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Grains: Wheaties · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Ag Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the ag markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Today is June 20th.
• 0:25
  SPEAKER_00: I've got Pat back with us here today.
• 0:26
  SPEAKER_00: How's it going, Pat?
• 0:27
  SPEAKER_01: Good, Mike.
• 0:28
  SPEAKER_01: How are you?
• 0:28
  SPEAKER_00: It's the first day of summer.
• 0:30
  SPEAKER_01: Is it the longest day of the year?
• 0:32
  SPEAKER_00: It is also the longest day of the year.
• 0:34
  SPEAKER_00: Now, I could involve some smart aleck comment, Pat, about being the longest day of the year, but I'll tell you what.
• 0:41
  SPEAKER_00: Fire away.
• 0:45
  SPEAKER_00: All right.
• 0:46
  SPEAKER_00: Well, the grain markets, I'll tell you what, we had plenty to trade this week.
• 0:49
  SPEAKER_00: Even last week, too, that seemed like there was a major headline every single day of the week involving some market-moving activity.
• 0:57
  SPEAKER_00: This week, uh, no shortage of that either.
• 0:59
  SPEAKER_00: The really big ticket items on the grain markets, I'd say wheat was up 25 cents in one trading session the other day.
• 1:06
  SPEAKER_00: Something many folks have been waiting for, it seemed like in the wheat market for quite a while.
• 1:11
  SPEAKER_00: We finally found some of that volatility.
• 1:13
  SPEAKER_00: Uh, it just took some major extremes.
• 1:16
  SPEAKER_00: It took five-year lows, it took uh some pretty crazy weather in the south with rainfall and crop conditions, it took a major delay of harvest, and then it took just, you know, a war.
• 1:29
  SPEAKER_00: Another one.
• 1:29
  SPEAKER_00: I guess one didn't cut it between Russia and Ukraine.
• 1:32
  SPEAKER_00: So the Israel and Iran news got that fired up this week again as well.
• 1:36
  SPEAKER_00: And honestly, for being the middle of summer, Pat, that's kind of what it took to get the corn market f fired up five cents this week, I guess, but that's about all it had in it.
• 1:46
  SPEAKER_02: Yeah, it's pretty interesting.
• 1:48
  SPEAKER_02: I uh I was reading some comments uh this morning, and I think the the observation was uh you can uh you'll end up living on a on the street if you're trace chasing uh wheat rallies.
• 1:59
  SPEAKER_02: Um trade wheat, sleep in the street.
• 2:01
  SPEAKER_02: Yeah, exactly.
• 2:02
  SPEAKER_02: Yeah.
• 2:02
  SPEAKER_02: So anyway, I I uh um but when we're uh as I'm looking at the December corn chart to have this conversation, the good news is that 435 held again, right?
• 2:14
  SPEAKER_02: The bad news is is that so far here um we're also experiencing um kind of lower highs um as we kind of go through this trading range here.
• 2:24
  SPEAKER_02: And Mike, when was the last time that February was the high for the year?
• 2:29
  SPEAKER_00: 1982.
• 2:30
  SPEAKER_00: That was a while ago.
• 2:31
  SPEAKER_00: That was a while ago.
• 2:32
  SPEAKER_02: Yeah, so here we sit uh uh still so far, um uh 480 being the high easily, like the next swing high here was on April 16th at only 468, and then the next swing high on uh May 22nd at only 456, and then the next swing high uh on June 6th um at only 450.
• 2:58
  SPEAKER_02: And so, as we said, sort of like every time we've rallied up there, we've settled back down into that four mid 430s area, it's held, um, but then we just couldn't muster up since then.
• 3:09
  SPEAKER_02: And and so maybe that's all no big deal, um, just from the standpoint of of uh, you know, we're still more or less experiencing a pretty non-threatening start to the growing season and kind of the first third through here, and still pretty non-threatening.
• 3:26
  SPEAKER_00: Out of us and Brazil, I mean Russia and the southern U.S.
• 3:31
  SPEAKER_00: was pretty much the only problems here this week with weather, and it just, yeah, nothing.
• 3:35
  SPEAKER_00: I mean, that 181 yield, we have no reason to move off of that today at all.
• 3:40
  SPEAKER_00: And even either way, either way, and even planning pace out east, it was a little bit slower, but we'll figure out here in ten days if that was enough to lose a couple acres or not on corn.
• 3:50
  SPEAKER_00: So that part will be interesting now, too.
• 3:52
  SPEAKER_00: Ten days away from that.
• 3:53
  SPEAKER_00: Quarterly stocks report that day as well.
