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Transcript

WASDE · 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_00: Well, good afternoon, everybody.
• 0:25
  SPEAKER_00: This is Lucas Peters on the Professional Egg Marketing Podcast, and I am joined today by my good friend Mike Minor.
• 0:32
  SPEAKER_00: How are we doing, Mike?
• 0:34
  SPEAKER_00: Real good.
• 0:34
  SPEAKER_00: How about yourself, Lucas?
• 0:36
  SPEAKER_00: Well, doing well.
• 0:36
  SPEAKER_00: We're starting the countdown towards Christmas.
• 0:39
  SPEAKER_00: So if you have procrastinated, make sure you're getting uh your Christmas shopping done, or at least getting those presents ordered online so they can get shipped in time, Mike.
• 0:48
  SPEAKER_00: I know you need that reminder.
• 0:50
  SPEAKER_01: Amazon takes a while this time of the year, Lucas.
• 0:52
  SPEAKER_00: And the other thing I want to hit uh right off the bat uh so we don't forget as we get into the podcast, Mike, next week on Tuesday, December 17th.
• 1:02
  SPEAKER_00: If you are close by to the Laverne area, we're gonna have a little customer Christmas party appreciation event at the Take 16 Brewery in Laverne uh from 4 to 6 30 p.m.
• 1:13
  SPEAKER_00: We got some appetizers and some cold Take 16 beer.
• 1:17
  SPEAKER_00: Uh please swing by if you can.
• 1:19
  SPEAKER_00: Come and go as you uh as you need to.
• 1:22
  SPEAKER_00: Uh and at that little event, we're gonna record a podcast, Mike.
• 1:26
  SPEAKER_01: A live con podcast with yours truly.
• 1:29
  SPEAKER_00: Yeah, so if you uh have some good questions that you want to stump Mike Minor on the podcast, I think Pat will be on the podcast as well.
• 1:37
  SPEAKER_00: So uh we'll have a good time, and uh yeah, please come by if you are so able and close to the Laverne area.
• 1:44
  SPEAKER_00: Um but with that uh let's get into today's podcast, and we're gonna focus kind of on the grain markets this week.
• 1:51
  SPEAKER_00: Uh Mike, we had a Wazday report and and that had a few gems in it, and then we had some kind of mixed action on the week for the markets.
• 1:59
  SPEAKER_00: So uh what did uh what did the WASD report tell us this week?
• 2:03
  SPEAKER_00: What are what were the highlights of it?
• 2:04
  SPEAKER_01: Yeah, let's just talk over a few of the highlights.
• 2:07
  SPEAKER_01: And the main really main one there was definitely the move in the corn uh balance sheet there.
• 2:13
  SPEAKER_01: We saw uh increase in demand on this on this WASDA report of 200 million bushels on the corn US side, which uh it was incredible actually.
• 2:23
  SPEAKER_01: Uh seeing ending stocks drop by 200 million bushels, that was the largest single-month cut that we've seen since the fall of 2020, Lucas.
• 2:31
  SPEAKER_01: So uh for a move, uh, you know, it was a pretty big one for uh quite a few years here.
• 2:37
  SPEAKER_01: And also just to put it into context, you know, December's usually a quiet WASD airport.
• 2:44
  SPEAKER_01: Any major changes, they usually wait until January to make those.
• 2:47
  SPEAKER_01: So for us to get that big cut in ending ending stocks in December was a little bit of a, you know, it was a little bit of a surprise.
• 2:55
  SPEAKER_01: Now, that cut happened from a hundred and fifty million bushel increase in uh export demand on corn, uh, and then fifty in the uh ethanol demand increase as well.
• 3:07
  SPEAKER_01: So both of those, if we break them down, exports on corn have been running well ahead of the needed pace to meet the USDA's estimate.
• 3:15
  SPEAKER_01: Now, for them to make that change higher totally made sense.
• 3:18
  SPEAKER_01: They should have adjusted, makes sense.
• 3:20
  SPEAKER_01: Even ethanol, you know, it was 50 million bushels.
• 3:23
  SPEAKER_01: Uh we've maybe been just running pretty strong here this fall.
• 3:26
  SPEAKER_01: We'll see if it actually ends up being uh the case or not.
• 3:29
  SPEAKER_01: But both had a fairly decent reason, fairly fairly decent trend or a reason to make those changes.
• 3:37
  SPEAKER_01: Now, I think the market was anticipating those, but the market was not anticipating that in the report this week, Lucas.
