From the Furrow – Shelby Myers – September 18, 2023

00;00;00;00 – 00;00;02;28
VOICEOVER
Futures trading involves risk and is not suitable for all investors.

00;00;02;29 – 00;00;08;18
VOICEOVER
Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.

00;00;08;20 – 00;00;41;02
BRITT
Hello and welcome to From the Furrow, brought to You by Ever.Ag Insights. Each week we talk with subject matter experts on news and topics affecting the grain market. I’m your host, Britt O’Connell. Let’s get started with your view of today’s markets. Today is Monday, September 18th. December 23, Corn Falls down four and three quarters at 471 and a half with November 23, soybeans down 23 and a half, closing at 13, 16 and three quarters turning to our guest.

00;00;41;03 – 00;00;48;21
BRITT
This week, it’s our privilege to have Ever.Ags very own Shelby Myers, director of Grain Intelligence. Welcome to the show today, Shelby.

00;00;48;21 – 00;00;50;11
SHELBY
Thank you, Britt. Glad to be here.

00;00;50;17 – 00;00;59;16
BRITT
SHELBY The September WASDEE the wasn’t exactly riveting and full of new information. But what were your key takeaways?

00;00;59;21 – 00;01;17;15
SHELBY
I think the key takeaways for new crop corn. Frankly, it was bearish, too neutral, in my opinion, that there were a lot of things that really could have pushed the corn price lower. If you were expecting what happened in the WASDEE to actually happen, which is kind of what went down, which is why it wasn’t very exciting.

00;01;17;16 – 00;01;36;16
SHELBY
So bearish too neutral overall. But then on the soybean side of things, you know, fundamentally, I really thought that that was kind of a bullish to neutral scenario. A lot of things in the soybean balance sheet happened the way that we thought it was going to go down. But you could tell, too, that a lot of the trading algorithms didn’t react the same way.

00;01;36;16 – 00;01;42;14
SHELBY
So a lot of the market reactions, I think, threw everybody for a loop more than the actual report did.

00;01;42;17 – 00;02;02;21
BRITT
Yeah, I think you’re right on that. You know, one of the things that was really interesting is there were some little nuanced changes. One of them was in corn. They had changed the harvested acreage a bit. They obviously adjusted yield down. Were there any other surprises or any of those little nuance things that really caught your attention in this report?

00;02;02;22 – 00;02;26;14
SHELBY
You had it the planted and harvested acreage increase of 800,000 acres. You know, not fully unexpected, but that’s just a verification of what they’re seeing. And the FSA reported data and kind of reconciling the acres that we filed through FSA that are auditable and reportable. Not every planted corn acre and not every planted soybean acre will file an FSA report.

00;02;26;16 – 00;02;57;19
SHELBY
So, you know, USDA has to take those numbers and reconcile it with the balance sheet. And that’s what we got this week. So maybe that was a little surprising. Just if you’re not familiar with that process. And then I think on the soybean side, some of the adjustments to demand I don’t want to say continue to be surprising, but just interesting how we’re keeping the balance sheet fairly neutral while trying to maintain the expectations of how strong demand truly is for the U.S. soybean right now.

00;02;57;20 – 00;03;19;12
SHELBY
And, you know, we’d love to dive into that a little bit deeper as we talk, but at what point we maxed out the ability to go lower on Crush. And we do have a really strong demand globally for U.S. soybeans. This would be the peak time this fall period just before Brazil and Argentina start harvesting and producing their soybeans and start competing with us again on the global market.

00;03;19;12 – 00;03;34;06
SHELBY
So, you know, you’re just playing with some of these factors that this is our window to really thrive on soybean exports. And yet we’re seeing USDA start to ration that demand in expectation. So it makes you think what’s on the horizon and in starting to monitor some of those things rather closely.

00;03;34;10 – 00;03;55;05
BRITT
So no time like the present, shall we? Let’s dive into it. On soybeans, it’s a tight balance sheet. Soybean balance sheets, pretty simple through demand centers, by and large, exports and domestic crush. Your take on the revision lower on exports, your take on where the current projection is on crush, given additional capacity that is going to be coming online?

