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Lets Talk Corn · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the egg 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.
• 0:24
  SPEAKER_00: Today is November 11th.
• 0:25
  SPEAKER_00: I've got Jeff with us here today.
• 0:27
  SPEAKER_00: How's it going, Jeff?
• 0:28
  SPEAKER_01: Afternoon, Michael.
• 0:29
  SPEAKER_01: Doing well.
• 0:30
  SPEAKER_00: Awesome.
• 0:31
  SPEAKER_00: Well, today we're going to talk about the corn market.
• 0:33
  SPEAKER_00: How's that sound?
• 0:35
  SPEAKER_01: Well, it was probably one of the more exciting markets of today.
• 0:38
  SPEAKER_01: Sure beat the pants off the uh cattle market, at least.
• 0:41
  SPEAKER_01: That thing's been relatively boring.
• 0:43
  SPEAKER_00: But you know no one came here to talk about cattle, okay, Jeff.
• 0:46
  SPEAKER_00: That has been like the most boring market.
• 0:48
  SPEAKER_01: Actually, actually, that your corn market would have come in uh first place the last 30 days.
• 0:54
  SPEAKER_01: Yeah, as far as number one boring most market out there.
• 0:57
  SPEAKER_00: So let's get to the fun stuff.
• 1:00
  SPEAKER_00: Corn technicals, basis first futures, WASDA report, talk a little bit about uh yield there, demand destruction, talk about South America weather.
• 1:10
  SPEAKER_00: We're gonna fit economic activity in there as well.
• 1:13
  SPEAKER_00: How's that sound?
• 1:14
  SPEAKER_01: I think let's start with the economic activity, Mike.
• 1:17
  SPEAKER_01: I know that's something that you spend a fair amount of time on, so I don't know, lead the way.
• 1:21
  SPEAKER_01: What did we see?
• 1:22
  SPEAKER_01: What were we expecting?
• 1:23
  SPEAKER_01: Seemed like the market took it as a pretty bullish uh situation.
• 1:27
  SPEAKER_00: Yes, best week for the NASDAQ here since November of 20.
• 1:31
  SPEAKER_00: And uh most stocks would reflect that as well.
• 1:33
  SPEAKER_00: SP had the best day since 2020, uh, yesterday, had a really nice reaction here to uh U.S.
• 1:40
  SPEAKER_00: inflation finally offering some relief, uh, but there's a long way to go on that here yet.
• 1:46
  SPEAKER_00: We pulled the CPI number down to about 7.7% this month versus 8.2% the prior month.
• 1:55
  SPEAKER_00: So we are starting to see inflation start to back off a little bit or uh weaken, and that is in favor of what we've been looking for.
• 2:04
  SPEAKER_00: The Fed I know has been looking for that for quite some time as they've been raising interest rates to try to combat that.
• 2:10
  SPEAKER_00: So we're starting to see some things kind of uh catch traction here.
• 2:15
  SPEAKER_00: You saw unemployment go up last week to 3.7%, and historically, when you start to see unemployment go up, you start to see inflation go down, actually.
• 2:25
  SPEAKER_00: There's a really strong correlation between those two things.
• 2:28
  SPEAKER_01: That makes sense.
• 2:28
  SPEAKER_00: So when I look at the the data that we've got the last two weeks out of our economic data, it's telling me what the Fed is doing today is working.
• 2:36
  SPEAKER_00: Now it depends who you talk to, what kind of uh uh uh outlook we have here, but how bad is bad gonna get down the road?
• 2:44
  SPEAKER_00: Can we pull and slow inflation without just throwing ourselves into a recession?
• 2:49
  SPEAKER_00: We've talked about it a lot on this podcast, but when I go forward and and start to see this, this could be the start of it.
• 2:56
  SPEAKER_00: Uh you could come next month and see that inflation's back up again, but historically it's it's not gonna vary month to month that greatly.
• 3:04
  SPEAKER_00: Usually you're gonna go in trends, right?
• 3:06
  SPEAKER_01: Trend stays the same, sure.
