Grain Gab – Game On, Blinders Off! – April 15, 2024

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Future trading involves risk and is not suitable for all investors. Content provided in this for educational purposes and is not a solicitation to buy or sell commodities. Welcome to Green Gab, a show where we sit back and gab about what’s going on in our minds and the markets, and how it affects you, our producer, and what to do about it.

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Look, the grain markets are forever moving, changing, downright crazy and sometimes emotional. That’s why we’re here to sit down, look at things holistically, and find a strategic but yet grounded approach to handling obstacles that the market may give us from time to time. I’m Lori Nelson, your host and this is Kristen Steen, my coworker. How are you doing today, Kristen?

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We are doing good. Spring is officially upon us. I’m like, Easter’s over with. Planting is about to begin. We’re breaking out the spring colors. Like, bring it on. I’m energized off of this. How about you, Lori?

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Yeah, I talked to a guy today, and he said, it’s game time game opening day. He said opening day.

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Yeah.

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It was a guy in Iowa. So today is he said it was opening.

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Day, technically April 10th. I mean, that’s crop insurance that keeps easing earlier and earlier. And guys are there ready. I haven’t talked to too many that are actually planting yet, but they’re all geared up. They’re all getting ready to go.

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So yeah our first plant date here was April 1st. And so this week is a busy week here in Missouri.

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Yeah, they’re always ahead of us right?

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Right.

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So you’re I mean you’re kind of full of energy today. What’s in your cup for you? Are you drinking Red Bulls today or what’s going on?

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You know, I had a smoothie this morning, so try. We’re gonna help the health function. Yeah. So how about you? What are you working on today?

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Full fledged water. Get the the big ol basic white girl, Stanley going on, making sure I’ve got plenty of water consumption going on, which we need to talk about markets like this. So we got to be healthy and awake on. Right?

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Yeah, definitely. This month, what have we seen in the markets is we had an exciting day on March 28th on the report. And over a long Easter weekend we kind of lost our thunder. Crude oil has been an uptrend since first of the year. Gold is running higher. We’ve got the wise the report South America is wrapping up harvest.

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I think they’re close to what 80% harvested at this time are U.S. corn is definitely competitive in this world market. And what does that mean going forward? Kristen.

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Yeah, I mean, let’s tackle the big one that I’m still a little like. Did this really happen? I mean quarterly stocks came out report. But the bigger story in that was the planting intentions report. Right. Where they said 90 million acres of corn were going to get planted. And I was to be honest expecting a little bit more than that.

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But when you take the numbers back to what they are, it still gives us, depending on what you plug in for yield, which is still a big question mark, it can still give us a 1.8 to 2 billion bushel carry out. Right. And plenty stocks to use. Right. Still in that 15% ish stocks to use ratio. So historically speaking early cuts in acres tend to lead to bigger adjustments.

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Later on June report we could see possibly some increases.

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We’ll see. We’ll see what spring is like. Certainly. And we can kind of get into this a little bit later. But certainly that being the corn ratio is giving pause to some people saying what do I truly want to have happen here? And outside of that, when you take a look at other commodities, you look at crude oil, gold, cocoa.

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I mean, don’t be messing with my chocolate price here, people. And that is gone through the roof. The funds have been interested in other commodities, there’s no doubt about that. They have been adding to their long positions on that. Some for good reason. Right. When you consider what’s happened with South Africa and the weather over there, that’s why cocoa is doing what it’s doing.

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But others that it’s kind of unknown as to why gold’s going up or why funds are investing into that. Some are saying, well, they’re not entirely sure where we’re going to be at from an economic standpoint. So there are uncertainty around the stock market, which then lends the opportunity for that funds to be out of the stocks and back into commodities.

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But the hard part about that is, is the knees start to say cool, like, great. They’re going to be in all commodities, right? They haven’t been with corn and soybeans. And that’s been the big issue. But for good reason. Right. When you take a look at those balance sheets, that’s the reason why they have such a big short position on from that standpoint.

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I mean, there’s more looming factors on top of that, right? It’s not just the U.S. balance sheet that they’re looking at, but the world balance sheet. And you’re talking about South America’s harvest almost being over. And while there’s continue to be a few cuts here and there, there’s still plenty that we’re sitting on from a global perspective. Right.

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And so with that harvest wrapping up, what’s interesting to watch on that is as their doors start to close, because getting out of the glut of harvest, we’re finally competitive in the world market for corn, not for soybeans, but for corn. We are we’re starting to inch away from Brazil that way, which is awesome news, right? Can we start to see some exports?

