Latest / Professional Ag Marketing Podcast / WASDE

Transcript

WASDE · 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 involve 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 December 9th.
• 0:25
  SPEAKER_01: I've got Jeff with us.
• 0:26
  SPEAKER_01: How's it going, Jeff?
• 0:27
  SPEAKER_00: Hey Mike.
• 0:28
  SPEAKER_00: Yep, everything's going pretty good.
• 0:32
  SPEAKER_01: A little snow.
• 0:32
  SPEAKER_01: I don't know what you're looking at, but I uh eight inches it looks like outside.
• 0:36
  SPEAKER_01: That's plenty for me to move.
• 0:38
  SPEAKER_00: That's the biggest moisture event I had all summer.
• 0:40
  SPEAKER_01: My arms are smaller than yours, though.
• 0:42
  SPEAKER_01: I'm sure you can scoop just fine.
• 0:44
  SPEAKER_01: We had a WASDA report today, so we're gonna talk about that a little bit here.
• 0:48
  SPEAKER_01: Jeff talk about some of the different numbers from the USDA for the United States and for Argentina.
• 0:54
  SPEAKER_01: A little bit of talk about Ukraine.
• 0:56
  SPEAKER_01: Then we're gonna talk about uh some energy markets here just a little bit.
• 1:00
  SPEAKER_01: So let's get started.
• 1:01
  SPEAKER_00: WASDAY report is I I sure didn't notice it in the markets, Michael.
• 1:06
  SPEAKER_01: No, if you didn't notice, we closed the week up a penny today on the uh March contract of corn and down about two cents on the March soybeans.
• 1:16
  SPEAKER_01: So, yes, Jeff, it was not exactly volatile like uh maybe Mark Gold was thinking this week, anyways, here.
• 1:22
  SPEAKER_01: But honestly, that's not unusual.
• 1:25
  SPEAKER_01: December's usually a very boring report compared to the January report, which I think is what we're really leading up to with a lot of these markets.
• 1:32
  SPEAKER_00: Yeah, we did uh a customer of ours asked us to look at that last week, Mike.
• 1:37
  SPEAKER_00: I don't know if I shared that with you, but um it was kind of surprising how you know, so this the thought was how much does the yield change even though the harvest is ahead of schedule?
• 1:47
  SPEAKER_01: Gotcha.
• 1:48
  SPEAKER_00: And so it was actually that you know, just like anything else, about half the years it it moves pr pretty aggressively between the October-November yield report and the January one.
• 1:57
  SPEAKER_01: Well that gives us that gives us a lot of uh trend.
• 2:00
  SPEAKER_00: Yeah, this is yeah, click here for more uh astounding information, right?
• 2:05
  SPEAKER_00: But yeah, so I mean it it can still move, which that kind of did surprise me.
• 2:08
  SPEAKER_00: I thought we would, you know, all the information's gathered, harvest is long over, wouldn't change much, but that's not really the case.
• 2:15
  SPEAKER_01: Yeah, so I mean, mostly as expected out of the US side of things, they really didn't change many numbers on the corn balance sheet at all.
• 2:22
  SPEAKER_01: Uh it was mostly expected, they did cut into the US corn stocks on lower exports here, so uh that was fair enough.
• 2:31
  SPEAKER_01: We needed to move that a little bit lower, but that's really the only thing that was moved, so I mean everything stayed the same.
• 2:37
  SPEAKER_01: Uh they did make a couple other interesting cuts here.
• 2:40
  SPEAKER_01: Interesting cut to the Ukraine corn crop, uh, but they did increase exports for them anyway.
• 2:46
  SPEAKER_01: Some of those stocks there were left over from last year as well.
• 2:50
  SPEAKER_00: So increased uh exports out of Ukraine, decreased it slightly in the US, um obviously the South American crop, which we'll talk about in a minute, um, comes into the equation as well.
• 3:03
  SPEAKER_00: But uh just over two billion bushels now on um the WASD for export demand, Mike.
• 3:10
  SPEAKER_00: Does that current pace does that stay there or does it have to come down some more?