00;03;55;06 – 00;04;22;02
SHELBY
Yeah. And for listeners, we can review the balance sheet a little bit to keep in mind. So U.S. cut the soybean yield to 50.1, which is down slightly from 50.9 last month, right around where trade expected at 50.2 on the balance sheet, too, there was also an increase to planted and harvested acres, but only about 100,000 acres. So the decrease in yield still overtook that increase in acreage, reducing overall production.

00;04;22;02 – 00;04;53;00
SHELBY
So we kind of took a tight balance sheet, made it a little tighter, and that’s kind of what spilled over into the demand side. So we lowered crushes by 10 million bushels. And I truly think that we can’t go much lower. We’ve had a series of record crush months throughout the summer. It despite even the regular maintenance schedules that many of those plants have to go through, we have increased capacity for Soy crush that’s been announced by the end of this year plus the next two years have plans for increased capacity.

00;04;53;03 – 00;05;21;16
SHELBY
You know, at some point, all of these soybeans that we’re producing are already in the pipeline for that crush to be in on the balance sheet. So the only other category that we can really lower to match that high supply side is exports. And we’ve seen announcements particularly to China, of large export sales. Any export sale that’s over 100,000 metric tons has to be reported via an FAS a blast.

00;05;21;21 – 00;05;50;27
SHELBY
So we’ve had quite a few of those to China for our soybeans that have come through. But overall, I would say our year to date soybean export sales is down. So I think that’s really where folks can reconcile this change on the balance sheet, is that if you look at net sales of this current crop that we now refer to as old crop in some in some circles, because that marketing year ended August 31st, we’re into the current marketing year.

00;05;50;29 – 00;06;17;04
SHELBY
We have the lowest net sales this past week since 2018, and that was in the middle of trade war issues and some of those things. So not unexpected, but also starting to see the ramifications of some of these higher priced soybeans and how competitive we are on the global market, despite we’re the ones harvesting in Brazil and Argentina are nearly out of what they need to sell.

00;06;17;07 – 00;06;44;20
BRITT
So I want to switch gears a little bit on us and talk a little more about corn, because the USDA did lower corn yields in this last WASDEE most producers across the country believe maybe those numbers need to come down a bit further. You’ve been on record saying, hey, maybe so, but we’re seeing some really good yields in some of the nontraditional corn belt states.

00;06;44;28 – 00;06;46;24
BRITT
Unpack that a little bit for us.

00;06;46;27 – 00;07;10;18
SHELBY
Yeah, I think maybe to caveat a little bit, some corn producers in the Midwest think that those estimates should go down. But you look at some of the yields that are projected in the southeast, The corn yield in Alabama, for example, is expected to be 41% higher than it was last year. And the Carolinas are expecting 16, 17% increase.

00;07;10;18 – 00;07;38;15
SHELBY
Tennessee’s expected a 33% increase in yield, Texas 39%. All of the states are expecting higher yields. I’d even argue to you take Texas all the way up to North Dakota, they’re all expecting an increase in yields. So that’s the expectations for increased production, frankly, you know, Minnesota, Wisconsin, Illinois and Iowa, to an extent, Iowa was expecting no change in their year over year yield.

00;07;38;15 – 00;07;58;17
SHELBY
But, you know, we’ll look at Minnesota, Wisconsin and Illinois who do all expect a decrease in yield. I think those are the ones that you’re hearing loudest from to say, well, wait a second, I’m looking out my window. I know what my fields are. We had crop tours that went through the entire corn belt that said maybe yield isn’t there.

00;07;58;17 – 00;08;24;25
SHELBY
Maybe it is better than expected in Ohio. Indiana, not quite. As we move further west. And frankly, the USDA crop production report this month highlights that. So as you said, I’ve been on record, happy to talk about it more with any producers. My email box is open. Let’s chat. You know, we got to look at some of these other states that produce corn because we produce corn all across the US and say those are higher yields than they’ve been in the past.

00;08;24;25 – 00;08;44;17
SHELBY
Does that bring up the average despite our regular outperformers, like the Midwest, bread and butter is corn acres. Is this bring up the average of them being weighted down in some of those things and I think it does it helps when you know you have other quote unquote teammates pick up the slack. And that’s kind of what’s happening here.