• 3:44
  SPEAKER_01: I would say so that was kind of the main hitter.
• 3:47
  SPEAKER_00: That's exactly what you said.
• 3:48
  SPEAKER_00: It was the December report, is always kind of the snoozer report.
• 3:51
  SPEAKER_00: It's yes, it's one of those that uh if you could probably skip it and be fine, and then they come out with news like that, which I agree we we were on kind of an uptrend on corn anyway.
• 4:00
  SPEAKER_00: So you kind of thought they were building that in.
• 4:03
  SPEAKER_00: But when they came out with that surprising number, of course the markets reacted at least right away, uh, with some positive movement on the corn uh the day of the Waz Day, right?
• 4:13
  SPEAKER_01: But now you look at it, and yeah, we had a little bit of a uh some rally out of the corn market, but uh really you look at it now and it the corn market's pretty much reacted meh after it.
• 4:24
  SPEAKER_01: I mean, we're in the same trading range, we haven't really done anything new.
• 4:28
  SPEAKER_01: Um on the corn side as well, maybe something more interesting was going into the report, they said like we're not gonna change production in this report.
• 4:36
  SPEAKER_01: We're just not touching yield, acres, whatever.
• 4:38
  SPEAKER_01: We'll leave that till January in the final crop report, which I'm very curious about, by the way.
• 4:43
  SPEAKER_01: You know, uh we could see some yield reductions probably in that report that I'm looking forward to.
• 4:48
  SPEAKER_01: But uh, out of this report, they did not change the average expected price.
• 4:53
  SPEAKER_01: They left it at 410 on corn, which I was thinking if you're gonna cut ending stocks by 200 million bushels, that usually would reflect in a increased corn price.
• 5:05
  SPEAKER_01: They didn't move that in this report.
• 5:07
  SPEAKER_01: Now, maybe they're just waiting to reflect that in January's report, but for them to not move that had a lot of folks really scratching their head, I think, after you.
• 5:16
  SPEAKER_01: It took a while probably for the market to look at it and then find that at the bottom of the page uh to scratch their head at.
• 5:23
  SPEAKER_01: So I think we'll be watching that in the January report as well.
• 5:27
  SPEAKER_01: The soybean side of the balance sheet didn't change at all.
• 5:30
  SPEAKER_01: They didn't change like a single number on the U.S.
• 5:32
  SPEAKER_01: soybean balance sheet.
• 5:33
  SPEAKER_01: Really, the only major change there was a very, very slight increase in the Argentina production, so very small.
• 5:40
  SPEAKER_01: Uh Brazil created a lot of headlines as well this week, not necessarily just from the USDA estimate, but we had in the last 48 hours here as we sit here on Friday afternoon, uh, a lot of different uh production estimates come out on Brazil's soybean crop.
• 5:56
  SPEAKER_01: And uh we're looking a lot in the very high 160s, very low 170s on million metric tons of production out of Brazil.
• 6:05
  SPEAKER_01: To put that into perspective, last year was a record at 153.
• 6:09
  SPEAKER_01: Yep.
• 6:10
  SPEAKER_01: Very big Brazil soybean crop.
• 6:12
  SPEAKER_01: Weather-wise, uh, we caught up in a normal planting pace by the end of it, even though it kind of happened all at once at the end.
• 6:20
  SPEAKER_01: Um you're looking at uh weather is okay.
• 6:24
  SPEAKER_01: It could be better in spots, but it could be worse.
• 6:27
  SPEAKER_01: Could be better?
• 6:27
  SPEAKER_00: What I I'll like the weather in Brazil is almost perfect.
• 6:31
  SPEAKER_00: What good excellent ratio is over 60% this year?
• 6:34
  SPEAKER_01: It is, but it's like some of the areas are a little bit too wet.
• 6:37
  SPEAKER_01: Uh forecast looks okay or normal, like 108% of normal rain, stuff like that.
• 6:43
  SPEAKER_01: So the next two weeks too, it just looks fine.
• 6:46
  SPEAKER_01: Yeah.
• 6:46
  SPEAKER_01: But you know, nothing red flag-wise.
• 6:50
  SPEAKER_01: And we're getting to that time of the year where you need something out of them to really spark this soybean market, Lucas.
• 6:54
  SPEAKER_00: Yeah, and so that's that maybe that's probably the other big surprise of the Wazday is that they didn't increase the Brazil number, right?
• 7:02
  SPEAKER_01: They're playing slow ball.