• 3:07
  SPEAKER_01: So the the 30,000 foot view is they're thinking the the market is stepping ahead of the Fed a little bit here, saying, all right, inflation's slowing a little bit, so maybe we don't have to jack up interest rates as much as uh what we would have thought before this week's report.
• 3:22
  SPEAKER_01: Maybe getting that one pretty close.
• 3:24
  SPEAKER_00: Yep.
• 3:24
  SPEAKER_00: And you saw, so the US dollar was a perfect example of that today.
• 3:28
  SPEAKER_00: I'll put it up on the screen here for you, Jeff, and uh for our daily email here, send that out as well.
• 3:33
  SPEAKER_00: But the US dollar took a really big hit this week.
• 3:36
  SPEAKER_00: We talked about it a lot in our recommendations uh letters this week, but 106.41 on the index to close out the week here, down a buck and a half at the end of uh today as well.
• 3:48
  SPEAKER_00: And that's really pulled back off.
• 3:50
  SPEAKER_00: So you would see a US dollar go up when interest rates are going up in the United States, especially compared to the rest of the world, and you would see it go down when you have the interest rate market starting to back off a little bit.
• 4:03
  SPEAKER_00: So you are seeing that reflected in the US dollar today, and that's kind of how you start to get this back to commodities.
• 4:10
  SPEAKER_00: Yep.
• 4:11
  SPEAKER_00: If we start to see a weak US dollar, that is a good news item for export activity, which it sounded like the hogs and some of these other commodities really need right now, grains uh between both corn and soybeans, besides some other logistical issues, but uh that would go a long way in supporting these markets.
• 4:29
  SPEAKER_01: Weekly sales on all those commodities, Mike, were pretty sour.
• 4:33
  SPEAKER_01: I know on the meat side we had some of the weakest numbers we've seen, and I think that corn the corn trend really stayed the same, right?
• 4:39
  SPEAKER_01: Just struggling to see any traction on the corn export front.
• 4:45
  SPEAKER_01: Um and you know, soybeans, that that storyline continued as well.
• 4:50
  SPEAKER_01: Decent sales over there, good shipments.
• 4:52
  SPEAKER_01: So it's certainly a story of uh everything's really taking a back seat on the export front.
• 4:58
  SPEAKER_01: Um so it's interesting to see this dollar chart.
• 5:01
  SPEAKER_01: You're right.
• 5:02
  SPEAKER_01: It definitely you can definitely see the peak there, almost um a hundred points higher than where you're at today um at 115.
• 5:10
  SPEAKER_01: So it'll be it'll be one to watch for next week for sure.
• 5:13
  SPEAKER_00: That SP market though, just to finish up on some of those equities first, we did close over uh 4,000 on the SP futures today.
• 5:20
  SPEAKER_00: Oh wow.
• 5:21
  SPEAKER_00: That's a pretty big mark, I'd say, for this week, anyways.
• 5:24
  SPEAKER_00: Seeing uh a very nice strong close there at the settle, uh put the December futures right at 4,000.
• 5:30
  SPEAKER_00: So kind of interesting there when I start to look at that.
• 5:33
  SPEAKER_00: But you mentioned corn exports.
• 5:34
  SPEAKER_00: Um just a quick stat here.
• 5:36
  SPEAKER_00: Corn export commitments as a percentage of the USDA's marketing year forecast is at twenty-six point nine percent.
• 5:44
  SPEAKER_00: It's the lowest on record going back to at least nineteen ninety, is where their data goes back to.
• 5:50
  SPEAKER_00: Wow.
• 5:50
  SPEAKER_01: And we didn't adjust that number at all on the WASDA report this week, which surprised me.
• 5:57
  SPEAKER_01: Didn't seem like the market.
• 5:59
  SPEAKER_01: I mean, I guess the market trended lower after that, but I I was a little surprised that the pre-report estimates didn't have um the exports getting beat up a little bit more than what they were.
• 6:09
  SPEAKER_01: So that that was one key takeaway for me.
• 6:11
  SPEAKER_01: I mean, I I don't know if it's a takeaway or not, but I was just surprised that we were we were unwilling to take down that demand factor.
