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Corn Continues to Rally for Multiple Reasons · Professional Ag Marketing Podcast

• 0:03
  SPEAKER_00: You're locked in to the Grain Market Talk Podcast.
• 0:06
  SPEAKER_00: Fast updates, market movers, and the grain news you need right now.
• 0:12
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_02: Well, good afternoon, everybody.
• 0:23
  SPEAKER_02: It is August 21st on a Friday, and you are locked into the Grain Talk Podcast.
• 0:28
  SPEAKER_02: Um, Lucas Peters here filling in for Mike Minor, who is uh having a little much needed day off.
• 0:35
  SPEAKER_02: And in the Sproeg studios today, I also have Jordan.
• 0:38
  SPEAKER_02: Jordan, how's it going today?
• 0:40
  SPEAKER_02: Good.
• 0:40
  SPEAKER_02: How are you, Luke?
• 0:41
  SPEAKER_02: Well, we're good getting by.
• 0:42
  SPEAKER_02: Glad it's Friday, glad the sun's shining.
• 0:44
  SPEAKER_02: Have picked up a little bit of rain uh here in the Laverne area.
• 0:48
  SPEAKER_02: I don't know if it's enough to matter, but at least it's starting to rain again uh this past week.
• 0:53
  SPEAKER_02: Although there was a little bit of weather uh that you experienced, and our friends in Nobles County had some wind and hail go through as well.
• 1:00
  SPEAKER_02: But uh we started off the week.
• 1:02
  SPEAKER_02: I mean, as we look at these grain markets, uh overall pretty positive week on the corn and bean markets.
• 1:08
  SPEAKER_02: Corn up roughly 25 cents uh across the board, uh soybeans up, you know, just shy of 50 cents.
• 1:14
  SPEAKER_02: Um, you know, we we'll we'll talk weather, we'll talk pro farmer into that, but uh what are some of the other numbers or things that could have contributed to some of that bullishness this week?
• 1:23
  SPEAKER_01: Yeah, so you know, like you said, uh we did have a very strong grain market here this week.
• 1:28
  SPEAKER_01: And you know, the demand side of this uh market continues to be strong.
• 1:33
  SPEAKER_01: Not only the supply side is in question, but the demand side is strong and and exports uh this morning.
• 1:39
  SPEAKER_01: Uh we did see some very large export sales out of China, some of the largest ones we've seen in quite some time on the on the soybean side.
• 1:45
  SPEAKER_01: So, you know, we're finishing strong there or starting the year off strong there, and we're finishing the year strong on uh corn export sales, is where we're sitting at there.
• 1:52
  SPEAKER_02: Yep, that's uh it's always been good news.
• 1:54
  SPEAKER_02: That's kind of helped us as uh through kind of the glut we had last week.
• 1:59
  SPEAKER_02: At least the demand has been pretty strong and the beans have picked up now with China, and now we got kind of switched gears to the supply side as we look forward uh to this next year.
• 2:07
  SPEAKER_02: And we started out this week on I know when we came in the office uh on Monday, we were looking at the past rainfall from the past weekend.
• 2:15
  SPEAKER_02: And you know, locally it's not like we had very much, but when you looked east, uh kind of through central Iowa, central Illinois, central Indiana, uh, you know, we were looking at rainfall totals of you know three to six to upward of 12 inches in places.
• 2:32
  SPEAKER_02: Um, and we were very curious.
• 2:33
  SPEAKER_02: I remember on our Monday morning call, we were talking of like how does that affect a crop, right?
• 2:38
  SPEAKER_02: If obviously, if it if that type of rain happens in April, well, now we got planting delays and emergence concerns, all that, that's pretty obvious.
• 2:46
  SPEAKER_02: When it happens towards the end of the growing season, we're always kind of curious what is that gonna amount to in the end.
• 2:52
  SPEAKER_02: And we still don't know for sure, obviously, uh, those areas where the waters over the ear and flooding, of course, are are gone.
• 3:00
  SPEAKER_02: But um, overall, how does that concern?
• 3:02
  SPEAKER_02: And we kind of made the comment uh uh a little bit like normally we'd come in if you saw that much rain in uh in the middle of August across Iowa, Illinois, Indiana, beans should be down pretty hard in the week, right?
• 3:17
  SPEAKER_02: Yes, like like I I mean you were you were saying like this should add this should act X amount of bushels, right?
• 3:22
  SPEAKER_01: Correct.
• 3:22
  SPEAKER_01: Yep, and that's that's spot on.
• 3:24
  SPEAKER_01: And you know, looking at that chart there on Monday, you know, you've seen that rain kind of come come across perfectly through Nebraska into Iowa and Illinois and Indiana, and the market wants to talk about you know all this excess rain out in Indiana.
• 3:37
  SPEAKER_01: But the way I kind of see that is, you know, there's a lot of acres through that stretch that received you know two to three inches of rain in the middle of August.
• 3:46
  SPEAKER_01: That is huge on a bean crop.
