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End Of Month · 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 Miner.
• 0:22
  SPEAKER_01: Let's get started.
• 0:23
  SPEAKER_01: Today is December 1st.
• 0:25
  SPEAKER_01: I've got Lucas with us.
• 0:26
  SPEAKER_01: Here, how's it going, Lucas?
• 0:28
  SPEAKER_01: Well, it's good to be with you, Mr.
• 0:29
  SPEAKER_01: Miner.
• 0:30
  SPEAKER_01: December 1st.
• 0:32
  SPEAKER_01: Yeah, you can start wearing your uh Santa gear.
• 0:34
  SPEAKER_01: That's I already have.
• 0:36
  SPEAKER_01: You're trying to grow the beard out, I see, so that's good.
• 0:38
  SPEAKER_01: It's turning gray too.
• 0:40
  SPEAKER_01: Awesome.
• 0:41
  SPEAKER_01: Well, corn market here this week.
• 0:43
  SPEAKER_01: Uh, we're gonna talk a little bit about that trade, talk a little bit about soybeans, some seasonals here, talk about carry a little bit.
• 0:50
  SPEAKER_01: We've got a bundle full of fun things to talk about.
• 0:52
  SPEAKER_01: Lucas, where do you want to start?
• 0:53
  SPEAKER_00: Yeah, so let's uh I guess let's start kind of where you mentioned uh on the corn market.
• 0:58
  SPEAKER_00: What started out the week in not such a rosy picture, but the last couple days had a nice little upturn at the end of the week.
• 1:06
  SPEAKER_00: And I guess uh uh what's what's exactly going on here, Mike?
• 1:12
  SPEAKER_00: It seems like we have a lot of bad news, and then all of a sudden the last two days everybody's feeling a little better because the price is higher.
• 1:18
  SPEAKER_01: Yeah, so I think the corn market they experienced towards the front part of the week we had quite a bit of long liquidation that was going on on the week side.
• 1:27
  SPEAKER_01: Um, and then we had plummeting, open interest also occurring.
• 1:31
  SPEAKER_01: So the liquidation really cleared out some of the week longs before, you know, short-term technical indicators really turned things higher towards the end of the week here.
• 1:40
  SPEAKER_01: And we had a couple strong closes Thursday and Friday now.
• 1:44
  SPEAKER_01: Uh I think that was a very positive sign for the bull camp.
• 1:48
  SPEAKER_01: But I think the corn market, they put in their lows, uh uh contract lows actually on Wednesday.
• 1:53
  SPEAKER_01: That was the lowest corn price we've seen in over three years, Lucas.
• 1:58
  SPEAKER_01: And uh I think that price just got low enough to try to stimulate some demand here.
• 2:03
  SPEAKER_01: Towards the end of the week, yesterday's uh export sales report came out uh very strong.
• 2:09
  SPEAKER_01: That was uh a nice sign that uh probably one of the first signs we've seen in a long time that signified enough of a sell-off that we've had occur to really stimulate demand.
• 2:20
  SPEAKER_01: And uh really, I think uh this week's trade action too, we were looking at uh when we started getting into the first notice day of the December contract there, you know, we had adequate supplies going into that first notice day, and that really has been weighing on prices towards month's end, and that really seemed to run its course kind of like the first or the the couple days leading up to that first notice day, that we are starting to see a little bit of a sell-off, and that those extra supplies weigh on prices from at least a futures perspective.
• 2:52
  SPEAKER_01: That is going into uh going into a a little bit of a new month.
• 2:57
  SPEAKER_01: So it was the end of the month, you know, that selling ran its course for a couple days, and then um now we're looking towards it was a new month today, so we had some buying actually occur, and then I think next week with uh our fresh month, uh first full week of December, we could see some commodity inflow maybe come into this corn market, and hopefully that'll that'll set up corn for a nice recovery here uh from the lowest price we've had in in over three years.
