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Little Bit of Everything · 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 September 6th.
• 0:25
  SPEAKER_00: I've got Jeff with us here today.
• 0:26
  SPEAKER_00: How's it going, Jeff?
• 0:27
  SPEAKER_01: Good afternoon, Mike.
• 0:28
  SPEAKER_01: Everything is going well so far.
• 0:30
  SPEAKER_01: We've had kind of a tough close here, but pretty impressive week as far as uh all the commodities that we really care about, huh?
• 0:40
  SPEAKER_00: For the most part here, if you really look at it, uh we could talk about the soybean market making actual new highs on the move today, 1031 on soybeans.
• 0:50
  SPEAKER_00: Corn uh closed uh well, we had a high today of 416.
• 0:54
  SPEAKER_00: That was the highest price we've had on this move so far, Jeff.
• 0:58
  SPEAKER_00: The uh lean hog market on the December there.
• 1:01
  SPEAKER_00: That one we had a high put in on the fourth, I guess.
• 1:05
  SPEAKER_00: So that would have been like Wednesday.
• 1:07
  SPEAKER_00: We got up to 74.
• 1:09
  SPEAKER_00: We did trade over 74 there.
• 1:11
  SPEAKER_00: Uh that was impressive on Wednesday.
• 1:14
  SPEAKER_01: Yeah.
• 1:14
  SPEAKER_00: Yeah.
• 1:15
  SPEAKER_00: And then, you know, cattle.
• 1:17
  SPEAKER_01: I I guess that you probably don't want to talk about cattle a whole lot, but there's always gotta be something to throw a wrench in our theories, isn't there?
• 1:25
  SPEAKER_01: Yeah, a little bit.
• 1:26
  SPEAKER_01: But a lot of those markets, you know, very weak.
• 1:27
  SPEAKER_01: Hogs have been a really a struggle for a long time, of course.
• 1:31
  SPEAKER_01: And I guess you gotta say the same thing about the corn and the soybeans, right?
• 1:35
  SPEAKER_01: And um, all that finding some pretty solid um lows there or support uh is about a little over two weeks ago now.
• 1:46
  SPEAKER_01: Um I know we've talked a lot about managed money and such, but we're seeing seeing a lot of that activity yet this week currently.
• 1:54
  SPEAKER_00: A little bit, I'd say soybeans paint a pretty good picture there.
• 1:57
  SPEAKER_00: We've rallied up pretty decent, and we actually bounced right off the 50-day moving average on November soybeans.
• 2:03
  SPEAKER_00: That's pretty much right at where our high was today, Jeff.
• 2:05
  SPEAKER_00: And that was the first time we've kind of got up there.
• 2:07
  SPEAKER_00: So corn kind of bucking that trend.
• 2:10
  SPEAKER_00: We we've probably used it as more of a support the last three days, it looked like so.
• 2:14
  SPEAKER_00: We'll uh try to make that a story, I guess, somehow on this podcast between the two of those.
• 2:19
  SPEAKER_00: But uh this week on the corn, soybeans wheat, a little bit of different story on each one of them.
• 2:25
  SPEAKER_00: Wheat, it sounds like we've had some uh money flow, some short covering.
• 2:29
  SPEAKER_00: Uh no news story there from what we've been talking about lately.
• 2:33
  SPEAKER_00: Uh a little bit of Russia dryness as well helping us out, but found some weakness today.
• 2:38
  SPEAKER_00: The soybean market, we've had South America dryness help us out on that rally as well, and also had a record short position, so maybe a little bit of money flow short covering there as well.
• 2:47
  SPEAKER_00: And then the corn market sounds like we've had uh a little bit of a demand boost uh as part of the reasoning here for the market talk this week on this rally.
• 2:56
  SPEAKER_00: So a little twist on each one of those stories for the grains and oil seeds, but uh both uh corn and soybeans really trying to rally this week and and wheat.
• 3:05
  SPEAKER_01: I think the the message that I want to talk about there just a little bit, it's really the combination of both, right?
• 3:10
  SPEAKER_01: You've got these grain markets that are the the all the types of funds are are super short, and now you get just as like uh the dryness on the wheat, the dryness in South America, even though we're not really we're not growing anything in South America right now.
• 3:25
  SPEAKER_01: None of those are huge fundamental factors, but combined with uh uh the the money position, that's what causes us the rally that we've seen the past two weeks in my mind.
• 3:35
  SPEAKER_00: It got so bad that the funds were like, ah, we could buy those, I guess, now.
• 3:40
  SPEAKER_01: At least get rid of some of the short positions we have.
• 3:42
  SPEAKER_00: From a seasonal average, you typically do find a low at this time of the year in those three grain sectors and oil seeds.
• 3:49
  SPEAKER_00: So uh not uncommon to get some support at this time of the year.
• 3:52
  SPEAKER_00: Corn mimicked, you know, the last five years.
• 3:54
  SPEAKER_00: We've had about a 35 cent recovery at this time of the year, so that was pretty close.
