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Grain Gainz · 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.
• 0:23
  SPEAKER_01: Today is May 17th.
• 0:25
  SPEAKER_00: How's it going, Lucas?
• 0:26
  SPEAKER_00: It's going very well and glad to be back with you in the ProAG podcast studios, Mike.
• 0:31
  SPEAKER_01: Perfect.
• 0:32
  SPEAKER_01: Well, I was happy to at least drag one person away from the TV screens or the golf course today as the PGA championship started off day two with a little bit of a bang this morning, didn't it?
• 0:43
  SPEAKER_00: Yeah, it did.
• 0:43
  SPEAKER_00: I I think it's a uh it's a good way to show how someone would perform under pressure, Mike, right?
• 0:51
  SPEAKER_00: When you get arrested for driving where you shouldn't be, even though you could have been.
• 0:58
  SPEAKER_01: Yeah.
• 0:59
  SPEAKER_01: I mean, and then carrying a cop on your car for ten yards.
• 1:02
  SPEAKER_01: Yeah.
• 1:02
  SPEAKER_01: And then after all that and getting arrested and having your mugs mugshot splattered everywhere, then shooting what, five under on the day?
• 1:10
  SPEAKER_00: That's uh five hundred on the day.
• 1:12
  SPEAKER_01: So he's ten under for the tournament, second place.
• 1:14
  SPEAKER_01: That's impressive.
• 1:16
  SPEAKER_01: If he comes out and wins this, this'll just be Well, he is the number one in the world.
• 1:20
  SPEAKER_01: He is number one in the world.
• 1:22
  SPEAKER_00: But to do that after getting arrested, you know, if I got arrested this morning, I don't think I could make it to work today.
• 1:28
  SPEAKER_00: So but let's not try it.
• 1:30
  SPEAKER_00: That there might be some other things going on.
• 1:33
  SPEAKER_01: But nonetheless, that was a tad bit more exciting than the end of the week on these markets, Lucas.
• 1:39
  SPEAKER_01: Uh, but how about planning conditions and planning progress?
• 1:42
  SPEAKER_01: Let's talk about that here as uh we're sitting here on the middle of the middle of May.
• 1:47
  SPEAKER_01: We've had pretty good rainfall all the way throughout planning.
• 1:50
  SPEAKER_01: How do you think guys are wrapping up?
• 1:52
  SPEAKER_00: Yeah, so I think a lot of people are really enjoying today's weather as we sit in Laverne and it's 88 degrees outside and a southwest wind at about 20 mile an hour in July.
• 2:05
  SPEAKER_00: We probably wouldn't like this weather very much, but uh right now it's kind of exactly what our area needs, I know, and and I think a few others areas need it uh to try to dry up and get this crop finished planting.
• 2:19
  SPEAKER_00: Uh locally here uh in the southwest Minnesota, uh northwest Iowa area, I would say planting is is progressing along.
• 2:28
  SPEAKER_00: I mean, corn I'm gonna say is is basically done, and soybeans are wrapping up uh here this weekend if we can uh avoid a couple of stray showers here and there.
• 2:38
  SPEAKER_00: But even saying that, there's pockets not very far away that are extremely wet and way behind.
• 2:45
  SPEAKER_00: Um, you know, I think of you know, just then an area just about 50, 60 miles east of Laverne down the interstate, uh, in that Noble's Jackson County area.
• 2:56
  SPEAKER_00: It's just an area where all these areas have gotten rain, um, but every time it rains, they get a little more than Laverne did, right?
• 3:05
  SPEAKER_00: So Laverne gets an half inch, they got an inch.
• 3:08
  SPEAKER_00: And even this morning in that same area, there really wasn't much chance of a rain, and a little shower pops up and drops four tenths.
• 3:15
  SPEAKER_00: And and boy, like if you're sitting in that area, there's nothing more disheartening of looking at that weekend forecast, think you got an opportunity, and then you wake up to another half inch and you in there you sit again.
• 3:27
  SPEAKER_00: So uh again, all in all, pretty good planting uh weather.
• 3:32
  SPEAKER_00: You know, I think last time I was on the podcast, we were kind of going into a wet spell, uh, and that definitely um came true.
• 3:40
  SPEAKER_00: And unfortunately, when we were I know when we were talking about it, we kind of looked at the long-term forecast and said, Oh yeah, it's gonna dry up and and go.