• 3:23
  SPEAKER_01: And you know, uh as mentioned above, trade could uh could have shown some of that towards the end of this week, I think, to kick it off going into the weekend, Lucas.
• 3:32
  SPEAKER_00: Yeah, so it's again, hopefully it's kind of a start to maybe a little bit of an upswing.
• 3:37
  SPEAKER_00: Seasonal patterns would suggest December corn generally climbs a little bit in December.
• 3:43
  SPEAKER_00: Is that correct?
• 3:44
  SPEAKER_00: Uh heading in towards the end of the year.
• 3:46
  SPEAKER_00: Um so maybe it's a start of that.
• 3:48
  SPEAKER_00: Um yeah, it is kind of sad to think about when on Wednesday the lowest corn price in three years, you said.
• 3:55
  SPEAKER_00: Yeah.
• 3:55
  SPEAKER_00: That's uh uh I like having uh it close on an uptick.
• 3:59
  SPEAKER_00: It just makes it feel better, even though we aren't that much higher than that uh that low, are we?
• 4:04
  SPEAKER_01: It's an interesting pattern because if you really go back, I mean, in from 2007 to about 2020, we stayed between three and a half to four and a half dollars.
• 4:14
  SPEAKER_01: And now we're all the way back to four and a half bucks, kind of the top end of the range.
• 4:18
  SPEAKER_01: And in prior um cycles when we had traded in those ranges, our bottom of the new cycle was kind of at the top of the old, and that's right where we find ourselves now.
• 4:30
  SPEAKER_01: So I'm very curious to see if front month futures can kind of try to hold and put a bottom in here around this four and a half bucks ahead of this next summer and maybe get some weather volatility back in this thing.
• 4:41
  SPEAKER_01: But if we trade right back in below four and a half bucks and start headed towards four or even lower, then you know we're I it'd be tough to say we're not still in that same trading range that we had been in.
• 4:52
  SPEAKER_00: 350 to 450 range instead of setting the new plateau of right where kind of we're at.
• 4:58
  SPEAKER_01: Which isn't as fun.
• 4:59
  SPEAKER_01: No, uh that we're gonna be able to do that.
• 5:00
  SPEAKER_01: We like new stuff, right?
• 5:01
  SPEAKER_00: We like we like new stuff to talk about.
• 5:03
  SPEAKER_00: So even though the price is low, I'd still rather have it at four and a half than three and a half.
• 5:07
  SPEAKER_00: Very true.
• 5:08
  SPEAKER_00: So yeah, I guess the other thing is we got a little bump.
• 5:12
  SPEAKER_00: Uh what should producers be doing to take advantage of that?
• 5:16
  SPEAKER_00: Uh uh let's say with the corn in the bin, uh, maybe the harvest was a little better in some areas, not all areas.
• 5:23
  SPEAKER_00: So we've probably got a little on-price corn out there right now, Mike.
• 5:26
  SPEAKER_00: What should guys be doing this uh for December corn?
• 5:30
  SPEAKER_01: That's a really good question.
• 5:31
  SPEAKER_01: So one thing I've been talking with uh to grain producers here this week has been the the close of December went down really hard.
• 5:39
  SPEAKER_01: December futures really went down compared to what the back months had done, March, May, and July, even next year's prices.
• 5:47
  SPEAKER_01: But the spread between December and July uh a couple days ago, if you go back to kind of the the lowest point in that spread, was you were getting almost 50 cents more off the July futures than you were off the December.
• 6:03
  SPEAKER_01: Um what I'm encouraging producers to do here today is that I want to take advantage of that carry market on bushels in your bin currently for corn.
• 6:14
  SPEAKER_01: And one of the ways I'm doing that is a little bit of a uh a low-cost option strategy, a three-way option all the way out into July.
• 6:23
  SPEAKER_01: And I think that's readily available for many producers, I think, on on that are producing corn, and I think that's something they should look at because taking advantage of that carry right now is uh probably one of my biggest take-home points with managing risk in today's market.