• 3:48
  SPEAKER_01: And overall, we should really be talking about higher bean yields where most wanted to kind of talk it down.
• 3:53
  SPEAKER_01: And even the USDA a couple weeks ago wanted to pull bean yields down from one fifty, sorry, from fifty-three down to fifty-two seven, and the market wants to kind of be fifty-two and a half area.
• 4:03
  SPEAKER_01: And now today you see pro farmer actually come through and post a 53 and a half bushel yield or close to it and and raise that.
• 4:10
  SPEAKER_01: And and I am totally on board with that.
• 4:13
  SPEAKER_01: I really feel like this crop is finishing well.
• 4:15
  SPEAKER_01: And even here locally, where we've been dry all summer, you know, you start to uh you know pick up a little bit, you know, two, three, four tenths, you know, every a couple days here, and you start to think, well, shoot, we could really see some pretty decent bean yields here yet, including South Dakota.
• 4:30
  SPEAKER_02: Yep, and that I mean that's a good point.
• 4:31
  SPEAKER_02: That like that pro farmer came out, and the you know, first one on the beans kind of caught us a little off guard of like, whoa, that's a little higher than where we thought they'd be.
• 4:40
  SPEAKER_02: Uh, you know, pro farmer being above USDA is relatively rare.
• 4:45
  SPEAKER_02: Um, and the fact that, okay, that's you know, a lot driven off pod counts and and different things that they're finding in the field.
• 4:52
  SPEAKER_02: Um, but okay, so the pods are there.
• 4:54
  SPEAKER_02: Now that a giant area got much needed rainfall, even like you said, in the dryer is getting a little bit, the beans number uh and the and the yield does seem to be growing a little bit.
• 5:06
  SPEAKER_02: Yes, uh, compared to where the USDA came out uh on that August report.
• 5:10
  SPEAKER_02: So uh I think that'd be something we'll have to watch here going forward is uh we're gonna need demand uh to stay there to keep the momentum in beans because on the supply side this crop might be getting a little bigger.
• 5:20
  SPEAKER_01: Yes, I I agree 100%.
• 5:22
  SPEAKER_01: And then when you kind of shift gears here a little bit and kind of look at pro farmers' numbers on corn, they're coming down, right?
• 5:28
  SPEAKER_01: You know, we kind of seen that all week, you know, looking at their state by state estimates, they've been quite a bit lower than the USDA, including Illinois, which was you know really kind of eye-popping, right?
• 5:37
  SPEAKER_01: When you've seen that come out there a Wednesday night when they posted a 185 uh for their findings on Illinois, which was almost 30 bushels less than uh where the USDA is at.
• 5:48
  SPEAKER_01: But then you kind of start to look at what they've done in the past years, and you know, including last year, they were 15 off on Illinois from where the USDA's final number was.
• 5:56
  SPEAKER_01: And now today they come out with a 173, which can be surprising, right?
• 6:02
  SPEAKER_01: I mean, that is seven bushels off of the USDA's number, maybe seven and a half uh to be exact, is where that's sitting at.
• 6:09
  SPEAKER_01: Um but uh if you kind of look at the the Pro Farmer Tour history, they tend to be over four bushels uh lower than the USDA, and including last year at six and twenty twenty-two, I believe at over seven.
• 6:23
  SPEAKER_01: Yep.
• 6:23
  SPEAKER_01: So it's not at all surprising to see them under the USDA.
• 6:26
  SPEAKER_01: It is, you know, a big number there at seven.
• 6:29
  SPEAKER_01: But now that the corn market has rallied uh 25 cents, like you said earlier, Lucas, in the podcast, we're trading uh 508.5 tonight.
• 6:37
  SPEAKER_01: That is a new high for the move here, but not a new high for the contract.
• 6:41
  SPEAKER_01: Contract high is a little over 511.
• 6:43
  SPEAKER_01: Um, but you know, I feel like this lower yield is kind of baked into the market now.
• 6:48
  SPEAKER_01: And uh, you know, with that 173, is the USDA gonna be 180, 181?
• 6:55
  SPEAKER_01: Maybe a little bit less, but they're they're it's not normal for them to drop down to that that pro farmer number.
• 7:00
  SPEAKER_01: They pro farmer tends to be under the USDA by a ways.
• 7:03
  SPEAKER_02: Yep, and I I think that's that's good to recognize, right?
• 7:06
  SPEAKER_02: Like it that that number was maybe a little lower than I thought it was gonna be, but we kind of expected it to be lower than the USD anyway, because as you said, over the years they're generally four to six bushels lower than than the USDA.
• 7:18
  SPEAKER_02: I mean, they call it pro farmer for a reason, right?
• 7:20
  SPEAKER_02: They correct they're gonna they're gonna uh get a number that's probably maybe a little bit more on the farmer thinking or farmer side.
• 7:28
  SPEAKER_02: But that that when we compare it, I want to this a little bit to our crop tour, right?
