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Grains: Pro Farmer · 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.
• 0:24
  SPEAKER_00: Today is August 22nd.
• 0:26
  SPEAKER_00: I've got Jaden here with us today.
• 0:27
  SPEAKER_00: We're going to talk about the Pro Farmer Crop Tour results.
• 0:30
  SPEAKER_00: They came out with their final number just moments ago.
• 0:33
  SPEAKER_00: Then we're going to talk about the EPA and some of their decisions here this week.
• 0:37
  SPEAKER_00: Got Jaden.
• 0:38
  SPEAKER_00: How's it going, Jaden?
• 0:39
  SPEAKER_01: It's going good, Mike.
• 0:40
  SPEAKER_01: How about yourself?
• 0:41
  SPEAKER_00: Not too bad.
• 0:42
  SPEAKER_00: It was a very interesting week in the grain market here.
• 0:45
  SPEAKER_00: First off, thank you for everyone who joined us at Dakota Fest this year.
• 0:48
  SPEAKER_00: It's always nice to put some faces to names there and uh just get to interact with all of you.
• 0:53
  SPEAKER_00: So thanks again for a wonderful Dakota Fest.
• 0:55
  SPEAKER_00: It was awesome being out there, especially in a year where it's nice and green all the way to Mitchell.
• 1:00
  SPEAKER_00: Jaden, what did the corn and soybean futures trade like this week?
• 1:04
  SPEAKER_01: Yeah, so we were we were green on both markets this week.
• 1:07
  SPEAKER_01: We gained six cents on December corn and sixteen cents on November beans.
• 1:11
  SPEAKER_00: Week over week, nice little advance higher.
• 1:14
  SPEAKER_00: Uh nice little bull run higher.
• 1:17
  SPEAKER_00: Uh a lot of a lot of questions, I would argue, being posed around.
• 1:22
  SPEAKER_00: We put in a low on December corn, 392 on August 12th.
• 1:26
  SPEAKER_00: That would be uh awfully seasonally matter-of-fact there, if that does end up being our low there.
• 1:32
  SPEAKER_00: Uh we broke yesterday a massive uh technical close, I thought, broke above that 20-day moving average, closed well above it.
• 1:40
  SPEAKER_00: Um not a whole lot of follow-through today, which was maybe a little disappointing to Bulls, but we've got some resistance hanging here around 411 and maybe another nine cents higher or so.
• 1:49
  SPEAKER_00: But nonetheless, it was a little bit of buying the rumor and selling the fact.
• 1:54
  SPEAKER_00: Uh, the Pro Farmer Crop Tour this week that went Monday through Thursday, and then they gathered up all the results, kind of weather trend adjusted it and whatnot, and then threw out their number just moments ago, Jaden.
• 2:05
  SPEAKER_00: And what did the uh ProFarmer Crop Tour come out with?
• 2:08
  SPEAKER_01: Yeah, Mike, they came out with a 182.7 on corn and 53 on soybeans.
• 2:13
  SPEAKER_01: And last year the uh pro farmer's gas was 181, and the USDA ended the in January, they're at 179.3.
• 2:22
  SPEAKER_00: Alright, and at that time, August and September, they're 183.1 and then 183.6 in August and September.
• 2:30
  SPEAKER_00: So they they did get the trend right, I would argue, which was a little bit smaller crop.
• 2:34
  SPEAKER_00: This time around, I would argue they're probably getting that trend correct as well.
• 2:38
  SPEAKER_00: As Eastern Corn Belt right now, pretty hot and dry conditions out there.
• 2:42
  SPEAKER_00: That crop's likely shrinking in a pretty good way.
• 2:44
  SPEAKER_00: Not maybe as extreme as last year, but still not a very good finish for that crop.
• 2:50
  SPEAKER_00: So 182.7 on corn, the USDA 188.8.
• 2:55
  SPEAKER_00: Uh pro egg marketing, we were at 184.6.
• 3:00
  SPEAKER_00: So not very far off.
• 3:02
  SPEAKER_00: It's also worth mentioning the pro farmer crop tour is usually two off to the low side, so you add that on and you're pretty much right where we were jaded in at 184.6.
• 3:12
  SPEAKER_00: I think even since we went on the crop tour, that number's probably going down.
• 3:17
  SPEAKER_00: It's not it's not getting bigger given the current conditions out east.
• 3:21
  SPEAKER_00: Uh that crop's likely shrinking, a little bit excess water in northern Minnesota and northern South Dakota, likely bringing those numbers down from what they were a couple weeks ago as well.
• 3:32
  SPEAKER_00: So if you had to rate this trend, I mean, we're coming in pretty comfortably with a lot of these tours around 184, it seems like here.