• 6:41
  SPEAKER_01: And it's tough because we're at the lowest price we've had in three years, so it's really tough to tell guys, you know, let's go out and sell some corn.
• 6:49
  SPEAKER_01: Yep.
• 6:49
  SPEAKER_01: Um so I know that not all the corn's gonna move out of the bin here this month, but on some of those bushels that you know you're gonna keep around till July, and uh even if corn rallies five or ten cents, it's gonna be probably a pretty tough sale uh on futures.
• 7:04
  SPEAKER_01: So I kind of like to have something in my back pocket to protect uh to protect some bushels, take advantage of that 50 cent carry almost at the other day's value by locking in a three-way option out in July potentially that please call in and we can chat about that anyways.
• 7:20
  SPEAKER_01: But I think uh that's a readily available strategy that we can do today.
• 7:24
  SPEAKER_00: That sounds good.
• 7:25
  SPEAKER_00: What uh what about basis?
• 7:27
  SPEAKER_00: Uh you know, I I know basis levels probably aren't as strong as they were last year at this time, right?
• 7:31
  SPEAKER_00: But uh where what do you see in the local and more of the national basis picture on corn?
• 7:36
  SPEAKER_01: One of the things we've recognized this this uh post-fall has been the inability to procure bushels into elevators.
• 7:45
  SPEAKER_01: Farmers are incredibly slow sellers, so basis values are having to make up the difference, especially in the Western Corn Belt.
• 7:53
  SPEAKER_01: The Western Corn Belt right now, farmers have filled up the bins and they're not really selling a whole lot of bushels.
• 7:59
  SPEAKER_01: We are getting some activity here in the last week, I would call it, based on it's December 1st now and the weather's just way too nice to keep the trucks in the shed.
• 8:08
  SPEAKER_01: So there is some getting centers taken out of bins and things like that that's occurring.
• 8:14
  SPEAKER_01: Um not a whole lot of want to make that sale, especially as people rolled from December futures to March.
• 8:22
  SPEAKER_01: Basis weakened up quite a bit when they did that.
• 8:24
  SPEAKER_01: But to incentivize some more sales while the weather's a little bit nice, we've noticed that uh basis levels off of the March are quite competitive compared to even just a week ago for what you can lock in.
• 8:37
  SPEAKER_01: So I think right now you're almost to the time frame where you can find some really competitive basis levels out there, get some get some centers taken out, move a little bit of corn, um, and then make it a basis discussion, make it a spreads discussion.
• 8:51
  SPEAKER_01: You know, if you got corn in the bin, if you're gonna leave it there till July or or later for a rally, potentially, you probably should try to lock in some of that carry and do something with that three-way option.
• 9:03
  SPEAKER_01: But if you're gonna do it up front here, I mean you can always look at just look at basis if if you're gonna make a decision there, don't look at flat price, make it basis, not futures, and then we can decide what to do with futures later at a different time there.
• 9:16
  SPEAKER_00: So yeah, I think that's probably a pretty good idea.
• 9:19
  SPEAKER_00: Of if you know you got some, you're gonna leave some corn in the bends, try to get that protected, lock in that carry now versus hoping that it's there come June and July when you're ready to haul it in.
• 9:28
  SPEAKER_00: Uh and then like you said, with the right now, it is the time of year where you're gonna start corn out some bends, moving some grain, making sure it stays in condition.
• 9:37
  SPEAKER_00: Uh, like you said, we're we're going into the first week of December and what highs next week are in 40s and 50s.
• 9:43
  SPEAKER_00: Yeah.
• 9:44
  SPEAKER_00: It is hard not to get some of that winter work done, such as corn out bins, hauling corn to town or to the elevator.
• 9:51
  SPEAKER_00: And so calling around, checking, looking for uh uh a strong basis area might be a good opportunity to squeeze out a few extra pennies uh on those bushels you don't have protected yet.
• 10:03
  SPEAKER_01: And as a grain buyer, I have noticed more bushels getting sold the last two days.
