Market Analysis with Kristi Van Ahn-Kjeseth

[Yeager] Export business -  or the lack thereof - has pressured much of the grain trade as the strong American dollar dampened global interest in U.S. commodities. 

For the week …

The nearby wheat contract lost 17 cents and the March corn contract fell 3 cents. 

The meal trade helped steady the soy complex as the Brazilian weather stayed in the ideal category.

The March soybean contract gained 2 cents while March meal cut $1.90 per ton.

March cotton contracted $1.23 per hundredweight. 

Over in the dairy parlor, February Class Three milk futures improved 12 cents.

The livestock market was mixed. February cattle added $3.40. March feeders put on $3.63 and the February lean hog contract fell $3.37. 

In the currency markets, the US dollar index added 107 ticks. 

February crude oil found $3.80 per barrel. 

COMEX gold expanded $20.20 per ounce, and the Goldman Sachs Commodity Index moved almost 13 points higher to settle at 552.95.

Joining us now is regular market analyst, Kristi Van Ahn - Kjeseth. 

Kristi Van Ahn-Kjeseth: Hello.

Paul Yeager: Happy new year.

Kristi Van Ahn-Kjeseth: Happy new year.

Paul Yeager: But we're stuck with some of the same issues from the old one. Yes, it comes to wheat. however, there is potential. We'll get to that in a minute. Let's talk about the current state of affairs. Russia continues to cast this large shadow that's impacting the American farmer when it comes to wheat. Do I still read that accurately? Is that changed?

Kristi Van Ahn-Kjeseth: No, I think that's still a case. You do have their production down taking slightly. So I mean that is a benefit. But in general if you look at world carry out of wheat, it's actually at a very low stage. You know, one of those stages we haven't seen since I think like 2012, 2014. And so it's got friendly statistics behind it. But the U.S. is not part of that friendly situation. We have plenty of wheat around here. And that's the problem. I think overall.

Paul Yeager: And moisture coming this week and we talk about the I-70 is going to impact cattle a little bit, but it's also going to give a blanket if it doesn't already have a blanket on that wheat crop. So if I have a producer sitting in there and in Kansas and Oklahoma, what am I thinking about this weekend?

Kristi Van Ahn-Kjeseth: Yeah, I for the most part for wheat, I think the word patience is what brings true with me, for the most part, is that you hope that if prices aren't, great, at least you can get the big yields and, help yourself out that way. But I think wheat has that story more of a spring wheat story, honestly, I think, than anything. But you look at those world carryout situations and wheat and that is probably that friendly statistic. I think overall it's just where is the spark we made new lows and new contract lows in all three wheats, about a week and a half, two weeks ago. And we really need to build off of that to try and get some extension, some retracement counts out there, and they're just not there right now. And I think everyone for the longest time has wanted to be friendly. Wheat and everyone for the longest time has wanted to be on the long side of wheat. But it just can't find that spark.

Paul Yeager: You set yourself up for this question. Let's do this one. We have a question that came in via social. Scott in Wisconsin wants to know what commodity has the most upside in 25, and which has the biggest downside in 25.

Kristi Van Ahn-Kjeseth: Yeah. So I think spring wheat is, a market that we're watching pretty closely. if you look at the Drought Monitor from the end of October, everything was lit up. Since then, we've had great improvement in so many areas, and it really took that bullish situation out of wheat sales for winter wheat country. Now you start to see where it's dry. And I think if you're going to have that drought start, which people I think want to talk about the dry forecast that's out there for summer, and the, you know, the tree ring studies and all of that. I think you want to talk about that. But I do wonder if that's not going to start in the West, because that's where you have the dry concerns. And that could potentially be in spring wheat country. I also think there's going to be a lack of acreage for spring wheat. I think that corn is going to be that winter in so many areas. So I think if you want to do see a spark, it could be in spring wheat. But in the same breath, I'm itching to get on some Nov. 

Paul Yeager: So if you had to say the one that has the what is the actual question? What has the biggest downside? Yeah, but you're also saying that soybeans have the potential to swing up too.

