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Tariff Talk and DC · 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 Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Today is April 11th, and I've got Pat back with us here today.
• 0:27
  SPEAKER_00: How's it going, Pat?
• 0:28
  SPEAKER_01: Good, Mike.
• 0:29
  SPEAKER_01: How are you today?
• 0:30
  SPEAKER_01: Very good.
• 0:30
  SPEAKER_01: Well, we have Hey Mike, did you get a chance to have some of the donut holes that we just brought?
• 0:36
  SPEAKER_00: I did.
• 0:37
  SPEAKER_01: Sometimes when I say donut holes, I'm afraid it's a naughty word.
• 0:40
  SPEAKER_00: That I could see that.
• 0:42
  SPEAKER_00: You definitely want to catch the front part of that.
• 0:44
  SPEAKER_00: That's right.
• 0:45
  SPEAKER_00: Yeah, that's for sure.
• 0:46
  SPEAKER_00: It uh they sure are tasty.
• 0:48
  SPEAKER_00: They are tas he brought a box as big as a table, sadly.
• 0:51
  SPEAKER_00: Yeah, that wasn't necessary.
• 0:52
  SPEAKER_00: No, that was not.
• 0:54
  SPEAKER_00: Speaking of donut holes, especially if you say it that way.
• 0:59
  SPEAKER_00: Yeah.
• 1:00
  SPEAKER_00: The markets have uh been on quite the roller coaster this week, Pat.
• 1:04
  SPEAKER_00: We're just gonna do a pretty broad overview.
• 1:06
  SPEAKER_00: It's been a couple weeks since I chatted with you, so I want to take your gauge on just kind of what's been going on the last week and all the volatility and what you take from it for markets relevant to our listeners in the agricultural commodities.
• 1:19
  SPEAKER_01: Yeah, my gosh.
• 1:20
  SPEAKER_01: You know, it's um I I found myself.
• 1:23
  SPEAKER_01: I mean, first of all, uh uh, you remember a couple months ago we uh did that uh that team building exercise where we went through and we did our disc profiles, like everyone's different personality profiles.
• 1:33
  SPEAKER_01: Oh yeah.
• 1:34
  SPEAKER_01: I've decided in the last couple weeks that these markets are like high D personalities and maybe a little schizophrenic too, right?
• 1:41
  SPEAKER_01: Like they're like trying to deal with everything real time and trying to solve all the problems immediately, um, and an obviously ever-changing uh dynamic landscape.
• 1:52
  SPEAKER_01: And so um, and so I I know that one of our responsibilities, you and I and and all of us on the and on the pro ag team here, I know one of our responsibilities is to try to uh not add to that uh um angst volatility, but look for ways to try to take advantage of that.
• 2:14
  SPEAKER_01: And I I um and I do appreciate that uh opportunity and perspective that these markets have provided for us.
• 2:22
  SPEAKER_01: It doesn't really matter if you're in the business of of um raising corn or buying it.
• 2:27
  SPEAKER_01: You've had uh you've had some chances to do both here lately, right?
• 2:31
  SPEAKER_00: Yeah, I was uh like the cattle market I was looking.
• 2:35
  SPEAKER_00: We opened on Monday at like 196.20 and we were at 196.20 when I was doing WNAX at 11.30.
• 2:42
  SPEAKER_00: I'm like it that does not describe this week at all for market activity to be two cents apart from where we open this week.
• 2:49
  SPEAKER_01: Yep, that's exactly right.
• 2:50
  SPEAKER_01: And and so anyway, that's one thing that we should be able to at least come to expect is that we are probably not quite done with the volatility, and and uh and that shouldn't add a a layer or a level of angst or or concern, but it should um provide some comfort in the in the sense that these markets are trying to um manage these opportunities in risk real time, and it should provide um enough volatility to provide some opportunities for our business.
• 3:22
  SPEAKER_01: And so that's the first thing.
• 3:23
  SPEAKER_01: The second thing is is that um we also do need to recognize what um the longer-term end game is here, and I think you and I did get a chance to talk about this a couple weeks ago, but I think it's worth mentioning again um the idea behind trying to um I mean, we've been on a 30, 40, 50, six, fifty, sixty-year trend of um increasing trade deficits.
• 3:52
  SPEAKER_01: And um the current administration ran on this.
• 3:55
  SPEAKER_01: I mean, and and and they were elected in to uh to change that trend, frankly.
• 4:00
  SPEAKER_01: Now, the degree and impact of which those things are going to occur is the is the debate, and that's the market volatility behind all of these things, is as to how quickly that that that trend's gonna change.
• 4:11
  SPEAKER_01: And so, you know, for those of us that uh are uh heavily invested in agriculture, which is everyone uh likely that's listening to this podcast and and beyond, um you know, we are certainly at the tip of the spear of that.
• 4:24
  SPEAKER_01: And and uh and you know, I did Mike have the opportunity to spend three days in Washington, D.C.
• 4:30
  SPEAKER_01: this week and on behalf of of um of Minnesota pork producers and and national pork producers and and talking to legislatures and and uh having some really good conversations about about what potential um um significant impacts that this could have um on all of us that are in in invested in agriculture.
