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COF and Weather · 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 involves 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.
• 0:24
  SPEAKER_01: Today is May 24th.
• 0:26
  SPEAKER_01: I've got Nick with us here today.
• 0:27
  SPEAKER_01: How's it going, Nick?
• 0:28
  SPEAKER_00: Good.
• 0:28
  SPEAKER_00: How about you, Mike?
• 0:29
  SPEAKER_01: Very good.
• 0:30
  SPEAKER_01: We're going to talk about the Catalan feed report that just came out about an hour ago or two.
• 0:34
  SPEAKER_01: And uh we're going to talk about a little bit of a planning update, weather, things like that.
• 0:39
  SPEAKER_01: So let's get started.
• 0:40
  SPEAKER_01: Where do you want to start, Nick?
• 0:42
  SPEAKER_00: Well, I think that Catalan feed report was probably something to start with.
• 0:47
  SPEAKER_00: I guess it was everything was pretty even with the estimates, Mike.
• 0:50
  SPEAKER_00: Um, so no real surprises from that front.
• 0:54
  SPEAKER_00: Um Mark, you know, it was a big month for marketings, but then of course, um this April had two more slaughter days in it than last April.
• 1:02
  SPEAKER_00: So that's part of the reason why that was at 109, 110%.
• 1:07
  SPEAKER_00: Um and I think though the bigger the bigger story right now on the cattle deal is kind of what these cash cattle are doing and weights, and then and then um you know just how what we're gonna have for supply going forward.
• 1:21
  SPEAKER_00: And this the placement data from this report really showed that um August is gonna have quite a few less cattle available than last year.
• 1:31
  SPEAKER_00: Certainly that does not include the carryover cattle cattle though, so we'll see how that all plays out because we certainly think that even the calf feds and um the you know last year's calf crop were we're making we're adding quite a bit of weight on that front just because uh those calves cost a lot of money and and everybody knows that they're gonna feed them bigger this year.
• 1:53
  SPEAKER_00: And we've also got feed costs um as cheap as what they've been in a very, very long time.
• 1:58
  SPEAKER_00: So all that is gonna add some weight to these cattle and likely um push them out, but certainly from a supply side, it is looking like July and August are gonna have quite a bit less available, um at least placed for those months.
• 2:13
  SPEAKER_00: So so that'll be interesting to see how that plays out.
• 2:16
  SPEAKER_01: That usually start you start to get into a bigger supply cattle right after that, don't you?
• 2:21
  SPEAKER_00: Yeah, yep.
• 2:22
  SPEAKER_00: Going in the fall months.
• 2:23
  SPEAKER_00: Um, you know, the is the the north will have more cattle available and and uh and yeah, we'll see how that all goes too because the north obviously loves to make them big, a lot bigger than the south, and and this year is is no exception to that.
• 2:37
  SPEAKER_00: In fact, we're gonna likely make um substantially big cattle going in the fall.
• 2:42
  SPEAKER_01: So already seem to be seeing a little bit of a spread there, right?
• 2:46
  SPEAKER_01: 187 or so cash market in the south right now, north about 192.
• 2:51
  SPEAKER_01: Uh they certainly don't mind the bigger cattle in the north right now, do they?
• 2:55
  SPEAKER_00: No, they are they're certainly choosing to bid up for them here now, certainly with what Choice Beef has done recently that's allowing them to bid up for cattle.
• 3:02
  SPEAKER_00: And uh um the board really isn't coming along.
• 3:05
  SPEAKER_00: I mean, it's been moving up, but certainly the board is not positioning like the market went last year, right?
• 3:12
  SPEAKER_00: Where we just steadily ground the cash market higher.
• 3:15
  SPEAKER_00: And um uh, you know, June trading in the in the low to mid-180s and cash cattle in in the north at 192, south's at 187.
• 3:25
  SPEAKER_00: Yet that's what the board has to respect, but um uh it's not showing any premiums going further out like the like the cash market would have acted last year.
• 3:35
  SPEAKER_01: So interesting.
• 3:36
  SPEAKER_01: Interesting.
• 3:37
  SPEAKER_01: Let's talk about the reaction you think that they'll have.
• 3:40
  SPEAKER_01: Uh so we don't have markets on Monday, Nick.
• 3:42
  SPEAKER_01: Uh so the first time we'll get to trade this report is on Tuesday.
• 3:46
  SPEAKER_01: Are they gonna care at all by the time we open up Tuesday, or is this old news by then?
• 3:50
  SPEAKER_00: Yeah, it's hard to say.
• 3:51
  SPEAKER_00: I don't think the report itself is gonna be any any kind of a mover and shaker on Tuesday.
