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Grains: Trade War and Charts · 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 Miner.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Today is October 3rd.
• 0:25
  SPEAKER_00: This is Mike Miner.
• 0:26
  SPEAKER_00: I'm gonna give you a quick market update on the soybean market and some of the outside markets here.
• 0:31
  SPEAKER_00: We've seen a lot going on with the soybeans lately.
• 0:34
  SPEAKER_00: I just wanted to give you a solo here today on Friday, going into the weekend.
• 0:38
  SPEAKER_00: One of the things I wanted to start back with was let's go back in time a little bit.
• 0:43
  SPEAKER_00: About September 17th of last month, the soybean market got rocked.
• 0:50
  SPEAKER_00: Over a span of about four days, we took off about half a dollar in the soybean market.
• 0:54
  SPEAKER_00: And that market got put under some serious stress there.
• 0:57
  SPEAKER_00: What happened was Argentina took off their export tax, and this allowed them to sell over 96 million bushels in a week of soybeans to China.
• 1:07
  SPEAKER_00: And this was a big deal.
• 1:08
  SPEAKER_00: I mean, that's over 40 cargo loads of soybeans.
• 1:11
  SPEAKER_00: Could you imagine what an export shipment like that would or export sale would do for the United States, for example?
• 1:17
  SPEAKER_00: This happened right after the United States did a currency swap deal with Argentina.
• 1:22
  SPEAKER_00: Some of the most recent updates here would report that that$20 billion currency swap deal between the U.S.
• 1:28
  SPEAKER_00: and Argentina is reportedly in jeopardy after leaked texts revealed that Argentina sold a significant amount of soybeans to China after the U.S.
• 1:37
  SPEAKER_00: bailout.
• 1:38
  SPEAKER_00: This was seen on text messages with Scott Bessant and another party here this past week or so.
• 1:45
  SPEAKER_00: This has really led to some lower prices in soybeans for American farmers, and uh really it it appeared that it had violated the spirit of the U.S.
• 1:54
  SPEAKER_00: trade agreement with Argentina.
• 1:56
  SPEAKER_00: So this caught some steam here over this past week or so, especially the leaked text that was earlier on in this week.
• 2:04
  SPEAKER_00: To follow that up, right after those leaked texts came out, Trump tried to kind of put some water on the fire.
• 2:11
  SPEAKER_00: He said right away, he addressed it in a truth post uh indirectly, and he said that uh China's uh President Ji has been using soybeans as a tactic ahead of the trade talks.
• 2:23
  SPEAKER_00: So going into their meeting at the end of October in South Korea, he plans that they will discuss first and foremost soybeans.
• 2:32
  SPEAKER_00: The lack of Chinese buying hurts US soybean farmers immensely.
• 2:37
  SPEAKER_00: So he says uh China avoids U.S.
• 2:40
  SPEAKER_00: soybeans as part of their negotiations, and he wants to talk about that and see what they can do.
• 2:45
  SPEAKER_00: Going back to the last trade war, they did buy some soybeans from the U.S.
• 2:49
  SPEAKER_00: just in good faith before the deals were finished, for example.
• 2:52
  SPEAKER_00: This got things fired up a little bit back in the soybean complex again this week.
• 2:56
  SPEAKER_00: November did trade up as high today on Friday up to 1028.
• 3:01
  SPEAKER_00: We really rallied to the 20-day moving average here, and we've been hitting some resistance.
• 3:05
  SPEAKER_00: So that's been brought up.
• 3:07
  SPEAKER_00: It's been something that's been recognized by this market as of late.
• 3:11
  SPEAKER_00: That helped us get a 30 or so cent rally here over the past couple days, kind of hard fought off a rumor or hope that we could have better chance for Chinese soybean purchases going forward because they still haven't bought anything yet, and uh that's gave us a little bit of hope on the soybean front.
• 3:28
  SPEAKER_00: The other aspect of this, Trump also came out right after it and said, hey, maybe next Tuesday, there are some reports coming out from uh newspapers that the government could be giving a$10 billion bailout to U.S.
• 3:40
  SPEAKER_00: farmers.
• 3:41
  SPEAKER_00: That would be equal size to what he did in the first bailout package during the trade war in 2018.
• 3:46
  SPEAKER_00: Uh about 8.6 of that went to farmers, uh, about 7.3 of that went to soybeans.
• 3:52
  SPEAKER_00: So specifically, soybeans like a dollar and a half a bushel, something like that, um, are gonna be targeted again in this.
• 3:58
  SPEAKER_00: And this round of a bailout sounds like it would potentially be coming from the tariff funds that they've been taking from that revenue.
• 4:07
  SPEAKER_00: So a little bit different there, however.
• 4:09
  SPEAKER_00: Uh, it sounds like our administration is aware of what damage this is doing to the soybean market, and that's really been pushing around the market here as of late.