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Yeah, the issue there is we haven’t. And I would argue that a lot of the reason for that is because we have very reluctant sellers on our end aka the farmer. Right at these prices, they’re like yep I’m going to focus on planting. I’m not going to worry about it right now. And so there’s nothing really for that to sell until that starts coming to market from that standpoint too.

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So it’ll be interesting to watch how that picks up, especially as South American starts to get done with the last 20% that they have as well. Right. What do we start to look like from there?

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So you’ve talked about, you know, the American farmers, not a willing seller right now. So what have we been doing with our producers here in the last month.

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Yeah. So like we talked about last month, we’ve really been honing in on that goal and readjusting the targets to have a plan to get after that, especially as we get into planting season. As you know, the phones have gotten a little quiet this week, right? Their minds are set on something else. So that’s what we were busy with all up until this past week, is making sure guys are set and ready to go with their marketing plan.

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Going into planting season now, it seems to have been changed a little bit and the mindset is more on. We’ve got May coming up for expert contract expiration, right? And what needs to be managed there. For a lot of our guys, it’s how you do it on the rest of the old crop, right? Do you have hedge to arrives or board positions that we need to be setting basis on or rolling out to July?

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Do we have plots that we can either be selling and selling the cash, right. And having the extra value in those puts add to the lower cash price that we have right now. Right. May options are going to be expiring here in a couple of weeks. Do we need to be managing some of that. But then even with some of the new guys that we’ve been talking with, right, there’s a lot of basis contracts that are working out there and whether it’s basis contracts or anything like we just discussed, that all has some sort of action item behind it.

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And this is your friendly reminder, right? If you do have something, make sure you manage it before the last week in April. And specifically to the guys that have basis contracts on be very, very wary of rolling into a carry market, right. Because then that makes your basis contract worse. You the carry doesn’t work for you in that instance.

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It works against you. Right. And then you’re still open on the futures in a market that still has plenty of downside risk. So be very careful about that. We’re all we’ve been helping producers keep their heads up on straight and focused on where they are and where they need to be going forward.

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Sure. And that just kind of leads into what number number eight is, you know, helping avoiding tunnel vision and what we see, you know, in the summertime when we’re working with producers is sometimes they’re tunneled into what they’re seeing in their fields and what’s in their specific area, but trying to not get tunnel vision and just keep that big overall picture of what’s going on in the market.

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So you’re participating in that market opportunity when given that opportunity?

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Yeah. When you think about it, you’re from Missouri. I’m from Iowa. If you look at the Drought Monitor, you and I have both been extremely dry for a very long time. Right. And while we’re not in the summer yet, that still seems to be the number one comeback as to why I don’t want to sell corn right now.

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And I’m not saying just go and dump it. All right now, I’m just saying when we’re having these readjusting target conversations, it’s all but it’s pretty dry, right? And it’s funny how, I mean, since Easter, that sentiment has completely changed. And while we still have more ground work to make up for the deep soil levels, it’s the sentiment, the feeling, the positivity around growing a crop has certainly changed with the rain that has come recently, so that’s really good to see, right?

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We need the rain. Keep it coming.

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I would agree, I would agree with you there. The sediments definitely changed, gotten a little bit lighter, a little bit more forward thinking I guess on, you know, having the ability to want to make a sale.

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Exactly. And that I mean, that’s the big picture to keep in mind when it comes to that is instantly whether can change like that. We went from a three year drought to now all of a sudden we’re feeling a little bit better. Over a two week period. Argentina experienced the same thing this last fall. That’s part of that big picture.

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And then the other part of that is still going back into that planting intentions report that I’m probably still caught up on a little bit. I would agree with the USDA in that we are going to have fewer acres of corn planted this year compared to last year.

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Sure, at 94 million from last.

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Year. I mean, naturally, if your acre rotation that you typically find yourself in. Right, the part that I struggle with is the fewer acres than what the U.S. ag outlook form said, right? Meaning at that time we were still closer to 2.8 being the corn ratio. And what I mean by that is the bean price compared to the corn price was at 2.8 to 1.

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Right. And any time we’re near that closer to the 3.0, it starts to favor beans. Right. And that was when the US AG outlook farm came along. And now that we were getting closer to the planting intentions, what happened in the market? Beans fell out of bed. Yeah right. And corn stayed relatively steady. And that ratio dropped drastically.