• 3:48
  SPEAKER_00: And it did in most areas, but maybe not as fast as we thought, and those uh kind of just those showers kept coming in this active pattern, and you look ahead for another two weeks, sure doesn't look like it's gonna stop either.
• 4:01
  SPEAKER_00: Uh I know uh in in uh eastern South Dakota, southwest Minnesota, northwest Iowa, over the next 10 days they're forecasting two to three more inches of rain.
• 4:12
  SPEAKER_00: Not necessarily in one big storm, but just consistent chances.
• 4:17
  SPEAKER_00: Um it's gonna be kind of a long planting weekend, I think.
• 4:20
  SPEAKER_00: If you're a seed dealer, you're you're gonna have to put in some long hours.
• 4:23
  SPEAKER_00: If you're a farmer getting things done, getting things sprayed, it's gonna be an important weekend to do that.
• 4:29
  SPEAKER_00: Um to hopefully uh put a bow on it and move on.
• 4:35
  SPEAKER_00: So I I know one thing, since I am the insurance guy, Mike, uh we have to talk a little in crop insurance.
• 4:40
  SPEAKER_00: I got you off last time without talking any, but um what a shame.
• 4:44
  SPEAKER_00: Yeah, I know.
• 4:45
  SPEAKER_00: The uh so everybody's favorite topic uh this time of year is we we talk about prevent plant.
• 4:50
  SPEAKER_00: And that's a topic wit when we uh you know during sales closing season in March and in February, boy, no one was worried about Prevent Plant.
• 5:00
  SPEAKER_01: No.
• 5:01
  SPEAKER_00: In fact, I had some guys want to take off the Prevent Plant buy-up uh to save some money because it was so dry, there was no snow, it was warm weather.
• 5:10
  SPEAKER_01: Heaven in the last couple years.
• 5:11
  SPEAKER_00: Exactly.
• 5:12
  SPEAKER_00: So um now all of a sudden it's interesting how the weather can change and create some of these wetter areas.
• 5:19
  SPEAKER_00: And so we were talking a little this morning.
• 5:21
  SPEAKER_00: We there will definitely be more I should I shouldn't say definitely, I feel there's gonna be more prevent plant areas in the country this year than last year.
• 5:31
  SPEAKER_01: Makes sense.
• 5:31
  SPEAKER_00: Um, and last year being historically low, so I'm pretty safe saying that.
• 5:36
  SPEAKER_00: And it but it's it is gonna be in pockets.
• 5:40
  SPEAKER_00: It's it's not I don't anticipate anything real widespread where like half a state uh is significant prevent plant, but we're gonna have places in South Dakota, we're gonna have places in Minnesota, um probably uh places out east in Ohio, maybe a little Indiana.
• 5:58
  SPEAKER_00: Uh I know we were talking a little in the northern Illinois, it was really wet, so um there's gonna be pockets where there's gonna some probably be some prevent plant acres.
• 6:09
  SPEAKER_00: Now, saying all that, we we have we still have 10 days, two weeks, depending on where you're at, uh, before you can uh have a prevent plant claim on corn, and we got a long time before uh soybeans because we have to reach the final plant date, which for most of our area would be May 31st on corn and June 10th on soybeans.
• 6:33
  SPEAKER_00: Uh northern South Dakota would be May 25th.
• 6:36
  SPEAKER_00: So we got some time yet, uh, but if all of a sudden these rains come true, I think we'll have a few more PP acres than we did last year.
• 6:44
  SPEAKER_01: I would say that as well, and it'll be interesting to watch that total number of what the USDA has already factored in here, and and then you know, planning conditions, kind of the same progress-wise as what we saw in like 2022 type, you know, kind of a fast start, then kind of tails off towards the end.
• 7:02
  SPEAKER_01: So we'll see what uh what this ends up showing us going forward here.
• 7:06
  SPEAKER_00: Yeah, no, I agree.
• 7:07
  SPEAKER_00: I and so, you know, as we we kind of maybe stick in the weather discussion a little bit, Mike, I wanted to ask you, since you're our marketing uh guy on the podcast here today, uh about this corn market.
• 7:19
  SPEAKER_00: Because well, last week we had the WASDA report, we had a little strength in corn, everybody got kind of excited and felt good.