• 3:39
  SPEAKER_00: So uh some it was a big week on the tour.
• 3:42
  SPEAKER_00: We expected, the market expected, ProAg expected that we would have a lower number out of the ProFarmer Crop Tour when they went out and started taking samples, especially in that eastern corn belt.
• 3:55
  SPEAKER_00: So it's worth mentioning, I guess, that are we gonna have some buy the rumor, sell the fact going on in this market with them expecting a little bit poor samples, and uh it'll be very interesting to see what the trade acts like on Sunday night and Monday during that session there, Jaden.
• 4:14
  SPEAKER_01: Yeah, Mike, uh either way, no matter how you look at it, it definitely does not hurt the corn market.
• 4:19
  SPEAKER_00: No, it does not hurt the corn market.
• 4:21
  SPEAKER_00: I'd argue the only way it does hurt it is if there was some of that buy the rumor and then selling the fact uh of that lower number.
• 4:28
  SPEAKER_00: So we'll see what comes out with.
• 4:30
  SPEAKER_00: We also had some other news today, Jaden, which um uh well, even before we get that, let's talk about the demand category on that.
• 4:38
  SPEAKER_00: So let's say the USDA does adjust down to that type of number on yield.
• 4:43
  SPEAKER_00: That would equate to about 450, 500 million bushels less of a corn crop.
• 4:50
  SPEAKER_00: Ironically, very similar to what we increased demand in this last report on.
• 4:56
  SPEAKER_00: Now the ethanol and the export number, they're still right in line.
• 4:59
  SPEAKER_00: Those increased expectations are very um backed.
• 5:04
  SPEAKER_00: I think that it that those are um considerable.
• 5:08
  SPEAKER_00: The feed and residual number, I would argue, was more of a slush fund that they can pull back out.
• 5:13
  SPEAKER_00: So basically the way I look at it is if they shrink yield in one of these reports going forward to something like a 183, 184 type number, you're probably looking at them taking that additional demand in feed and residual back out of this marketplace, I'd argue.
• 5:30
  SPEAKER_00: Talking a lot of numbers and what ifs here, but that would likely put you at a very close to two billion bushel carry out, 195, something like that, at the end of the day.
• 5:39
  SPEAKER_00: Your fundamental situation on the corn market does not change a lot overnight on any of those numbers, Jaden.
• 5:46
  SPEAKER_01: Yeah, so either way, Mike, you're just kind of saying we're gonna stick around that ending ending stocks number we're at right now.
• 5:52
  SPEAKER_00: Yep, maybe just a little bit lower.
• 5:54
  SPEAKER_00: Once they increase decrease yield, they'll take most of the VIP back out in demand, but probably not all of it.
• 6:00
  SPEAKER_00: Um the next thing worth looking at is soybean market had a very massive trading week this week.
• 6:05
  SPEAKER_00: It was a lot of volatility.
• 6:07
  SPEAKER_00: Um, yeah, honestly, at this point, we had November soybeans trade up to 1062 today as the high.
• 6:14
  SPEAKER_00: That would have been the high on the move.
• 6:16
  SPEAKER_00: I I want to argue or mention that we traded up to 1074 here.
• 6:20
  SPEAKER_00: That was back in June on that one.
• 6:23
  SPEAKER_00: We really haven't traded above that 1075, even back to February.
• 6:27
  SPEAKER_00: There is a high.
• 6:28
  SPEAKER_00: You go all the way back to a year ago in September, they got just over 11.
• 6:32
  SPEAKER_00: So at this point, I'd argue you're within basically 10 cents of the high we've had in the last 11 months at this point.
• 6:40
  SPEAKER_00: So on the soybean market, we've made up a lot of ground on this rally, and uh that's getting quite a bit of attention.
• 6:47
  SPEAKER_00: We're above crop insurance level standpoint at this at this level.
• 6:51
  SPEAKER_00: But what was something helping us this week, Jaden?
• 6:54
  SPEAKER_01: Yeah, Mike, the the soy oil market was really helping push the soybeans around this week.
• 6:59
  SPEAKER_01: We had a really volatile day actually in the soil market today.
• 7:03
  SPEAKER_01: We we had a point before uh Trump's announcement came out around 10 o'clock.
• 7:08
  SPEAKER_01: We were down a buck in the soy oil market, and now we closed the day up a buck fifty.
• 7:13
  SPEAKER_00: Yeah, so the EPA came out on Friday, began clearing a backlog of requests from small oil refiners uh for exemptions, uh exemptions from the U.S.
• 7:23
  SPEAKER_00: biofuel laws.
• 7:24
  SPEAKER_00: So here's what they did.
