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Grain Outlook · 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.
• 0:23
  SPEAKER_01: Today is March 3rd.
• 0:24
  SPEAKER_01: I've got Pat with us here this week.
• 0:26
  SPEAKER_01: How's it going, Pat?
• 0:27
  SPEAKER_00: Doing well, Mike.
• 0:28
  SPEAKER_00: How are you?
• 0:29
  SPEAKER_01: Very good.
• 0:29
  SPEAKER_01: Very good.
• 0:30
  SPEAKER_01: Well, we've had some uh colorful action in the grain markets here since we talked last, Pat.
• 0:35
  SPEAKER_01: Uh corn and soybeans really found some support after a pretty hard sell-off there.
• 0:41
  SPEAKER_01: If you look back now, uh May Corn Futures sold off 60 cents from high to low last week and this week here.
• 0:48
  SPEAKER_01: So put in some support on Wednesday on the corn market, but the soybeans, they had a little bit harder time there as that uh really had a shock after uh after corn was done trading down.
• 0:59
  SPEAKER_01: And uh for now, anyways, both of them caught some more mild support.
• 1:03
  SPEAKER_01: I saw some uh technical traders kind of talking about how uh uh this could be a trend uh kind of starting lower, uh finding just a dead cat bounce or a little bit of a uptrend here technically.
• 1:15
  SPEAKER_01: Uh there's a lot left in this game to play, though, I think, Pat, don't you?
• 1:20
  SPEAKER_00: Yeah, I agree.
• 1:21
  SPEAKER_00: I mean, we're uh um I guess I I keep thinking we're in this time of year where it gets a little bit harder to find the next round of information.
• 1:29
  SPEAKER_00: I mean, we we've uh beat up uh uh South America weather uh discussions, concerns, all of that um pretty thoroughly, and uh and uh have been kind of gone through uh South America's harvest or at least getting started in some areas of of the country there.
• 1:48
  SPEAKER_00: And and then a second crop in Brazil.
• 1:51
  SPEAKER_00: We've been trying to trade a little bit of weather early on there and with a a little bit of excess moisture and and so but but anyway, mostly things are calming down a bit there and and and mostly just because of the time of year, and and uh you know, we're starting to get a little bit of an acreage discussion and and uh longer range forecasts for for U.S.
• 2:12
  SPEAKER_00: crop prospects.
• 2:14
  SPEAKER_00: But you know, we are uh just in a little bit of a quiet time here, and I would I suspect it's not too uncommon for us to to see a little bit of a of a correction in in both these corn and soybean markets as a result.
• 2:27
  SPEAKER_00: And so, you know, Mike, uh yeah, and I I mean it does seem like uh as we kind of finish off this week here that we are starting to kind of consolidate a little bit here in maybe the 635 area.
• 2:39
  SPEAKER_00: We at least on corn spent an awful lot of time up in that 685 area and couldn't break through it.
• 2:44
  SPEAKER_00: And and so, and so maybe that's right.
• 2:47
  SPEAKER_00: Maybe they've uh you know the market's uh kind of transitioned from South America weather to to to more of a a lower volatile sort of a time here, and we're gonna sort of consolidate down at this lower end of the range and then see what happens next as we get uh a little deeper into the month of March and you know see what basis levels do here in the U.S.
• 3:07
  SPEAKER_00: on both corn and soybeans, but also start to get some some uh trade guesses on stocks at the at the end of the month here and and then also acres.
• 3:17
  SPEAKER_01: You can at least kind of see some of the things coming at us with uncertainty about the uh the export corridor deal between Russia and Ukraine.
• 3:25
  SPEAKER_01: That news will be talked about the middle of March here, the 18th, I believe, is that deadline, and uh talking about its surge in the US dollar here.
• 3:33
  SPEAKER_01: We're gonna have a big report uh coming up in a couple weeks on if the Fed's gonna raise uh interest rates again, 25 basis points expected, maybe they'll do more.
• 3:42
  SPEAKER_01: Um, you know, a surge in in uh losses of production out of Argentina.
• 3:48
  SPEAKER_01: Uh you can just kind of see some of those factors getting talked about here before we start to talk about the really the bigger things that probably matter in the long run, like you said, which is acres at the end of the month in March and uh crop conditions starting off in the United States.
• 4:03
  SPEAKER_01: So it'll start to trade uh I did see some pictures though uh this week of some uh cornfields in Texas and whatnot, Pat.
• 4:10
  SPEAKER_01: That was kind of the first time I've seen some stuff popping out of the United States.
• 4:14
  SPEAKER_00: We'll transition quickly this time of year somewhere, right?
• 4:16
  SPEAKER_00: We'll we'll the spring will come.
• 4:18
  SPEAKER_00: It's uh it always does.
• 4:19
  SPEAKER_00: And so I uh I mean so yeah, you're just and there's an awful lot of stuff that you you you just rattled off there, and it's true.
• 4:26
  SPEAKER_00: I mean, you still have uh the uh more macro sort of impacts, Fed raising interest rates, you have geopolitical concerns, the Russia-Ukraine crisis.
• 4:35
  SPEAKER_00: I mean, you still have we have all kinds of different things that are that are uh impacting these commodity markets, and and uh you know we we believe that we're not gonna have uh that corn isn't gonna be at seven bucks forever, or that beans aren't gonna be at fifteen bucks forever, and we believe that you know hogs aren't gonna be at ninety-eight bucks like they were last year, that kind of thing.
• 4:57
  SPEAKER_00: And so sooner or later, your your these outside influences and how the Fed manages inflation and interest rates and all of those things will ultimately I think uh uh allow for us to to uh or allow for all of these markets to to to maybe reset some pricing ranges uh likely at some lower levels here.
