In The Grain Feed, guest host Phil Plourd is joined by a rotating cast of analysts to discuss what dairy and livestock producers can be doing to manage their risk. This week, Phil is joined by Jake Kingsley and Verl Prather.
Questions or comments? Topics you’d like to see discussed? Contact us at Insights@Ever.Ag or give us a call at (312) 492-4200.
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Hello peace fanatics and green geeks, welcome to another edition of The Grain Feed, brought to you by Ever Egg. Each week we bring you updates on the markets with unique perspective from an amazing team of analysts with the intention of helping livestock, feeders and dairy farmers manage risk. I’m Phil Plourde filling in for Jim Matthews on assignment this week.
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That’s the bad news. The good news is that we have two exceptional panelists on board for the ride today. First, from the Dallas-Fort worth area, we have Jake Kingsley, our director of feed procurement and next Real Profit from Atlanta, Illinois, who works on our grain marketing team. Hey guys.
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Good afternoon for Costco. And Phil.
00:00:51:29 – 00:00:56:04
Going great. Going great. So Aussie Gate very exciting. We’ll get to that in a minute though.
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I’m starting to think Jim takes a day off when he knows I’m going to be on the recording.
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You think he’s avoiding you? Or maybe he’s punishing you by putting you on with me? Well, we wouldn’t want to talk about that way. All right. Let’s go ahead and timestamp this episode. It’s about 2 p.m. central time on Thursday, April 11th, in our markets today, nearby corn trading about $4.34 per bushel, up $0.03 from a week ago.
00:01:19:09 – 00:01:54:06
Soybeans are at 1165, down $0.17 on the week. Soybean meal $331 a ton, up a buck. Class three milk, $17.23 for 108 on the six month strip. That’s up $0.48 while class four hanging out over $20 2073 up $0.09 earlier today. The USDA released its latest World Agriculture Supply Demand Estimates report. The April numbers came in. They leaned bearish in my opinion, most notably on the ending stocks lines.
00:01:54:06 – 00:02:28:07
Corn ending stocks 2.122 billion bushels. That was down 50 million from March, but up about 110 million from the analysts guess consensus estimate. Soybeans came in at 340 million bushels on the ending stocks line. That was actually up 25 million and ahead of expectations for 317. I would say that the other widely watched data came on South America crop estimates, and here USDA delivered exactly nothing or not much.
00:02:28:09 – 00:03:04:24
Brazil corn crop 124 million metric tons. Same as March above expectations. Brazil soybeans 155 million metric tons. No change from March, again ahead of expectations. Argentina. Soybeans. No change 50 million metric tons, just a little bit below expectations. Argentinian corn 55 million metric tons, down 1 million from March. Just a touch below expectations. Barely moving the needle. Virgil, I’m no grain market expert, but this seems like a pretty sleepy report.
00:03:04:24 – 00:03:31:11
Yeah, I feel you hit the nail on the head. Right? And as he mentioned, kind of in the opening, we don’t always expect the April wise report to bring a whole lot of fireworks. along with it. And today’s report certainly failed to create much enthusiasm around the corn and soybean markets domestically. As you mentioned, corn ending stocks were lowered by 50 million bushels as a result of increased demand.
00:03:31:14 – 00:04:01:15
You know, the USDA decided to tick up ethanol usage, which was to be expected. Right? We’ve had and we’ve seen good corn demand for ethanol over the course of the last handful of months. What was also interesting is they took feed demand up a hair, which has been kind of under question as of late, if you will, on the soybean front, really the export demand estimate decreased and this continues to be the overwhelming trend, right?
00:04:01:15 – 00:04:29:19
I mean, we’ve now seen a 14% drop in soybean export expectations since USDA’s initial estimate back in May of 2023. And so basically, you remember last June when we had that big surprise on planet acreage. Basically, we lost 4 million acres of soybeans, mostly to corn. Right. But that has almost been completely offset by the lack of global demand for U.S. soybeans.
00:04:29:21 – 00:04:55:18
Both markets ended up closing the day lower, and some of the negative reaction at least appears to be tied to USDA continued optimism surrounding South America’s crop. I mean, they have thus far been completely unwilling to entertain the production estimates of private firms, which in some cases are much lower than what the USDA has continued to say in their velocity reports.
00:04:55:20 – 00:05:05:07
I mean, they’ve been rock solid, right? I mean, that Brazilian soybean line is just not budge. And I mean, we’ve seen is 130 somethings right out of private forecasters. Yeah. In Brazil.
00:05:05:07 – 00:05:22:27
That’s right, that’s right. The gap is is continuing to widen as well as the USDA kind of stays put. And then on top of this kind of the cherry on top of the cake, right. We saw that corn export sales data that was released early this morning came in at a marketing year low for the week.
