Latest / Professional Ag Marketing Podcast / Grain Rally

Transcript

Grain Rally · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_02: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_02: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_02: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_02: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_02: This is your host, Mike Miner.
• 0:22
  SPEAKER_02: Let's get started.
• 0:23
  SPEAKER_02: Today is May 3rd.
• 0:24
  SPEAKER_02: I've got Nick with us here today.
• 0:26
  SPEAKER_02: How's it going, Nick?
• 0:27
  SPEAKER_02: Good.
• 0:27
  SPEAKER_02: How are you, Mike?
• 0:29
  SPEAKER_02: Oh, we're doing really good.
• 0:30
  SPEAKER_02: It was a very interesting week across the board for the uh grain markets, cattle markets.
• 0:36
  SPEAKER_02: Uh where do you want to start today, Nick?
• 0:39
  SPEAKER_00: Well, why don't you start it off, Mike, with uh with the green and these grain markets that we've seen this week?
• 0:45
  SPEAKER_02: Definitely.
• 0:46
  SPEAKER_02: So the uh July soybeans closed right at about 1215 today, had a high of twelve sixteen.
• 0:54
  SPEAKER_02: So that would put us just shy of that 100-day moving average at 1222.
• 0:59
  SPEAKER_02: Uh a really a nice recovery, uh, about 50 cents off of that low that we put in on Wednesday there, and then some, so really nice rally.
• 1:08
  SPEAKER_02: The November soybean market there, 1201 closed today.
• 1:12
  SPEAKER_02: We hit a high hit a low this week at about 12 or 11.53, so almost 50 cents there, a little more in the July.
• 1:19
  SPEAKER_02: But uh a really nice rally out of the soybean market, and uh really what I want to start with is all of the extra stuff going on with soybeans that kind of led up to this.
• 1:29
  SPEAKER_02: And uh right now I'm gonna start off with maybe the fund positions, that'd be a nice place to start uh, you know, up until this point.
• 1:37
  SPEAKER_02: Last Tuesday, the managed money on the soybeans, about 149,000 contract short.
• 1:43
  SPEAKER_02: Their record was 171,000, so somewhat close to a record short position that they've been getting rid of here over the last few weeks.
• 1:53
  SPEAKER_02: And uh yeah, the soybean complex really got some nice legs under it, uh really got a good run here, uh, along with the wheat as well.
• 2:02
  SPEAKER_02: But the soybeans got that lift up with meal kind of taking off.
• 2:06
  SPEAKER_02: We saw Argentina delays, we saw heavy rains and flooding across southern Brazil that's gonna delay their soybean harvest for at least a week, 10 days, something like that.
• 2:15
  SPEAKER_02: Maybe they'll get started here with some s uh some drying out on Sunday, but uh we'll see what that looks like going forward.
• 2:22
  SPEAKER_02: And uh, you know, southern Argentina they may have damaged some of their later, uh uh later maturing corn and soybean crops here with the freeze that they had.
• 2:32
  SPEAKER_02: So a little bit of support along those lines.
• 2:35
  SPEAKER_02: And then if you really dive in deep next Friday, we've got a WASDA report nick that we're gonna come out with.
• 2:41
  SPEAKER_02: And Conab, they came out with a 146 production on the soybean number uh for Brazil there.
• 2:46
  SPEAKER_02: Uh USDA is currently about 155, so we are gonna probably slide that lower here.
• 2:53
  SPEAKER_02: Um we'll see how much we can get.
• 2:56
  SPEAKER_02: We've been awaiting that move out of them for quite a while, and uh maybe they'll go to 152 or something along those lines, but most of what we're experiencing this week probably won't be taken into account for that report.
• 3:07
  SPEAKER_02: Uh the Argentina side too.
• 3:09
  SPEAKER_02: What do you think?
• 3:10
  SPEAKER_01: Yeah, well, do you think that we got um these funds getting kind of nervous here with with what's going on in South America, and then maybe even you know the the the rain we've been experiencing that uh they're actually covering some shorts here or or is it uh or is it mate just commercial buy-in here?
• 3:31
  SPEAKER_02: I I would put it along this line.
• 3:33
  SPEAKER_02: I would I would say that uh we don't have bullish trade going on.
• 3:37
  SPEAKER_02: We don't have bulls entering the market, we don't have bulls taking long positions, we have uh s short sellers that have started to cover up some of those positions.
• 3:48
  SPEAKER_02: They're getting rid of the risk that they've had on ahead of a growing season, as we started to see some problems in South America really at this point, anyway.
