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Grains: WASDE and BBB · 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 July 11th.
• 0:25
  SPEAKER_01: I've got Lucas Peters here with us today.
• 0:27
  SPEAKER_00: How's it going, Lucas?
• 0:28
  SPEAKER_00: Well, it is going great on a Friday.
• 0:30
  SPEAKER_00: Mike, thanks for having me back into the ProAg Podcast Studios.
• 0:35
  SPEAKER_01: Well, I'm about done being a celebrity today after Eggger talk and background to Illinois there and this.
• 0:41
  SPEAKER_01: I mean, I get the Lucas Peters experience now.
• 0:44
  SPEAKER_00: I'm happy I can listen to you on the recordings this weekend to see what Mike Minor had to say to everything.
• 0:49
  SPEAKER_01: You're going to talk a lot in this podcast.
• 0:51
  SPEAKER_01: That's all I'm saying.
• 0:53
  SPEAKER_01: We're going to start about at the uh WASD Airport today.
• 0:56
  SPEAKER_01: We're going to talk about what trade uh what trade's thinking on yield, and then uh we're going to talk about disaster.
• 1:02
  SPEAKER_01: Big beautiful bill, crop insurance, arc PLC 45Z.
• 1:07
  SPEAKER_01: I'm definitely not forgetting anything in all that.
• 1:09
  SPEAKER_00: I'm sure not.
• 1:10
  SPEAKER_00: There's a lot of lot to cover, Mike, so why don't you start with the WASDA?
• 1:14
  SPEAKER_01: WASDE came out, and we changed almost every category on the crop for corn and soybeans, but minutely, and it was pretty much as expected.
• 1:24
  SPEAKER_01: Um, some of the major talking points are ending stocks on the U.S.
• 1:28
  SPEAKER_01: corn balance sheet came out at 1.66 billion bushels.
• 1:32
  SPEAKER_01: It was at 1.75 last month.
• 1:34
  SPEAKER_01: So it was a little bit tighter balance sheet.
• 1:36
  SPEAKER_01: We're under 11% stocks to use ratio on corn.
• 1:40
  SPEAKER_01: Some of the major challenges or changes in this was they dropped feed and residual for next year down a little bit on demand.
• 1:47
  SPEAKER_01: They increased uh old crop exports by 100 million bushels, so that was finally, I mean, it's been expected, they finally caught up a little bit more.
• 1:57
  SPEAKER_01: Um no other major changes on corn, I'd argue.
• 2:00
  SPEAKER_01: Soybeans, I think it it developed a tr it's starting a trend that we in the balance sheet, sure, we ended up at 310 million bushels.
• 2:09
  SPEAKER_01: It was at 295 last month, so just a slight increase in ending stocks.
• 2:14
  SPEAKER_01: However, you I you also changed almost every category a little bit.
• 2:19
  SPEAKER_01: But some of the main take-homes were they increased crushings by 50 million bushels on soybeans for next year's balance sheet.
• 2:26
  SPEAKER_01: But at the same time, they decreased exports 70 million.
• 2:31
  SPEAKER_01: And I think that'll continue, or at least that should, right?
• 2:34
  SPEAKER_01: We should increase the crush capacity in the United States with these new plants coming on, and as we do that, we lose business to China.
• 2:41
  SPEAKER_00: Yep, and and kind of tied into that, the you will see and we'll talk about in a little bit, the 45Z changes, which will contribute to more beans getting crushed in the United States.
• 2:52
  SPEAKER_01: Exactly.
• 2:53
  SPEAKER_01: So we're gonna talk all about that.
• 2:54
  SPEAKER_01: Those are more important things probably than this WASDAerport.
• 2:58
  SPEAKER_01: It was a non-nothing burger.
• 3:00
  SPEAKER_01: I mean, it really we were down a couple cents on corn and down about a nickel on soybeans.
• 3:04
  SPEAKER_01: So not a whole lot going on in the WASDAerport other than that.
• 3:08
  SPEAKER_01: The world numbers, the corn uh global ending stocks number maybe a little tighter than what they were thinking, but that was the US and China taking away their China actually just we'll get to it, have a special podcast another day.
• 3:22
  SPEAKER_01: Um, no huge, huge decrease in exports or exports into China or their imports for corn and wheat.
• 3:30
  SPEAKER_01: They're uh not importing hardly anything now.
• 3:33
  SPEAKER_01: So that's something we need to cover in a in a future episode, Lucas.