00;08;44;22 – 00;09;17;16
BRITT
So given the fact that the USDA has incrementally moved both corn and soybean yields down, it’s up for debate whether that is justifiable or not. I think part of the problem has been there hasn’t really been any conclusive evidence in any one direction this year. Many of the crop tours have got mixed results, if you will. I think even from the producer crowd, we hear mixed results, particularly late folks who are out maybe in the fields doing some chopping of some corn silage.

00;09;17;18 – 00;09;36;03
BRITT
It’s just there’s still a lot of unknowns that exist as we move forward in the future. WADEE reports are there any expectations you have, anything you’re watching saying, hey, this one could sneak up on a saw, This is something we need to be watching? Yeah.

00;09;36;06 – 00;09;54;19
SHELBY
I think maybe let’s label this year mixed expectations because we’ve been hearing that a little bit all throughout the summer too, that fields are kind of uneven. There’s better growth in different it’s kind of been patchy in the growth that we’ve seen. So, you know, maybe it’s a year of averages that you have higher spots and low spots.

00;09;54;19 – 00;10;21;07
SHELBY
They come together. You’re right about average. You know, I don’t doubt that that’s certainly not an option that could happen, especially on the corn side being side. It got hot quick. We turned really we turn green to yellow really fast and dropped leaves fast. So I’ve got to wonder there, does that have a bigger impact? And maybe we see that in the next WASDEE soybean yields fall a little bit lower just as combines start getting in the field.

00;10;21;10 – 00;10;41;26
SHELBY
I say all of that knowing and recognizing to you that there’s about 15 and a half days left from where we’re recording this, that if the government does shut down, we don’t get in October WASDEE if it’s still shut down that same day. And so, you know, this big surprise could be no one gets a market update in October and then what do we do?

00;10;42;01 – 00;10;49;14
SHELBY
I think then we’re all just running on rumors and yield monitors. And frankly, what everybody’s talking about at the at the coffee shops.

00;10;49;19 – 00;10;53;20
BRITT
Things could get exciting in a lot of regards. If that were to play out.

00;10;53;25 – 00;11;14;27
SHELBY
It could be very interesting and I guess thankfully or not so thankfully, we do have a little precedent to know what to expect. We have had a government shutdown in October before back in 2013, so that could help. Give us a little bit of context to navigate some of those certain unknowns. But yeah, it could keep keep things interesting and keep folks on their toes.

00;11;14;27 – 00;11;26;23
BRITT
Okay. I want to shift gears away from the WASDEE and talk about a couple other things while we’ve got you today. So New Prevent Plant Data was published last week. Can you walk us through the highlights there?

00;11;26;24 – 00;11;52;00
SHELBY
So each month FSA comes back in and updates all of the reporting information that they have for prevent plant failed acres and some of those things. Again, we’re reconciling the planted acreage and harvested acreage expectations and WASDEE. But also these are the acres filed for all the government programs with different filing deadline. So these get updated each month for corn.

00;11;52;00 – 00;12;31;28
SHELBY
We had 1.432 million acres filed as prevent plant. That’s only up about 11,000 acres from last month. So I would make the argument that that’s about where we’re going to be. And that’s a pretty normal number for corn acres, as we’ve seen previously. I think we’ve got to remember, too, the past couple of years have been skewed ever since 2019 when we talk about permit plant acres because we had such record about of Prevent plant in 2019 and then still had pretty high submissions in 2020 and 2021 and 2022, I would say we were getting back to normal, but this number very much is a normal level for soybean acres, a very minor increase there

00;12;31;28 – 00;13;02;26
SHELBY
to another 12,000 acre increase month to month for soybeans on prevent plant, both for corn and soybeans. The field acres only increased marginally, I think in corn we saw about a 14,000 acre increase and on soybeans, less than a thousand increase there. And so something to take into account there is that we planted a lot of corn and we’re going to see a lot of that corn thrive.

