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Grains: Fuel Up · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_01: If you want a deep dive into the egg 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_01: Today is December 26th.
• 0:26
  SPEAKER_01: I've got Jordan with us here today.
• 0:27
  SPEAKER_01: We're going to talk about the grain markets a little bit.
• 0:29
  SPEAKER_01: How's it going, Jordan?
• 0:30
  SPEAKER_01: Good.
• 0:30
  SPEAKER_01: How are you, Mike?
• 0:32
  SPEAKER_01: Not too bad.
• 0:33
  SPEAKER_01: Well, let's take a look at this market just after uh Christmas.
• 0:37
  SPEAKER_01: Hopefully, you all had a good holiday here.
• 0:39
  SPEAKER_01: But the uh corn and soybean market's pretty dead today.
• 0:42
  SPEAKER_01: It was pretty quiet out there.
• 0:44
  SPEAKER_01: Uh not a whole lot of activity or volatility.
• 0:47
  SPEAKER_01: Usually this day after Christmas can be pretty exciting because of low volatility.
• 0:52
  SPEAKER_01: You can get some pretty big moves through these grain prices.
• 0:55
  SPEAKER_01: So uh didn't really live up to the hype today, anyways, pretty much unchanged on corn and down four on soybeans.
• 1:00
  SPEAKER_01: But uh on Wednesday, you know, the soybeans were up a little bit.
• 1:04
  SPEAKER_01: We did have something exciting there to kind of talk about earlier in the week.
• 1:08
  SPEAKER_01: It it looked like some Argentine dryness maybe excited some things a little bit on soybeans, got us a little bit of a pop there recently.
• 1:16
  SPEAKER_01: We had filled a gap as well that was maybe a downside target and kind of got through that guy just a little bit, I guess, so we've been able to kind of stable out, maybe get a little rally on the soybeans lately here as well.
• 1:29
  SPEAKER_01: But overall, South America weather picture being a little benign, Jordan, has kept that soybean market under wraps lately, hasn't it?
• 1:36
  SPEAKER_00: Yes, it has.
• 1:37
  SPEAKER_00: It's it's been pretty quiet.
• 1:38
  SPEAKER_00: You know, we had that uh rally after the US-China trade deal was announced, and um, you know, we were supposed to get twelve uh million metric tons worth of exports, right?
• 1:48
  SPEAKER_00: Um hasn't really lived up to that, right, Mike?
• 1:50
  SPEAKER_00: I mean, I think you said that today you updated your your chart there were 53% complete on sales, so we're quite a bit behind.
• 1:58
  SPEAKER_00: Um you know, ending stocks today on that Wazley report was two hundred and ninety million bushels on soybeans, and with where exports are today, um you can make the case that you know ending stocks to be pushing closer to 400-500 million bushels just because of how far behind we're uh we are on exports, and I and I and you know has worked lower um these past few weeks, filled the gap just like you said.
• 2:24
  SPEAKER_00: So, you know, now have we done enough to the downside, you know, to kind of stabilize this thing, which the market seems to kind of be finding that area, you know, where we had some more sideways action than lower action this week is is what it felt like to me.
• 2:37
  SPEAKER_01: That's what it felt like, yeah.
• 2:38
  SPEAKER_01: And it we've taken everything out since we really started to rally since the middle of October when we got that China trade deal news starting to build, anyways.
• 2:48
  SPEAKER_01: So just knowing that premiums out of the market makes it a little bit more comfortable to to maybe stabilizing out here a little bit.
• 2:55
  SPEAKER_01: Not the story on the corn, though.
• 2:57
  SPEAKER_01: Corn, we're right at the top end of the trading range, highest price we've had in six weeks.
• 3:02
  SPEAKER_01: And I actually hear March corn closing again at 450 here, pretty strong resistance points around a few of these old highs, right around 452, and then earlier in November we got up to 457 there.
• 3:15
  SPEAKER_01: So that'd be if we could close seven cents higher or even just trade above it, that'd be the highest price we've had since June.
• 3:22
  SPEAKER_01: So it seems like the corn market's been on a pretty good tear here recently, and I think a lot of that has to do with good demand, doesn't it, Jordan?
• 3:28
  SPEAKER_00: Yes, it surely does, Mike.
• 3:30
  SPEAKER_00: You know, you're spot on.
• 3:31
  SPEAKER_00: Demand is the story on the corn side.
• 3:33
  SPEAKER_00: You know, we we did follow that soybean market lower, you know, kind of you know, pressed some lows there at what 438 on March.
