This is the Friday, September 29, 2023 installment of Market Plus.
Ted Seifried is back with us.
Ted, there's something on your head and we have to have something to I won't say laugh about, but positive about.
You had a hard time smiling during the television program today.
Markets are tough right now.
Yep.
My question to you is you brought the hat, so do I read into you have some positive news about corn?
Well, you know, like we talked about in the in the main segment, I.
Think there are some brighter spots happening for Korn now.
Again, I'm always a big fan of ethanol, but.
And you love to see ethanol profit margins.
Good.
That means.
We're going to.
Continue to grind ethanol, grind corn.
For ethanol.
And the export.
Sales are starting starting to pop.
Up.
We've got a lot.
Of work to.
Do to actually get.
To a point where we're happy and proud of our corn.
Export sales.
But we're showing.
Signs of life and that's.
Really.
Nice to see.
The problem is, is that I don't know if these things are bullish.
Enough or friendly enough.
To get.
Corn going higher in the short term.
I think everything that I'm just mentioning now might be the light at the end of the tunnel because like we were talking about in the main segment, I'm very.
Worried.
About what happens.
From a broader economy perspective.
And I know I'm not the only one.
I mean, you look.
At the market on Friday, all the markets on Friday, there is a lot of fear and concern out there.
So if that comes to fruition, those sorts those suggest that individual market fundamentals.
Might not really matter all that.
Much.
You are looking at, though, the end of the month, end of the quarter, end of the week, not as big of a deal.
Yeah.
So you could argue that September there's been more times for September has been a worse month than anything else.
So there's a couple of those factors outside markets are we due though for some corrections in some places and it's never positive to have a correction if you're on the wrong side of it.
But in the long term, it can be good question.
Mark.
Yeah, when we talk about a correction, I mean you could have said.
For a.
Long time the stock market needs a correction.
It's it's kind of a, an inflation bubble that that it may not.
Burst.
But at least needs to to take some steam out of it.
But we've really done that.
I mean, if you look at what the stock markets have done since beginning of August, they've really kind.
Of fallen apart.
So hopefully we're coming to the end of this correction.
But the concern.
Is that we're just getting started.
And that could be the case.
The dollar.
The strength in the dollar.
It's been one of the sharpest rallies.
In the dollar that we.
Seen in history from the.
Middle of July until now.
And yes, it did.
Kind of waver at the end of.
The week.
So maybe we can say had starting to act a little toppy, maybe it can have a correction to the downside, which would be.
Supportive for commodities.
You can also say crude oil is that's the.
One that's really due for a correction.
Okay.
We're going to move on to other topics.
I'm going to give you the opportunity.
You can take the hat off.
You don't need to leave it on the whole time.
You know, it's kind.
Of I am thinking about like.
The tassels.
I can look at the tassels in the shadow and it's it's it's making me smile.
Paul Okay.
All right.
Oil, I was going to ask at the end of the show, kind of ran out of time.
Yeah.
Do you see $100 a barrel in the future?
In the next six months?
Yeah.
I think that is sort of a likelihood.
The the supply situation in crude oil is.
Incredibly.
Tight for what we have here in this country.
We depleted our strategic oil reserve.
We we dabbled with the idea of refilling it, but we haven't done anything near enough to do that.
So it's going to work.
We're going to have to.
Fill that back up way.
Or another.
We're unfortunately.
Going to be doing.
It at higher prices.
So, yes, And by the way, higher crude oil isn't.
Necessarily bullish for grains.
And it is.
Actually really rather bearish for the stock market.
So that's one of the reasons why I think we're really concerned about.
What happens with, you.
Know, overall economy.
High crude is not a good thing for overall economy.
And by the way, it's when I say it's not great.
For grains necessarily.
Is that.
Yeah, okay.
On one hand, when you have high price gasoline, then the ethanol blend should be strong because ethanol is.
A lot cheaper, especially when corn prices are have come off their.
Highs, let's say.
But the problem with that is that if gasoline.
Prices at the pump are so.
Expensive that.
People start cutting back on driving.
Which has become.
A lot more discretionary.
post-COVID, you know.
Going into work is.
You know, work from home is the thing.
And it seems here to stay.
So people start.
Pulling back or spending less at the pump.
Not using much gasoline.
That's bad for.
Ethanol from.
A blend standpoint.
It's bad for biodiesel.
Let's go to the questions that you submitted.
And we always thank you.
I first, I want to say, Wayne, we did get your question in the main segment, so let's do Jeremy in Michigan now.
He's asking with talk about China canceling soybean purchases from the U.S.
If this comes true, how much downside risk could this open the market up to?
Look, we have.
A tremendous amount of risk.
In soybeans when it comes to China.
Right.
But that's that's always there.
If China invades Taiwan and we stop doing business with China or they stop doing business with us, that would be.
Catastrophic for our export program.
In soybeans, we saw hints of that when when we got into the trade deal and.
We saw our carryover.
Balloon to almost a billion bushels in soybeans, which is ludicrous.
So that's always a risk.
I mean, I've said for years that.
We need to be doing things to incentivize.
Infrastructure, developing crush facilities here in the.
United States, which, hey, the soybean.
Oil market is trying.
To do it by itself.
But we need to we need.
To take Argentina to.
Task and have the value add.
Here.
So that we have domestic demand for soybeans.
And we're not sending it we're not relying on China to send it overseas.
But I don't see that happening in a in a in a in a quick timeframe.
Yes, we.
Are putting some new facilities up.
That's great.
Biodiesel, renewable diesel, aviation fuel.
These are all things that are positive longer term.
But yeah, if.
China were to stop buying tomorrow or cancel.
What they have on the books with us and we.