• 3:37
  SPEAKER_01: But one thing that I've been getting talked about a lot lately is okay, the fundamentals not that bad on corn and soybeans.
• 3:44
  SPEAKER_01: We're actually pretty tight.
• 3:46
  SPEAKER_01: Corn price kind of sucks.
• 3:48
  SPEAKER_01: So where what's going on?
• 3:50
  SPEAKER_01: And one of the things is okay, well, the easy answer is what trade what is trade actually looking at for a yield today?
• 3:57
  SPEAKER_01: What is trade trading?
• 3:58
  SPEAKER_01: And I would argue when I run all the numbers given stocks to use first history, right now we're probably trading a 185 yield.
• 4:06
  SPEAKER_01: And that's with like no premium in the market, you know, no weather, nothing.
• 4:10
  SPEAKER_01: Yeah, we're we have a 181 in the USDA report, but above trend line yield is what probably is getting traded, and a 185 would be 13% stocks to use ratio.
• 4:21
  SPEAKER_01: I think that's right where we're at for futures today, Lucas.
• 4:24
  SPEAKER_00: Gotcha.
• 4:24
  SPEAKER_00: Yeah, and that would kind of correlate to historically where prices should be at, right?
• 4:28
  SPEAKER_00: Yep.
• 4:28
  SPEAKER_00: And I I mean it's hard to argue with that we're they're trading that number.
• 4:33
  SPEAKER_00: Now, I guess the talk can be, is that a realistic number?
• 4:36
  SPEAKER_00: Um, and driving around the countryside, talking to customers, both you know, in our local area and beyond, right now, yeah, it'd be hard to say you couldn't, right?
• 4:47
  SPEAKER_00: It uh the the general feeling for the area, corn especially, looks really good.
• 4:53
  SPEAKER_00: And when you want to talk high corn yields, well, the first thing is you got to get it planted early, right?
• 4:59
  SPEAKER_01: Yep.
• 4:59
  SPEAKER_00: We did that.
• 5:00
  SPEAKER_00: Uh at least we did that here.
• 5:01
  SPEAKER_00: We didn't necessarily do that every part of the United States.
• 5:04
  SPEAKER_01: The fringe states had problems.
• 5:05
  SPEAKER_00: The fringe states maybe not a ton of problems, but our core growing seed growing areas got planted early, and then the next thing you need is rain.
• 5:14
  SPEAKER_00: And we've been getting that.
• 5:16
  SPEAKER_00: And so uh we've been getting it, and Iowa's been getting it, and Illinois's been getting it, and now I see there are flood watches out for Illinois.
• 5:24
  SPEAKER_00: Um, so it so we're getting rain.
• 5:26
  SPEAKER_00: And we've, you know, at least in the the major corn belt, we've avoided real big swaths of severe weather.
• 5:35
  SPEAKER_00: Um you know, it's hit some of the fringe states, and of course, there's always spots that get you know four or five inches of rain, but that's even more limited this year, it seems, than the last few years.
• 5:46
  SPEAKER_00: And so is it possible?
• 5:49
  SPEAKER_00: Well, probably.
• 5:51
  SPEAKER_00: I just think that when we planted so many acres, Mike.
• 5:55
  SPEAKER_00: I mean, we're how many acres are we?
• 5:57
  SPEAKER_01: 95.2.2 corn.
• 6:01
  SPEAKER_01: They the the harvested it was at 86.8.
• 6:04
  SPEAKER_01: I thought that was a little low.
• 6:06
  SPEAKER_00: They look just lowered that a little bit this the report, right?
• 6:09
  SPEAKER_00: So I it's gonna be hard, in my opinion, to hit 185 when you have that many acres planted because now you need you either need your key corn states to all break a record, which maybe is possible, but I mean just significant records.
• 6:31
  SPEAKER_00: Everywhere.
• 6:31
  SPEAKER_00: And I don't think you're gonna get that in the fringe, especially, and it just it's it's gonna be hard to ring that bell.
• 6:38
  SPEAKER_01: Now, last year, August step, we we had a 183.5 yield in the Watts Day.
• 6:44
  SPEAKER_01: That's why I think like 184, not too much to ask for.
• 6:48
  SPEAKER_01: They can print that because they've done it before.
• 6:50
  SPEAKER_01: Anything above that, it's like you gotta have some big numbers on that spreadsheet.
• 6:55
  SPEAKER_00: And that you're exactly right.
