In our weekly series From the Furrow, host Britt O’Connell and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.
This week, Britt is joined by Brandon Weigel, Grain and Feed Risk Management Advisor at Ever.Ag. What did USDA’s latest WASDE report tell us about this year’s crop? How is the data impacting markets? Britt and Brandon discuss those topics and a whole lot more.
Contact Brandon at brw@Ever.Ag.
Questions or comments? Topics you’d like to hear us discuss? Contact us at Insights@Ever.Ag.
(Transcript auto-generated)
00;00;00;10 – 00;00;09;01
VOICEOVER
Future trading involves risk and is not suitable for all investors. Content provided in the statement is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;09;04 – 00;00;34;14
BRITT
Hello and welcome to from the for a podcast brought to you by ever AG Insights, where each week we talk with subject matter experts on news and topics affecting the grain markets. Today is Tuesday, February 13th. For all you gentlemen listeners out there, you still have time to get your sweetheart a Valentine’s gift. Turning to the markets, March 24 corn is up a half a cent.
00;00;34;22 – 00;00;52;12
BRITT
Trading for 31. Even with March 24 soybeans down six. Trading 1187 even. Turning to our guest this week, it’s our privilege to have Brandon wagle. Brandon serves as a grain marketing advisor for our very own ever ag. Welcome to the show today.
00;00;52;13 – 00;00;53;27
BRANDON
Brandon Thanks for having me.
00;00;54;00 – 00;01;13;12
BRITT
Brandon We want to spend some time talking about markets. Unfortunately for grains sellers, it’s been an environment where prices have been on the slide here. As of late last week the USDA came out with a was the report. Let’s start there. What were some of your key takeaways? And that was the report, Brandon.
00;01;13;12 – 00;01;36;11
BRANDON
So that was the report really showed us what we already kind of expected on the corn side of things that more likely to see a lot of adjustments coming out of that January report. Now we’re looking at over 2.1 billion bushels for a carry out number there. There wasn’t anything to major by way of adjustments. We did see a slight increase to ending stocks, but nothing that’s likely to move the needle and to significant of a way beyond where we are already at.
00;01;36;18 – 00;01;55;05
BRANDON
The largest surprise came on the soybeans side of things. We cut 35 million bushels off of our export demand. So we ultimately added that back to that 280 million bushel ending stock number to bring us back over 300 for the first time in a while, finishing at 315 million bushels there in February.
00;01;55;08 – 00;02;15;21
BRITT
I think the other thing that was really interesting coming out of the backside of that report was South American production estimates. Earlier in the day, CO NAB released their expectations and as harvest is taking place so the soybean crop in South America and will continue to for a number of months, we’re starting to plant the Safina crop down there.
00;02;15;22 – 00;02;30;03
BRITT
Let’s break down some of those numbers a little bit more. And then what are you hearing out of South America? And, you know, the USDA has been a little bit historically slow to take those production cuts lower. Do you think the USDA’s current numbers are about right, I guess tell us what you’re hearing.
00;02;30;10 – 00;02;48;10
BRANDON
Yeah, so far, they’re making some really good progress on the harvest, especially in some of those north, north central regions of Brazil. If you look at Mato Grosso, as of last week, there already almost 40% completed with soybean harvest. Another region of Parana was over 20% completed. And it seems like they’ve had some fairly good moisture as well.
00;02;48;10 – 00;03;09;13
BRANDON
So they’re coming right behind the combines and planting in the good moisture with the Farina crop. And if you look at what their export prices are doing down there, they have been extremely lackluster, have only continued to get worse. So what that means from a production perspective, from a yield perspective, it shows us they’re probably not too worried about what those yield numbers are coming in at.
00;03;09;21 – 00;03;20;20
BRANDON
Yields so far have been very I would call it quiet. There hasn’t been much by way of actual results from yields down there. But as we move forward these next two weeks, I would expect to get a lot more.
00;03;20;27 – 00;03;39;24
BRITT
And certainly the additional soybean acres help offset some of that potential yield loss. And they’re still looking at potentially the second largest soybean crop that they’ve ever produced down there. Let’s talk about the Sabrina corn crop a little bit that’s going in the ground as you mentioned, right behind the soybeans. We’ve heard mixed reviews there. They’re going to plant more acres.
00;03;39;25 – 00;03;49;24
BRITT
They’re going to plant less acres. Talk to me a little bit about what you’re hearing on that front. Do you expect or acres do you expect less acres? You mentioned prices have been sliding. What are your thoughts there?
00;03;49;26 – 00;04;08;28
BRANDON
Yeah, I would say that there is a lot of variability so far in what’s going to occur down there with that Sabrina crop. I would say we probably don’t end up seeing too significant of an adjustment. I know there was a lot of worries early on that maybe we were going to see delays in that planting because of the dryness that push back soybean planting, which ultimately pushes back harvests.
00;04;08;28 – 00;04;21;07
BRANDON
But if you look at things versus historically they are on pace with, that’s free crop. And in fact, they’re actually even a little bit ahead of place with planting so far. So I don’t know. I mean, I wouldn’t expect a lot of changes, I guess. What are your thoughts, Bret?
00;04;21;10 – 00;04;43;08
BRITT
Yeah, I mean, I think that there’s two sides to that coin. You know, you’ve got a producer who, as you said, has seen prices slide, which has cut into their potential revenue. And on the other side of that, you’ve got guys who have good moisture, who have got an opportunity to get in in early to timely fashion and maybe potentially bring some additional revenue back to the table.