Are in a world of trouble and.
We have no business being bullish soybeans in that in that scenario because we'd go back to pretty close to a billion bushel.
Carryover.
Well let's get into what crop is out there.
You were on the pro forma crop tour.
Mike in Nebraska wants to know what's your view of the crop since you were on that tour?
Yeah, that tour was.
This was a difficult one.
It was so hot.
You know, I'm I think what we were saying and thinking on the on the crop tour, which was he soybean pod counts.
Are really.
Pretty good.
But look at the forecast going forward.
And that forecast did come to fruition.
So I think what we were.
What we were expecting.
To happen, it did happen.
We saw a crop that went backwards.
But in our in the pro farmer estimates.
At the time, that was all noted and they gave us some.
Lower numbers based on that forecast.
So yeah, I think, I think that that was expected.
I will say that, you know.
Some areas, the.
Soybeans.
Fared a lot worse than I was.
Expecting, but a lot.
Of areas, the.
Soybeans actually hung on pretty well.
I've got guys going in the field telling me they're pleasantly surprised by soybeans.
And I.
Think the reason for that.
Was we had a lot of big plants that were healthy going into the end of August, going into the hot and dry timeframe that we had.
And they took all the moisture that they had in them and pushed that out into the pods.
Do you anticipate crops that were in early will do better than those put in late.
Yeah.
Earlier better in which is that's normal but because of the timing the rains in August.
Yes the earlier.
Is better let's do a wheat question let's go to Phil in Ontario if we could, please.
Phil is says I've always planted S.R.
s rw wheat.
Oftentimes a grain gel traces a grain drill, chases the combine.
I'm sorry, Phil, however, wheat futures give me nothing.
Everybody, it seems, wants to be bullish.
Wheat Is there a narrative for that or is it the opposite?
Yeah, I feel, you know, everybody we've all wanted to be bullish.
Wheat for for quite.
Some time and we've all tried to pick a low in wheat and.
It's just never come to.
Fruition.
I think at some point we'll be right.
I don't know if that points soon.
Like I said, you know, I know this is a recurring theme and I hope that next week we can say, you know, that.
Those fears that we had.
About the economy, that was.
Whatever.
And Ted, that Ted was crazy.
And way too bearish.
I hope that's the case.
But if.
These fears to come to.
Fruition.
It's really it's really difficult.
To get bullish.
Anything right now.
But wheat like we talked about in feeder cattle, we'd gotten beaten, beaten up so bad that it's kind of like, well, we can't beat it up too much more.
At some point it's going to get close.
To corn prices.
And should have a.
Natural floor.
In that neighborhood.
Let's let's close with one last question.
Tony in Nevada had a good question last week.
Just ran out of time.
But, Tony, here's your question.
Farmers have rain gauges.
They subscribe to weather services.
The question is why weather matters?
Yes, with Mother Nature wreaking havoc on our planet, our grain markets price 2 to 3 years in the future, severely underpriced.
For example, DEC 25 and 26 corn at 495 a bushel.
Mm hmm.
Yeah, I know.
Tony's wanted to ask.
This question for a while, and.
I picked it for you, Tony.
So here we go.
You know, I'm not saying you're wrong.
I'm not saying Tony's wrong.
I'm not saying.
That weather is not.
Becoming.
More extreme and will.
Continue to.
Ravage crops.
And we will see.
Could see.
Crops or production.
Really start to decline because of it.
However, I.
Mean, we are growing some pretty hearty crops, hybrids get better, technology gets better, planting.
Procedures, good practices get.
Better.
If the market was really concerned.
About not being able.
To grow corn or.
Soybeans.
Two or three or four years from now, then.
That would.
Be reflected in the prices that that are out there.
This is why we have markets, right?
If you if you believe in something and you believe something would happen, well, that's great.
Use the market go get long.
That December 25th 2627 corn and I'm not saying he's wrong I honestly I think it's an interesting thing but.
If the commercials if.
The big end users.
If they were really.
Really worried about that if China was really really worried about that, then the prices would be higher because they'd be in buying.
It.
Makes it makes sense.
But I'm going to pull back on one little thing that you said the last two years when we've had some challenging seasons.
We haven't had it for a full growing season.
BE the challenge.
It's either been dry early or it's been dry late.
We haven't had that, but if we get that at some point, that could upend things.
But again, that's speculating on the market, not the speculators in the market.
Yeah, and look, that was 12, right?
And we can we will have another 2012 at some point.
Somebody said it was.
Like a 30 year cycle.
But we will have a 2012 at some point.
But that's a one off year.
And then prices do.
What prices do.
They bring out more production.
For the next year.
They ration demand and then what happened after 12?
We went to a.
Long period of time of oversupply in the market, right?
We had too much corn.
Soybeans sitting around.
Our carryovers were burdensome.
So what Tony is talking about is that it's a 2012 type situation.
Happening year after year.
After.
Year.
It's possible, you.
Know, I mean, there are a lot of.
People that say.
Weather is going to extremes and it's going to get worse.
And it's it's yeah, I don't know.
I'll also say.
Our growing area is.
Kind of shifted north and.
West.
Right?
And so.
That might continue to happen to Phil in Ontario might might get a little.
Busier.
My but no, it's an interesting concept.
It's an interesting conversation.
But the markets are their own conversation.
And if it's not.
Reflected in the prices, then the markets aren't concerned.
About it, at least not yet.
Ted, thank you so much.
Good to see you.
Hey, pleasure's mine, Paul.
Thanks for having.
Me.
Ted Seifried appreciate the time.
Next week we are going to look at the problem of safety when entering the barn and the commodity market analysis of Sue Martin, thank you for joining us.
Have a great week.