• 3:41
  SPEAKER_00: But, you know, over the past week and a half, we've seen that corn market really rally uh back to 452, I think was a high this morning, which you know, you look at the chart and 458 was in previous highs, like you mentioned.
• 3:51
  SPEAKER_00: It seems like demand it has really you know started to push that that corn market up.
• 3:56
  SPEAKER_00: You know, you look at exports.
• 3:57
  SPEAKER_00: Um the last WASDA report raised exports to 3.2 billion.
• 4:01
  SPEAKER_00: But with where sales are at, you can make the case that you know we could we could raise that again, is what it what it looks like.
• 4:06
  SPEAKER_00: You know, we're actually ahead of schedule.
• 4:08
  SPEAKER_00: And you know, whether or not we're front loading or not, demand is strong.
• 4:11
  SPEAKER_00: You know, ethanol is uh currently on pace for 5.6 billion.
• 4:16
  SPEAKER_00: Um so you couple them two together and and we're using quite a bit of corn.
• 4:20
  SPEAKER_00: Um you know, you look at the cash market, the basis has strengthened here over the past uh few weeks.
• 4:30
  SPEAKER_00: Um now this week we did start it start to see some cash sales being made with this rally that was happening on the future side, and you know, a little bit of uh good weather, you know, warmer temps definitely helps, right?
• 4:43
  SPEAKER_00: So, you know, you are starting to finally see some some cash corn kind of move, but you know, I think it's gonna kind of be this 450 futures range that that makes that happen.
• 4:51
  SPEAKER_01: I wonder why we are so competitive and been exporting so much corn here lately.
• 4:56
  SPEAKER_01: I mean it yeah, I'm just been I've been curious to see is it low global ending stocks, is it a cheaper US dollar lately?
• 5:04
  SPEAKER_01: Why has why have exports just overperformed first kind of what expectations have been, you think?
• 5:10
  SPEAKER_00: I think uh both those uh points you made are are correct, right?
• 5:13
  SPEAKER_00: I mean the US dollar has continued to trend and get cheaper, and you know, when you look at a global um balance sheet, we are tight.
• 5:22
  SPEAKER_00: You know, it's kind of the opposite of where we are here in the US, where we have ample supplies.
• 5:26
  SPEAKER_00: Um you know, we started the year with 99 million acres of corn, a 186 yield.
• 5:31
  SPEAKER_00: There's a lot of corn bushels to move, and we are doing that on the demand side because of uh you know world ending stocks, I believe.
• 5:38
  SPEAKER_01: Up front in the Western Corn Belt, it just seems like it's been a lot of corn to chew through, a lot of piles getting taken out.
• 5:44
  SPEAKER_01: It seems like that's been kind of just plugging things up in the near term here.
• 5:49
  SPEAKER_01: Hopefully we can get through some of that and get some better basis levels here in the early part of 2026, anyways.
• 5:55
  SPEAKER_01: People are corn the bins out, and those piles getting picked up has just held the basis back, I think, from what it probably could be here going forward.
• 6:02
  SPEAKER_01: Yes.
• 6:02
  SPEAKER_01: It'll be interesting to see.
• 6:04
  SPEAKER_01: So the corn market, pretty boring there too lately, actually.
• 6:07
  SPEAKER_01: I mean, it we're still stuck in that very tight range.
• 6:09
  SPEAKER_01: I think was it a week or two ago?
• 6:10
  SPEAKER_01: Corn market had an entire six cent trading range.
• 6:13
  SPEAKER_01: I mean, it's just been dead in the water here.
• 6:16
  SPEAKER_01: So without any main catalyst to really push this into a new price level, uh, in the near term here, anyways, it seems like business is normal.
• 6:23
  SPEAKER_01: And that really occurs until the January WAS day, and then nothing else changes again until basically March.
• 6:28
  SPEAKER_01: So not uncommon for us to have a sideways or more uh just stable corn or soybean market kind of this time of the year without any south any major South American weather problems.
• 6:39
  SPEAKER_01: A few other things I wanted to touch on today would obviously be next year's corn price and further out, you know, D's 26, still 468 and uh and a half.
• 6:48
  SPEAKER_01: There, some opportum opportunities really laying out there.
• 6:52
  SPEAKER_01: So continue to look at some option strategies to start looking at coverage levels in 26.
• 6:57
  SPEAKER_01: And I think that's something we need to tackle here ahead of crop insurance and the January WASDA report, especially.
• 7:03
  SPEAKER_01: So something we want to work with you on.
• 7:05
  SPEAKER_01: But other than that, you know, I think the energy market has been a big a big point here to talk about lately as well.