• 6:19
  SPEAKER_01: For myself, uh and I was in this camp for a while, but um seeing a higher, slightly higher yield on corn, um, in my mind, Mike, you disagree with me if you would like, but you know, seeing the the yield trend change from consistently lower to coming back up, you know, for almost a half a bushel on the corn and on the soybeans, I think that shows tells the market, hey, we're not getting lower on yield.
• 6:49
  SPEAKER_01: And I think that kind of kind of ruins the story a little bit for the bulls here short term on the corn market.
• 6:57
  SPEAKER_01: Um, so to jump into that chart for a little bit, because I I really think that was most one of the more interesting things that happened this week is that seeing that dece corn start to break away.
• 7:07
  SPEAKER_00: Yeah, so I mean when you start talking about dece corn in the chart here, uh you lost 23 cents on December futures here just this week, and really we pulled December corn back from that 690 level that we've been trading really strong for quite a while down to the 660 type area and hovering probably 30 cents off of that or so.
• 7:29
  SPEAKER_00: And uh for us to find some support around this area, I think you're at a breaking point a little bit from really considering this a downtrend or getting too worried about the December corn chart today, because a lot of our support areas were around the 200-day moving average at 660 in this area, and uh you saw a nice 25 cent pullback, you know, um, which makes sense with what we had.
• 7:55
  SPEAKER_00: We had the longest managed money fund position since May on corn.
• 7:59
  SPEAKER_00: You saw yields now started to go up in this week's WASDA from 171.9 up to over 172.3, and then you see uh demand destruction really taking place as well.
• 8:12
  SPEAKER_00: Total export commitments right now are down 54% from last year at this time, so the smallest since 2019.
• 8:20
  SPEAKER_00: And it makes sense why we pulled off, especially even ahead of the WASDA.
• 8:23
  SPEAKER_00: Those weren't those were kind of anticipated options, I even feel like after we saw it.
• 8:28
  SPEAKER_00: Fair point.
• 8:28
  SPEAKER_00: Fair point.
• 8:29
  SPEAKER_00: I mean, when you pulled back here, I think it makes sense, but how much more are we gonna have to have to really push this down to like 630, for example?
• 8:37
  SPEAKER_00: And I think you're at a support level here that doesn't quite want to break yet until we get something like a rail strike.
• 8:43
  SPEAKER_01: So it takes another piece of fundamental information in your mind to chase us because the the gap man Jordan there, he's reminding us that we do have just a smidget of a jet a gap down there at 630.
• 8:55
  SPEAKER_01: But I I would probably have to be in your camp.
• 8:57
  SPEAKER_01: It's it's you know, even from 650 something on the low end of this week on the December, it's hard to m 630 feels a long ways away yet to me.
• 9:08
  SPEAKER_01: I I think you might be right about the fundamental needs to needs to support lower markets here.
• 9:13
  SPEAKER_00: And if you do start to pull back to six thirty, I mean maybe it just comes down to the fact that exports don't pick up or the fact that maybe this ethanol picture doesn't look as good going forward with gas demand down eight percent kind of weak, weak, weak, and now consistently.
• 9:28
  SPEAKER_01: That all sounds like it takes time in my mind.
• 9:31
  SPEAKER_00: It does take time.
• 9:31
  SPEAKER_00: So that's why I don't think it's just a huge pullback right to six thirty and give you that huge break lower, kind of like what people expect in today's day and age when you have wheat up sixty on Monday and wheat down sixty on Wednesday.
• 9:45
  SPEAKER_00: So it last week.
• 9:46
  SPEAKER_00: So it uh it it would take some time for my examples probably to pull you down besides something like a rail strike that would give you that big jolt lower.
• 9:55
  SPEAKER_01: So talk to me about farmers selling, Mike.
• 9:57
  SPEAKER_01: I'm assuming uh producers are falling over themselves to bring corn to town right now on a 40-some cent break and uh basis has not been affected.
• 10:07
  SPEAKER_00: Not so much.