• 3:58
  SPEAKER_02: So I don't think we've talked much uh or traded much on planning progress in the United States itself yet.
• 4:05
  SPEAKER_02: I think we're still trading a lot of South America, a lot of Russia wheat story, I think we've traded uh as wheat just exploded here, as we talked about last week on this show.
• 4:14
  SPEAKER_02: I so I would revolve it more around those topics, I guess.
• 4:17
  SPEAKER_02: And I think it's very important with the grain markets to realize what stage we're in right now.
• 4:22
  SPEAKER_02: I mean, it's May 3rd.
• 4:24
  SPEAKER_02: We just rallied 50 cents in the soybean market.
• 4:26
  SPEAKER_02: Yeah, it's not it's common for us to see something like this at this time of the year from weather events in South America.
• 4:34
  SPEAKER_02: Um so it's important to realize kind of where we're at and all this, and then you've got the WASDA report coming out next Friday, uh significant event.
• 4:43
  SPEAKER_02: I mean, uh really at this point, I don't expect the grain markets to get quieter.
• 4:48
  SPEAKER_02: I still think we're gonna see a lot of volatility back and forth, giving us a lot of opportunities.
• 4:53
  SPEAKER_02: However, I think the grain producers in the room, they really need to start paying attention to the markets now.
• 4:59
  SPEAKER_02: I mean, we've had a nice hiatus for a while through the winter here, but uh really corn, this is the highest corn price we've had on futures since uh January, Nick.
• 5:08
  SPEAKER_02: So that's significant um and something to really pay attention to as we got December corn to close around that 480 to 485 type area today.
• 5:18
  SPEAKER_02: I think that was significant uh progress.
• 5:21
  SPEAKER_02: And I think we really need to start looking at if uh what old crop we got laying around still and moving that is yeah, I'm not the only one to say that this week with uh reports of over an hour and a half wait lines uh at ethanol plants, along with a lot of processors taking some free DP.
• 5:38
  SPEAKER_02: Uh the trucks have been moving this week with uh with the rain break, but uh I do think that looking forward we should really start to take some risk off the table uh for this next year's crop and maybe even twenty-five, and then you know, this old crop sitting in the bin, we have a substantial risk on just basis and and what futures can do here while that starts to sit and people wrap up planning as they start to move that down.
• 6:02
  SPEAKER_01: Sure.
• 6:03
  SPEAKER_01: Yeah, I think it's it's really easy to kind of get lost in some of the in some of this news that's going on that's driving the market higher and um you know, and kind of start to latch onto that and start to gain a bullish sentiment.
• 6:18
  SPEAKER_01: But the reality is we this is exactly what we needed to start making our new crop sales.
• 6:24
  SPEAKER_01: And I don't think there's really a whole lot that's that's changing the balance sheet yet.
• 6:30
  SPEAKER_01: We w we certainly were expecting some lower numbers out of South America with what with with what you know they got going on there.
• 6:37
  SPEAKER_01: So I think you know, stay the course and like you're saying, Mike, get you know, get get some of these sales and working orders going and and um this is exactly what we need to start to start uh you know b ensuring some profits for the year.
• 6:53
  SPEAKER_02: And I hope this is a start of something rather than the end of or middle of something.
• 6:58
  SPEAKER_02: I mean uh on this rally here that's occurring because a lot of South American problems with, you know, roughly 25% of their crop still waterlogged.
• 7:07
  SPEAKER_02: Um I I really look at this as hopefully we can slingshot this thing towards those gaps at five bucks on December 24 and 1240 on November uh 24 futures.
• 7:19
  SPEAKER_02: I I hope we get an opportunity at that, but uh I think it's important that each week we move forward now, the next uh probably two months.
• 7:28
  SPEAKER_02: Uh I want to be taking a little risk off probably each week, or pick your week and and really stick to a program here and and plug away at some of these sales and opportunities.
• 7:39
  SPEAKER_02: But uh maybe that's a little bit too in-depth, but let's talk about the cattle market, Nick, uh wrap up with that.
• 7:46
  SPEAKER_02: We had a lot of a lot of a lot of uh action going on with volatility in that market as well.
• 7:52
  SPEAKER_02: Can you just give me a breakdown of kind of why we moved the way we did in futures this week?
• 7:57
  SPEAKER_01: Well, sure, Mike.
• 7:58
  SPEAKER_01: There's there's quite a few things actually that were that were causing this volatility in the cattle market.