• 3:57
  SPEAKER_00: Um, probably just the the the bigger story on the cash side of things, which we were up most of the week in the futures market, feeder cattle included.
• 4:07
  SPEAKER_00: So I don't I see kind of that we probably you know just have a little bit of a correction early next week.
• 4:14
  SPEAKER_00: Um, but we'll see how that all plays out.
• 4:17
  SPEAKER_01: High this week on the June 184.67 and a half.
• 4:21
  SPEAKER_01: That goes pretty much back to where we were at the end of March there for the most recent level at this point.
• 4:26
  SPEAKER_01: So pretty strong resistance here around 185 for that.
• 4:29
  SPEAKER_01: We're getting pretty close to some resistance levels here.
• 4:32
  SPEAKER_01: Probably a couple bucks away, I'd argue, wouldn't you say?
• 4:35
  SPEAKER_00: Certainly, yep.
• 4:36
  SPEAKER_00: And have seen some really nice retracement levels here.
• 4:39
  SPEAKER_00: So, like you were saying earlier, you know, we're we're rewarding this deal, um, especially with some some uh summer cattle, you know, we're that uh maybe we're lacking little hedges on.
• 4:49
  SPEAKER_00: We're we're getting some coverage here.
• 4:52
  SPEAKER_00: Um maybe with options if those cattle don't quite work here yet, but um for the most part we're we're we're trying to reward this rally here because you never know what things what happens here after Memorial Day if if um if boxes maybe would start to decline again and and and they're not able to bid up for them as much.
• 5:12
  SPEAKER_00: Um we're we're we've definitely want to get some coverage on here and reward this thing.
• 5:17
  SPEAKER_01: Well, let's talk about the grain markets here.
• 5:19
  SPEAKER_01: 488 on December corn up about two cents at the end of the week here.
• 5:23
  SPEAKER_01: Uh November soybeans 1219 at the close.
• 5:27
  SPEAKER_01: Uh pretty decent levels, had some green trade across both of them here.
• 5:30
  SPEAKER_01: Soybean market couldn't quite get above those old highs.
• 5:33
  SPEAKER_01: Uh let's talk about planting delays versus weather going forward.
• 5:37
  SPEAKER_01: You know, the forecast's been pretty uh pretty wet going forward, still from here.
• 5:41
  SPEAKER_01: The corn crops about 70% planted versus 71% is a five-year average.
• 5:46
  SPEAKER_01: Last year we were at 76% planted at this time frame, but the numbers don't quite cut it, do they, Nick?
• 5:52
  SPEAKER_01: It uh uh with the prevent or with uh with the planting pace we have currently uh reported, uh that doesn't really reflect the conditions out in the field currently, does it?
• 6:04
  SPEAKER_00: No, right, right.
• 6:06
  SPEAKER_01: Um it's a little bit wet out there.
• 6:09
  SPEAKER_01: We've struggled to uh really gain pace here through the last couple days.
• 6:13
  SPEAKER_01: Really bad storms over last night again, Omaha, parts of Iowa, all experiencing some replant here, uh even before last night's rainfall, so trying to stir up some problems there.
• 6:25
  SPEAKER_01: You know, the pace at this point in 2019 was about 50%.
• 6:29
  SPEAKER_01: So we're 20% beyond that.
• 6:31
  SPEAKER_01: Granted, we will have replant and all that stuff, but uh it'll be interesting to see how the futures market reacts to some of this uh uh abnormally large rainfall.
• 6:40
  SPEAKER_01: If you look from this point out, so if you uh if you look at the July corn market today versus two weeks out from today, nine out of the last ten years, we were higher two weeks out from today uh than we are to at today's price.
• 6:55
  SPEAKER_01: So it'll be interesting to see if uh some of this delayed planning gives us some incentive to trade these markets up here over the next couple weeks.
• 7:02
  SPEAKER_01: And uh I'm looking forward to seeing some of that because honestly, at this point, the drought in the corn belt is completely gone.
• 7:09
  SPEAKER_01: The funds like to trade uh rain makes grain, and at this point, uh a lot of a lot of excess rainfall here.
• 7:15
  SPEAKER_01: They're gonna have to try to make a decision between trading uh prevent plant or uh delayed planting, replant.
• 7:22
  SPEAKER_01: Uh they're gonna have to trade that side of the coin here for a little bit before they probably fully transition into the fact that the drought map is completely white for the Corn Belt at this point.
• 7:32
  SPEAKER_01: And uh longer term, it seems like they struggle to really build a bullish story out of too much rainfall out of the United States, whether it's nine 1993 or 2019.