• 3:15
  SPEAKER_01: We are expecting to see a few more uh cuts here in the export number, Jeff.
• 3:20
  SPEAKER_01: But Mexico was in the market a little bit this week buying some corn.
• 3:23
  SPEAKER_01: Uh China bought a little bit of corn, but most of that was from a switch from unknown destinations there prior.
• 3:30
  SPEAKER_01: So we did see a little bit of that going on.
• 3:33
  SPEAKER_01: Um they're a little bit back from last year's numbers, but decently close to average.
• 3:37
  SPEAKER_01: What do you think?
• 3:39
  SPEAKER_00: Yeah, I guess you'll just look at the sales data, you would say we're running about 13% um, you know, behind last year.
• 3:47
  SPEAKER_00: Depends how you want to run the math on that.
• 3:50
  SPEAKER_00: And that actually gets you halfway close.
• 3:52
  SPEAKER_00: So yeah.
• 3:52
  SPEAKER_00: I would say you're you're here or you're lower based on everything we know today, is the way I'd put it.
• 3:57
  SPEAKER_01: That makes sense.
• 3:58
  SPEAKER_01: Soybean export sales fall short of the seasonal pace needed to hit uh the US Day's target, about forty-one million bushels shy there.
• 4:06
  SPEAKER_01: Uh so not much.
• 4:08
  SPEAKER_00: I mean that's that's getting that's shrinking.
• 4:12
  SPEAKER_01: You know, that that's uh that deficit is shrinking anyways.
• 4:15
  SPEAKER_01: Yep.
• 4:15
  SPEAKER_00: But we've we've put a lot of bean even this past week we had several daily flashes of some pretty decent sized sales.
• 4:22
  SPEAKER_00: So it's definitely I don't have any issues with them not changing the soybean um balance sheet on this report, I guess.
• 4:29
  SPEAKER_00: I sure didn't see anything out there.
• 4:30
  SPEAKER_00: And I I think lowering the export demand on the corn is probably about all they had to do for now, also.
• 4:36
  SPEAKER_01: Yeah.
• 4:36
  SPEAKER_01: You know the South American yields, they really didn't touch those at all here.
• 4:40
  SPEAKER_01: Uh I would have I guess I would have probably supported a slight cut to some of the Argentina yields from their trend, I guess.
• 4:47
  SPEAKER_00: Yeah, it's early.
• 4:49
  SPEAKER_00: It is what are we forty percent planted down there, something like that?
• 4:53
  SPEAKER_01: So you would you would normally get a South American weather rally somewhere in December, January, kind of in this time frame.
• 5:00
  SPEAKER_01: So I think uh when I look at the impact of South American weather going forward, it's just starting, which is a little bit earlier than normal, but it's right in the right time frame from a seasonal perspective.
• 5:12
  SPEAKER_01: And uh you're gonna have some earlier crops there a little bit.
• 5:16
  SPEAKER_01: Brazil's still holding in mostly well.
• 5:18
  SPEAKER_01: I know there's some pictures floating around trying to make a problem out of Brazil, but you've got a really large number to start taking from there, and I I think you're just fine.
• 5:27
  SPEAKER_01: It's gonna be Argentina, but I mean you know, Brazil's 66% larger in production than Argentina is on uh soybeans, so it's gonna take a little bit there, I think, to start pulling away from those South American crops to actually make a difference, but you are gonna trade South American weather going forward more frequently, and that that'll be a big topic.
• 5:47
  SPEAKER_00: And following the Argentina rainfall, you know, and temperatures, it it does look miserable down there.
• 5:52
  SPEAKER_00: They haven't been able to buy a rain and cranked up the thermometer quite a bit here this past week.
• 5:58
  SPEAKER_00: So I I was surprised that the USDA didn't adjust the Argentina yield down some, but would absolutely echo your thoughts on uh Brazil's the the big deal there.
• 6:08
  SPEAKER_00: And you know, compared to a year ago, we're projected to have a little over a billion bushels more of soybeans out of Brazil.
• 6:15
  SPEAKER_00: That's gonna heal up a lot of holes.