• 7:32
  SPEAKER_02: So we go out the first week of August, uh, and the boys found you know 184 roughly for national yield at the first week of August.
• 7:40
  SPEAKER_02: Well, then you take those areas and you look at South Dakota and Illinois probably getting a little too much rain, Nebraska, South Dakota not getting enough rain, Minnesota not getting enough rain.
• 7:51
  SPEAKER_02: Uh, it's not surprising that the crop is getting smaller, I guess is the point where I'm trying to make is you know, first week of August, good potential.
• 7:58
  SPEAKER_02: USDA came out in the uh a couple weeks ago at 180.7.
• 8:04
  SPEAKER_02: Um, seeing a little bit of shrinking there.
• 8:06
  SPEAKER_02: Profarmer goes out a little towards the end of August, comes in at 173.
• 8:10
  SPEAKER_02: I don't think the the final yield is 173, but we're probably trending uh trending down as we wind up this year on corn, kind of the exact opposite of what we just got done talking on soybeans.
• 8:22
  SPEAKER_02: So uh, you know, a lot to be written yet, right?
• 8:25
  SPEAKER_02: The we're not harvesting, um, but I would uh based on some silage appraisals and things uh coming in, you know, this harvest will will uh will catch up to us pretty quick.
• 8:35
  SPEAKER_02: And so we'll start and get some actual numbers here over the next two, three, four weeks, and we can start solidifying where this yield is at.
• 8:44
  SPEAKER_02: Is it is it closer to the 177 number?
• 8:46
  SPEAKER_02: Is it closer to the 182 number?
• 8:48
  SPEAKER_02: That will have to be determined, but it feels like the crop's not uh not getting uh larger, I guess.
• 8:54
  SPEAKER_02: Maybe I'll phrase it that way.
• 8:56
  SPEAKER_02: Would you agree with that, Jordan?
• 8:57
  SPEAKER_01: Yes, I'd agree with that.
• 8:58
  SPEAKER_01: And and when you talk about that, I mean, you know, a 180, 179 yield, maybe 181, that's still the second largest crop we've ever grown, right?
• 9:07
  SPEAKER_01: I mean, it's still a very, very large crop.
• 9:09
  SPEAKER_01: And the other thing one thing I'd like to add to that is you know, the market today closed on March at 523, which a 10% stock to use ratio equates to uh March futures at trading at 525.
• 9:22
  SPEAKER_01: So when I say that the you know the the futures market really has a little bit of a smaller crop baked into it, that's what I mean by that is you know the the the March uh contract is trading 525 equivalent to a 10% stock to use ratio, which is that lower 180 type yield.
• 9:36
  SPEAKER_02: Yep.
• 9:37
  SPEAKER_02: No, I think that's uh that's good.
• 9:38
  SPEAKER_02: That kind of wraps up the crop tour season, right?
• 9:41
  SPEAKER_02: So we don't uh really have too many more numbers on that side coming out.
• 9:44
  SPEAKER_02: Uh anything important that we're watching uh coming up here next week, Jordan, that uh you want to call out?
• 9:50
  SPEAKER_01: Yeah, I think uh you kind of hit on it there, Lucas.
• 9:52
  SPEAKER_01: Um, you know, you kind of get past these uh um farmer tours, and now you kind of you know get rolling into silage, and then you know, we'll start to see some combines rolling here in the next uh three weeks or so.
• 10:03
  SPEAKER_01: And at that point we'll we'll actually have some real information to kind of look at.
• 10:06
  SPEAKER_02: Yep.
• 10:07
  SPEAKER_02: I the last thing I I would comment is as we look, you know, we're talking a lot about the 2026 crop.
• 10:13
  SPEAKER_02: Uh don't sleep on the 2027 crop because that is uh we'll be planning for that here in the next few months if you haven't already.
• 10:21
  SPEAKER_02: Um and some of those prices, those futures prices on corn and beans are looking pretty attractive.
• 10:26
  SPEAKER_02: Uh, you know, roughly$5 corn,$12 beans out there for$27 new crop.
• 10:31
  SPEAKER_02: Something to think about on the crop insurance side.
• 10:33
  SPEAKER_02: Since I am the insurance guy, I got to put a little plug in there for crop insurance.
• 10:37
  SPEAKER_02: We're setting the uh margin coverage option prices uh right now, uh we'll kind of mid-August through mid-September.
• 10:44
  SPEAKER_02: And so we're kind of in that$5 range on corn,$12 on soybeans on those prices.
• 10:49
  SPEAKER_02: So if you are looking for a little different pricing uh timeline on the crop insurance, we'll be looking at that MCO product over the next few weeks and seeing if that would be a good option uh for guys to look at uh locking at least getting some price protection in for the 2027 crop.
• 11:05
  SPEAKER_02: So so don't sleep on that.
• 11:07
  SPEAKER_02: With that, I uh thanks, Jordan, for coming in and filling in, and we'll sign off from the uh Green Talk Podcast.
• 11:14
  SPEAKER_02: Yeah, thank you, Lucas.