• 10:08
  SPEAKER_00: But if you start to talk about some of the other factors in whether you're trading 50 to 70 over in northwest Iowa and some places now for nearby delivery, you're starting to notice that the cash level is starting to move closer and hovering around that seven dollar range, and you're gonna need to keep getting incentive incentivized to do that, I think, as you break lower here.
• 10:30
  SPEAKER_01: So it's gonna take something north of seven bucks to shake any corn.
• 10:34
  SPEAKER_01: And you're in so far, basis, at least in the corn deficit areas, and I I think some of these end users are very focused on keeping corn in northwest Iowa and northeast Nebraska, um, keeping it coin in this area versus getting railed out.
• 10:53
  SPEAKER_01: I kind of think that's part of the reason why they're bidding as hard as they are, and ethanol plants have some extra money right now to spend from a margin standpoint.
• 11:02
  SPEAKER_01: But yeah, we've spent a lot of time talking about that this week.
• 11:06
  SPEAKER_01: You know, the the it is an important conversation um for for both end users as well as growers.
• 11:14
  SPEAKER_01: So the the futures and basis probably are going to be um a little bit adversary related here.
• 11:22
  SPEAKER_01: As you know, futures go down, we've seen basis um pick up.
• 11:26
  SPEAKER_01: And I we would expect that to continue.
• 11:29
  SPEAKER_01: Um if you see a big rally back to seven bucks, you probably end up soft in the basis some because you probably get some sellers.
• 11:37
  SPEAKER_00: I I think that's perfectly fine.
• 11:40
  SPEAKER_00: But I think one of the best things right now that could happen for um for someone that has hedges on or sales, let's say as a grain producer, if you do have a break towards six thirty right now and you get a chance at 70 over or something like that here in the near term, that would be awesome to try to take that opportunity, I think, as a grain producer.
• 12:00
  SPEAKER_01: Well, that was gonna be my next question for you.
• 12:02
  SPEAKER_01: How do you what's the home run play and that's it, right?
• 12:04
  SPEAKER_01: That's it.
• 12:05
  SPEAKER_01: You lock in basis on lower futures.
• 12:08
  SPEAKER_01: Yeah.
• 12:08
  SPEAKER_01: You see if this thing will creep back up closer to seven bucks and set the futures, right?
• 12:12
  SPEAKER_01: Two different decisions.
• 12:13
  SPEAKER_00: And you have it on a big jerk move like that.
• 12:16
  SPEAKER_00: Sure.
• 12:16
  SPEAKER_00: Because hopefully then you can do it before something like a rail strike happens.
• 12:22
  SPEAKER_00: Because then you lose in both examples.
• 12:24
  SPEAKER_00: So I feel like just due diligence here, a guy has to think about making that an option here if we do pull back and have that opportunity.
• 12:35
  SPEAKER_01: So that's that's the home run play.
• 12:37
  SPEAKER_01: Is that is that the smart play?
• 12:39
  SPEAKER_01: Is that uh is or is that carry too much risk?
• 12:41
  SPEAKER_01: Or do you I mean uh kind of what I'm asking is do you go out and lock up today's um today's basis, or do you just uh let both the cash and the futures uh our basis and futures float because you know that the you got a little bit of a buffer there?
• 12:59
  SPEAKER_00: You do have a little bit of a buffer there.
• 13:02
  SPEAKER_00: Um I was just hoping you know everybody listened to us and sold some corn at seven bucks or something, but that's probably happened.
• 13:09
  SPEAKER_00: Yeah, a few too many times maybe.
• 13:11
  SPEAKER_00: But I uh I would say the safe option anyways is trying to uh wait for a little bit of pullback, set basis later here and on some sold bushels on hedges I have.
• 13:23
  SPEAKER_00: Otherwise, in the near term, if you're if you're open on basis and futures, then let's just see if I can keep getting opportunities to get$7 cash on a little bump in futures.
• 13:33
  SPEAKER_00: Hopefully basis kind of stays in this area.