• 7:26
  SPEAKER_00: And boy, these last four days it uh has not felt as good, Mike.
• 7:30
  SPEAKER_00: What what can you tell us uh about what's going on in the corn market?
• 7:34
  SPEAKER_01: Yeah, so a couple things.
• 7:35
  SPEAKER_01: We had that friendly WASDA report.
• 7:37
  SPEAKER_01: We also showed on Friday in uh in the afternoon report that we covered all like 116,000 contracts of managed money corn.
• 7:45
  SPEAKER_01: Um so that was a heaping pile of shorts that got covered up until Tuesday.
• 7:50
  SPEAKER_01: And what we learned through that time frame was we were able to rally up to the gap, basically, on corn or the right up until about that five bucks spot.
• 8:00
  SPEAKER_01: And uh, we sold a lot of corn.
• 8:02
  SPEAKER_01: It was a little bit wet.
• 8:03
  SPEAKER_01: People were selling uh corn to the elevators old crop and on the board for new crop and things like that, and uh really put the brakes on any rally that we were getting at the time.
• 8:12
  SPEAKER_01: And in uh the last couple days after we got that uh friendly WASD airport, ran things higher for a little bit and got some shorts covered, not necessarily people getting bullish, but just taking some risk off the table, uh, we were able to take a little bit of a correction towards the beginning of this week, especially when they start to focus on shifting from progress and planning progress to, you know, just weather patterns.
• 8:39
  SPEAKER_01: And one thing we are looking at is it's becoming wetter in the corn belt and rain makes grain historically.
• 8:44
  SPEAKER_01: And so a couple of the numbers I have for you today would be uh corn production located within a drought has dropped another two percent this week.
• 8:53
  SPEAKER_01: So only 12% of corn production is now experiencing a drought in the United States.
• 8:58
  SPEAKER_01: That's the lowest in well over a year, and uh especially at this time of the year.
• 9:03
  SPEAKER_01: Last June, for example, uh uh just about a year ago now, we were uh making a high at 70% of the U.S.
• 9:10
  SPEAKER_01: corn was growing in drought.
• 9:12
  SPEAKER_01: So that is significant.
• 9:14
  SPEAKER_01: That the that the funds today are starting to shift from focusing on planning progress, being a little bit slower, a little bit friendlier, a little bit tighter balance sheet to, oh yeah, well, we've got a lot of rain currently sitting in the United States that's occurring over small periods of time uh to start off this crop and uh kind of filling that water table back up.
• 9:34
  SPEAKER_01: And I think that's significant as we make that transition to talking more about weather as we enter the end of May and June and how difficult that can be to get a market to rally when it continues to rain on a corn crop at any stage of its growing cycle.
• 9:50
  SPEAKER_00: Yeah, that's a really good point, Mike.
• 9:51
  SPEAKER_00: Like you think back uh I I know it was dry last June, what you were saying, like 70% of the corn growing cycle was a high we made on it.
• 9:59
  SPEAKER_00: Uh I mean that's crazy, especially when you think about where we ended last year on yield, right?
• 10:05
  SPEAKER_00: Record high yield.
• 10:06
  SPEAKER_00: A record high yield, even though we had such a high percentage of the key corn growing areas in a drought.
• 10:12
  SPEAKER_00: Um and and so everybody kind of knew after a harvest of man, we get got those rains just at the right time, right?
• 10:20
  SPEAKER_00: They were just in the nick of time uh to save the crop or or to get it to the next stage or get it to the next rain, and that really worked out.
• 10:28
  SPEAKER_00: And you're exactly right of getting rain this time of year recharges that that subsoil moisture and uh will hopefully help carry through an upcoming dry spell, which we know will happen, right?
• 10:41
  SPEAKER_00: It always does.
• 10:42
  SPEAKER_00: Um, and that'll just kind of take some of the edge off.
• 10:45
  SPEAKER_00: And and so as you you say, the the market kind of gets a little more comfortable with that when they happen.
• 10:51
  SPEAKER_00: And and for the most part, I I know a few weeks ago there was a lot of tornadoes to the south of us, but uh all of these storms haven't caused a lot of flooding locally, right?
• 11:00
  SPEAKER_00: I I don't want to say nationally because you see some of the stuff going on in Texas and the south and the Western.
• 11:05
  SPEAKER_01: Well globally looking at Brazil.