• 3:56
  SPEAKER_00: Hopefully we can get a little hot weather to get the market fired up by then, but it otherwise weather it it's almost non-existent.
• 4:04
  SPEAKER_00: And it's funny how no one's I mean, it it isn't even hardly talked about right now, which is crazy, the middle of summer and beginning of summer, uh, middle of June.
• 4:14
  SPEAKER_00: It it's just, yep, weather's good, keeps raining, and hasn't been real hot or dry yet anywhere.
• 4:19
  SPEAKER_00: Um I talked to some guys in eastern Nebraska this week.
• 4:22
  SPEAKER_00: They turned their pivots on already, so it's a little bit dry in that part of the world, but that's Nebraska, so uh it's been just a struggle to really get a bull too excited at this point.
• 4:32
  SPEAKER_02: Yeah, exactly right.
• 4:34
  SPEAKER_02: And so how do you uh so if there isn't much of a story to talk about on the supply side, maybe you know, let's talk about demand a little bit.
• 4:40
  SPEAKER_02: What's out there, what's going on as it relates to the demand side of the equation, Mike.
• 4:44
  SPEAKER_00: You know, we don't talk about ethanol and the demand side probably a ton about it being a major moving object when it comes to futures, but like ethanol, uh core use for ethanol is running well ahead of the needed pace to meet the USDA estimate.
• 4:57
  SPEAKER_00: Uh this week was another really big week again for uh disappearance, and uh stocks have fallen to pretty decent levels now, so disappearance has been good and margins have been picking back up for that industry a little bit.
• 5:10
  SPEAKER_00: So that's some healthy signs in that category.
• 5:13
  SPEAKER_00: Uh exports, I think we could still see some work.
• 5:16
  SPEAKER_00: I'm mainly more concerned about like uh new crop exports at this point with the trade wars and uncertainty.
• 5:22
  SPEAKER_00: You know, China's gotta start buying US soybeans for new crop at some point, and uh it at some point the futures are really gonna be discouraged about that, especially after a 50 cent rally.
• 5:32
  SPEAKER_00: So from a disappearance standpoint, I think those are a couple things worth watching going forward.
• 5:38
  SPEAKER_00: And uh uh but competitive wise, I mean, we're getting a cheaper US dollar that helped out the grains a little bit as well this week, I thought Pat.
• 5:46
  SPEAKER_00: Uh that that was some stuff worth mentioning, anyways.
• 5:50
  SPEAKER_02: Right, exactly.
• 5:51
  SPEAKER_02: And so as it relates to um, you know, soybean, soybean prices to your point.
• 5:56
  SPEAKER_02: Well, I guess highest price that we've traded in about four months, and so the the new crop soybean chart, it does look a little different than the corn chart.
• 6:03
  SPEAKER_02: Yeah.
• 6:04
  SPEAKER_02: Right?
• 6:04
  SPEAKER_02: It looks a little more constructive.
• 6:06
  SPEAKER_02: That too though, a little bit tough to develop or build a bull story, um uh other than we have more time, right?
• 6:14
  SPEAKER_02: I mean, you could still kill a crop in August, I suppose, with with the bean crop, uh a little bit different than the corn crop.
• 6:20
  SPEAKER_02: So there's I guess some potential there, but boy, we sure would encourage row crop producers to take a pretty a pretty good look at this bean rally, and if there's something to reward, it's probably there.
• 6:31
  SPEAKER_01: Yeah.
• 6:31
  SPEAKER_02: Um and so, and there's some nice, I think, uh strategies that could be used there to uh put a little bit of a florin here, but keep yourself a little bit of upside potential.
• 6:42
  SPEAKER_02: Um back to the feed side of the equation on corn there for a little bit.
• 6:46
  SPEAKER_02: I I uh um I I do well certainly the motivation to continue to add weight in the beef sector is there.
• 6:55
  SPEAKER_02: If possible, we'd like to do the same thing in the pork side of things.
• 6:58
  SPEAKER_02: We're gonna be um pushing up against some some some heat here for a while, and that's true for the cattle guys as well.
• 7:04
  SPEAKER_02: And so we're gonna have a little bit of of a fall-off in feed demand just because of the time of year, um, is is certainly I I think um worth observing.
• 7:14
  SPEAKER_02: Um it is, I also think worth noting that that um as it relates to trade discussions, negotiations, particularly with China, it's as good as it's been for a while, right?
• 7:25
  SPEAKER_02: And I know we've got an impending uh um you know date coming up here in July that might matter and and all of that.