• 4:52
  SPEAKER_01: And then you know, there's a few folks out there that really you know have said this best, which is um you know, agriculture is exactly what what Trump is striving for on everything else.
• 5:03
  SPEAKER_01: Yeah.
• 5:04
  SPEAKER_01: We're the poster child.
• 5:05
  SPEAKER_01: We're the ones that have been creating a quality, um affordable food supply for the whole planet to enjoy.
• 5:15
  SPEAKER_01: And and uh in excess.
• 5:17
  SPEAKER_01: In excess, exactly right.
• 5:19
  SPEAKER_01: And so and so um while we what we shouldn't what shouldn't happen, right, is that agriculture gets gets punished, if you will, right, for for being what the poster child is of what's being what's trying to accomplish.
• 5:33
  SPEAKER_01: And and I tell you what, that that message is well received out there and very aware, right?
• 5:37
  SPEAKER_01: I mean, in terms of of all of that.
• 5:39
  SPEAKER_01: And so, and so the the opportunity to uh uh look for other markets, the opportunity to try to work through all of this volatility and and uh um is is is the the story's not over yet, right?
• 5:52
  SPEAKER_01: It's still gonna be interesting as we go forward here.
• 5:55
  SPEAKER_01: But but uh you know, as we wrap up this week, boy, you sure feel just uh maybe just a little bit better about things, right?
• 6:02
  SPEAKER_01: And and and today, you know, Mike, what's the situation?
• 6:05
  SPEAKER_01: We've got uh, you know, you got uh um, you know, you whatever whatever inning we're in in in uh China versus uh US as it relates to to racking up the uh the tariff number.
• 6:17
  SPEAKER_01: Now we're just talking silly numbers, right?
• 6:19
  SPEAKER_01: And as it relates to those guys, but at least I suppose we've got a 90-day reprieve uh they're on day three of or something like that uh um for for everyone else.
• 6:29
  SPEAKER_01: And so we'll see how that works out as we go through here.
• 6:32
  SPEAKER_01: But to your point earlier, as it relates to you know minimal market change from market open to eleven thirty, things have calmed down just a little bit.
• 6:40
  SPEAKER_01: Things have corrected a little bit off their lows.
• 6:42
  SPEAKER_01: And so, you know, what do you think, Mike?
• 6:44
  SPEAKER_01: How do you think things are gonna look as we start out next week?
• 6:47
  SPEAKER_00: Well, soybeans really stick out to me.
• 6:49
  SPEAKER_00: Soybeans had an awful day.
• 6:50
  SPEAKER_00: We were down 32 cents last Friday, a week ago today when China came out and retaliated the first time.
• 6:56
  SPEAKER_00: Today, this morning, they came out and retaliated again, and soybeans are up 18 cents.
• 7:01
  SPEAKER_00: So it the soybean market, corn market, I mean, a lot of these e commodities have bounced back and they're trading pretty well off of their lows.
• 7:10
  SPEAKER_00: I mean, uh November soybeans, 50 cents off their lows now from earlier this week.
• 7:14
  SPEAKER_00: So it seemed like you said it, a high deep personality, very schizophrenic.
• 7:19
  SPEAKER_00: The futures prices worked very fast to price that in.
• 7:24
  SPEAKER_00: And now we know the uncertainty.
• 7:26
  SPEAKER_00: I sure we we made a couple trade uh changes here.
• 7:30
  SPEAKER_00: We paused for 90 days on every other country except China, right?
• 7:34
  SPEAKER_00: So that was a change that we've had.
• 7:37
  SPEAKER_00: But in general, I mean, at this point, the markets have held up pretty well in the egg space compared to how they definitely could have pat, I think, this week.
• 7:45
  SPEAKER_01: No question about it.
• 7:46
  SPEAKER_01: I agree, I agree with that a hundred percent.
• 7:48
  SPEAKER_01: And and like I said, I I'm uh um it's uh these well, a little bit better news out of Washington, coupled with um a slight improvement in markets, although we have a long way to go to could to get us back to where we were not so long ago, right?
• 8:03
  SPEAKER_01: But but both of those things make you feel just a little bit better.
• 8:06
  SPEAKER_00: Especially after you get something like a WASDA port on wheat that was bearish yesterday and wheat's up like 18 cents today.
• 8:13
  SPEAKER_00: So a lot of these markets, you know, we had a big-ish report yesterday.
• 8:17
  SPEAKER_00: Normally, uh April Wazdare port.
• 8:20
  SPEAKER_00: We increased demand on corn, so that balance sheet, if you're looking fundamental, fundamentally now we're at like a 9% stocks to use ratio on old crop.
• 8:28
  SPEAKER_00: I mean, that's back to 21, 22, 23 levels for stocks to use ratio.
• 8:33
  SPEAKER_00: That's actually pretty tight.
• 8:34
  SPEAKER_00: Now the problem is new crop when we plant 95 plus million acres with a potential trend line yield.
• 8:40
  SPEAKER_00: But just fundamentally looking at some of these markets today, we're not as bad as what we maybe thought or could have been.