• 4:18
  SPEAKER_00: You go back to the middle of September as well.
• 4:20
  SPEAKER_00: I do believe that we had been seeing and could be piling on with some harvest pressure as well, especially as of late.
• 4:26
  SPEAKER_00: We should be getting a majority of the way through that here, especially as locally we are starting to wrap them some things up.
• 4:33
  SPEAKER_00: We'll talk about that in here a second.
• 4:35
  SPEAKER_00: I wanted to talk a little about some of the other uncertain aspects that are going on right now as well.
• 4:41
  SPEAKER_00: This week, the government shutdown is impacting these markets and maybe less in some ways than you would think.
• 4:48
  SPEAKER_00: The uh from an economic standpoint, it seems like the SP 500 doesn't truly care that much uh about this government shutdown.
• 4:56
  SPEAKER_00: However, gold, on the other hand, very much so.
• 4:58
  SPEAKER_00: Gold and the stock market are both rallying.
• 5:00
  SPEAKER_00: This would be in a combination of uh economic uncertainty driven by the U.S.
• 5:05
  SPEAKER_00: government shutdown and persistent inflation concerns.
• 5:09
  SPEAKER_00: Uh this is increasing the demand for gold as a safe haven asset.
• 5:13
  SPEAKER_00: And this market has just ripped higher recently.
• 5:16
  SPEAKER_00: If you haven't looked at it, pull up a chart on gold, it's it's really something.
• 5:20
  SPEAKER_00: Right along with this, the Federal Reserve, they said that they're planning to cut interest rates.
• 5:25
  SPEAKER_00: And after seeing an ADP report here, uh it looked like U.S.
• 5:30
  SPEAKER_00: companies shed 32,000 jobs in September.
• 5:33
  SPEAKER_00: This would be the latest sign of labor market weakness.
• 5:35
  SPEAKER_00: This really solidifies the fact that we're expecting two more rate cuts going towards the rest of the year.
• 5:41
  SPEAKER_00: This is helpful towards the stock market, and they're sure trading it like it.
• 5:45
  SPEAKER_00: So uh when we're looking at the SP and when we're looking at gold, very interesting things going on in both of those categories.
• 5:53
  SPEAKER_00: The SP is also getting led higher just with this uh massive uh bubble one could say would be forming, or massive influx of cash into AI stocks.
• 6:03
  SPEAKER_00: So those are definitely leading things higher.
• 6:06
  SPEAKER_00: But nonetheless, it really seems like folks are moving away from the US dollar.
• 6:12
  SPEAKER_00: They're getting away from that and buying things like Bitcoin up over$122,000 today going into the weekend.
• 6:17
  SPEAKER_00: They're buying gold up, which it now forecasting over$4,000 for a lot of folks by the end of this year, up to$4,500 in some cases.
• 6:25
  SPEAKER_00: Um so they're moving away from the US dollar and towards some more of these uh decentralized uh assets and currencies to really hedge and use as a safe haven investment rather than get out of the SP 500, for example.
• 6:40
  SPEAKER_00: So they see we're cutting rates, so they kind of want to hold on to the SP and these equities.
• 6:45
  SPEAKER_00: They they don't see enough to say that I need to take full risk off and pull my money out of the stock market.
• 6:50
  SPEAKER_00: They said I still want to participate in any rally that the AI space could potentially give us, for example.
• 6:56
  SPEAKER_00: I want to just hedge against it.
• 6:58
  SPEAKER_00: And one of the ways that we can do that is by being a little bit more aggressive at buying gold and buying things like Bitcoin and shorting the US dollar, for example.
• 7:07
  SPEAKER_00: So they are really doing some interesting things in both of those spaces, and I think that's something to really watch from a fund money flow perspective here in these markets.
• 7:18
  SPEAKER_00: I wanted to talk a little bit about harvest pressure here.
• 7:21
  SPEAKER_00: It's immensely picked up.
• 7:22
  SPEAKER_00: Uh you can go around locally by Pipestone here, CHS at Cargill or the old Cargill uh facility, they've got some piles on the ground for soybeans or got a pile on the ground for soybeans.
• 7:34
  SPEAKER_00: Uh, you're looking at some of the plants now locally, like Brewster, Volga, they're starting to slow down a little bit more after they had massive lines earlier on in the beginning of this week and last week.
• 7:45
  SPEAKER_00: So we're starting to see soybean harvest wrap up at the end of this week immensely locally, and we're starting to move right into corn.
• 7:52
  SPEAKER_00: Some low 20s on percent moisture, it sure seems like, but it's drying down quick.
• 7:56
  SPEAKER_00: Some folks even have some in the mid-teens, so just be aware out there the soybeans are really getting really getting low on on moisture here into the 8-9% moisture, kind of average soybean yields from what we've heard, uh, especially locally, tri-state area here, uh, kind of Minnesota, Iowa, South Dakota.