• 5:17
  SPEAKER_00: You just don't know when that happens.
• 5:19
  SPEAKER_00: And so all of us as producers and uh and risk managers are are concerned about this break.
• 5:26
  SPEAKER_00: We're concerned about this break as if is this the the start of that, or is this just a seasonal sort of a of a correction and we can get back at it again when we when we uh uh get closer to spring and start trading weather again.
• 5:41
  SPEAKER_00: And so for me at least, I'm I'm uh I'm uh very cautious, conscious of this uh of this issue, that sooner or later we are going to correct this thing.
• 5:50
  SPEAKER_00: And I and I do tend to think that this is that transition year.
• 5:54
  SPEAKER_00: And so then any so any corrective rallies that we that we do get, I I I do think we need to be pretty aggressive with it in this corn and soybean complex from a from a soybean and corn growers perspective.
• 6:05
  SPEAKER_00: And so I I think the story of 2023, if we fast forward and look back on it, that's what it's gonna be.
• 6:11
  SPEAKER_00: We're gonna we're gonna look at this as a transition year, a transition year to better production and a transition year to uh a slightly softer demand as a result of uh not only a US consumer but a global economy that that's uh that uh is feeling the effects of uh of inflation and and uh lowering commodity demand as a result.
• 6:35
  SPEAKER_01: Yeah, is this 2013 all over again or not?
• 6:38
  SPEAKER_01: That looking back at a few of those charts here with that sell-off, I think the high that year was pretty much in January.
• 6:44
  SPEAKER_01: We failed to have any significant seasonal rallies after that.
• 6:47
  SPEAKER_01: So it's been talked about here a little bit uh this week, anyways, after the sell-off, and uh we'll see going forward anyways.
• 6:54
  SPEAKER_01: Something new on the inflation route that I heard get talked about too this week is yeah, if you look at it, sure, China reopening, they're gonna use some more crude oil and uh things like that for raw materials, but they're re and that increases inflation in their own country, but they're reopening and sending products here in the United States and improving supply chain logistics and all that should help bring our inflation lower in the United States as well as they reopen and send us a bunch of stuff all over again.
• 7:20
  SPEAKER_00: So makes sense, yeah.
• 7:23
  SPEAKER_00: And and again, I I the the supply chain and logistics and all of that coming out of COVID has still it's not it's not uh running like a well-oiled machine or a pre-COVID type uh efficiencies.
• 7:37
  SPEAKER_00: And so that's a good point, Mike.
• 7:40
  SPEAKER_00: I I I I tend to agree with what you're saying there, that uh you know, as China's economic activity improves, it it provides for the opportunity to to at least put a lid on the rate of inflation increase as we go forward in some pretty major economies across the globe.
• 7:56
  SPEAKER_01: Something that impacts all commodities too across the board, corn, soybeans, cattle.
• 8:01
  SPEAKER_01: So what else you want to talk about today, Pat?
• 8:04
  SPEAKER_00: Well, I would just uh you know, as we talk about this, this a seasonal thing or a transition deal, and and uh, you know, there are various different risk management alternatives that can be put into into play here to manage those things.
• 8:19
  SPEAKER_00: And and uh one of uh uh I think a more popular sort of a strategy here, at least out of our office this week, is to maybe look at some shorter-term uh type option strategies that allow for us to bridge from this time from now until you get to May and June, when historically, at least from a s a seasonal perspective, we want to be making some some significant risk management decisions.
• 8:45
  SPEAKER_00: And so, you know, you reference appropriately so uh the transition out of 2012 into 2013 and sort of the reset of prices, it started in January and didn't really look back.
• 8:58
  SPEAKER_00: And so, and so um that is a that's a real possibility in this situation, right?
• 9:05
  SPEAKER_00: And so it's likely appropriate to consider something to to bridge us uh on this gap from you know the first part of March uh into uh into May and June.
• 9:14
  SPEAKER_00: So be more than happy to discuss those uh alternatives with uh with anyone as it relates to to how to implement those strategies in a way that makes sense for your business.
• 9:24
  SPEAKER_00: Uh look forward to that opportunity.
• 9:26
  SPEAKER_00: But you know, I uh it's those are the kind of things that we need to be thinking about this time of year.
• 9:30
  SPEAKER_01: And it's not just like a buy or a sell signal in in this environment, is it?
• 9:34
  SPEAKER_01: It's a really not a one-size fits all.
• 9:36
  SPEAKER_01: I mean, you really have to go through stuff, look at what you've done already, what position you're sitting in from a risk tolerance perspective, and uh that what strategy fits your operation the best.
• 9:46
  SPEAKER_01: Right now is is a lot more difficult to walk through, and you have to be much more thorough with it, I think, than uh than certain times of the year and stages of the cycle.
• 9:56
  SPEAKER_00: Yeah, it's well said, and everyone's risk tolerance is different.
• 9:59
  SPEAKER_00: Everyone's um approach, perception of what today's uh opportunity or challenge that uh and how that impacts their business is certainly unique, and and so that's that's well said, Mike.
• 10:11
  SPEAKER_00: Yeah, you're gonna have to take a little bit of extra time uh on this particular deal and make sure you're making the right decisions for your operation.
• 10:18
  SPEAKER_01: All right.
• 10:18
  SPEAKER_01: Well, thank you for coming today, Pat.
• 10:20
  SPEAKER_01: Thank you.
• 10:21
  SPEAKER_01: And thank you to all our listeners.
• 10:22
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 10:26
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:31
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 10:37
  SPEAKER_01: See you next time.