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Trade and 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.
• 0:24
  SPEAKER_01: Today is May 9th, Friday.
• 0:26
  SPEAKER_01: I've got Pat with us here today.
• 0:27
  SPEAKER_01: How's it going?
• 0:28
  SPEAKER_00: Good.
• 0:29
  SPEAKER_00: How are you this afternoon, Mike?
• 0:30
  SPEAKER_01: We're doing really good.
• 0:32
  SPEAKER_01: I think it's been a uh fun week so far through a lot of these markets, and it will be an even interesting, uh, more interesting trading session here to open up Monday, don't you think that?
• 0:43
  SPEAKER_00: Yeah, I uh um I heard someone say that there's uh like a hundred percent chance that the market's gonna react to uh the meetings in Switzerland over the weekend, and I I suppose there's some truth to that.
• 0:56
  SPEAKER_00: It'd be pretty hard for uh for everyone not to be all all uh at least wanting to put some something into uh uh the the trading platform for Sunday night into Monday and equities and all of those things as it relates to how conversations go uh in switcher the Switzerland this weekend with uh with uh China and the US.
• 1:18
  SPEAKER_01: It's gonna create some volatility one way or another.
• 1:20
  SPEAKER_01: Somebody's been positioning ahead of it, and uh and then right after that at 11 o'clock, you've got a WASDAerport coming out on Monday.
• 1:27
  SPEAKER_01: So you'll follow up one event with another major event here too.
• 1:31
  SPEAKER_00: Of course, on that front, we'd be a little bit surprised if if there's any surprises to it.
• 1:35
  SPEAKER_00: Uh we're gonna use the March Intentions uh uh acreage number and no reason not to use trendline yields, I suppose.
• 1:43
  SPEAKER_00: And so um, and I think that's part of the reason why we've seen a sell-off in in the corn market in particular, is because you know the market knows that we're gonna see uh you know printed on USDA paper on Monday, uh uh an excess of a two billion bushel ending stocks number, um, unless they do something with with demand and and somehow or choose to um you know raise some of those usage numbers, which I suppose is a possibility, uh, especially as it relates to um how aggressive disappearance has been for this old crop market.
• 2:16
  SPEAKER_01: I would expect that.
• 2:16
  SPEAKER_01: That's kind of the big headline I think coming out of it is just what the USDA is gonna do with old crop demand and then what number they'll use for new crop because this year demand number is really good.
• 2:26
  SPEAKER_01: I mean, that's one of the reasons we tightened up the balance sheet this well with a record corn yield.
• 2:31
  SPEAKER_01: But next year, if we do have even more corn available for us, demand should probably be increased year over year, you'd think.
• 2:38
  SPEAKER_00: One would think, um, I'm not sure how much uh USDA forecasters will for you know US currency trade.
• 2:47
  SPEAKER_00: But um, you know, one of those things can be supportive and the other one not so much, of course.
• 2:52
  SPEAKER_00: But but I mean for sure, cheaper dollar here and all of that can can provide some nice support for exports.
• 2:58
  SPEAKER_01: And we saw a minor glimpse of this this week, right, Pat?
• 3:01
  SPEAKER_01: We signed one trade deal with the UK this week.
• 3:04
  SPEAKER_01: Did you have any major talking points that you came out of that meeting with?
• 3:08
  SPEAKER_00: Well, I mean, I uh uh we've never really thought about the United Kingdom as being the uh you know the the the uh the trading partner that we've all desired forever and ever as it relates to agriculture, and none of that has anything to say negative against uh our our our friends over in Great Britain.
• 3:25
  SPEAKER_00: But uh um, you know, they're an exporter of food, just like we are.
• 3:30
  SPEAKER_00: Um, you know, their economy is is uh um is you know it's fine, but just not an incredible amount of opportunity there from a from from a commodity producer's perspective.
• 3:42
  SPEAKER_00: And so it's good, but it better be uh at the beginning of a list of of announcements, right?
• 3:48
  SPEAKER_00: And I think that's uh why the trade or why the market um you know reacted uh favorably to all of this.
• 3:56
  SPEAKER_00: I it it certainly shouldn't be because of of this deal, especially with the lack of detail to the thing, frankly.
• 4:03
  SPEAKER_00: Um I would uh um I I I suspect that the idea is that this is the beginning of of a line of of uh of um um trade deals coming out that that's supportive for for agriculture and the US economy in general.
• 4:18
  SPEAKER_01: At some point I'm still hoping we're gonna see something or at least a a week-long stretch where it's like Trump's just saving up a bunch of countries trade deals, all to pile them on a couple days to really just let's break through some barriers on equities, let's you know, get the meat market to move up a little bit more.
• 4:36
  SPEAKER_01: Like just a bunch of deals done at once.
• 4:39
  SPEAKER_01: I mean, if it's gonna be one country after another like this, I mean af after some point they're just not gonna care, I feel like.
• 4:45
  SPEAKER_00: The marketplace could get worn out on that pretty pretty quickly, I agree.
• 4:49
  SPEAKER_00: And I and and there is some sense of urgency as I as as it relates to all of this, right?
• 4:54
  SPEAKER_00: I I think there's um you know the the the market um might uh might might start to sell off at some point in this process, Mike.
• 5:05
  SPEAKER_00: If if if if there isn't uh progress, I I think you could just start to lose some some sort of faith in the in the process a bit here and and uh could see some sell-off as a result.
• 5:17
  SPEAKER_00: What do you think, Mike?
• 5:18
  SPEAKER_00: I mean, we talk about dece corn today, you know, settling at 442.