• 3:59
  SPEAKER_00: Uh, we'll see what we do from here on out, anyways, if we go put new lows in or not.
• 4:03
  SPEAKER_00: Um a year like 2014, we went and found new lows at the end of Octo or the beginning of October.
• 4:09
  SPEAKER_00: Uh other typical big crop years, uh, once that old crop gets priced at the end of August, you do typically put a low in at that time of the year, which we did do that on the corn here thus far, putting in a low at that time of the year.
• 4:20
  SPEAKER_00: So we'll see if that sticks and holds or not.
• 4:23
  SPEAKER_00: Otherwise, at this point, like you said, nothing dramatically changing fundamentally for us, just a little few things here and there that has kind of led to a little bit of a recovery, Jeff, but longer term it's kind of hard for the corn and soybean markets to probably get out of their own way here.
• 4:38
  SPEAKER_01: Like you mentioned, uh fairly common to see a 30 uh type of a cent type of rally on this corn market.
• 4:46
  SPEAKER_01: Probably kind of all we're expecting on this one, too, right?
• 4:49
  SPEAKER_01: I mean, I don't I don't think anybody in the shop here is really looking for this thing to take off in a big way, um, you know, and probably looking for more of opportunities.
• 5:00
  SPEAKER_01: Okay, what do we do with this rally that we're seeing?
• 5:02
  SPEAKER_01: We still have uh huge carry in the market.
• 5:06
  SPEAKER_01: I think there's some prices, um, although maybe not what we set our sights on at the beginning of this growing season, but you know, are off the lows enough here and with enough carry in the market, you know, four and a quarter, maybe some four forty, maybe some four fifty type futures numbers as you look at some of those more deferred um start to look halfway attractive, I'm afraid to say.
• 5:29
  SPEAKER_00: Today's uh grain wreck that we wrote and sent out here, Jeff, will be incredibly relevant for any storage decisions at harvest.
• 5:36
  SPEAKER_00: So please, if you're not getting that or taking a look at it today, that would be a really good one, I think, to look at before harvest here.
• 5:44
  SPEAKER_00: Just on should I store corn, should I store soybeans?
• 5:46
  SPEAKER_00: If I gotta pick between the two of them, what one do I do?
• 5:49
  SPEAKER_00: Uh, should either one go in the bin?
• 5:51
  SPEAKER_00: Uh, what is the carry situation looking like?
• 5:54
  SPEAKER_00: Uh, what percent of full carry are we?
• 5:56
  SPEAKER_00: All of those fun things and the fundamentals we talked about today.
• 5:59
  SPEAKER_00: So I think that's a really relevant grain wreck uh to talk about here uh ahead of harvest.
• 6:05
  SPEAKER_00: So please check that one out if you guys can, anyways, on this week's grain wreck.
• 6:10
  SPEAKER_01: Perfect.
• 6:10
  SPEAKER_01: Good information there, Mike.
• 6:12
  SPEAKER_00: Let's talk about the crude oil market a little bit, a little bit of weakness in those outside markets as well.
• 6:16
  SPEAKER_00: Lowest price on crude oil that we've had here since July of 2023.
• 6:22
  SPEAKER_00: So over a year uh has been uh where we've floated before this point, Jeff, on that, at least these contract months, like uh like the uh November crude oil, for example.
• 6:33
  SPEAKER_00: But uh, what did you take away from this week with a little bit of a weakness across the board here in the energy complex and equities?
• 6:41
  SPEAKER_01: Well, I think you know the message that I continue to you know ask you about, Mike, and talk about internally here, you know, it's always it's always kind of a um a moving target is you know, is bad news bad news as far as the outside market goes.
• 6:56
  SPEAKER_01: And today I think was a really good example of we're we're definitely in the mode of bad news is bad news for the markets that we care about.
• 7:03
  SPEAKER_01: And that's uh you know, jobs data coming out this morning right on the open was uh you know fairly disappointing.
• 7:11
  SPEAKER_01: Less jobs out there than what they were expecting.
• 7:14
  SPEAKER_01: And yeah, you've got crude down pretty hard, you've got the equities down, you've got money flowing out of the agulture markets, right?
• 7:21
  SPEAKER_01: So even though we're in the situation where yes, the marketplace is pricing in some rate cuts, uh, I think that's very much the the expectation moving forward.
• 7:31
  SPEAKER_01: Um, but that's not bullish enough, if you will, to offset the continued weakening economic information.
• 7:38
  SPEAKER_01: And I I think that's a kind of a big deal.
• 7:40
  SPEAKER_01: Um so essentially they're gonna have to cut rates more than expected to get any bullish reaction out of that and then slow up the the kind of the trend of bad news as far as the economics um are concerned here from more macro level.
• 7:58
  SPEAKER_00: Kind of a fun time frame here if you think about it.
• 8:00
  SPEAKER_00: We're gonna start cutting rates this fall.
• 8:02
  SPEAKER_00: We've got an election.
• 8:03
  SPEAKER_00: We're gonna have a lot of major pieces getting shifted here, I think, in this equity uh complex and energy complex going forward over the next few months.
