip and a little bit hot weather to try to catch this corn maturity back up.
• 8:37
  SPEAKER_01: But other than just uh corn conditions, Wazd Airport, more internal fundamentals, it's hard to hard to remember that we've got also some uh some outside market influence still playing its hand today.
• 8:50
  SPEAKER_01: The stock market was hit pretty hard after the CPI report came out.
• 8:55
  SPEAKER_01: Um inflation reports that uh we went up another percent from April after they thought that that was maybe stopping or the increase in inflation was slowed.
• 9:04
  SPEAKER_01: Um it was at 8.6% over last year, running hotter than most people were expecting there.
• 9:10
  SPEAKER_01: So it was a bearish report, causes stock market to sell off pretty hard this morning, pushed the US dollar higher, and that's gonna help uh help push some of these commodity prices a little bit lower, like we talked about because of both funds, and then just uh fundamentally too with exports being a little bit less competitive there.
• 9:28
  SPEAKER_01: So we'll see how that looks going forward.
• 9:30
  SPEAKER_01: But any final comments for our listeners today, Jordan?
• 9:33
  SPEAKER_00: Yeah, I'd just like to add that, you know, this is uh June 10th, and like you were saying, you do normally set um a pretty good amount of highs here in the month of June, right?
• 9:42
  SPEAKER_00: So over these next three weeks, um, you know, our grain producers really got to be thinking about you know setting some targets and trying to make some sales.
• 9:51
  SPEAKER_00: This is the time of year that we like to do that, and uh, I think uh the market should provide you a little bit of opportunity to do that with volatility.
• 9:58
  SPEAKER_01: Awesome.
• 9:59
  SPEAKER_01: Well, again, if you need this week's chart deck, please reach out.
• 10:02
  SPEAKER_01: We can send you over the this week's grain recommendation here at Professional Egg Marketing.
• 10:07
  SPEAKER_01: And thank you to all our listeners.
• 10:09
  SPEAKER_01: Please reach out to us from our website at professionalagmarketing.com or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 10:20
  SPEAKER_01: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.