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A wild week to go nowhere · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the egg 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.
• 0:24
  SPEAKER_01: Today is November 4th.
• 0:26
  SPEAKER_01: I've got Lucas with us here today.
• 0:27
  SPEAKER_01: How's it going?
• 0:28
  SPEAKER_00: It is going very well on this Friday afternoon, Mike.
• 0:32
  SPEAKER_00: Awesome.
• 0:32
  SPEAKER_01: Well, I'll tell you what, we've got a few things to talk about today, and they are far from boring.
• 0:38
  SPEAKER_01: We're going to talk a little bit about a weekly market update to start here, talk about Russia, Ukraine, China, some of the Fed news, talk about the South American election a little bit, talk about some weather, uh focus on some of the key events that really push these markets around this week.
• 0:54
  SPEAKER_01: Had a lot of volatility.
• 0:55
  SPEAKER_01: And uh then we're gonna wrap up Lucas talking about crop insurance, just a smidge there at the end to talk about our harvest price.
• 1:02
  SPEAKER_01: How's that sound?
• 1:03
  SPEAKER_01: That sounds like a full agenda.
• 1:05
  SPEAKER_01: Well, that it is.
• 1:06
  SPEAKER_01: So let's start off with these volatile markets here.
• 1:10
  SPEAKER_01: We had a close just to start with last Friday on the December corn around 681.
• 1:16
  SPEAKER_01: And guess where we came off today, Lucas?
• 1:18
  SPEAKER_01: I would guess 681, Mike.
• 1:20
  SPEAKER_01: That we did.
• 1:21
  SPEAKER_01: We chain we closed the week over week unchanged.
• 1:25
  SPEAKER_01: Now that doesn't quite do the week justice, does it?
• 1:28
  SPEAKER_00: It seems like uh Monday was a little bit uh more volatile than zero change on the week.
• 1:34
  SPEAKER_01: That it was.
• 1:34
  SPEAKER_01: Uh for what Lucas is referring to here is the Russia-Ukraine situation, sounded like uh we had put a stop to the Russian uh export corridor there, and uh Putin said that was not going to get extended.
• 1:47
  SPEAKER_01: And uh wheat market reacted up sixty cents that day for most of the day.
• 1:52
  SPEAKER_01: Um corn was up.
• 1:54
  SPEAKER_01: We ha started the week off very hot and heavy there.
• 1:56
  SPEAKER_01: And then by Wednesday, we had literally erased all of those gains uh in a single day, down to 60, as they kind of said, you know what, they kind of promised us they're not gonna use those export shipments for anything bad.
• 2:10
  SPEAKER_01: So it sounds like that deal kind of started going again.
• 2:14
  SPEAKER_01: And uh Turkey, UN, they maybe had a little bit of an influence in all that as well.
• 2:19
  SPEAKER_01: But nonetheless, we had a very wild roller coaster of a week here just from the Russia Ukraine news themselves, uh completely reversing uh from the beginning of the week just to midweek, getting a lot of volatility through the grain markets because of those.
• 2:33
  SPEAKER_01: But that really wasn't even half the story for the grains this week.
• 2:38
  SPEAKER_01: Um we also had uh China back in this market, China and Hong Kong equity markets.
• 2:44
  SPEAKER_01: They were sharply higher on social media talk that China uh could soon relax their strict COVID policies and uh have really had a positive uh news audit on most of the U.S.
• 2:56
  SPEAKER_01: listed stocks, uh who helped Chinese stocks.
• 2:59
  SPEAKER_01: Uh you know, the rising tide really lifted all boats here, Lucas.
• 3:03
  SPEAKER_01: We uh for both US and EU equities, grains, commodities, it uh all pretty much skyrocketed higher after that to close out the week here on Friday.
• 3:13
  SPEAKER_01: And some of the things like crude oil, they reacted in incredibly strong to this news.
• 3:18
  SPEAKER_01: So uh a far from boring week when it was talking about Chinese influence on these markets as well to finish off the week.
• 3:26
  SPEAKER_01: Um, but that doesn't quite cut it.
• 3:28
  SPEAKER_01: We got Fed news out this week as a FOMC released their news uh that had some influence on the market, really pushed the US dollar around as well.
• 3:37
  SPEAKER_01: Um as that backed off uh the last couple days.