00;04;43;08 – 00;05;01;27
BRITT
So when it all washes out, I think it will be interesting to see how the dust settles on that, because you could talk about it from both sides of the table and not necessarily be wrong. Switching gears a little bit. Brandon coming back closer to home, you know, it’s mid-February. While we’ve had some beautiful weather here in the Midwest, it’s still going to be a couple of months before we see planters rolling.
00;05;01;27 – 00;05;13;18
BRITT
But as you’re talking with producers on all crop corn, Brandon and new crop, let’s start with all crop first. What’s your advice to folks out there who’ve got underpriced corn on price, soybeans? What should they be doing?
00;05;13;20 – 00;05;37;11
BRANDON
Yes, And anything that’s still left in the bins are in commercial storage waiting to be priced. I think it’s pretty prudent to be proactive with that. Make sure that you’ve got targets out here that are relatively close to where this market sitting. Right. This thing is really drifted away from us and any topside opportunity is likely to be relatively subdued due to how large our inventory is right now and how large that pump price inventory is.
00;05;37;11 – 00;05;55;19
BRANDON
So probably be pretty quick to cut bait with that wrapped corn. And if you’re wanting some sort of ownership opportunity, do so by way of call options. You know, go out and spend 10 to $0.15 to reopen topside. But don’t let this thing slide away from us anymore, especially with what the cost of caring is with interest rates this year.
00;05;55;21 – 00;06;12;13
BRITT
All right. Let’s pivot a little bit. New crop caught there, too. We’ve seen prices slide a bit. Folks have been rather slow to come to that market as we talk to commercial elevators across the country. And they have a relatively small forward book on what are you recommending folks to do out into 2024 for corn means?
00;06;12;16 – 00;06;36;01
BRANDON
Yeah. So for 2024, you know, the name of the game is definitely being proactive and being forward looking. I’m really excited about where margins are at right now despite lower prices. We also are looking at a lot lower input prices and cost to the producer. So even with prices that are in that upper four 7480 range, we still have some really good opportunities from the profitability standpoint and return for ACRE.
00;06;36;01 – 00;06;53;23
BRANDON
So we definitely want to take advantage of those and whether that’s going out and making some sales or whether that’s just putting some coverage on with puts on the downside to make sure you’re protecting those margins, it’s definitely worth doing something right. And if you need the confidence to step out and make sales in that 24 market, come in and reopen some top side.
00;06;53;23 – 00;07;08;21
BRANDON
But this is one of those years where our inventory is large enough, our supply chains are large enough that we don’t want to mess around these markets. We have good margins and good opportunities because they could be a lot less opportunistic by the time fall rolls around, especially behind the big South American crop.
00;07;08;23 – 00;07;10;28
BRITT
How about new crop soybeans? What do we do in there?
00;07;10;28 – 00;07;43;23
BRANDON
Yeah, a new crop. Soybeans were definitely kind of of the same tune that, hey, we need to be fairly proactive with this thing. Now, I would say that soybeans can be explosive right? There definitely is more top side opportunity in beans just because of that tighter balance sheet. There are more fickle crop opportunities are still there. I think, you know, I don’t know that the opportunity is there that we had four or five months ago and we were looking at a balance sheet that was around that 200 to 250 million bushel mark, especially now that South America is putting together a good crop.
00;07;43;23 – 00;07;55;08
BRANDON
I think our expectations need to be tempered a little bit. We do still have some opportunities here in this soybean market to make some more opportunistic sales as we get through this spring timeframe.
00;07;55;11 – 00;08;12;02
BRITT
Brendan, it’s been a real pleasure to have you share some of your insights with folks. Just kind of enclosing. You know, we’ve talked about kind of redefining opportunity for the coming year. Give me a little bit of a glimpse into how you think that could kind of shake out for guys. What is opportunity potentially look like in 2024?
00;08;12;04 – 00;08;39;11
BRANDON
So as we look at 2020 for any sort of topside opportunity, especially as we talk about the corn market likely has to come by way of some fairly significant disruption, whether that’s due to some sort of severe drought or more likely than not, it comes by way of a geopolitical issue, Right. Our inventory, our supply is that ending stock number is in a spot once again where the buyer is back in the driver’s seat.
00;08;39;12 – 00;09;02;15
BRANDON
They can afford to be patient. Now, if we have any sort of rallies, these people that are purchasing this corn, whether it’s ethanol plants, whether it’s your processors, whether it’s feed yards and dairies and livestock producers, they can kind of say, hey, I’m going to sit on the sidelines for a little bit. Right? There’s no need to step out and rush to the market to grab up corn when we know that there is over abundant supplies that are not being utilized.
00;09;02;21 – 00;09;20;16
BRITT
And that’s certainly been a common theme that we’ve heard around our office here as of late, which is, yes, I understand you’d love to sell corn at $5 again, but who is the buyer? Who is the buyer of $5 corn ramping up? Brandon, if folks would like to learn more about working with ever again on the risk management side, how can they best do so?
00;09;20;18 – 00;09;36;29
BRANDON
Yeah, if folks want to learn more, they can go check us out on our website ever dot org. Otherwise they can reach out, give us a call at any point in time. We have a lot of folks around the Midwest that are always happy to answer questions on things. Come look it up. If you had any trade shows here the rest of the winter, we’re out and about quite a bit.
00;09;36;29 – 00;09;38;17
BRANDON
Always looking to talk to new people.
00;09;38;22 – 00;09;53;24
BRITT
Thanks to the ever Insights media crew for producing, mixing and mastering today’s production. If you’ve enjoyed listening to from the Furrow, subscribe to our podcast. Tell a friend about us and give us a thumbs up like.
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