• 5:22
  SPEAKER_00: Um you know that's uh I mean it just as it relates to kind of the like like fair value relative to history.
• 5:29
  SPEAKER_00: What's what are your thoughts about newcrop corn today?
• 5:32
  SPEAKER_01: You know, newcrop corn at 442 on the December.
• 5:35
  SPEAKER_01: It's we traded yesterday down to the lowest price we have since December.
• 5:39
  SPEAKER_01: So I mean, uh, that's the lowest price we've seen in the last few months.
• 5:44
  SPEAKER_01: Uh 470 was our crop insurance price.
• 5:46
  SPEAKER_01: So pulled back 30 cents basically on good forecast for early planning, no major weather problems.
• 5:53
  SPEAKER_01: It's still kind of forecasted to be dry, but some weather premium left the market already.
• 5:58
  SPEAKER_01: For fair weather prices at this point.
• 6:02
  SPEAKER_01: I you know, 440 is still, if we go back the last 10 years or so, we had a lot of years that that was the best price you were going to get on corn yet historically.
• 6:10
  SPEAKER_01: So we have to keep that in mind uh from a historical perspective that we've spent a lot of time before below four bucks.
• 6:17
  SPEAKER_01: But with the balance sheet, current fundamentals, how competitive we are globally, I mean, four and a half dollars is pretty hard to argue with, isn't a great spot for this corn to be priced at, especially ahead of a growing season.
• 6:29
  SPEAKER_00: Yeah, I agree with all of that.
• 6:31
  SPEAKER_00: And I but I also agree that that uh or would observe that we're you know, we there's not a whole lot of weather premium built into that number.
• 6:37
  SPEAKER_00: That's a 181-ish yield on 95 million acres or something like that.
• 6:41
  SPEAKER_00: And so, you know, from a real crop producer's perspective, I think it's it's uh um especially to your point of, you know, given that this price is uh you know 30 cents or so below your your your spring revenue guarantee, um, it's a it's a level that uh you know one would think at some point during the growing season it's not gonna feel like a 181 national yield and and and maybe a weather forecast here or there that that would create the desire for this market to put a little weather premium back into this thing.
• 7:12
  SPEAKER_00: And and uh, you know, one of the things I guess that I've been saying this week is is uh it's pretty dry in the western corn belt and it's pretty wet in the eastern corn belt, but it's not a problem.
• 7:22
  SPEAKER_00: Well, it's not a problem today, right?
• 7:25
  SPEAKER_00: Especially given um uh a a bit of an opening here as it relates to uh uh a weather forecast for our friends in the eastern corn belt and and really into eastern Iowa and south uh southeast Minnesota as well.
• 7:37
  SPEAKER_00: Um and for the certainly can be positive as it relates to to uh to crop development.
• 7:45
  SPEAKER_00: Um but you know we're gonna need timely rains out here.
• 7:48
  SPEAKER_00: Uh you know, the drop monitor map shows that that was released this week, and and uh and those folks over there are gonna need for rains to be consistent too.
• 7:56
  SPEAKER_00: If you're planning into slightly wet conditions, that's always a little bit tough for compaction, sidewall compaction, all those sorts of things.
• 8:03
  SPEAKER_00: And so um, and so anyway, just just the point is is that it's only the 9th of May, and it's and it's uh the crop's a long ways from being in the bin and all that, even though that it feels like the market's trading that today.
• 8:14
  SPEAKER_01: Over the last three weeks, I I do think it's got to be more of one of these things where it's like, oh boy, we're going down, you know, it's over already, we're getting the crop in the ground.
• 8:24
  SPEAKER_01: But at the same point, we really need to realize that it's just kind of getting started.
• 8:28
  SPEAKER_01: The whole weather season's ahead of us still.
• 8:30
  SPEAKER_01: Uh, volatility is obviously I mean, we could wake up Sunday and have an incredibly different volatile story on our hands given the negotiations.
• 8:40
  SPEAKER_01: We haven't signed a trade deal on basically anything to do with agriculture yet, if you put it that way.
• 8:45
  SPEAKER_01: So, I mean, when we start talking those things, there's immense possibilities for things that can happen over the next month yet, a lot of weather volatility.
• 8:53
  SPEAKER_01: Uh, corn is still sitting at four and a half dollars on December, soybeans are at ten thirty somehow uh in the midst of a trade war.
• 9:01
  SPEAKER_01: You know, last time around, sure, it didn't really fall apart until we got into the month of June.
• 9:06
  SPEAKER_01: But in this environment, it's just uh the volatility can make this a really wide range, and I wouldn't discount that with your marketing strategies going into this summer.
• 9:15
  SPEAKER_00: Well, that's exactly right.
• 9:16
  SPEAKER_00: And I you know, we we we like to try to take this opportunity to to um share that with our listeners is is that uh the likelihood of of volatility in these markets is very, very real, very high, and and uh well, what's important is that we have a sound risk management plan that allows for us to take advantage of that volatility and and make the right moves that make sense for our business.
• 9:40
  SPEAKER_00: And so, you know, we look forward to the opportunity, Mike, to interact with uh uh with producers all across the country and talk about uh uh the the right way to manage risk for your farm.
• 9:51
  SPEAKER_00: So we'd we sure would appreciate a phone call.
• 9:53
  SPEAKER_01: All right, thank you for your time.
• 9:54
  SPEAKER_01: Thank you, Mike.
• 9:55
  SPEAKER_01: And thank you to all our listeners.
• 9:57
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 10:00
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 10:06
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 10:12
  SPEAKER_01: See you next time.