• 6:57
  SPEAKER_00: And I that's probably what they're trading now because of the data we know today, the potential is probably there.
• 7:04
  SPEAKER_00: We we have lots of acres, we had good planning conditions for the most part, and now almost everywhere is getting rain.
• 7:11
  SPEAKER_00: It's one of the lowest portions of corn that's in the considered drought this year, right?
• 7:16
  SPEAKER_00: I mean, and we're and that's happening in mid-July going into pollination, which also, hey, there's gonna be a cool spell happening uh across the corn belt.
• 7:26
  SPEAKER_00: So so your th thought of, well, maybe we'll get a little weather scare at pollination time, man, that's that's kind of going the other way too.
• 7:34
  SPEAKER_00: So maybe we are just setting up for a perfect weather year.
• 7:39
  SPEAKER_00: Um, but obviously we got three months left of this corn season.
• 7:43
  SPEAKER_00: Um, but the first three months have been pretty dang good.
• 7:46
  SPEAKER_01: Now uh keep this number in mind.
• 7:48
  SPEAKER_01: 2% above trend line yield would be a 184.62.
• 7:52
  SPEAKER_01: That's gonna be the exact yield number I'm holding on to here.
• 7:54
  SPEAKER_01: There you go.
• 7:55
  SPEAKER_01: Um if you have above 70% crop insurance ratings in the month of July.
• 8:00
  SPEAKER_01: Historically, that almost always ends up in being a higher than trend uh yield at the end of the day.
• 8:06
  SPEAKER_01: So just something that's worth it there for that.
• 8:08
  SPEAKER_00: Now, are you are you gonna do your crop tour this year, Mike?
• 8:11
  SPEAKER_01: Yeah, first week of August.
• 8:12
  SPEAKER_01: Jaden and I are going again.
• 8:13
  SPEAKER_01: Well, perfect.
• 8:14
  SPEAKER_01: So we'll find so experienced people now.
• 8:16
  SPEAKER_00: We'll have boots on the ground to see how big of the yields are on the first part of August.
• 8:20
  SPEAKER_01: Yeah, it's gonna yeah.
• 8:21
  SPEAKER_01: That's cool.
• 8:22
  SPEAKER_01: I I have a hard time imagining that's gonna get too bad by that point.
• 8:27
  SPEAKER_01: Um the other thing worth mentioning is just from an options perspective, when I look at values above and below where we're at today, the corn market is not expecting us to go anywhere fast.
• 8:37
  SPEAKER_01: Like options are very cheap at or below four bucks on dies corn.
• 8:44
  SPEAKER_01: Uh corn options calls specifically above four and a half dollars very cheap today.
• 8:49
  SPEAKER_01: So it it to me, it doesn't seem like the market or the trade is really looking for corn to go anywhere today.
• 8:56
  SPEAKER_01: At this point, yeah.
• 8:57
  SPEAKER_01: So something worth mentioning there uh about a risk management.
• 9:00
  SPEAKER_00: And that's probably a little bit into the forecast, right?
• 9:03
  SPEAKER_00: Like there's been little volatility in the corn market.
• 9:06
  SPEAKER_00: The forecast suggests little volatility in the weather, and I guess that's what we're seeing on the options.
• 9:12
  SPEAKER_01: Yep.
• 9:12
  SPEAKER_01: All right, let's talk about all this other fun crap that you've got piled on the desk here.
• 9:16
  SPEAKER_01: So we've got disaster.
• 9:18
  SPEAKER_01: Let's start there.
• 9:18
  SPEAKER_00: Yeah, I got five pieces of paper in front of me, Mike.
• 9:21
  SPEAKER_00: And since we can't make money off the board growing corn, now we rely on the government to send us money.
• 9:29
  SPEAKER_00: Sounds about right.
• 9:30
  SPEAKER_00: No, so uh did want to hit on a few different things, and the first one to hit on is the Supplemental Disaster Relief Program or SDRP.
• 9:39
  SPEAKER_00: This uh is a program that just got released this week and has really kind of hit everybody's mailboxes or the farmer mailboxes here uh today, it seems like, based on the calls we've been getting.
• 9:51
  SPEAKER_00: And and so what this uh disaster program is for, it's for 2023 and 2024 crops.
• 9:58
  SPEAKER_00: Um, it's an automatically calculated disaster program based off of your crop insurance yields that were certified in 23 and 24, and there's going to be two stages to it.