00;13;03;01 – 00;13;39;16
SHELBY
And so that’s where, again, I point out, check out those those states that we don’t normally rely on to be our high producing corn states, because that’s not where we’re seeing some of these prevent plant and failed acres. We’re seeing those in more of the Midwestern area. And so we’re you know, the U.S. as a whole is relying on some of those teammates to step up as the Corn Belt sees some of those filings and then on the wheat side, you know, this is something that we’ve been talking about, kind of post the winter wheat harvest earlier this year, that we had a large drought throughout out the fall and into the winter kind of

00;13;39;16 – 00;14;06;14
SHELBY
in the central U.S., that there was an expectation of a lot of abandoned acres there and so filled acres for all wheat did right. Slightly month to month from August to September we saw about 42,000 acres added to the failed acre number in all wheat prevent plant, not nearly as much, maybe about 2000 acres. But, you know, we continue to see the repercussions of that drought persist into some of the reporting that we’re now catching up on.

00;14;06;14 – 00;14;25;06
BRITT
Excellent. Another question I’ve got and you touched on this a little bit, what else are you watching here as we move into harvest things besides maybe any WASDEE data that may be coming out or any other USDA data. You mentioned government shutdowns. Is there anything else that you’re kind of keeping an eye on or that could be coming out on the horizon?

00;14;25;06 – 00;14;43;05
SHELBY
I think there’s a couple of things. I mean, certainly we’re going to keep an eye on what the federal government is doing and whether we have a continuing resolution and what is and is or isn’t included in that continuing resolution and at what point it comes off. We do have a pause in government programs due to a shutdown or not.

00;14;43;06 – 00;15;15;12
SHELBY
The repercussions of that to spill a lot into agriculture, any of the processing paperwork, stuff that we see for a lot of our crop insurance programs, any of our government sponsored loans, you know, a lot of the farm bill, USDA programs that rely on government processing would be paused. And so some cases you either, you know, just have to wait until you’re till the government comes back and plays catch up on submissions or that’s just a skipped month like the WASDEE that would be a skipped month.

00;15;15;17 – 00;15;43;26
SHELBY
The other thing we’re keeping an eye on too, is that September 30th is the expiration date for the 2018 Farm bill. Now looking at some of the programs of mandatory funding, there’s a lot of conversations about extending the farm bill, getting through the government funding issues, and then coming back and saying, let’s take a look at the House draft, let’s take a look at the Senate draft and send those to the conference committee so we can find some resolution and pass something rather quickly.

00;15;43;26 – 00;16;13;14
SHELBY
So that’s one thing I’m watching. I think on the private industry side of things too, I’m really interested to see where the renewable fuels conversation continues. You know, we had Secretary Vilsack this week talking to the ethanol industry and where corn ethanol future could be in things like sustainable aviation fuel. We’re obviously talking about crush capacity on WASDEE. And some of the things for expansion on renewable basial. And so that’ just an industry that I found really fascinating and something that I think a lot of grain growers can see happening even in their own backyards. It’s adding to local basis levels and really seeing the opportunity for domestic demand increases for commodities. And so just really find that world fascinating.

00;16;33;07 – 00;16;55;29
BRITT
Certainly a lot to watch on the horizon. Producers are going to be very busy here as harvest gets kicked off. Hopefully weather cooperates for us. Definitely appreciate your time today, Shelby. It’s always a joy and pleasure to have you on and for you to share your insights with us. If listeners would like to learn more about some of the insights that you and your team at ever.AG provide, how can they best do so?

00;16;56;00 – 00;17;21;16
SHELBY
Yeah, remember, you can sign up for insights dot ever dot ag. That is our online portal to access all of the content that the insights team publishes. We have web exclusives there. That’s where you can get signed up for things to be delivered directly to your mailbox. And you also have your data dashboard information there that we put up A chart of the day allows you to kind of explore some of the things that we’re following and just some fun, interesting economic tidbits that were thrown out there.

00;17;21;16 – 00;17;24;21
SHELBY
Plus my weekly article, Market Moment is found there, too.

00;17;24;21 – 00;17;44;23
BRITT
Excellent. Thanks again, Shelby. If you’ve enjoyed listening to From the Furrow, feel free to subscribe to our podcast. Share it with a friend or give us a like. Thanks to Korri Romero, our producer, and Paige Driscoll, for mixing and mastering today’s production.