• 8:03
  SPEAKER_01: Number one, of course, was the the USDA testing these uh ground meat for avian flu and and um and that kind of spooked the market initially, I think, when that so that's not a common practice by any means.
• 8:17
  SPEAKER_01: No, no, and uh and and obviously, you know, the the when you start looking for stuff, typically you start finding stuff, right?
• 8:25
  SPEAKER_01: And so that got the market pretty nervous about all that and what the perception was gonna be to the public in beef demand.
• 8:33
  SPEAKER_01: But actually they came out yesterday um and that they did not find it in the samples that they tested from the states that have um had had cattle with that did test for avian flu.
• 8:47
  SPEAKER_01: So that you know traders like that, didn't they?
• 8:50
  SPEAKER_01: Yeah, after not liking the market for a couple days there, they really liked it yesterday.
• 8:54
  SPEAKER_01: And then you had some other news going on, certainly on the fundamental side of things, um, that really was was good.
• 9:02
  SPEAKER_01: Um we had a really strong export week, um 22 and a half thousand metric tons, which we shipped.
• 9:10
  SPEAKER_01: Uh that's a marketing year high for beef exports.
• 9:14
  SPEAKER_01: Um and and also um cash cattle trading one to two bucks higher in light of what these futures were doing this week, you know, two two significantly lower days, and uh and they were not able to buy them cheaper.
• 9:30
  SPEAKER_01: So uh I think that was really encouraging to the market.
• 9:34
  SPEAKER_02: Um there was sellers held out pretty good before that, didn't they?
• 9:38
  SPEAKER_02: When the futures were breaking, it seemed like they were waiting.
• 9:41
  SPEAKER_01: For sure, for sure.
• 9:43
  SPEAKER_01: Yep.
• 9:44
  SPEAKER_01: Uh weeks or the weights did finally take a little um move a little lower, down three pounds week over week.
• 9:50
  SPEAKER_01: Uh we're still 25 pounds above a year ago and 30 pounds above the the five-year average, but they they did work a little lower.
• 10:00
  SPEAKER_02: Still some to take off there from the looks of it.
• 10:02
  SPEAKER_01: Yep, yep.
• 10:04
  SPEAKER_01: Seasonally we should uh we should continue lower yet, not for long though.
• 10:08
  SPEAKER_01: Um probably June sometime is when you kind of start to pick them weights up, and we're not that far away from that anymore.
• 10:15
  SPEAKER_01: So um we'll see how this all goes.
• 10:18
  SPEAKER_01: It does look like we're gonna have quite a few carryover cattle going into May, even though the placement data suggested we weren't gonna have as many cattle for this May as last May.
• 10:28
  SPEAKER_01: We certainly have a lot more carryover cattle.
• 10:30
  SPEAKER_01: They the industry is not as current as it was last year, and so it'll be really interesting how that plays out.
• 10:36
  SPEAKER_01: Packing margins are in the red, have been for three to four weeks here, and um, and it'll be interesting if they're able to gain that back.
• 10:46
  SPEAKER_01: You know, if we we've had a really flat choice beef um price over the first four months of the year here, and it'll be really interesting if we can if we can get that to work higher and they could actually gain margin that way, or if we're simply gonna gain it by lower continuing or lowering this cash market.
• 11:07
  SPEAKER_01: Um I think with with all that coming our way, we gotta be we gotta be ready for a for a lower cash market just because um of those carryover cattle.
• 11:18
  SPEAKER_01: But um but yeah, they're they're all and they're also running short slaughter weeks yet, just 36 hour weeks.
• 11:25
  SPEAKER_01: So um both with with uh a higher seasonal supply coming but more and more uh carryover cattle.
• 11:35
  SPEAKER_01: Um you'd think that they start to increase their slaughter weeks too, again, their hours, but uh we'll see how that all plays out.
• 11:43
  SPEAKER_02: All right.
• 11:44
  SPEAKER_02: Well, thank you for your time, Nick.
• 11:45
  SPEAKER_02: Uh, a lot going on in the marketplace this week, so it made a fun podcast.
• 11:49
  SPEAKER_02: Uh please give us a holler if you have any questions about the markets.
• 11:53
  SPEAKER_02: It's a great time of the year to be chatting with your risk manager and let us know what we can do for you.
• 11:58
  SPEAKER_02: Thank you.
• 11:58
  SPEAKER_02: And thank you to all our listeners.
• 12:00
  SPEAKER_02: Please reach out to us at professional eggmarketing.com.
• 12:04
  SPEAKER_02: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 12:09
  SPEAKER_02: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 12:15
  SPEAKER_02: See you next time.