• 10:12
  SPEAKER_00: And stage one is based on if you had a crop insurance loss in 23 or 24.
• 10:19
  SPEAKER_00: Uh so if you did, you are going to get a letter in the mail uh sometime soon from FSA, so don't throw that away, uh, showing what your calculated uh loss is for the disaster program.
• 10:33
  SPEAKER_00: Okay, so there's gonna be two stages to the SDRP program.
• 10:37
  SPEAKER_00: Stage one, again, based on your crop insurance loss.
• 10:40
  SPEAKER_00: Uh stage two is going to be based on kind of those shallow losses that you know weren't covered by crop insurance, meaning your yield was just high enough where you didn't trigger a loss, and that's where stage two will come in.
• 10:52
  SPEAKER_00: Stage one is happening right now.
• 10:54
  SPEAKER_00: Stage two will happen probably in September, October uh time frame, would be my guess.
• 11:00
  SPEAKER_00: So the way they're calculating the disaster payment, it's gonna be based on the level of crop insurance that you bought.
• 11:07
  SPEAKER_00: So if you bought an 80 or 85% crop insurance program, the disaster factor is gonna take you up to 95%.
• 11:15
  SPEAKER_00: So you in reality you're gonna get about a 10% bump uh in your uh crop insurance indemnity.
• 11:22
  SPEAKER_00: If you're at 75%, they're gonna take you to 92 and a half, 70% coverage go to 90, and uh you there's a chart that kind of breaks that down.
• 11:31
  SPEAKER_01: So that's so it's benefiting the people that got a uh crop insurance claim.
• 11:36
  SPEAKER_01: People who had problems are gonna get a little bit bigger checked.
• 11:40
  SPEAKER_00: That's an excellent way to put it, Mike.
• 11:41
  SPEAKER_00: If you had a loss where it triggered a crop insurance, you're gonna get a little bit more out of stage one of this program.
• 11:49
  SPEAKER_01: But if you had like a record corn yield, you're you aren't gonna get it.
• 11:53
  SPEAKER_01: You're not gonna get it.
• 11:54
  SPEAKER_00: Because you didn't have a loss.
• 11:55
  SPEAKER_01: You didn't have a problem.
• 11:56
  SPEAKER_00: Correct.
• 11:57
  SPEAKER_00: And so then stage two is gonna come back and do the same calculation, but not on the ones that had crop insurance losses.
• 12:05
  SPEAKER_00: So if you qualified for stage one because you had a loss, you aren't gonna qualify for stage two.
• 12:11
  SPEAKER_00: Yeah.
• 12:12
  SPEAKER_00: So if and but now you got to look at well, maybe you had a loss in 23 and not 24, or vice versa.
• 12:18
  SPEAKER_00: So I I'm not saying you won't get anything from from part one or part two, uh, but it is there, there's lots of parts to this program.
• 12:28
  SPEAKER_00: But the nice part about it from the farmer's standpoint, there's not a lot of things you have to do.
• 12:33
  SPEAKER_00: You have to right now for stage one look for your letter, you could verify the loss, talk to your crop insurance agent, see if you had a yield loss or a loss that year, uh, you're gonna get a form in the mail, you sign it, you fill it out, and you take it back to FSA and they process it.
• 12:50
  SPEAKER_01: So if who gets paid on the second part of it?
• 12:56
  SPEAKER_00: For those that didn't have a crop insurance loss, uh, but their yields, you know, if if they would recalculate on the new disaster factor to 95%, then that's what you're going to uh trigger those.
• 13:08
  SPEAKER_01: So if you were right on the edge of getting a crop insurance payment, which is normally everybody, then you're gonna probably get a little bit of a payment.
• 13:16
  SPEAKER_01: Yep.
• 13:16
  SPEAKER_00: Okay, and it's important to note on this program right now there is a 35% payment factor.
• 13:22
  SPEAKER_00: Meaning if you do the math on your crop insurance loss to take you to 95%, and it says you're gonna get$100 an acre, your actual disaster payment's gonna be 35% of that or$35 in that example.
• 13:34
  SPEAKER_01: So makes sense.
• 13:35
  SPEAKER_00: So that's how they're going to kind of limit the budget a little bit.
• 13:39
  SPEAKER_00: And then if there is money left over after stage one, after stage two, after everybody kind of gets it figured out, then maybe there'll be an additional payment after that.
• 13:48
  SPEAKER_01: All right, let's talk about the big beautiful bill.