• 7:26
  SPEAKER_00: They granted 63 requests, so they said you can have the exemption.
• 7:30
  SPEAKER_00: They denied 28 of them completely, and then they had 77 of them that they approved partially, and then 13 were bit basically undecided.
• 7:39
  SPEAKER_00: Now, here's the deal.
• 7:40
  SPEAKER_00: So that exemption amounted to like 5.3 billion rins through that um through that process.
• 7:47
  SPEAKER_00: The soybean oil market was down a buck ahead of it, it was up a buck after it.
• 7:52
  SPEAKER_00: Basically, the way the market took it was that it must have been expecting for them to do more than that, or let's just say all of the exemptions is what they were worried about, given the fact that they did partials and then denied some and are undecided on some, was maybe better than what the market had expected going all the way back to 2016 on these backlog of rents or on uh exemptions.
• 8:16
  SPEAKER_00: So I guess bullish news, kind of.
• 8:19
  SPEAKER_00: It's still not that bullish of news for the soybean oil market or ethanol market, etc.
• 8:25
  SPEAKER_00: Um, but at this point, you know, I thought that had pretty good implications on the marketplace today because crude oil market really was unchanged during that time frame.
• 8:36
  SPEAKER_00: Uh we even ending up the day up just a quarter here basically on crude oil, so there wasn't a ton of volatility there.
• 8:42
  SPEAKER_00: It was mainly on the soybean oil side I saw.
• 8:45
  SPEAKER_00: There was some talk about Trump in India as well that maybe could have played a part, but nonetheless, I feel like that was a major mover here today, at least.
• 8:55
  SPEAKER_00: One of the other major movers is that we've talked about the deterioration in the eastern corn belt.
• 9:01
  SPEAKER_00: August weather matters a whole lot more for soybeans than it does for corn.
• 9:05
  SPEAKER_00: And August weather in the Eastern Corn Belt is pretty hot and dry at this point.
• 9:10
  SPEAKER_00: And then in the Western Corn Belt, there are spots or little holes that are getting probably too much water.
• 9:15
  SPEAKER_00: And we all know soybeans don't like wet feet in big exceptions.
• 9:20
  SPEAKER_00: So that's kind of what we're looking like in the grain market this week, anyways.
• 9:24
  SPEAKER_00: Uh I would say some of the other conversations we've been talking about a lot of would be basis Jaden.
• 9:30
  SPEAKER_00: We've been talking about spreads, those have been narrowing up a little bit, maybe hinting that a low could potentially be in in these markets.
• 9:37
  SPEAKER_00: Uh what else are we noticing or getting to talk to customers about this week?
• 9:41
  SPEAKER_01: Yeah, Mike, uh all what you said was very true.
• 9:44
  SPEAKER_01: I just I just um incentivize people to call in and you can ask these questions about the markets.
• 9:50
  SPEAKER_01: And also I I want to get people uh involved with our new uh technology pro egg power grains where you can you have uh you can stack your positions and see see your uh cost production compared to Iowa states, and it's just a good way to know what's going on in your farm and kind of see where you're at uh on the crop here.
• 10:09
  SPEAKER_00: Yeah, so use us to keep track of your marketing info for your farm on the cash and future side combined all into one place that you can access on a URL.
• 10:19
  SPEAKER_00: It's very friendly, brand new, innovative technology, and we would love to work with you on that project.
• 10:26
  SPEAKER_00: So brand new as of Monday.
• 10:28
  SPEAKER_00: We're really excited about it, so please contact us to get thrown on that so we can get all your info in and we can help give you some better advice here going forward.
• 10:37
  SPEAKER_00: Uh, thank you for your time, Jaden.
• 10:39
  SPEAKER_00: We've got some exciting things, a lot of active trades here this week on the grain front, especially.
• 10:45
  SPEAKER_00: So please call in.
• 10:47
  SPEAKER_00: Let's talk about how you're sitting ahead of the harvest here at these upper echelon of prices that we've been at in the last year, especially for soybeans and even corn market, getting back into this 411 type area.
• 10:59
  SPEAKER_00: So we're really excited about some of the things we see in these markets and some of the opportunities that are uh are right here today or fairly close.
• 11:08
  SPEAKER_00: Thank you for your time today.
• 11:10
  SPEAKER_00: This podcast is also brought to you by Pro Ag Power Grains, the all in one grain marketing tool tied directly to your brokerage account.
• 11:17
  SPEAKER_00: Track cash, futures, and options all in one place, compare your cost of production with others, use what if tools to build your marketing plan, and get to work with uh wonderful people at professional ag marketing on developing the right risk management strategy for your operation.