• 3:40
  SPEAKER_01: We really had some uh positive influence on those uh commodity markets as well as they liked that little bit of a lowest lower US dollar there.
• 3:50
  SPEAKER_01: And then as we kind of talk about South America, bring them into it, we had the Brazil election, and uh that talked about some protests and and retaliation to uh a little displeasing um results out of that mar out of that election, it sounded like with their new president, and uh it sounds like that could influence some of their shipments on things like fertilizer and grain going forward, etc.
• 4:16
  SPEAKER_01: But they also got in the news for uh supposedly selling some corn to China as well.
• 4:21
  SPEAKER_01: So we had some export measures get changed week over week on that aspect.
• 4:26
  SPEAKER_01: Um really a lot of influences um from multiple fronts here on the grain markets this week, Lucas.
• 4:33
  SPEAKER_01: And then kind of to wrap up, I I wanted to talk about uh weather a little bit before we got into uh crop insurance prices here that got finalized this last week.
• 4:43
  SPEAKER_01: So um when we talk about weather, you know, back about in May 31st, about 19% of the uh corn crop was in a drought in the United States, uh, where nineteen percent of the corn is raised was in a drought.
• 4:59
  SPEAKER_01: Uh today, uh, with yesterday's data, it looked like we were about 71% of the corn raised in the United States was in a drought.
• 5:08
  SPEAKER_01: So we are uh really, really dry compared to normal here.
• 5:14
  SPEAKER_01: And especially in that southern United States now, it seems like that uh that drought pattern has started to shift a little bit.
• 5:21
  SPEAKER_01: You know, a lot of talk about the Mississippi River here recently.
• 5:25
  SPEAKER_01: Looks like they are gonna try to get some rain anyways and try to get those water levels up.
• 5:29
  SPEAKER_01: They've started to a little bit, but um a far cry from help here is they're gonna need a lot more than a one-inch rain to say the least out of that area from St.
• 5:39
  SPEAKER_01: Louis South.
• 5:40
  SPEAKER_01: So um that didn't really change a whole lot, but they did get a little bit more rain down in that part of the world.
• 5:47
  SPEAKER_01: But um when we talk about the La Nina uh situation that we're experiencing here, it looks like we've got about a three-quarters uh percent chance that we're gonna see that continue through this winter.
• 5:58
  SPEAKER_01: And that'll likely lead towards uh the current conditions that we've been experiencing until probably next spring.
• 6:05
  SPEAKER_01: Um, maybe lead to a little bit of snowfall in the north uh through this winter, but it sounds like that's not really gonna help water levels out until that melts next spring, anyways.
• 6:15
  SPEAKER_01: So uh what do you think about weather here before you get into the uh crop insurance prices, Lucas?
• 6:20
  SPEAKER_00: Yeah, so you bring up a good point about the uh La Niña, El Nino, uh kind of definitely all the the models are suggesting La Niña will continue through uh last part of 2022 into the first part of 2023, and then uh I some of the things that I've looked at is like April starting to switch more to an El Nino.
• 6:39
  SPEAKER_00: Is that about your spring time frame?
• 6:42
  SPEAKER_00: Um, you know, so generally that should be a little bit more snowfall in the far northern plains.
• 6:48
  SPEAKER_00: Uh, you look at the forecast for that area, Montana, North Dakota, Southern Canada.
• 6:54
  SPEAKER_00: Uh, there is supposed to be some pretty significant snowfall uh up in that area next week, right?
• 7:00
  SPEAKER_00: Uh of course weather forecasts have changed, but we're gonna need that.
• 7:04
  SPEAKER_00: It's kind of odd uh talking about corn belt drought in November.
• 7:10
  SPEAKER_00: Um, but uh I think that's where we sit in all these markets, right?
• 7:14
  SPEAKER_00: Like uh it it's when we look at how tight the balance sheet is and everything going on in the world uh and every market place uh where you need to raise a good crop next year, and all of a sudden now a drought in November is something we have to watch for.
• 7:31
  SPEAKER_00: Um you know it's you know, you listen to your podcast last week, Mike.
• 7:35
  SPEAKER_00: You ran through some of these big events uh coming up in November and and how that uh can affect the the grain markets.