• 8:14
  SPEAKER_00: You're hearing normal high, maybe top three yields ever on soybeans, but nothing crazy.
• 8:20
  SPEAKER_00: A little bit disappointed, maybe versus some of their expectations.
• 8:24
  SPEAKER_00: Corn, however, on some of the early reports that we are getting out of the fields in this tri-state area, it has been phenomenal.
• 8:30
  SPEAKER_00: Uh, a couple weeks ago, for some of the corn coming out uh more southern Iowa, more east, more Illinois, a little bit disappointing.
• 8:37
  SPEAKER_00: However, locally here as we move from soybeans to corn, we are seeing some phenomenal yields here in this local geography.
• 8:45
  SPEAKER_00: This isn't somewhat surprising because we had fantastic crop conditions here locally.
• 8:49
  SPEAKER_00: Um, there's a lot of the corn harvest to go.
• 8:52
  SPEAKER_00: I'd say it's it's just getting underway here locally, but we are hearing some ri fantastic things locally.
• 8:58
  SPEAKER_00: So I would uh if you gotta sell some bushels out of the field here locally, uh, which a lot of folks will if we do have some bigger yields, especially this year on corn, uh really be watching basis locally as we actually had a few folks actually tighten up and strengthen here as of real late.
• 9:14
  SPEAKER_00: A few of the technical markers I'm watching on soybeans, we had a pretty poor close today, down five cents, but we ran right up to that 20-day moving average, really the past two days, right around that like 1025 type level on November soybeans.
• 9:27
  SPEAKER_00: Could be a nice resistance spot here.
• 9:29
  SPEAKER_00: You just had a big pop uh over the past three days, given some uh positive rhetoric out of trade.
• 9:35
  SPEAKER_00: It sure seems like those are selling opportunities here out of some positive trade news, especially as harvest wraps up here.
• 9:42
  SPEAKER_00: So keep an eye on that.
• 9:43
  SPEAKER_00: Uh balance sheet still does look pretty good on soybeans, though.
• 9:46
  SPEAKER_00: They obviously planted lower acres in the United States.
• 9:49
  SPEAKER_00: That put the balance sheet in a really comfortable position going into this harvest.
• 9:53
  SPEAKER_00: So uh just from that perspective, if we do get some news on China trade, for example, especially at the end of this month in October, watch out for some big uh blow-up opportunities in this uh in a rally on the soybean market.
• 10:06
  SPEAKER_00: But however, in the meantime, especially as you wrap up your harvest, look for some of these pops and opportunities to take some of that risk off your balance sheet.
• 10:16
  SPEAKER_00: On corn, some of the really key support and resistance areas I'm watching there is I was a little worried that we blew apart a trend line.
• 10:24
  SPEAKER_00: I had been watching uh kind of going on to like the 29th and 30th of September here.
• 10:30
  SPEAKER_00: We kind of broke some support levels.
• 10:32
  SPEAKER_00: I wanted to hold out of that market on December corn, for example, or any of those months.
• 10:38
  SPEAKER_00: However, we've held decent.
• 10:40
  SPEAKER_00: We put in a new low on the move there on the 1st of October, right around 410.
• 10:45
  SPEAKER_00: I I do believe we're trying to trade choppy in this little range right around the 414 to the kind of 423 type area on Dece Corn.
• 10:54
  SPEAKER_00: We still were not able to fill that gap up at 430.
• 10:57
  SPEAKER_00: Keep an eye on this type of level, especially as you're making sales out of the field, anyways.
• 11:02
  SPEAKER_00: Uh, we're gonna want to keep an eye on some of these tighter opportunities towards the top ends of these trading ranges.
• 11:08
  SPEAKER_00: Yeah, please reach out.
• 11:09
  SPEAKER_00: Uh, there's some really cool option opportunities out there these days as well.
• 11:12
  SPEAKER_00: A lot of folks are giving us questions about, you know, I got to take X amount of corn or soybeans to town and sell it this harvest.
• 11:19
  SPEAKER_00: What should I do?
• 11:20
  SPEAKER_00: This is uh probably the most relevant and most frequent conversation we're having at ProAg with our customers of this week.
• 11:27
  SPEAKER_00: And if you're not a customer and want to reach out, uh we would love to chat with you just about some different options you have uh to explore.
• 11:33
  SPEAKER_00: And if you are a customer, please be already talking to us about your storage situation and any opportunities out in the marketplace today.
• 11:41
  SPEAKER_00: There are some interesting ones.
• 11:42
  SPEAKER_00: So thank you for your time today.
• 11:44
  SPEAKER_00: Uh please check out our other podcasts we did this week on the hogs and cattle as well.
• 11:49
  SPEAKER_00: And please have a safe harvest going into this weekend.
• 11:51
  SPEAKER_00: It's a hot one out there, and progress is really ramping up and going quickly.
• 11:55
  SPEAKER_00: Thank you.