• 8:12
  SPEAKER_00: But yeah, that U.S.
• 8:13
  SPEAKER_00: hiring fell short of the forecasts in the August report here after downward revisions for the past two months.
• 8:20
  SPEAKER_00: Uh that's gonna likely fuel some ongoing debate over how much the Federal Reserve should cut interest rates at this point.
• 8:26
  SPEAKER_00: Not really if they should, more of how much should they, Jeff.
• 8:30
  SPEAKER_00: So that's a switch in in the tone of their uh of uh their speeches here recently that we've noticed anyways is how much rather than if they should.
• 8:40
  SPEAKER_00: So a little bit of a change.
• 8:42
  SPEAKER_00: What else do you got for us here today, Jeff?
• 8:44
  SPEAKER_00: Uh bounce over to the livestock market?
• 8:46
  SPEAKER_01: Yeah, I think uh one of the things I wanted to talk about here today is um we we got some monthly export data out again this week.
• 8:55
  SPEAKER_01: Um it's it's you know old when we get it, but it's still pretty useful.
• 8:59
  SPEAKER_01: And that uh for so for the month of July, um maybe nothing too huge on the pork side of things, you know, kind of coming in as expected and and similar to the trends that we've been seeing here.
• 9:12
  SPEAKER_01: We've so we've got a net export um of 21% of our production.
• 9:16
  SPEAKER_01: Um the beef side of things is quite a bit different.
• 9:20
  SPEAKER_01: You know, the there's been quite a few things stacking up against this beef market right now, and this is definitely one of them.
• 9:26
  SPEAKER_01: We've seen a pretty high increase in actual live cattle coming into the U.S.
• 9:32
  SPEAKER_01: We're also seeing a pretty high increase in the amount of beef coming into the U.S.
• 9:37
  SPEAKER_01: So we imported a little over six percent of our production in the month of July, Mike.
• 9:43
  SPEAKER_01: That was quite a bit more than what we were expecting.
• 9:46
  SPEAKER_01: It's also um you know about the only time in recent history that we've competed with that number was back in January when we imported a little over seven percent of our production, and that was what we uh largely saw Brazil and some other countries trying to fill their quotas for the year, and it was kind of some pent-up demand.
• 10:07
  SPEAKER_01: So this is a really big deal in my mind for the beef complex, maybe a little bit for the protein complexes in general.
• 10:16
  SPEAKER_01: We are working really hard to uh make up this gap in um pounds of beef being produced, and and we're doing it through imports.
• 10:26
  SPEAKER_01: We're also importing live cattle and feeder cattle.
• 10:31
  SPEAKER_01: I really think this is going to continue to put a uh lid on this box beef prices, probably even starting to take it down some, is my guess.
• 10:40
  SPEAKER_01: And that's also the the seasonal expectation here as we move past labor day.
• 10:45
  SPEAKER_01: But worth noting whether you're on the pork side or on the beef side, um the market is working hard to uh fill in some of the supply gaps here.
• 10:53
  SPEAKER_00: Any final thoughts on the livestock here before we wrap up?
• 10:57
  SPEAKER_01: I think um, like I said, on the the cattle side, they seem to um not be able to participate in some of the money flow as it comes in from the long side that we've seen the past few weeks.
• 11:10
  SPEAKER_01: You know, we had a decent little rally there, but we really get to participate in bad days like today, right?
• 11:16
  SPEAKER_01: And I'm afraid that is gonna be the trend there.
• 11:19
  SPEAKER_00: Um I mean you carry a long position in the cattle market today, which is odd for the rest of the egg commodities.
• 11:25
  SPEAKER_00: Um, you know, lean hogs, you've been adding to it, I guess, at this point.
• 11:29
  SPEAKER_00: So that'd be the other one uh that's adding, but you know, all the corn, soybeans, wheat, all of those have been pretty massive short positions that they're just covering.
• 11:41
  SPEAKER_01: Yep, I think that long position, and it's pretty tired in the cattle market, and it's it's looking for places to go, no doubt about it.
• 11:48
  SPEAKER_01: Um so be careful with the cattle.
• 11:51
  SPEAKER_01: They're they're concerning for sure.
• 11:53
  SPEAKER_01: Um Pork, the hog market, very impressive week again this week, in my opinion.
• 11:58
  SPEAKER_01: Um, I we're not expecting any huge fireworks there to the upside.
• 12:04
  SPEAKER_01: I think uh be taking a hard look at you know your hedge position on both of those commodities is my advice, Mike.
• 12:09
  SPEAKER_01: Make sure you're make sure you're happy with where we're at here.
• 12:12
  SPEAKER_00: All right.
• 12:12
  SPEAKER_00: Well, thank you for your time today.
• 12:14
  SPEAKER_00: Uh give us a call if you have any questions on anything, everyone.
• 12:17
  SPEAKER_00: Thank you.
• 12:17
  SPEAKER_00: And thank you to all our listeners.
• 12:19
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 12:23
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 12:28
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 12:34
  SPEAKER_00: See you next time.