• 13:50
  SPEAKER_00: Okay, so we got big beautiful bill, and there's lots of different uh parts to it.
• 13:54
  SPEAKER_00: Um, and and obviously we're just gonna talk about the egg side of it.
• 13:59
  SPEAKER_00: Uh, you know, there's a tax side of it and a whole bunch of other things, but specifically on uh items that are gonna affect our customers, and I'm gonna start on the crop insurance, okay?
• 14:10
  SPEAKER_01: So most of the egg changes on it was what crop insurance?
• 14:16
  SPEAKER_00: The FSA programs, Arc PLC, um, and uh then 45Z, some sustainability things, and then the tax things, of course, have egg.
• 14:27
  SPEAKER_01: It was like damn it was dang near like a farm bill, a seven-year farm bill.
• 14:31
  SPEAKER_00: It it is a farm bill.
• 14:32
  SPEAKER_00: Like, I mean, everything we were asking for, uh almost everything we were asking for in the farm bill got passed in this bill.
• 14:39
  SPEAKER_00: Interesting, which is going to hurt trying to pass a farm bill.
• 14:43
  SPEAKER_00: Um, and and that's a probably another topic for another day, but they're gonna try to pass a farm bill.
• 14:50
  SPEAKER_00: Farm bill would be beneficial because it's a little bit more um a longer term, in my opinion.
• 14:57
  SPEAKER_01: I have a feeling this has been having a problem getting those things passed anyway.
• 15:01
  SPEAKER_00: And but they're gonna probably pass one because of all the stamp program benefits are tied to the farm bill, so they'll probably get through uh with that.
• 15:10
  SPEAKER_00: But for the big beautiful bill, uh from a crop insurance standpoint, and and these I will say, uh, you know, I'm kind of going off some notes I've read and some sources that I trust.
• 15:21
  SPEAKER_01: And they're subject to slightly changing.
• 15:23
  SPEAKER_00: They very well could change, and they might not be implemented right away.
• 15:26
  SPEAKER_00: They might take a year.
• 15:28
  SPEAKER_00: Uh, it's everybody's trying to figure this out since it was just signed into law here July 4th.
• 15:34
  SPEAKER_00: But one of the things that's gotten a lot of attention is uh SCO coverage got a bump in in subsidy or or kind of a discount of the premium there from 65% to 80%.
• 15:46
  SPEAKER_00: And the coverage also got bumped up from 86 to 90.
• 15:50
  SPEAKER_01: So what that means is with what that means is the government wants me to buy county coverage.
• 15:54
  SPEAKER_00: They want you to buy county coverage and you'll be able to get it at 90%, and the government's gonna discount it 80%.
• 16:01
  SPEAKER_00: Sounds good.
• 16:02
  SPEAKER_00: And I think that's a really good deal.
• 16:03
  SPEAKER_00: I think that's a good deal for our guys, especially as we go west of here where crop insurance rates are higher.
• 16:10
  SPEAKER_00: You know, even the extra subsidy on ECO, those premiums are still pretty high.
• 16:14
  SPEAKER_00: This is gonna look really attractive to them, and you can buy SEO and sign up for ARC County uh going forward.
• 16:23
  SPEAKER_01: Okay, so you that's not just a one-the-year thing.
• 16:25
  SPEAKER_01: Now you can do that every year.
• 16:26
  SPEAKER_00: Correct.
• 16:26
  SPEAKER_00: So that's uh that's a big change from the past where you could not have both ARC and SEO.
• 16:32
  SPEAKER_00: Um, so I think those are positive changes that will result kind of change coverage ideas come you know this spring when we're up talking about podcasts.
• 16:41
  SPEAKER_01: And we need to talk about ARC and PLC too.
• 16:43
  SPEAKER_00: Yep, so that was a big thing on crop insurance.
• 16:45
  SPEAKER_00: The other thing I wanted to mention before we move off is they did increase the subsidy on your just standard crop insurance uh coverages as well.
• 16:53
  SPEAKER_00: Uh all the way from 50 all the way up to 85% got adjusted a little bit higher.
• 16:59
  SPEAKER_00: Um, so our coverage next year was most likely going to be a little cheaper because the subsidy went up.
• 17:05
  SPEAKER_00: Also, probably because the price isn't gonna be as high, but we'll worry about that later.
• 17:09
  SPEAKER_00: Okay, so let's move on to ARC and PLC.
