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Transcript

WASDE · 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 Miner.
• 0:22
  SPEAKER_00: Let's get started.
• 0:23
  SPEAKER_00: Today is October 11th.
• 0:25
  SPEAKER_00: I've got Jeff with us here today.
• 0:27
  SPEAKER_00: How's it going, Jeff?
• 0:28
  SPEAKER_01: Good, Mike.
• 0:29
  SPEAKER_01: Good afternoon.
• 0:30
  SPEAKER_01: Report day Friday, huh?
• 0:32
  SPEAKER_00: It was Report Day Friday.
• 0:34
  SPEAKER_00: The grain markets moved around a little bit.
• 0:36
  SPEAKER_00: Let's start with that.
• 0:37
  SPEAKER_00: We uh had the corn market down today three cents.
• 0:40
  SPEAKER_00: That put Deese corn 415 and three quarters at the close.
• 0:44
  SPEAKER_00: Somewhat new territory.
• 0:45
  SPEAKER_00: We haven't really dipped much below 420 here.
• 0:48
  SPEAKER_00: So kind of right below that 20-day moving average for the first time here on the move.
• 0:52
  SPEAKER_00: And we'll see as this uptrend uh tries to hold itself intact.
• 0:56
  SPEAKER_00: Soybean market down nine cents, ten oh five.
• 0:58
  SPEAKER_00: A little bit rougher of a day for the soybeans, but I'd probably argue that wheat was the uh the real problem today for the grains.
• 1:06
  SPEAKER_00: And we closed down about five to six cents through the three complexes today, but we did find more world uh global stocks on wheat than what was expected after they expected uh a large uh portion of analysts expected that number to drop.
• 1:21
  SPEAKER_00: So we're looking at a little bit weaker grain prices after the October WASDA we had today, Jeff.
• 1:27
  SPEAKER_00: But honestly, the soybeans, let's start with that.
• 1:30
  SPEAKER_00: That was an easy one.
• 1:31
  SPEAKER_00: The US balance sheet didn't really change a whole lot today in that.
• 1:35
  SPEAKER_00: We had the uh balance sheet just changed with a 0.1 uh change in yield lower.
• 1:41
  SPEAKER_00: Uh that would make sense with a little bit disappointing yields to finish off soybeans here.
• 1:45
  SPEAKER_00: Otherwise, nothing else really changed.
• 1:47
  SPEAKER_00: Beginning stocks went up just two million bushels.
• 1:50
  SPEAKER_00: Those two basically offset each other to equate for an unchanged ending stocks number on the soybean balance sheet, Jeff.
• 1:56
  SPEAKER_01: Yeah, and everything that we see as far as trends go, you know, when you look at the crush um trend or or you know, crush trends that we're seeing so far, um, and uh export sales, export shipments.
• 2:09
  SPEAKER_01: I mean, it's all kind of in line at this point, right?
• 2:12
  SPEAKER_01: You got export shipments maybe a little bit behind where they're supposed to be, but they've caught up a smidget.
• 2:19
  SPEAKER_01: Um same with the the crush capacity or crush usage.
• 2:23
  SPEAKER_01: I don't think there's anything alarming there to say, hey, the USDA's got to come back and you know start adjusting these demand numbers up or up or down.
• 2:32
  SPEAKER_01: So I I think everything's kind of status quo there for a minute.
• 2:36
  SPEAKER_01: You know, the price action today was kind of interesting, Mike.
• 2:39
  SPEAKER_01: You had right going into the report, you were up seven to eight cents, ended up being ten or so lower, um, kind of putting new lows in for the week and in for this move that we're in right now.
• 2:52
  SPEAKER_01: Next spot to kind of watch is maybe like that 1015 area on the January futures, the way it looks to me.
• 2:59
  SPEAKER_01: Might um find some support there if you break through that.
• 3:03
  SPEAKER_01: You got a little bit further to go down.
• 3:06
  SPEAKER_01: But we've taken a lot of m money off that bean market in the past couple weeks, haven't we?
• 3:10
  SPEAKER_00: Six weeks it took to get that rally, Jeff, six days to wipe over half of it away.
• 3:16
  SPEAKER_00: So it definitely uh taken it away pretty quick here.
• 3:19
  SPEAKER_00: Hard come, easy go, I guess.
• 3:21
  SPEAKER_01: Yeah, it's almost uh almost like the cattle market.
• 3:24
  SPEAKER_00: Yeah, we'll get to that.
• 3:25
  SPEAKER_00: We'll get to that.
• 3:26
  SPEAKER_00: Corn balance sheet today.