• 7:03
  SPEAKER_01: Really, they're balking at that pretty hard.
• 7:05
  SPEAKER_00: And so you you saw that you know there's you know, we'll call it good weather, uh, and likely a very large crop coming out of there.
• 7:14
  SPEAKER_00: It kind of seems like we're setting up for some negative news come January on that side of it.
• 7:21
  SPEAKER_00: Uh, and maybe there's an adjustment that they're looking to make on either yield or or something like that on the January report as well.
• 7:27
  SPEAKER_00: But um that's what it when I looked at the soybean information, it kind of seemed like, hey, here's your opportunity to try to get some more sold before more bad news hits the market.
• 7:39
  SPEAKER_01: Yep.
• 7:40
  SPEAKER_00: And and I guess price just really didn't do anything this week.
• 7:43
  SPEAKER_01: Price didn't do anything.
• 7:44
  SPEAKER_01: So I said, you know how they didn't change the corn one at 410, they left it the same.
• 7:49
  SPEAKER_01: Well, soybeans they did decrease that price estimate by 60 cents.
• 7:53
  SPEAKER_01: So I mean that probably said something too.
• 7:57
  SPEAKER_00: Yep.
• 7:58
  SPEAKER_00: So what about uh the wheat side?
• 8:00
  SPEAKER_00: I I don't want to go into a different uh topic here right away, Mike, but you know, the wheat volatility seemed to really jump up uh this week.
• 8:08
  SPEAKER_00: We um and you know, some of the information come out of Russia on a poor crop and and the Ukraine and the Black Sea.
• 8:16
  SPEAKER_00: What uh what's the wheat market been doing?
• 8:19
  SPEAKER_01: You know, the wheat market the big story here recently has been the uh good weather in the south in the United States.
• 8:25
  SPEAKER_01: So for the uh for the report, anyways, I mean ending stocks out of the United States was just slightly below the trade estimated average.
• 8:34
  SPEAKER_01: So it was a friendly report on corn and soybeans, or corn and wheat, I would say, out of it.
• 8:38
  SPEAKER_01: The soybeans they didn't touch anything.
• 8:41
  SPEAKER_01: So uh wheat got an okay report.
• 8:43
  SPEAKER_01: The bigger thing this week probably was this continued problem of Russia, very poor crop conditions, and then also, you know, our export number was kind of crap this week on wheat, um, a very, very low end of expectations, could have been a lot better.
• 9:00
  SPEAKER_01: And then uh corn and soybeans also came in below expectations.
• 9:03
  SPEAKER_01: So a pretty rough week on exports when it came to a lot of these grains, anyways.
• 9:08
  SPEAKER_01: But the the wheat situation's been trying to carve out a bottom.
• 9:12
  SPEAKER_01: Uh, it was somewhat explosive earlier on in the week here, and now it's uh fading a little bit into the weekend here as we fought back to the 20-day moving average.
• 9:21
  SPEAKER_01: So we'll see if we are creating an uptrend finally in this wheat market after we've spent quite a bit of time at somewhat historical low levels here, especially if you look at the relationship like for wheat to be in the mid-fives in all three complexes now, basically, while corn is well into the fours, not even below four, that spread or that relationship is pretty tight, Lucas.
• 9:46
  SPEAKER_00: Yeah, and so the other thing when we look at the prices this week, and it seemed like we kind of got a little sp well, especially on the corn market, I guess.
• 9:53
  SPEAKER_00: We got a little spike middle of the week after the Waz Day, and then kind of balanced out down here at the end of the week, and we kind of end the week right where we started.
• 10:01
  SPEAKER_00: But uh, you know, as this corn price has crept higher here over the last few weeks, um, you know, and the soybean price has really stayed really flat.
• 10:12
  SPEAKER_00: Of course, we were talking a little bit earlier this week on this corn soybean ratio and planting intentions for next year.
• 10:18
  SPEAKER_00: Uh what do you think about that?
• 10:20
  SPEAKER_00: I mean, I we're probably a little too early to get worried about it.
• 10:23
  SPEAKER_00: I don't think, you know, we always talk planting and and acre shifts, and in reality, we're not shifting tens of millions of acres, we're shifting one to four million acres.
• 10:35
  SPEAKER_00: Uh but you know what the further we go along in the year as guys are making these decisions, the more important this ratio and this price relationship is.
• 10:45
  SPEAKER_00: Uh, what are your thoughts as we stand here middle of December of 24 as we're we're wrapping up paying for seed bills, chemical bills, fertilizer bills.