• 13:36
  SPEAKER_01: Hard to go wrong with that kind of revenue, even if you know, especially on yields, of course, that were impressive, even yields in some of our areas that wasn't quite so impressive.
• 13:45
  SPEAKER_01: It's it's uh still nice revenue, still good sales.
• 13:48
  SPEAKER_01: I mean, we know there's a throttle out there on demand.
• 13:51
  SPEAKER_01: Um, that's the export market.
• 13:53
  SPEAKER_01: Seven dollar plus uh futures in my mind is it's it's gonna be tough to can you know compete on the world market up there.
• 14:00
  SPEAKER_01: Um probably puts a pretty hard ceiling in it for now.
• 14:03
  SPEAKER_00: We're well out of whack when it comes to the world market.
• 14:06
  SPEAKER_00: In today, in today's grain recommendation, I put a chart up that Jordan had shared with us on it showed U.S.
• 14:12
  SPEAKER_00: corn price versus all the other export countries, and like we're in our own realm up there, man.
• 14:17
  SPEAKER_00: Everyone else is down here and we're way up there.
• 14:20
  SPEAKER_00: So even the US dollar dropping to 106 today ain't gonna cut it.
• 14:24
  SPEAKER_01: That's yeah, that'll that get you back basically two weeks.
• 14:27
  SPEAKER_01: So wrap this thing up, Mike.
• 14:29
  SPEAKER_01: Give us an update on South America.
• 14:31
  SPEAKER_01: You got uh WASD saying Brazil's got a decent crop.
• 14:35
  SPEAKER_01: You're ticked dry in Argentina.
• 14:37
  SPEAKER_01: What's happening there in the last two weeks?
• 14:40
  SPEAKER_00: Yeah, Brazil for corn, anyways, early crop conditions are remaining favorable, but we're watching uh a dry turn in uh in the forecast here going forward, expected kind of after Sunday-ish here for the southern uh part of Brazil and Argentina.
• 14:55
  SPEAKER_00: So dry conditions are currently a greater concern in Argentina than it would be in Brazil for South America, anyways.
• 15:03
  SPEAKER_00: But uh really keeping uh a good eye on uh Argentina here and the Brazilian forecast going forward on corn and and soybeans too.
• 15:13
  SPEAKER_00: I mean, but soybeans here, Brazil's looking at a monster crop.
• 15:16
  SPEAKER_00: Uh they're one of the biggest bearish threats going forward on soybeans, I think.
• 15:21
  SPEAKER_00: They're looking to reach roughly 5.6 uh or so billion bushels here in early 23.
• 15:26
  SPEAKER_00: So there's still plenty of season ahead of us for that weather to turn a little bit drier.
• 15:31
  SPEAKER_00: But um that that'd be one of my main bearish concerns on the soybean market, anyways, after you know, we really start talking about, yeah, you've got some slow export activity out of the U.S.
• 15:41
  SPEAKER_00: too before Brazil picks up.
• 15:43
  SPEAKER_00: But um, at least in the near term here, you've had some really, really nice demand help from the crush side.
• 15:49
  SPEAKER_01: So South American weather, um, that's got to be something that we'd crank up the priority list a little bit on, right?
• 15:55
  SPEAKER_01: We're getting into the growing season there, um, further and further into the growing season, I should say.
• 16:01
  SPEAKER_01: So we'll try and keep everybody up to date a little bit more on that front uh on these podcasts and on our weekly letters.
• 16:07
  SPEAKER_01: Mike, uh, what else are you looking at going into next week?
• 16:10
  SPEAKER_00: I'm gonna watch corn price pretty consistently here through this week.
• 16:13
  SPEAKER_00: Are we going up or down from 660?
• 16:15
  SPEAKER_00: And I think uh we're gonna start to be able to at least make some decisions based upon that.
• 16:20
  SPEAKER_00: Perfect.
• 16:21
  SPEAKER_00: All right, thanks for joining the show today.
• 16:23
  SPEAKER_00: And thank you to all our listeners.
• 16:25
  SPEAKER_00: Please reach out to us from our website at professionaleggmarketing.com or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 16:36
  SPEAKER_00: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.