• 7:44
  SPEAKER_00: I don't think you mentioned Corn Belt Drought, and I know the Ukraine deal is in there, but that was supposed to be like two or three weeks from now.
• 7:51
  SPEAKER_01: Yeah, that was November 22nd, not necessarily the literally the next day.
• 7:55
  SPEAKER_00: Yeah, October 29th or 30th or whenever uh they announced that.
• 8:00
  SPEAKER_00: So um, so kind of interesting that uh uh you you you said November's gonna be pretty interesting, the grain markets, and all of a sudden, bam, the first week, not even a full first week, and we were uh slammed uh with uh a lot of things and and at the end of the day didn't uh really result uh in too much change in in any market for for the most part.
• 8:20
  SPEAKER_00: So yeah, weather is gonna be important uh on top of all the other craziness.
• 8:24
  SPEAKER_00: What next week?
• 8:25
  SPEAKER_00: What's the big crazy thing next week, Mike?
• 8:27
  SPEAKER_01: Well, we got the Waz Day report on the 9th and uh got a few different estimates out.
• 8:31
  SPEAKER_01: Stonex came out this week with uh higher corn yield and a little bit lower soybean yield.
• 8:37
  SPEAKER_01: IHS came out with higher on both.
• 8:40
  SPEAKER_01: Um we are starting to see some question marks raised about maybe this is the smallest number that the USDA has posted on yield.
• 8:48
  SPEAKER_01: And uh so that's a concern for some of these markets and then demand destruction as well.
• 8:53
  SPEAKER_01: So um corn's been just stuck in this tight, tight trading range.
• 8:57
  SPEAKER_01: We saw it this week, you know, we failed to go above seven bucks again in these front months, even with some of this crazy news headlines that came out and really pushed the markets around, we still couldn't break out of this range.
• 9:08
  SPEAKER_01: And uh so it does raise some questions, you know, uh, what's it really gonna take to get corn to go up from this level much more in the meantime?
• 9:16
  SPEAKER_01: And uh if it's gonna struggle to do so here, uh maybe you see a breakout lower.
• 9:22
  SPEAKER_01: I don't know.
• 9:22
  SPEAKER_01: It's uh it's something to watch out for here, uh especially around a date or uh an event like the WASD Airport.
• 9:29
  SPEAKER_00: Yep, that's uh you bring up a good point, you know, some of the estimates.
• 9:32
  SPEAKER_00: It's it seems like all the corn yield just kind of keeps going up, right?
• 9:35
  SPEAKER_00: And we kind of expected that.
• 9:37
  SPEAKER_00: Uh but even talking to the farmers we work with, generally yields were better than everybody expected.
• 9:43
  SPEAKER_00: On corn, yeah.
• 9:44
  SPEAKER_00: Yeah, on corn, yep.
• 9:45
  SPEAKER_00: Uh and that's kind of been the trend the last couple years of oh my gosh, it's dry, it never rains anymore, and then oh, I guess we can still raise 240 bushel corn with uh 11 inches of moisture.
• 9:56
  SPEAKER_01: Don't ask me how that still happens.
• 9:58
  SPEAKER_00: So it's uh it's kind of odd, and that's probably uh probably why we can't really move uh the market, right?
• 10:06
  SPEAKER_00: Because it just we get some bad news and then we follow up with some good news.
• 10:09
  SPEAKER_00: The the yield goes up a little, so that should drive corn down, and then we got Russia-Ukraine forcing corn up.
• 10:15
  SPEAKER_00: But uh kind of interesting thing.
• 10:16
  SPEAKER_00: Of course, we also have the election next week.
• 10:19
  SPEAKER_00: Uh so who knows what that'll do for midterm election for grain markets, but uh whoever you are, wherever you are, make sure you get out and vote, right?
• 10:27
  SPEAKER_00: There's a good message to get out on the podcast, Mike.
• 10:30
  SPEAKER_01: So um another interesting thing is all of these things besides the election, basically, will will or can continue to happen.
• 10:39
  SPEAKER_00: Yeah, yeah, you're right.
• 10:41
  SPEAKER_01: Like we're talking about drought.
• 10:42
  SPEAKER_01: It's not like we're gonna get five inches, ten inches of rain here over the next couple weeks and be done with that.
• 10:48
  SPEAKER_01: Uh the Russia-Ukraine situation, that's obviously back and forth.