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More to like a 2.42.5 to where if you’re re crunching the numbers and you have the opportunity to change your acre rotation, you may take a look at it because profitability wise says maybe actually corn isn’t such a bad idea. And we actually had a few guys that did change that compared to the winter meetings that we were sitting with them, which is a rare moment.

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Right? I mean, most farmers like to stick to what they’re doing. We’ll see how that comes along this spring.

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Yeah. As the planners get rolling, I was just going to say, Kristin, if they’re on the corn, do they actually turn it off?

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Yeah, exactly. Prices decent? I’m not going to say good. Especially for what we’ve seen in the last few years. But compared to breakeven, we’re still a mostly profitable numbers there. I mean, there’s opportunity on both stands, but I think the greater opportunity if you’re just taking a snapshot in time right now, the opportunities in corn for a lot of producers, that’s going to be dependent.

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It’s going to be area dependent. Obviously. But by and large, that seems to be the field that we’ve been hearing the last month or so. That’s why I think you could start to see that number change going into that June report on what it was actually planted.

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Sure. And we’ve all counted dollars per acre. You look at some of those break evens and it’s pennies. So definitely environmental change.

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That goes back to that overall arching rule right. Keep the big picture in mind. Big picture. We’ve got plenty of stocks worldwide. We’ve got a good amount of stocks on corn domestically beans a little air you can always import. Right. It just depends on what that demand looks like. And even with that cut in acres, it doesn’t cut it quite yet.

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To really start saying, oh, we are in a bull market. Right. And so this goes back to every opportunity you get. Are you ready to capture on that opportunity.

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Right. Having your targets in place and going to be summer soon. And there’s always emotions around.

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To be ready to manage those emotions. Yeah absolutely. Yeah. Absolutely. All right Laurie, so you’ve asked a lot of questions and I feel like I’ve done a lot of the talking. I’m going to turn it back on you now okay I ask the questions finally okay. So I have these handy dandy question for human cards that I’m going to pull on in here.

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Okay. So what’s the best concert you’ve ever been to?

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The best concert I’ve ever been to. I would cry pretty typical of me, but I would say George Strait.

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how come.

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My sister and brother in law went with us? And it was kind of a last minute deal for them to join us. And, well, George sang to my sister and I, he was just saying to us.

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Saw straight through you, right? Right into your heart.

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Right? Right up there to the third balcony. You just right to it.

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So Taylor Swift has not been on George Strait is what you’re telling me.

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Not in my opinion.

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All right, one more question. Just because. Just because I like to.

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Your your title, your opening the best. I like to keep things a little tight. I mean, yes.

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So the reality is we all have to get to know each other. And it’s really hard to do so when we’re just on a screen to people. So I’m just trying to let them open up and get to know who Lori Nelson is here. Besides YouTube star. Yeah.

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Okay. All right.

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What historical figure would you like to go on a date with? And I mean historical could just be 20 years ago. They could still be alive.

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Just saying. Oh, that is getting to the best.

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So you can’t say Mr. Nelson.

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Yeah, okay. He’s a given. Okay. I’m going to step out and say I have two. So I’m going to say my first one, is, pro rodeo world champion bareback rider Tim O’Connell. And if I could spend a half a day with Tim O’Connell and his.

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He’s historical.

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I think he’s historical. Maybe he’s. I mean, he’s not old enough to be.

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Okay. I haven’t you’re getting to be cougar status there, Laurie.

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I look at Tim’s passion for what he does. It’s. Yes, it’s a sport, but it’s also his business. Yeah. And how?

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Like farmers, right?

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Yeah. Like farmers. How can we carry that passion in our day to day that he obviously is very passionate about? Just a great individual to get to know. And if there’s anything that I would want to spend time with Tim doing is maybe, just maybe, I could ride the spur board and he could give me some tips.

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On the bourbon idea, what you’re talking about right now, all I hear is Lori Nelson wants to date Tim O’Connell. You hear? Heard it here first, folks. That’s all for today.

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Do you want to know my second one?

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Let’s hear.

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It. It was going to be, George Strait.

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Look at Mr. Nelson. Both men are still alive and well. So Matt’s got some competition going here, but.

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Well, maybe on that. We should just wrap it up. Thanks for joining us that episode of Green Gab. If you like what you hear, please hit the subscribe button. That really helps our algorithms. Thank you to page and the insights team for making us look good. And until next time, keep your head up and feet grounded. Cheers.

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Cheers.