• 8:47
  SPEAKER_01: At least we talk about new crop corn, I I would I would make the same observation there that I was attempting to make just about these old the the market action over the last uh six weeks or so.
• 9:00
  SPEAKER_01: Um it'd be a fair bet that both sides will get a chance at uh above or below trend, right?
• 9:06
  SPEAKER_01: Just in terms of of how the market perceives um current current weather conditions.
• 9:12
  SPEAKER_01: I mean, we've already um seen um significant um uh moisture events in the in the southern part of the eastern corn belt.
• 9:22
  SPEAKER_01: Um for now at least we sort of like this uh this open April as it relates to uh being able to see some field work progress and and even some some some planting progress likely to be made here in the northwestern corn belt with with um pretty wide open conditions, Mike.
• 9:39
  SPEAKER_01: But boy, if you're uh you that can go both ways too, right?
• 9:43
  SPEAKER_01: Like if you're planting into the dust in April, the old saying is you plant in the dust, the bins will bust.
• 9:48
  SPEAKER_01: But boy, we're gonna need a change in in moisture pattern here in order for that to occur, obviously.
• 9:52
  SPEAKER_01: And so anyway, would just say, right, there's gonna be something on on both sides of trend as it relates to weather.
• 9:58
  SPEAKER_01: At some point it's gonna feel like that we're not gonna be able to achieve that trend line number, and in spite of even more acres, when you're starting from a 9% stocks to use ratio, um, you've got uh you've got a little bit of a hole to dig out of, right?
• 10:12
  SPEAKER_01: And so I suspect, especially now that we've been into this little bit of a pattern for five or six years here, where we've struggled to be above trend in the first place, right?
• 10:23
  SPEAKER_01: And so I think the market's gonna be a little more concerned about about uh um about uh weather events that are occurring.
• 10:32
  SPEAKER_01: Um again, we just don't have much of a reserve to build off of coupled with um we've had some volatile weather the last five or six years that have produced um trend or below trend line, well mostly below trend line yield events.
• 10:47
  SPEAKER_00: I do also want to just touch on one thing here.
• 10:49
  SPEAKER_00: The US dollar dipped below 100 today.
• 10:52
  SPEAKER_00: Um I think that's got traded into some of this too, just because that we're getting pretty low on that thing.
• 10:57
  SPEAKER_00: That makes us competitive to the rest of the world.
• 11:00
  SPEAKER_00: Um I know we've still got to negotiate with 75 plus countries on this tariff situation, but the futures are at least looking at that today, and that makes anything we produce and export more competitive, and I think that's put a little bit of a floor under these commodities and it's a temp it's a 10% bump in competitiveness, right?
• 11:19
  SPEAKER_01: That we that we recently experienced.
• 11:20
  SPEAKER_01: And I thanks for bringing that up.
• 11:22
  SPEAKER_01: I I intended to bring that up too to as we wrap up uh this podcast.
• 11:26
  SPEAKER_01: But that's been a lot of conversation um in the financial markets too about um one of the one of the ramifications or the impact of all of this trade policy talk uh can certainly be a uh a cheaper currency, which is uh sneaky good for commodities.
• 11:46
  SPEAKER_00: That's a good way to put it.
• 11:47
  SPEAKER_00: Sneaky good.
• 11:48
  SPEAKER_00: I like that.
• 11:48
  SPEAKER_00: Uh any final thoughts here, Pat?
• 11:50
  SPEAKER_00: I know just a couple quick hitting notes.
• 11:53
  SPEAKER_00: Um Dece corn only seven cents away from crop insurance price now, so we're approaching that pretty quickly.
• 11:59
  SPEAKER_00: Soybeans still got about 30 cents to go there.
• 12:02
  SPEAKER_00: Uh the lean hog market, a little softer on fundamentals this week, closing out the week, it looks like.
• 12:07
  SPEAKER_00: What do you think?
• 12:08
  SPEAKER_01: Yeah, probably more of a seasonal thing than anything.
• 12:10
  SPEAKER_01: We've got uh um we're kind of you know wrapping up uh from a meat trade business, uh uh, you know, working into uh a plan for Easter and uh a little bit early for spring grilling and those sorts of things.
• 12:23
  SPEAKER_01: And so just worth observing, I think, from a a little bit softer from a seasonal perspective.
• 12:29
  SPEAKER_01: But um, you know, to your point, we've had a nice little rally here in the corn market.
• 12:33
  SPEAKER_01: The last thing that I would just say is, is especially as folks get more busy here on and uh dedicated to their tasks of of getting the crop in the ground and everything else that's going on this time of year, um, the the importance of getting your orders in, firm orders, have a risk management plan established, uh, get it and and and figure out a way to get it executed without you needing to be relying on on uh on watching these volatile markets every second of the day.
• 12:59
  SPEAKER_00: All right, good advice there, Pat.
• 13:00
  SPEAKER_00: Thank you for your time today.
• 13:01
  SPEAKER_00: Thank you.
• 13:02
  SPEAKER_00: And thank you to all our listeners.
• 13:04
  SPEAKER_00: Please reach out to us at professional eggmarketing.com.
• 13:07
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 13:12
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 13:19
  SPEAKER_00: See you next time.