• 10:54
  SPEAKER_00: Um, is that relationship pushing guys to look at more corn on corn?
• 10:59
  SPEAKER_00: What are you hearing from your guys?
• 11:00
  SPEAKER_01: I don't think it's so much of corn.
• 11:03
  SPEAKER_01: I think that, yeah, we had good corn yields this year, so that leaves a good taste in guys' mouth for planting it.
• 11:08
  SPEAKER_01: Um you know, corn's a little expensive to plant, so maybe that pushes a few guys away.
• 11:13
  SPEAKER_01: Uh fertilizer is still really expensive, so maybe that's not so friendly.
• 11:17
  SPEAKER_01: So there's a few of those things.
• 11:18
  SPEAKER_01: The outlook on it is pretty close to break-even, I'd say, in most scenarios right now that I run.
• 11:24
  SPEAKER_01: So it's not really a corn thing.
• 11:26
  SPEAKER_01: It's all the big elephant in the room is just how much money am I going to lose planting soybeans?
• 11:30
  SPEAKER_01: I mean, I heard at breakeven's this week anywhere from eleven dollars to eleven seventy-six on Joe's podcast this morning.
• 11:38
  SPEAKER_01: So, you know, you when you're talking about uh cash soybeans at nine and a half dollars in this part of the world, probably that does not bode very well for getting people to plant more acres.
• 11:48
  SPEAKER_01: So I really think that soybeans, it's more of a discussion of how many can I get by with planting, you know, minimal.
• 11:56
  SPEAKER_01: Uh I think we'll decrease soybean acres to a pretty low level historically here.
• 12:00
  SPEAKER_01: Uh now does that all go to corn?
• 12:03
  SPEAKER_01: You know, those are some discussions I'll probably have to have more.
• 12:07
  SPEAKER_01: Is North Dakota sitting okay weather-wise?
• 12:09
  SPEAKER_01: Like that's what it usually comes down to, I think.
• 12:12
  SPEAKER_00: But well, especially spring weather, right?
• 12:14
  SPEAKER_00: But man, you look at like you just talked about on the wheat market, we're kind of trying to you know find a bottom on this thing and soybeans.
• 12:22
  SPEAKER_00: I it like say the the the weeks we don't go down is probably a win.
• 12:26
  SPEAKER_00: I mean when you look at the what the crop that's coming in South America and and kind of lack of exciting news up here, uh, and especially on an export side.
• 12:34
  SPEAKER_00: And so it seems like corn's gonna be the winner.
• 12:37
  SPEAKER_00: Um, but yeah, it'll be interesting where that actually shakes out.
• 12:40
  SPEAKER_00: I guess we'll have to wait till next summer to find out.
• 12:42
  SPEAKER_01: We're definitely like soybeans, I think, had a 17 cent range of trade this week.
• 12:47
  SPEAKER_01: It's very sideways, might be a little choppy, but I mean we had a Wazley report this week, and that's all we had for an entire range.
• 12:53
  SPEAKER_01: So we're in that time of the year now where you just go sideways, maybe chop around a little bit in these grain markets, but it seems like you get a lot of news, but nothing's enough to really push the market to new levels.
• 13:04
  SPEAKER_01: And that's where I think we're sitting in a lot of these grain markets right now, Lucas.
• 13:08
  SPEAKER_00: Well, that sounds good.
• 13:09
  SPEAKER_00: Anything else you want to hit on today, Mike?
• 13:11
  SPEAKER_01: That's pretty much it for this week.
• 13:12
  SPEAKER_01: That uh hits a lot of the topics I think worth talking about.
• 13:15
  SPEAKER_01: And uh just watch the ranges, watch basis at this time of the year as well as uh grain producers uh seem to be running on borrowed time now all of a sudden with soybean basis at a lot of these processors, uh seeing some weakness in basis with a little bit of a rally that sparked some selling, and we want to core bins out and things like that.
• 13:34
  SPEAKER_01: So uh it seemed like uh Cash Corn moved really well this week, and basis weakened up just a little bit, could be the start of something, and I'd I'd really watch that.
• 13:43
  SPEAKER_00: That's a really good point.
• 13:45
  SPEAKER_00: Thanks for uh coming on the podcast today, Mike, and have a good weekend.
• 13:49
  SPEAKER_00: All right, thank you.
• 13:49
  SPEAKER_00: And thank you to all our listeners.
• 13:51
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 13:55
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 14:00
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 14:06
  SPEAKER_01: See you next time.