• 3:27
  SPEAKER_00: We had a 0.2 bushel higher yield on the corn.
• 3:31
  SPEAKER_00: I guess corn yields so far have been coming out pretty good, but we'll see on that one.
• 3:34
  SPEAKER_00: And the beginning stocks dropped first last month, just like expected from after the stocks report gave us here at the end of September.
• 3:43
  SPEAKER_00: And then other changes.
• 3:45
  SPEAKER_00: We had 25 million bushel increase in exports and the ending stocks dipped just below two billion bushels, Jeff.
• 3:51
  SPEAKER_00: 1.999.
• 3:53
  SPEAKER_00: So uh we are below two here as we've been firing fighting our way down to uh to about two billion bushels here.
• 3:59
  SPEAKER_00: And uh historically speaking, we we were about 1.76 last year uh carrying into this year.
• 4:06
  SPEAKER_00: So for example, uh we've increased production dramatically with uh you know six bushel higher yields record, uh yields by over six bushel, and uh we've got ending stocks growing by just over two hundred and forty million bushels or so.
• 4:23
  SPEAKER_00: Not too bad, I guess, considering what it could have been uh given a higher production like we're seeing.
• 4:29
  SPEAKER_00: So demand is stepping up in a pretty big way here, it looks like Jeff.
• 4:32
  SPEAKER_01: Yeah, and solid yield, you know.
• 4:34
  SPEAKER_01: I know that I know we're in a tough spot um um as far as crop yields go.
• 4:40
  SPEAKER_01: Um uh, you know, this southern Minnesota area, especially kind of that uh, you know, Jackson kind of going north and east of there, I would say Worthington area.
• 4:51
  SPEAKER_01: Um, you know, we've been hearing some tougher reports from that geography.
• 4:56
  SPEAKER_01: I think that probably is the worst crop of the of the corn belt here.
• 5:00
  SPEAKER_01: So try not to look in our backyard too much there.
• 5:03
  SPEAKER_01: But I would I would say that there's been some discrepancy on what the yield is gonna be going to this report and to see in two reports now where we kind of thought, hey, this finish was hot, this finish was dry, not much rain in August at all.
• 5:17
  SPEAKER_01: Well, we've got two reports suggesting the yield is gonna stick in this uh mid to upper 183 type numbers.
• 5:24
  SPEAKER_01: So getting to feel better and better about that.
• 5:27
  SPEAKER_01: Obviously, we've got some reports to go there, and then you know, as the other notable thing is you know, we we've reduced the ending stocks of old crops pretty much uh the last three months or so here, and they of course just took that ending stocks number, which was lower than expected here a couple weeks ago, and pushed that into the balance sheet, which you know reduced uh the beginning stocks for new crop um by another 50 or 60 million, and you know, still got just a hair under 2 billion.
• 5:59
  SPEAKER_01: Like say it's it's not bad.
• 6:01
  SPEAKER_01: It's it's somewhat comfortable.
• 6:03
  SPEAKER_01: Um it's but it's also not uh incredibly burdensome either, I would say.
• 6:08
  SPEAKER_00: Stocks to use ratio on corn, 13.3%.
• 6:12
  SPEAKER_00: Uh currently that would put us pretty comfortable here, I think, with where corn prices are in the you know 425 range or so on this uh winter market.
• 6:21
  SPEAKER_00: So uh from that perspective, I think fundamentally we're lined up pretty decent with what price is telling us at this point.
• 6:27
  SPEAKER_01: Yeah, that corn market especially really likes to find a winter range, don't it?
• 6:31
  SPEAKER_01: So uh we're probably carving that out here um as we watch this marketplace.
• 6:37
  SPEAKER_01: You know, maybe against the D's, you're in that 430 something on the top side.
• 6:41
  SPEAKER_01: We'll see where the bottom side ends up.
• 6:44
  SPEAKER_01: I I would say we're in the camp.
• 6:45
  SPEAKER_01: It's it's not at the old lows from August.
• 6:48
  SPEAKER_01: It's probably something above that 390 area, maybe four bucks, 405, 410, something in that country.
• 6:56
  SPEAKER_01: Uh probably start to find a little support here.
• 6:59
  SPEAKER_00: What else are you thinking about this week, Jeff, beyond the WASD Airport and a few other things this week?
• 7:05
  SPEAKER_01: Well, we could jump into the cattle market just a little bit, if you will.
• 7:09
  SPEAKER_01: It's been a you know, these livestock markets have been incredibly powerful, Mike.
• 7:13
  SPEAKER_01: Um pretty much, yeah, pretty much every day we have a higher high and a higher low.