• 10:52
  SPEAKER_01: That was just uh one week's worth of news, anyways.
• 10:56
  SPEAKER_00: China China news is never gonna end in the short term.
• 10:59
  SPEAKER_01: That won't.
• 11:00
  SPEAKER_00: Uh yeah, you're right.
• 11:01
  SPEAKER_00: That's the only uh official uh and that in the WASDI report, right?
• 11:05
  SPEAKER_00: We'll get another one and decide.
• 11:14
  SPEAKER_00: Uh the last half of November and and see what happens on there.
• 11:19
  SPEAKER_00: Uh but I guess since I'm in the room, we got to talk a little bit about crop insurance.
• 11:24
  SPEAKER_00: Um, so we did finally turn your snoozes on.
• 11:27
  SPEAKER_00: So a little uh we did set the final prices, the harvest prices for our uh corn and soybeans and some other crops.
• 11:34
  SPEAKER_00: We're gonna talk corn and beans uh here on Monday.
• 11:38
  SPEAKER_00: Uh so they average the uh harvest prices during the month of October using the December uh corn contract and the November soybean contract, and so we came out at 686 on corn for a harvest price and 1381 on soybeans.
• 11:57
  SPEAKER_00: Um, so where does that compare to uh the projected price that we had in February?
• 12:01
  SPEAKER_00: Well, corn was at 590 in February, so about a 16% rise uh in the uh harvest price.
• 12:10
  SPEAKER_00: Uh soybeans were$14.33, so uh about a 5% decrease uh in price uh there for uh for soybeans.
• 12:20
  SPEAKER_00: So uh how does that relate to your policy?
• 12:23
  SPEAKER_00: Well, if you're buying a revenue protection policy, uh you get the higher of the two prices.
• 12:29
  SPEAKER_00: So on corn, now you get to use 686, uh and soybeans you'll keep your 1433, uh, and then we'll calculate the final values using the harvest prices to determine any uh revenue loss indemnities.
• 12:42
  SPEAKER_00: Um be sure you uh are talking to your crop insurance agent, uh, get your yields calculated, get all your paperwork put together, uh, talk to your agent, uh, make sure you get any losses uh uh submitted, and uh we can put the uh 2022 claims uh season uh to rest.
• 13:00
  SPEAKER_00: Uh a little bit of a historical picture on these prices.
• 13:05
  SPEAKER_00: So corn price was the second highest ever.
• 13:09
  SPEAKER_00: Uh 2012 fall harvest price uh was 750.
• 13:15
  SPEAKER_00: That was the only time we were higher than the 686 uh where we are at uh this year.
• 13:21
  SPEAKER_00: And so you think of 20.
• 13:23
  SPEAKER_01: I mean, even 2011 was six thirty-two, but really besides that, not even close.
• 13:29
  SPEAKER_00: It's pretty rare to even be in the sixes.
• 13:31
  SPEAKER_00: Uh and and you know, you think of twenty twelve to go to seven fifty, we weren't all that far away from that number this year, and twenty twelve was one of the worst droughts in the heart of the corn belt um ever.
• 13:47
  SPEAKER_00: And so that's what it takes, and that's kind of right during the ethanol boom, too, right, Mike?
• 13:51
  SPEAKER_01: So we were using corn and now we were short corn and it just very similar spring prices through those time frames 601 and 11, 568 and 12, 565 and 13 compared to the 590 this year.
• 14:05
  SPEAKER_01: Pretty close.
• 14:06
  SPEAKER_00: Exactly.
• 14:06
  SPEAKER_00: But also you notice on there, Mike, uh, we're just kind of looking at a chart here that they kind of go in three-year spurts.
• 14:14
  SPEAKER_00: Okay, and that's when we have kind of our higher prices, and then they start falling off.
• 14:18
  SPEAKER_00: So if you look, okay, 2021, we had a 458 spring price and a 537 fall, 2022, a 590 and a 686.
• 14:28
  SPEAKER_00: We'll we'll likely have a pretty good spring price for 2023.
• 14:33
  SPEAKER_00: Um, you know, just based off what uh Mike and I were talking about, I don't the corn's been in such a tight range.
• 14:39
  SPEAKER_00: Uh granted, 20 December 2023 corn is trading lower than that.