• 7:43
  SPEAKER_01: Uh you know, it took a while for them to uh really get wheels under that market to get them higher, and then by the end, you know, it was just too late by the time they made the revisions to to really matter.
• 7:55
  SPEAKER_01: So it'll be interesting to see what kind of reaction we have here.
• 7:58
  SPEAKER_01: Uh, you know, looking at the market, it it has some uncertainty with uh the current planning conditions, I think, as we try to finish out this crop, and I think that'll help uh these funds buy on breaks a little bit.
• 8:10
  SPEAKER_01: You're down four or five cents, you know.
• 8:12
  SPEAKER_01: I think that's gonna help funds to step back on it, uh step back in and and create some longs.
• 8:17
  SPEAKER_01: Uh however, that's probably pretty limited.
• 8:20
  SPEAKER_01: Longer term here, when we start to talk about it, rain makes crane, Nick.
• 8:24
  SPEAKER_01: So it'll be interesting to watch the weather pattern going forward.
• 8:27
  SPEAKER_01: Any comments about planning progress or uh weather going forward?
• 8:30
  SPEAKER_00: Well, just I was just gonna ask you, I mean, the east, so the east we know was behind, but they're I mean, obviously we're not that far off of the five-year average or last year now as far as corn planning progress, and there never really was any concern for the east, I mean, just be them being, you know, um that much lower, I guess, in the United States.
• 8:52
  SPEAKER_00: But why I mean how are they coming today or how are they sitting today uh versus versus our neck of the woods?
• 8:59
  SPEAKER_01: You know, out there they don't get as concerned because they don't have to worry about the frost, things freeze uh as much as us over here.
• 9:06
  SPEAKER_01: Uh so when I look at how progress has gone over there, a lot of it was planted in a way later time frame window.
• 9:14
  SPEAKER_01: We had a lot planted in a very early time frame window, and then we had troubles just basically wrapping up, or we had a lot of, you know, corns done around Sioux City, but basically you've got soybeans to go in, kind of a story.
• 9:26
  SPEAKER_01: Um then it's been uh just they started slower, now they had a few days to kind of pick back up and get some stuff done, and and uh now they're gonna be held off again, obviously, as these storms roll through today, through uh kind of eastern Iowa, Illinois, uh those areas over there.
• 9:42
  SPEAKER_01: So it'll be interesting to see what we show on uh Tuesday's afternoon crop progress report with the holiday this weekend, Nick.
• 9:49
  SPEAKER_01: Any final thoughts?
• 9:51
  SPEAKER_00: Not really.
• 9:52
  SPEAKER_00: I just I just would echo, you know, what we said earlier about getting some kettle coverage on here, I guess, um reward this thing a little bit, and and like you're saying, Mike, too, I mean, kind of rewarding this thing as we've been going along here the past couple weeks with some grain sales.
• 10:07
  SPEAKER_00: Um certainly got a shot again this week to put on some some bean options uh with the$12 puts,$13 calls.
• 10:16
  SPEAKER_00: Um and uh I would just continue that effort, I think, and and if we move higher, then we're probably gonna look at start looking at some future sales there.
• 10:25
  SPEAKER_00: Don't you agree?
• 10:26
  SPEAKER_01: Completely agree.
• 10:27
  SPEAKER_01: You know, uh when I look at some of the other factors out there today that uh kind of matter, uh, you know, South American production here, take a look at that, uh look at the Russian wheat crop problem, I think that is substantial.
• 10:39
  SPEAKER_01: I mean, as we talk about a little bit less feed wheat in the world, then you start to talk about what meal can do in place of that.
• 10:46
  SPEAKER_01: I think that was part of this week's support as well.
• 10:48
  SPEAKER_01: Uh obviously the the South American uh situation here with uh their water levels, uh flooding that they recently had has played a part in some of the front month strength on these soybean markets in particular, is those spreads are really wacky, Nick.
• 11:02
  SPEAKER_01: A lot of strength in the front months, not as much strength in the back months there, as those spreads have really been strengthening.
• 11:08
  SPEAKER_01: And uh pretty decent part of that probably coming back to what we've seen out of uh out of Brazil and uh and then the wheat market as well here.
• 11:16
  SPEAKER_01: So keep a few uh eyes on that this week.
• 11:19
  SPEAKER_01: If you need anything, please give us a call here at Professional Egg Marketing.
• 11:23
  SPEAKER_01: Uh thank you for joining us this week, Nick.
• 11:25
  SPEAKER_00: Thank you, Mike.
• 11:26
  SPEAKER_01: And thank you to all our listeners.
• 11:28
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 11:31
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:37
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 11:43
  SPEAKER_01: See you next time.