• 10:08
  SPEAKER_01: You've had a little bit of an upmarket, that weather's nice.
• 10:11
  SPEAKER_01: I can definitely tell the difference and ability to cook your bushels.
• 10:15
  SPEAKER_00: What about uh for 24?
• 10:17
  SPEAKER_00: Uh should we be looking ahead to the crop we're gonna plant and and doing anything out there, uh, Mike?
• 10:24
  SPEAKER_00: What what's been going on in these uh deferred markets?
• 10:27
  SPEAKER_01: Somehow, someway, December 24 futures are at 514.
• 10:31
  SPEAKER_01: That spread between December 23, where it's gonna be coming off the board, and then December 24, uh sitting out there today at like 47 cents difference.
• 10:42
  SPEAKER_01: Uh that's quite extreme, I think, uh, at this point.
• 10:46
  SPEAKER_01: So they're they got a pretty good carry going into this next year.
• 10:49
  SPEAKER_01: That maybe goes back to a little bit of this talk of inflation, uh weather, uh, a little bit of dryness in South America, still pretty dry in the United States, if we're being honest, over the winter here.
• 11:00
  SPEAKER_01: So uh that that's a little bit further out yet, and maybe 513 isn't as exciting as it as it once was, but uh an option strategy, probably just a two-way.
• 11:10
  SPEAKER_01: You don't need to get uh too deep into the weeds on three ways.
• 11:13
  SPEAKER_01: You can get a nice 50-60 cent option window there and uh try to get something locked in uh for you know 20-25% of next year's crop pretty easily here, maybe just even on like a five cent bump.
• 11:25
  SPEAKER_00: Well, and and I mean most of your expenses for next year are gonna be penciled in now, if not already written for.
• 11:32
  SPEAKER_00: You know, as we reach the end of the year, guys, you're writing the checks for fertilizer, seed, chemical, land, everything's it lines up well.
• 11:38
  SPEAKER_00: It lines up pretty well.
• 11:40
  SPEAKER_00: I mean, even at that price, you probably got a little profit or at least really close to break-evens.
• 11:45
  SPEAKER_00: Uh, and so it would be a good opportunity to get uh some of that protected.
• 11:49
  SPEAKER_00: What uh so let's switch uh gears over to soybeans.
• 11:52
  SPEAKER_00: Uh not as rosy pitcher to end the week there, Mike.
• 11:55
  SPEAKER_00: What uh what's been going on in the soybean market?
• 11:57
  SPEAKER_01: Not quite as much.
• 11:58
  SPEAKER_01: You know, the the soybeans have actually had a little bit more of a bull camp favor here recently because of South America weather being dry.
• 12:05
  SPEAKER_01: You know, uh at the end of the week here they put a little bit of rain into that December 11th time frame for Brazil, so they're kind of watching that 11 to uh 14 day forecast, and that kind of helped us trade a little bit lower here.
• 12:18
  SPEAKER_01: We're also looking at a little bit of chart damage here.
• 12:21
  SPEAKER_01: The January uh support really kicks in around like that 1323, that'd be that 20-day uh or that'd be that moving average that they're kind of looking at for that support level.
• 12:32
  SPEAKER_01: Uh I think that's a really key point, and uh we've we closed right at 1325 today, so we're pretty much right on that mark of uh you know, I really don't want to get too much lower on this soybean market.
• 12:44
  SPEAKER_01: Uh we're trading between that that line from the old like May low and this most recent low.
• 12:50
  SPEAKER_01: We're pretty much right there at the bottom of this trading range.
• 12:53
  SPEAKER_01: So yeah a little bit of money flow too, I think, uh, had occurred uh to get us to sell off here a little bit.
• 13:00
  SPEAKER_01: We had uh some buy the rumor, sell the fact going on, I think, with some export sales this morning.
• 13:05
  SPEAKER_01: So we kind of pulled back after that.