• 14:43
  SPEAKER_00: About 630.
• 14:44
  SPEAKER_00: Yeah, it's right around that 630 range.
• 14:46
  SPEAKER_00: So um, you know, I I it's not I mean, I would say that six dollar range is definitely uh a possible, uh probably even likely, uh barring something crazy happening.
• 14:58
  SPEAKER_00: Um but then you gotta start wondering uh where it goes from there.
• 15:02
  SPEAKER_00: You need, I mean, as you know, Mike, you need a lot of uh a lot of bad news to keep a corn market uh up that long, and eventually they start going the other way.
• 15:12
  SPEAKER_00: So history would say that high prices don't stick around forever.
• 15:16
  SPEAKER_00: I know that's uh groundbreaking news, but uh as you look at your crop insurance plan for 2023, uh you definitely look at that revenue protection, look at your levels of coverage, uh see what uh you can get and prepare for maybe a slight uh dip in price, because boy, it's hard to sustain those levels for for many years.
• 15:38
  SPEAKER_01: 13 there was 565 in the spring, and then four thirty-nine was a fall.
• 15:45
  SPEAKER_01: So that was kind of where we fell back off after twelve, it seemed like.
• 15:49
  SPEAKER_00: So we went from seven fifty in the fall of twelve to four thirty-nine to in the fall of twenty thirteen.
• 15:56
  SPEAKER_01: Yeah, that's when farming started to get fun again.
• 15:59
  SPEAKER_00: Yeah, and then it started getting not fun shortly after that, right?
• 16:02
  SPEAKER_00: Yeah, not fun.
• 16:03
  SPEAKER_00: Because we started setting input prices at 750 corn, and then we had guarantees of four thirty-nine.
• 16:09
  SPEAKER_00: Yeah.
• 16:10
  SPEAKER_00: And so that's that's I don't think that needs to get explained.
• 16:13
  SPEAKER_00: We gotta prepare and watch out for because maybe it doesn't happen.
• 16:17
  SPEAKER_00: Maybe we're in new levels, all this other fun stuff that we like to think about.
• 16:21
  SPEAKER_00: Uh history is usually likes to repeat itself, and uh we might be able to.
• 16:26
  SPEAKER_01: Maybe that'll be an upcoming podcast here, Lucas, if we talk about are we in a new plateau?
• 16:32
  SPEAKER_00: I'll let uh you and somebody else do that one.
• 16:34
  SPEAKER_00: I don't need a few weeks, I think.
• 16:36
  SPEAKER_00: I don't think we're there yet, Mike, but uh well well, here's to thinking positively.
• 16:41
  SPEAKER_00: Maybe we can we can follow that along.
• 16:43
  SPEAKER_01: Well, it was a fun week here, had a lot of fun talking points.
• 16:46
  SPEAKER_01: You got anything to finish up with?
• 16:48
  SPEAKER_00: No, that's uh all I got.
• 16:50
  SPEAKER_00: Uh uh get out and enjoy one of the last warmer weekends it looks like we have coming up, and uh and yeah, get out and vote next Tuesday.
• 16:57
  SPEAKER_01: Thanks for joining us, Lucas, and then uh one other key thing to end up with here, uh November soybeans here for 23.
• 17:05
  SPEAKER_01: I want to finish up talking about that a little bit.
• 17:07
  SPEAKER_01: Worth noting that NOVE 23 uh approaching that$14 range again really hard this week, closed just below it here.
• 17:15
  SPEAKER_01: And then uh Jan soybeans had a really nice rally here, 1462 on the week.
• 17:20
  SPEAKER_01: You know, corn was pretty quiet, but that actually closed out pretty good.
• 17:23
  SPEAKER_01: So a lot of activity on that soybean market this week.
• 17:26
  SPEAKER_01: I think that should get looked at.
• 17:28
  SPEAKER_01: But uh thank you for listening in, everybody, and we'll catch you next week.
• 17:32
  SPEAKER_01: And thank you to all our listeners.
• 17:34
  SPEAKER_01: Please reach out to us from our website at professionalegmarketing.com, or check out our newly added hog specific podcast named Hog Market Talk that's released every Thursday.
• 17:45
  SPEAKER_01: Trading commodity futures and options involve substantial risk and loss that is not suitable for all investors.