• 6:17
  SPEAKER_01: I think the January WASD airport, that'll catch most of that.
• 6:20
  SPEAKER_01: We'll start to see some reductions in that part of the world, but uh until that time frame, we'll still have some weather volatility, I think, Jeff.
• 6:27
  SPEAKER_00: Fair points.
• 6:28
  SPEAKER_00: You mentioned crude oil in the beginning of the podcast.
• 6:31
  SPEAKER_00: What uh what do you got on the agenda there?
• 6:33
  SPEAKER_01: Well, uh that's been a pretty major setback in the crude oil market here.
• 6:37
  SPEAKER_01: Uh about$50 off of their high.
• 6:40
  SPEAKER_01: We're trading about$71 to$72 now on that WTI crude oil.
• 6:45
  SPEAKER_01: And we've really pulled back uh uh slight demand drops and uh really starting to increase some stocks there actually on gasoline stocks.
• 6:55
  SPEAKER_01: So we're starting to finally see that go up a little bit, and it's still low relative to history, but I think it's a trend they're focusing on, and and you do see a little bit of concern over recessionary fears, and and uh that's definitely relevant as well.
• 7:10
  SPEAKER_01: Um but when we look at the crude oil market, that has had an impact on things like diesel prices for you, egg producers.
• 7:17
  SPEAKER_01: I mean uh dropping a dollar in the uh cash market here for eel recently, going getting some tankers in the low threes.
• 7:26
  SPEAKER_01: Uh that sounds pretty attractive to try to start getting some stuff on on 2023.
• 7:32
  SPEAKER_01: And uh that market here, you know, that's putting a little bit of a cap on the corn market too, I think.
• 7:38
  SPEAKER_01: Soybeans have been running really hard here towards the top end of the range off this Argentina dryness.
• 7:44
  SPEAKER_01: And uh when I look at corn, it's bounced down to the bottom end of the range, so those two have separated themselves from each other a little bit, and I think this is so those are the two reasons why.
• 7:53
  SPEAKER_01: Argentina dryness helping soybeans, and then the crude oil market wanting to drop, and the ethanol market dropping as well, and making margins a little bit tighter on these ethanol plants.
• 8:03
  SPEAKER_01: And you can see it in the bid structures.
• 8:06
  SPEAKER_01: You have to look a little bit harder to see it because before guys are posting 40 over, but they're paying 70 over, you know, in the cash market.
• 8:14
  SPEAKER_01: Now you call that same producer or that same end user and they're not pushing from their bid.
• 8:19
  SPEAKER_01: They'll they've kind of left the bids alone or maybe took five cents off, but they're not making the large pushes like they were, Jeff.
• 8:27
  SPEAKER_01: So it uh that's kind of what I'm focusing on in the crude o market and some of the impacts that has on agriculture right now.
• 8:33
  SPEAKER_00: So what are you looking at going forward here, Mike?
• 8:36
  SPEAKER_00: Uh what's the next we got the WASD report behind us, um, some economic data.
• 8:42
  SPEAKER_00: What's coming up in the coming weeks outside of the holidays?
• 8:46
  SPEAKER_01: So focus on the weather, Argentina.
• 8:48
  SPEAKER_01: I'll be focused on that.
• 8:49
  SPEAKER_01: But here in the meantime, I mean, we've had a broader commodity sector sliding lower here with equities too, and really a lot of eyes going into next week's Fed meeting.
• 9:00
  SPEAKER_01: So that'll be one of the major topics here this next week to focus on, Jeff.
• 9:04
  SPEAKER_00: Very good.
• 9:05
  SPEAKER_01: All right, well, thank you for coming on the show today.
• 9:07
  SPEAKER_01: And if you need anything, guys, please reach out.
• 9:10
  SPEAKER_01: Uh, send us some questions, and if there's anything we can do for you, please let us know.
• 9:14
  SPEAKER_01: And thank you to all our listeners.
• 9:16
  SPEAKER_01: Please reach out to us from our website at professionalagmarketing.com.
• 9:21
  SPEAKER_01: Or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 9:28
  SPEAKER_01: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.