• 7:12
  SPEAKER_01: Uh, you know, farm uh farm-dyed fuel, I think that's gonna be uh a pretty big expense here in the next month from a seasonal perspective.
• 7:20
  SPEAKER_01: It's pretty cheap uh this time of the year, normally, anyways, or a good time to try to buy that fuel.
• 7:26
  SPEAKER_01: And crude oil prices being a little bit lower lately, those prices have finally started to come down on diesel fuel, even though they had held up pretty well up until this point relative to uh to a really cheap gas market.
• 7:38
  SPEAKER_01: So at this point, I think that's something we should be looking at as well, just from if if I'm uh looking at it from a seasonal perspective, it's it's the right time of the year to look at some of those other items too.
• 7:49
  SPEAKER_01: Kind of control what you can, anyways.
• 7:51
  SPEAKER_01: And then let's look at the equities too.
• 7:53
  SPEAKER_01: S P 500 pushing 7,000 points here, finishing out 2025.
• 7:58
  SPEAKER_01: Uh, really odd.
• 7:59
  SPEAKER_01: I mean, a lot of people probably weren't expecting this to be this strong towards the end of this year.
• 8:05
  SPEAKER_01: I believe a lot of folks had uh, you know, end of the year gauges around 55 to 6,000 uh earlier on in the year with some of the struggles that we had and the big April setback that we had.
• 8:16
  SPEAKER_01: So we've really made quite the comeback.
• 8:18
  SPEAKER_01: And a large part of that looks like consumer spending's been superb.
• 8:22
  SPEAKER_01: Uh exports have been superb out of our country, and uh GDP growth has been pretty good here.
• 8:27
  SPEAKER_01: So that's been kind of the news to help finish this year off on a strong foot with some of these equity markets.
• 8:33
  SPEAKER_01: But I I think that's something worth mentioning as well that you get around 7,000 here, it starts to get a little bit harder to continue to really push push money into these equity markets with some uncertainty going into this next year.
• 8:45
  SPEAKER_01: And uh that also makes us just raise the question of inflation, you know, uh uh the the interest rates.
• 8:52
  SPEAKER_01: It doesn't look like we're really gonna be cutting too many rates at the start of uh this 2026 year.
• 8:58
  SPEAKER_01: However, uh it inflation is still a very heavily talked about topic and a concern.
• 9:03
  SPEAKER_01: So if that is the case, watch out for some of these commodities still to find some extra money flow as well that is gonna have to be watched going into this new year.
• 9:12
  SPEAKER_01: So any final thoughts this week, Jordan, that you think uh at the top of mind?
• 9:16
  SPEAKER_00: Yeah, so you you touched on it there a second.
• 9:19
  SPEAKER_00: Um and you know, kind of want to kind of go back to that a little bit is you know, looking at December 26th corn, um today I believe we closed at around 468.
• 9:30
  SPEAKER_00: We're gonna have a crop insurance uh averaging period here in the next month in February.
• 9:34
  SPEAKER_00: We're only month one month away from that.
• 9:36
  SPEAKER_00: But if we can kind of get that that market, you know, north of uh 470, 475, that's gonna be a good base going into next year.
• 9:43
  SPEAKER_00: So, you know, just something to kind of think about.
• 9:44
  SPEAKER_00: And if we get through that uh January WASI report and we're we're trading 475, 480, we might want to take some short per short-term protection um type products to kind of protect that uh September or sorry, that spring crop insurance prices.
• 9:57
  SPEAKER_01: And remember, it's it's uh very i if you look at volatility right now, it's the lowest level we've had in the last year on the corn market.
• 10:04
  SPEAKER_01: So options are a pretty good value right now uh for some of those shorter dated options for sure.
• 10:10
  SPEAKER_01: So a good good way to look at it.
• 10:11
  SPEAKER_01: But thank you for coming on the show today and talking.
• 10:14
  SPEAKER_01: I know out of the entire year of fantastic, fun, exciting things to talk about.
• 10:18
  SPEAKER_01: The grain market right now is probably not one of them.
• 10:21
  SPEAKER_01: So it's it's been uh still plenty of things to kind of talk about, but just a very sideways market lately.
• 10:27
  SPEAKER_01: So thank you, Jordan, for hopping in after uh Christmas Day here.
• 10:31
  SPEAKER_01: I really appreciate it, and uh we'll catch you next time.
• 10:33
  SPEAKER_01: Sounds good.
• 10:34
  SPEAKER_01: Thank you, Mike.