• 13:07
  SPEAKER_01: But uh, I'm really looking at this time of the year just being focused solely on Brazil reigns, and that's gonna be uh really important here as we got down to this bottom support line.
• 13:17
  SPEAKER_01: I'd like to see that not really get broke.
• 13:19
  SPEAKER_00: Yep.
• 13:19
  SPEAKER_00: What about uh basis level on soybeans?
• 13:21
  SPEAKER_00: Should we be looking at that this time of year, Mike?
• 13:24
  SPEAKER_01: I think you're getting close.
• 13:26
  SPEAKER_01: You know, for some processors around here, you're getting to some pretty competitive levels to start uh moving some soybeans, which would be very normal seasonally when you're looking from uh Thanksgiving to Christmas.
• 13:37
  SPEAKER_01: I usually like to try to lock in soybean basis uh at that time frame.
• 13:42
  SPEAKER_01: But when we start thinking about uh what the next couple months could look like, uh uh some carry's been built into this soybean market.
• 13:50
  SPEAKER_01: Uh, you know, the Panama canal is a little bit too low to really get ships through uh from that uh from that Gulf side of uh of the route to China.
• 13:59
  SPEAKER_01: So I would like to see um some PW, so Western Corn Belt bids uh get a little bit better on the uh soybean front, and you could see some uh better basis levels going forward here on the soybeans potentially if we do get some exports to flow from the US to China, which is a little bit tough.
• 14:18
  SPEAKER_01: You know, the the later soybeans being planted in Brazil right now is going to impact that because now that opens up some export windows for like January and February, where a couple weeks ago they weren't really expecting to have to buy from the U.S.
• 14:33
  SPEAKER_01: for that time frame.
• 14:35
  SPEAKER_01: So that influenced this decision a little bit to say, you know, maybe you could wait things out just a little bit and see um and take advantage of some of that carry in the soybean market too.
• 14:45
  SPEAKER_01: But otherwise, from a seasonal perspective, we should probably start looking at doing something soon.
• 14:50
  SPEAKER_00: Gotcha.
• 14:51
  SPEAKER_00: Well, so it's uh Friday afternoon.
• 14:53
  SPEAKER_00: Uh, what about uh next week?
• 14:54
  SPEAKER_00: What are you looking for either in the corn of soybean market or some other market you got your eye on for next week?
• 15:00
  SPEAKER_01: Yeah, that 1323 area on jan soybeans, keep an eye on that if we hold that support.
• 15:05
  SPEAKER_01: The corn market, that March futures where we closed at 485, uh that's getting kind of back up to that top end of the range.
• 15:13
  SPEAKER_01: So if we can get above 490, that'd be a really big win.
• 15:17
  SPEAKER_01: Uh getting some cash corn to trade anywhere near five bucks is uh, you know, we had some cash corn this week trade into Cedar Rapids, Iowa at five bucks, and they they pretty much gave that offer for just an hour and they bought more bushels than they wanted to.
• 15:32
  SPEAKER_01: So uh the trucking was just horrendous with how backed up they were.
• 15:36
  SPEAKER_01: So it you've got a price point that people are willing to sell corn at, and once you get those March future futures really close to that, at this point I think it's gonna move a lot of bushels.
• 15:45
  SPEAKER_01: So that's what I'm looking at.
• 15:46
  SPEAKER_01: And then besides that, really, you know, keep an eye on those further out futures.
• 15:51
  SPEAKER_01: D'24, if we can get that above 520 again, and NOV24 futures, if if we can get that back up to that 1320 area that we keep failing to break through, that's a key sub key line as well.
• 16:03
  SPEAKER_01: And um yeah, otherwise, that that's really the only market news I'm really gonna be following or chart action, I think, next week.
• 16:11
  SPEAKER_00: That sounds good.
• 16:12
  SPEAKER_01: All right.
• 16:12
  SPEAKER_01: Thank you for your time, Lucas, and thank you to all our listeners.
• 16:16
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 16:19
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 16:25
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 16:31
  SPEAKER_01: See you next time.