• 17:11
  SPEAKER_00: Uh in the in the big beautiful bill, there were some key changes uh and some real positive changes with ARC and PLC.
• 17:19
  SPEAKER_00: And I'm actually gonna start with PLC.
• 17:22
  SPEAKER_00: We have not been a big proponent of PLC.
• 17:24
  SPEAKER_00: I know a pro Especially for soybeans.
• 17:26
  SPEAKER_00: It's never paid for it's never paid for soybeans, right?
• 17:29
  SPEAKER_00: And and even corn, it's pretty rare uh that it paid.
• 17:32
  SPEAKER_00: Of course, it did uh in when we were in this last cycle where of the downside down uh movement in price.
• 17:38
  SPEAKER_01: But until 2019, I felt like it was pointless to even talk about ARC and PLC because uh they're so low, we never got paid, it didn't matter.
• 17:48
  SPEAKER_01: Now it's like this year, it actually is gonna matter, isn't it?
• 17:52
  SPEAKER_00: Yep.
• 17:52
  SPEAKER_00: So so there's a couple things we gotta be careful when we talk uh on timelines, right?
• 17:58
  SPEAKER_00: So there's going to be a 2024 ARC county payment in a lot of our local counties around southwest Minnesota, Northwest Iowa, Southeast Minnesota.
• 18:05
  SPEAKER_00: Not a lot of Iowa, not eastern Iowa because they had good yields, right?
• 18:09
  SPEAKER_00: So that's gonna be all baked in.
• 18:11
  SPEAKER_00: Everything that was set in 24 is gonna be the same for those calculations.
• 18:16
  SPEAKER_00: But one of the things the bill did is they increased the prices on PLC, those reference prices.
• 18:23
  SPEAKER_00: So remember, on PLC, it's price loss coverage.
• 18:26
  SPEAKER_00: It only pays if price, the marketing year average price, falls below a certain number.
• 18:32
  SPEAKER_00: And historically that number has been 370.
• 18:35
  SPEAKER_00: Uh, and then last year on corn, because of some calculations, it went to 426.
• 18:41
  SPEAKER_00: Now with a new calculation, it's 442.
• 18:44
  SPEAKER_01: Just keeps getting better.
• 18:46
  SPEAKER_00: So 2025 and 2026, the way it looks, the effective reference price is going to be 442.
• 18:53
  SPEAKER_00: And that's gonna be really key because most of us didn't sign up for PLC, did they?
• 18:58
  SPEAKER_00: No, we didn't.
• 18:58
  SPEAKER_00: For 25, I think 99% of the people sign up for Arc County.
• 19:06
  SPEAKER_01: Just wait.
• 19:06
  SPEAKER_00: There's more.
• 19:08
  SPEAKER_00: And so what's nice is with that change in PLC, potentially yields being very high, which we get got done talking about, you know, potentially out yielding an ARC uh payment, if the price would continue to go down and trigger a PLC.
• 19:24
  SPEAKER_01: We're at 412 already today on D's corn.
• 19:27
  SPEAKER_00: Yep.
• 19:27
  SPEAKER_00: And so now you're looking at, well, I wish I would have signed up for PLC, right?
• 19:32
  SPEAKER_00: For 25, they're gonna pay farmers the higher uh whatever program would have paid them the most, either PLC or our county, automatically.
• 19:41
  SPEAKER_00: You don't have to go in and sign up again.
• 19:43
  SPEAKER_00: Uh, you don't have to change your elections.
• 19:46
  SPEAKER_00: 25 for the crop that's in the ground, if PLC would pay you more, they're gonna pay you PLC, which is an awesome change because the other thing with PLC, it's not capped.
• 19:56
  SPEAKER_00: R County is capped at 10% of the expected revenue benchmark revenue for the county.
• 20:02
  SPEAKER_00: PLC has no cap.
• 20:03
  SPEAKER_00: So if price keeps going down, uh your PLC payments could be pretty significant.
• 20:08
  SPEAKER_00: And so I mentioned corn effective PLC price, that reference price is$442, beans is up to$10.71, which doesn't sound great historically.
• 20:17
  SPEAKER_01: But weren't we just at$840?
• 20:19
  SPEAKER_00: It's yeah, the prior PLC price was$840.
• 20:23
  SPEAKER_00: So uh a nice jump there.
• 20:26
  SPEAKER_00: Uh ARC, they did not change uh the price calculations or anything.