• 7:31
  SPEAKER_02: But you know, those things too seem to be uh doing okay.
• 7:35
  SPEAKER_02: And and and so, but it's not something where I I mean I where we're gonna get a big motivation from the funds to get out here and start buying these commodities either.
• 7:44
  SPEAKER_02: And so, and so here we sit.
• 7:46
  SPEAKER_02: I mean, and this has been, you know, for um for a year, Mike, where the internal fundamentals had the opportunity for some fireworks, right?
• 7:57
  SPEAKER_02: Old crop um ending stocks projected in that one three, one four area, it set the table for some market moves, and then external fundamentals, everything that's going on, or potentially could have been going on as it relates to trade, trade war, tariffs, inflation, how the feds react to inflation, economic activity, um are there better places for your money if you're Goldman Sachs, those kind of things.
• 8:26
  SPEAKER_02: Like, like all of those things had the potential for an incredibly volatile summer.
• 8:31
  SPEAKER_02: And here we sit.
• 8:32
  SPEAKER_02: Yeah, right.
• 8:33
  SPEAKER_02: It's a fascinating thing that that both internal and external fundamentals are really quite quiet.
• 8:39
  SPEAKER_02: And I and and so what you said initially, Mike, as it relates to the size of this crop, there's really no reason to move it from 181.
• 8:48
  SPEAKER_02: I agree with that a hundred percent.
• 8:50
  SPEAKER_02: And there's also really no reason for the feds to make an interest rate adjustment.
• 8:55
  SPEAKER_02: Not at all.
• 8:55
  SPEAKER_02: Right?
• 8:56
  SPEAKER_02: And there's also really no reason for you know someone to wake up this morning and start buying the the the the the the Dow or corn for that matter, right?
• 9:04
  SPEAKER_02: And so here we sit.
• 9:05
  SPEAKER_02: And so again, just the the the uh the analogy or comparison, if you will, of of uh boy, we had all kinds of reasons for this thing to get excited, and just there isn't any of those reasons materializing today.
• 9:17
  SPEAKER_00: And which by June, I mean I've probably said it three times this year so far that oh, we'll know more next month.
• 9:23
  SPEAKER_00: Oh, we'll know more next month.
• 9:24
  SPEAKER_00: Oh, here we sit, like you said.
• 9:26
  SPEAKER_00: So it uh we did, if there is worth noting one thing, like we saw a little volatility this week, whether it was the cattle market, we've seen some pretty big up and down days.
• 9:36
  SPEAKER_00: You saw the hog market move around a little bit and cutouts going and uh just wider trading ranges and some of the protein sectors, and then the grains, I mean, range isn't really different, but we did see a little bit more volatility there this week.
• 9:49
  SPEAKER_00: The soybean rally just uh kind of happened there too, put on 50 cents quick, and we was up 25 one day.
• 9:55
  SPEAKER_00: So at least we're getting a little activity.
• 9:58
  SPEAKER_00: But uh yeah, I hate to say it because everyone's probably saying it is that in 10 days we've got an acreage report and quarterly stocks report, and it's supposed to be kind of hot and dry that that time frame.
• 10:08
  SPEAKER_00: So we'll see.
• 10:09
  SPEAKER_02: Yep.
• 10:09
  SPEAKER_02: And so to wrap up here today, you know, I for for again from a for a real crop or from a real crop producer's perspective, nice little rally in the beans.
• 10:17
  SPEAKER_02: Think of some way to reward that rally a little bit.
• 10:19
  SPEAKER_02: Always a good idea on the corn side of the equation.
• 10:22
  SPEAKER_02: Um, the uh the bad news is that the high from February held.
• 10:27
  SPEAKER_02: The good news is that high was in February, and that set your spring price.
• 10:31
  SPEAKER_02: And so um, you know, most of us do have a nice uh foundation of a marketing plan built with our crop insurance.
• 10:39
  SPEAKER_02: Um, rely on that, hold that, and uh, you know, we'll just keep our fingers crossed and keep praying that we can get that uh that 181 yield or better and uh have some bushels to work with next year and and and maybe uh maybe look for a better day to uh um extend your uh your coverage on the corn side of the equation.
• 10:58
  SPEAKER_00: All right.
• 10:59
  SPEAKER_00: Well, thank you for joining me on this short week, Pat.
• 11:01
  SPEAKER_00: We'll see you next time.
• 11:02
  SPEAKER_01: Thank you, Mike.
• 11:03
  SPEAKER_00: And thank you to all our listeners.
• 11:05
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 11:09
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:14
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 11:20
  SPEAKER_00: See you next time.