• 7:19
  SPEAKER_01: There's a couple days in there in the hog market, one day in the cattle market this week where it acted like, okay, maybe we were getting a little tired, maybe we're running out of some of this buying power, but you know, today was another big day in the hogs.
• 7:32
  SPEAKER_01: We're able to push up to new highs, pretty much solidifying that uptrend um that we're seeing on charts.
• 7:39
  SPEAKER_01: You know, the cattle market off a little bit today, but that's been pretty solid week there.
• 7:44
  SPEAKER_01: We ended up on our lows for the day, but um, you know, every day here we've put in a higher high.
• 7:49
  SPEAKER_01: And no doubt we've talked a lot about money flow, um, and no doubt that's a big part of it or portion of it uh pushing into this marketplace.
• 7:58
  SPEAKER_01: And I just I get more and more impressed by both of these commodities right now.
• 8:02
  SPEAKER_01: You know, you look at the meat side of the equation, every day on that hog's product values, um, the 602 cutout, every day that goes by and that sucker stays in this uh 94.95 area.
• 8:14
  SPEAKER_01: That's really impressive as you start pushing into uh late October.
• 8:18
  SPEAKER_01: And then you spin around, you look at the beef side, and they were able to put some money on that week over week.
• 8:24
  SPEAKER_01: You know, choice and select both higher.
• 8:27
  SPEAKER_01: Um there's uh there's some really good disappearance going on in the protein world right now, and it's and we're not exactly sure why.
• 8:36
  SPEAKER_01: Um it's a little bit counter-seasonal, certainly early for any sort of a beef rally, um, as you consider any holiday stuff.
• 8:44
  SPEAKER_01: So we'll take it, but it's been uh it's been pretty impressive and gets a little bit more impressive each day that goes by.
• 8:51
  SPEAKER_01: The other thing that we had come out this week was the monthly exports for August.
• 8:57
  SPEAKER_01: Um, pork, I think, was pretty much in line to where you would expect it be, and of course, the number that we focus on there is going to be you know the percentage of our production, and that hung real steady with the July numbers at a little over 20%.
• 9:12
  SPEAKER_01: Um versus 20% of our production was exported across the borders.
• 9:18
  SPEAKER_01: Um, the beef trade was really crazy again in August.
• 9:23
  SPEAKER_01: If you guys remember, you know, we put in uh um around six percent of our product was imported.
• 9:30
  SPEAKER_01: Uh we bumped that to almost eight percent in August, Mike, and that's gonna be like the second biggest monthly import number that I've seen as a percentage of our production.
• 9:41
  SPEAKER_01: So um that makes the the protein you know pushing higher here as far as values go, even that much more impressive.
• 9:50
  SPEAKER_01: And we are importing just a mountain of beef here, and we seem to be chewing through it uh without any issues.
• 9:56
  SPEAKER_00: All right.
• 9:57
  SPEAKER_00: Any final thoughts for us this week, Jeff?
• 9:59
  SPEAKER_01: Just approach the cattle market with a lot of caution.
• 10:02
  SPEAKER_01: I'd like to throw in a tidbit there.
• 10:04
  SPEAKER_01: Um, this market is powerful, it it kind of lulls you to sleep a little bit every day that you procrastinate on making any decisions uh make make makes yourself look better and better, right?
• 10:16
  SPEAKER_01: Makes your plan look better.
• 10:17
  SPEAKER_01: Um, you know, as you mentioned on the bean market, that's exactly like what this cattle market likes to do.
• 10:23
  SPEAKER_01: Go up for three, four months, then all of a sudden, three, four days, you've taken that whole thing away.
• 10:30
  SPEAKER_01: Um, so that has happened very often in the past.
• 10:34
  SPEAKER_01: That can happen again, most likely will, in my opinion.
• 10:38
  SPEAKER_01: So I think be real careful.
• 10:40
  SPEAKER_01: Things are busy with harvest.
• 10:42
  SPEAKER_01: Let's spend a little time on a marketing plan.
• 10:44
  SPEAKER_01: Let's make sure we don't wake up surprised one day with this thing down three, four dollars with what kind of inventory we got on hand all of a sudden.
• 10:52
  SPEAKER_00: All right.
• 10:52
  SPEAKER_00: Well, thank you for your time this week, Jeff.
• 10:54
  SPEAKER_00: I appreciate it, and we'll see you next time.
• 10:56
  SPEAKER_01: Thank you, Mike.
• 10:56
  SPEAKER_01: Take care.
• 10:57
  SPEAKER_00: And thank you to all our listeners.
• 10:59
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 11:03
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:08
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 11:14
  SPEAKER_00: See you next time.