00:05:23:00 – 00:05:57:11
Just from a high level. I’m not granular in the day to day of corn trading, grain trading. But let me just give you my perspective and you tell me if I’m crazy. I see 2.1 billion something bushels on the ending stocks line. I see a stock to use ratio today, 17.2%. And I think, well, I don’t think 450 ish corn is radically underpriced in a world where we’re live staring at 17.2% stocks, U.S matter of fact, we might be overvalued against history in those kind of numbers.
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So it’s going to take a big change to the ending stocks line to get me excited. Is that way too simple a way to look at things?
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Now, I agree with you that the stocks to use ratio is. It feels pretty darn heavy right now. And to your point, when you look back at historic, I mean, barring any, you know, production issues within the US this summer, it does feel like corn path of least resistance is lower at this point as far as South America goes.
00:06:28:28 – 00:06:49:12
And corn. I heard some noise about rain in Brazil, maybe slowing down soybean harvest in places, but also helping the Sarafina corn crop get going. So it looks like South America is going to bring plenty to the table in both corn and soybeans this year. That seems to wait. Whether I mean, we could be quibbling around, you know, 20 million metric tons.
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That’s not nothing. But bottom line is, good crops in South America makes a huge difference.
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That’s correct. And, you know, I think that the overwhelming topic as of late, still in the headlines has continued to be on the supply side, which makes sense for this time of the year. But you know, that demand question mark is also extremely important. And there’s still a lot of concerns surrounding China in that respect.
00:07:14:16 – 00:07:30:18
Jake, I’m guessing that our feeder clients are saying, yeah, 17.2% stocks to use. Why is my corn price over $4 not likely to change tomorrow morning based on this report? We’ve been living with this for for a while. How are you seeing this report maybe impacting the feed world?
00:07:30:18 – 00:08:10:17
Yeah, I think we’re seeing it as as a continuation or a reaffirmation of our sentiment that this market is bearish and should at some point provide opportunity to our feed buyers and our end users. You said it, 2.1 something billion bushels of corn. That’s a big number. why are we not at $4 corn? I think the answer, pretty simply, is that crude is still pretty steady here in the mid 80s, and soybeans have to maintain some sort of value to ensure they get the acreage rebound that they’re projecting.
00:08:10:17 – 00:08:34:23
And so it’s just a little bit of support from some other commodities that’s keeping corn strengthened here for the moment. And you know, we’re in the time of year where you see normal risk management around weather headlines. Primarily we’re talking about what’s the weather in Brazil doing to the finishing of their being harvest and and kicking off that second corn crop.
00:08:34:25 – 00:08:57:27
We’re very near two or entering the planting window for many folks in the Midwest. And a couple of weeks ago, there were whispers that, hey, we’re a little bit concerned of how dry we are. And then I hear talks yesterday of folks that are like, well, we may not be able to get out there and get to planting quite as early as we thought we could, because now it’s just a little too wet.
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And by too wet, I mean too wet for the tractor to get over the ground. But in a matter of days they’ll be able to do it and it’ll be ideal conditions for what they’re planting. Right. So I call.
00:09:07:18 – 00:09:16:25
This the two season, right? Yes. To be too wet, too dry, too cold, too hot, too soon, too late. It’s part of the fun of planting season. It’s always to something, somewhere.
00:09:16:29 – 00:09:37:13
Those ultimately are pretty unexciting headlines. Folks are asking us on calls throughout today and yesterday. You know, I haven’t heard much of anything coming out of South America. What’s going on down there? We didn’t have a whole lot of excitement coming out of this report today. Hey, what’s going on with these markets? Why am I not hearing anything?
00:09:37:15 – 00:10:05:08
Well, you’re not hearing anything because they’re boring. They’re really uneventful, which means that farmers are out there doing what they normally would do in most years. And that tends to be a good thing for feed buyers. So while we’re not seeing it materially play out in lower prices basis wise, or breaking corn futures to $4 or soybean meal futures to $300, we are again well off the highs of the last few years.
00:10:05:08 – 00:10:32:14
We have pretty limited concerns for upside price risk on all of those fronts, and we think that we can just continue to be patient here, both on the remaining old crop needs. We need to protect, as well as anything that you got to go out and do in the new crop space, that there’s potential that at some point this thing tips over a little bit and we get better prices, yet we get through the planting season and these folks run out of things to do in the field.
00:10:32:18 – 00:10:48:27
They’re probably going to get in the cab of a truck and start taking some grain to market. They’re going to get a little cash flow and being ready for the next crop to come in here this fall, and that might be what it takes to get us another move lower in feed prices. It’s just a matter of when.