• 20:31
  SPEAKER_00: It's still a five-year Olympic average price, but what they did is they increased the trigger from 86 to 90 percent.
• 20:37
  SPEAKER_00: Okay, so now uh I only need a 10% loss to trigger uh that 90% coverage for ARC County still uses the the yields times the Olympic average yield, Olympic average price to determine the revenue.
• 20:50
  SPEAKER_00: Uh so a really nice program, uh, a couple nice changes there, and the fact that you don't have to go and try to decide what you want to do now, they're just gonna pay you the automatically higher for 2025 uh is a key key uh change that they put in there.
• 21:06
  SPEAKER_00: There will be some chain, an opportunity to change some base acres and things like that, but we're gonna skip over that uh for the current time period because it's hard to explain calculations on a podcast mic.
• 21:18
  SPEAKER_01: Let's talk about 45Z.
• 21:20
  SPEAKER_00: All right, so last part that I wanted to hit on, uh, and this was in the the big beautiful bill as well.
• 21:25
  SPEAKER_00: Uh 45Z had gotten a lot of headlines here well a year ago, right?
• 21:30
  SPEAKER_00: And then there was just this big mystery of what was gonna happen with it.
• 21:34
  SPEAKER_00: And so a couple of positive things they did is they extended it to 2029.
• 21:40
  SPEAKER_00: So now uh it is a longer-term deal.
• 21:43
  SPEAKER_00: I'm not saying the rules are written on it yet.
• 21:45
  SPEAKER_00: I think there's still some uh calculations trying to figure out how exactly things are gonna qualify for the credit.
• 21:52
  SPEAKER_00: They did lower the credit uh a little bit, but some of the key things they did, uh which goes back to our soybean discussion from earlier, is they said in order to qualify for 45z tax credits, your biofuel source has to come from the United States, Canada, or Mexico.
• 22:12
  SPEAKER_01: Yes.
• 22:13
  SPEAKER_00: So now we've eliminated the I won't say eliminated because I'm sure somebody will backdoor used cooking oil through Mexico up, but right now at least it's gonna be harder to ship used cooking oil from China or Malaysia to the US to use as uh feedstocks for biofuels, and I think that's a key change.
• 22:33
  SPEAKER_00: Um, it should increase demand for soybeans specifically because we have uh the capability to crush them and get that oil.
• 22:42
  SPEAKER_00: Um, and it also makes the the credit, they changed some of the rules on the land use designation, and all that does is it makes uh biofuels or the oil from soybeans and corn more competitive uh with uh domestic use cooking oil and tallow, uh which give a little higher credit uh carbon score.
• 23:04
  SPEAKER_00: Now by changing that qualification, that land use qualification, it makes everything on a similar playing field, which is going to make soybean oil uh pretty attractive.
• 23:13
  SPEAKER_01: Because soybean oil was the worst for that CI score out of all of those.
• 23:19
  SPEAKER_00: That's exactly right.
• 23:19
  SPEAKER_00: Before that thing.
• 23:20
  SPEAKER_00: And so now they've changed the language on that to put that uh at a little better spot and should be able to use for renewable diesel, biodiesel, SAF, all those things that 45Z are supposed to help.
• 23:34
  SPEAKER_00: Uh, it should increase the use of U.S.
• 23:38
  SPEAKER_00: grains for biofuels, renewable fuels, and that's uh what a lot of corn soybean producers wanted.
• 23:45
  SPEAKER_01: This is not the last time we're gonna have to talk about this.
• 23:48
  SPEAKER_00: I would say it's probably not the last time we're gonna have to learn about it from the government changes either.
• 23:52
  SPEAKER_00: But uh so far, uh at least it's positive news.
• 23:56
  SPEAKER_00: Yes.
• 23:56
  SPEAKER_01: All right, thank you for your time today, Lucas.
• 23:58
  SPEAKER_01: I appreciate it.
• 23:59
  SPEAKER_01: You have a fantastic weekend.
• 24:00
  SPEAKER_01: You too, Mike.
• 24:01
  SPEAKER_01: Uh we will catch most of you, or some of you, I should say, out at the NPIC next week at the Wisconsin Dells.
• 24:08
  SPEAKER_01: Please stop by and visit with one of our team members.
• 24:11
  SPEAKER_01: Thank you.
• 24:12
  SPEAKER_01: And thank you to all our listeners.
• 24:14
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 24:17
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 24:23
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 24:29
  SPEAKER_01: See you next time.