• 11:07
  SPEAKER_00: Exactly.
• 11:07
  SPEAKER_00: Well, yeah, exactly.
• 11:08
  SPEAKER_00: So so we I don't want to say that uh no one is is suffering from it, but from our local area, uh really just kind of timely, uh nice soaking rains, and hopefully that'll benefit us going forward.
• 11:20
  SPEAKER_00: So uh so one thing that I as a the farmer in me as I look at the the market action every day, Mike, and it's down, it becomes harder and harder to sell corn.
• 11:31
  SPEAKER_00: Should guys should should we just stop selling for a while and see what happens, or what do you think?
• 11:36
  SPEAKER_01: At this time of the year, it's key to continue to sell rallies historically.
• 11:41
  SPEAKER_01: Now, if you take all these numbers and be incredibly analytical about it that we've been talking about with uh you're comparing comparing planning progress to a prior year, and it falls very closely to 2022, uh that year between the May report and the January report, uh corn yield came off 3.6 bushels.
• 12:01
  SPEAKER_01: That's where we closed on the final crop report below where we came with that initial trend line yield.
• 12:06
  SPEAKER_01: So that puts you at a 177.4 today on uh new crop uh new crop corn yield there.
• 12:13
  SPEAKER_01: That would be 0.1 over the record.
• 12:16
  SPEAKER_01: I think that's a very comfortable spot, and that would suggest about a 12.2% stocks to use ratio, which would end up suggesting something right along that four and a quarter to four and a half dollar range on March futures.
• 12:30
  SPEAKER_01: That's not that bad of a spot.
• 12:31
  SPEAKER_01: If you fall back to that, um, you know, uh the futures aren't awfully, you know, in a big corrective mode from where we're already trading at today, most likely in the high fours.
• 12:41
  SPEAKER_01: Um now if it stays anywhere around 181 today and you're at 14.2% stocks to use ratio, then you're talking pretty much 380 corn historically on that March futures.
• 12:53
  SPEAKER_01: So it's that's a pretty big difference between four and a half bucks and then three eighty, because I I would argue that four and a half dollars keeps you in this range that we've been in probably for the last year or so, right around this five dollar mark, and having that opportunity to sell that.
• 13:07
  SPEAKER_01: So it'll be interesting to see where we go moving forward, but the it's key to continue to sell rallies, and from a seasonal perspective, going back to the year 2000, uh, eight of the summer highs have occurred in June, eight have occurred in uh July, six have occurred in May, and then just two in April.
• 13:26
  SPEAKER_01: So historically they would suggest that we should find a new high in the corn market between June and July.
• 13:34
  SPEAKER_01: Most years.
• 13:35
  SPEAKER_01: Um we'll see.
• 13:37
  SPEAKER_01: Uh April, you know, uh or uh back in 2014, a very similar chart.
• 13:42
  SPEAKER_01: You were probably putting in your high a little bit earlier in April there.
• 13:47
  SPEAKER_01: But uh that's one of the outlier years as well.
• 13:49
  SPEAKER_01: So those are a few things to look at from a seasonal perspective.
• 13:53
  SPEAKER_01: Otherwise, keep your foot on the gas, especially in the high fours on corn, and then on the soybeans, anything above twelve bucks.
• 14:00
  SPEAKER_01: You know, the soybeans were pretty resilient this week, I think, is a green light from my end.
• 14:05
  SPEAKER_00: Well, that sounds good.
• 14:05
  SPEAKER_00: I think that's uh as we're planting our crop, we should be looking at selling our crop, and that uh tends to hold every year following the seasonal pattern, just like you said.
• 14:14
  SPEAKER_01: It's better to be early on this than late on this.
• 14:16
  SPEAKER_01: I would agree.
• 14:17
  SPEAKER_01: That'd be my one one bullet punchline out of this.
• 14:20
  SPEAKER_01: So all right.
• 14:21
  SPEAKER_01: Well, thank you for your time today, Lucas.
• 14:23
  SPEAKER_01: I appreciate it.
• 14:24
  SPEAKER_01: Thank you.
• 14:25
  SPEAKER_01: And thank you to all our listeners.
• 14:26
  SPEAKER_01: Please reach out to us at professional eggmarketing.com.
• 14:30
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 14:35
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 14:41
  SPEAKER_01: See you next time.