00:10:49:01 – 00:11:21:09
I think now that all that said, we are seeing the occasional dairy producer or other feed buyers come in and say, hey, I’ve got this offer for next year’s crop on soybean meal basis, canola basis cotton. See some different commodities just in very select pockets. It may be that the vendors got a good relationship and a very limited amount that they’ve purchased for the next window that they’re like, hey, we want to go ahead and get a little bit of this off the books.
00:11:21:09 – 00:11:33:08
Do you want it? There are a few instances like that where it’s worth talking about and looking about getting a little bit of early coverage on the next crop year, but by and large, I think we can still remain patient.
00:11:33:10 – 00:11:56:20
For some of Jake’s commentary there, he was sort of alluding to grain in the bin in one way or another. Kind of an interesting time of year. Lots of grain on farm right now. We’ve seen some basis, if I’ve read your commentary correctly, like the grain elevators anywhere are saying, look, you know, these guys are ready to go to the field, we better buy some corn loose from them before they disappear for six weeks.
00:11:56:22 – 00:12:12:29
And we’ve seen occasional Jake talk about basis, you know, sales, if you will, are cheap deals and in parts of the world. But we’re also seeing some little basis elevation where people are like, you know, let’s get some of the stuff that, you know, into town. This for the tractors roll hard. Is that accurate. And how do you see that evolving.
00:12:13:06 – 00:12:38:16
Yeah that’s correct Phil we definitely saw some strengthening of of corn basis in particular over the course of the last couple of weeks at ethanol plants and and as you mentioned, they see the writing on the wall. Right. They know that the farmer is going to basically put his cell phone down and focus solely on getting the next crop into the ground.
00:12:38:16 – 00:13:06:17
And they know that it’s likely coming sooner than later. So they tried to get as much as possible beforehand, especially kind of riding the wave. A little bit of that perspective plantings report that Jake had mentioned as well, with the nice pop in corn futures there for a little while now. What we’ve seen more recently is that on the other end of this thing, when producers start to go to the field, you know, these buyers have prepared for it, right?
00:13:06:17 – 00:13:50:21
They knew this time was coming. Some of them are going to on site stored bushels that they’ve held in a pile, potentially since since harvest. And they’re starting to pick that up in order to rely less upon fresh corn coming across the scale. And so we’ve actually seen some basis in areas that back off a touch here, as the weather has kind of gotten better and more fit for the producer to be back in the fields, you know, going forward, there’s always that opportunity for basis if if folks get in a pinch and then likewise, you know, expect to see some weakness come from rainy days or rainy periods this spring.
00:13:50:21 – 00:14:11:16
Nonetheless. I mean, on a planting note, we have started to see some planters roll around me and in in my neck of the woods, if you will. Soybeans are going into the ground the last couple of days. We we miss some rains here and there that we’re forecasted. Although to your comment of being too hot, Sunday’s forecast is for 80 degrees.
00:14:11:19 – 00:14:26:16
And there’s actually some concern that that 80 degree weather could, encourage the soybeans to come out of the ground in a very, quick manner. And we’re not quite out of the risk of seeing a frost around here. Yeah.
00:14:26:16 – 00:14:35:14
Too cold. There we go. Too hot to cold, Jake. George Strait saying Amarillo by morning that you are leaving the great state of Texas.
00:14:35:14 – 00:14:38:03
The rumors are true, Phil. The rumors are.
00:14:38:03 – 00:14:52:03
True. You missed like I left New York. Like in 1996. I still haven’t had a good piece of pizza. When you leave Texas, what are you gonna miss? The big pickup trucks. The longhorn cattle roaming on that side of the highway.
00:14:52:03 – 00:15:13:25
I guess from a food perspective alone, what I’m going to miss is there’s really good Mexican food down here. Of course, Tex-Mex. One of our favorite restaurants is a really nice sushi place. But outside of food, some great flight opportunities, very mild winters, something you guys could have taken advantage of while I had a place to host you.
00:15:13:25 – 00:15:26:11
But nobody ever showed up. I’m always flying to Chicago in Wisconsin in February, I don’t understand. Yeah, we’re a couple short weeks from heading north and returning to a bunch of family in Kansas.
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So are we going to increase our wheat coverage as a result? Are we are we going to start focusing on wheat more?
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We could we might, we just might.
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I will say I live in a Tex-Mex food wasteland. And so I do enjoy my Texas visits mightily my casino this week. As a matter of fact, I had a bowl of chips there by 7 p.m. first day. There you.
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Go.
00:15:46:24 – 00:16:05:09
All right. Well, Vernon, Jake, that’s going to be a wrap for today’s show thanks to the stats crew. Ever insights for the data and charts. And thanks to the ever AGD media team for making us look good. Last but not least, thanks to our viewers for tuning in. As Jim likes to say, we love your feedback. Contact information is on the screen.
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