Kristi Van Ahn-Kjeseth: Yeah. I mean, have you really had anyone that wants to be a friend of beans for a while? Yeah. So, I'm still in that camp. I mean, that is a conversation that I have talked about a lot over the last two weeks is soybean marketing, along with corn marketing. But, soybean marketing and $10 has been a level that's been very tricky for soybeans to be able to get through. And I just think that soybeans are in this spot. That's the mid zone that if we come into this next administration talk tariffs, and you continue to have that ideal situation in Brazil, you can see beans fall down to that $9.11 to even $8.55, which is not what we want to see happen. And that's futures prices. But in the same breath that you come in here and you don't have those acres and we do have a drought, you're not prepared for that, I don't think. And we know that President Trump wants to get ahead of these tariff talks. And we've been through this once with China. So China knows kind of how to go about this. I think those conversations hopefully can go better. I'm more concerned about the tariff talk that's, been kind of talked about between Canada and Mexico in the US than I am the ones with China.

Paul Yeager: Stories written late this week about relationships, waiting to see what president Xi is going to do. Is he going to come to the US for the inauguration? Is there going to be the talk? But you mentioned trading partners one and two for the U.S. with grain that impacts corn. We had a story that happened, right before Christmas about biotech corn in Mexico. Did that have any carryover through Christmas, new year's for you and corn?

Kristi Van Ahn-Kjeseth: I think that corn actually has friendly statistics behind it. Your carry out of, just over 1.7 billion bushel carryout is, a decent carryout. It's, you know, well below 2 billion bushel carryout. demand is ran really, really hot. And so I think you can justify getting to it. And after that December 10th report, I actually giggled out loud when I saw that our carryout level was much higher and corn was a good $0.30 to $0.50 higher than where we currently are. So I think the prices in general are very suppressed right now too. And so I think that you could justify that corn one. We moved on corn marketing, over this last week. And one of the biggest things is that I feel like corn is going to have a hard time going at it alone, and I can't find, the short term friendly nature in soybeans and wheat to be able to support that corn market. And it's just been tricky for it to support itself.

Paul Yeager: So nobody's really going to be able to go buy themselves. They need a dance partner. They do. And you if you had to pick one, it sounds like maybe Wheat's the partner and that could be June, right? July before we see that.

Kristi Van Ahn-Kjeseth: Yeah. For example, a couple days ago you watched, soybeans. They had a, like a 12 cent trading range and, corn had like a 3 cent trading range. But corn was consistently trading how soybeans wanted to trade. Soybeans traded negative also. And corn was down like a half cent. And then soybeans were able to find those buyers come in and all of a sudden corn was up a penny. And so it just seems like it's tethered to that. And to be honest, they're completely different situations. Corn has friendly fundamentals. Soybeans have disaster fundamentals, especially world wide corns manage money holding that. You have funds, that have continued to buy corn. We'll find out, what they did last Tuesday to Tuesday later. But, they are long corn. Where in soybeans, they're short yet. And so I think they're just so different. They're having a hard time correlating together.

Paul Yeager: Okay. Let's talk about those who might still have 24 crop in the bean. Enough. No plan for it. Are you writing a number down right now? Of course. You always kind of have to have a number. Is there a number that you would write on a piece of paper for corn?

Kristi Van Ahn-Kjeseth: Yeah, it was this week. But if you wanted to say, hey, it's I want something higher. Right. Because I think everyone wants to shoot for something higher. I think that you could potentially look to like a $4.68 level. So $0.10 higher above that. You're looking at more $4.78. the upside is $4.97. And so I think those are all price counts you can think about. But in general I think they're going to be tricky to get to unless we have one week from now, a crop report that offers a slew of information and quarterly grain stocks, that will be a nice check in to say how hot is demand right now for corn?

Paul Yeager: You mentioned the low side target or not target, but low side potential for beans. I don't think I caught a top side if a couple of things happen. Do you have something in beans you like? Yeah.

Kristi Van Ahn-Kjeseth: Unfortunately you know, you're looking at, you know, for March soybeans, you know, $10.27. But if you really wanted to go higher, I think that you could potentially start to talk about like $10.46. That's a retracement count. so nothing close. And so it's kind of that tricky spot, you know, are you talking near-term does the grain need to be sold in the next month or two or are you talking, extended, you know, are you holding it for a while. Are we talking 2025? Because I think there's potential for some higher counts out there. But if you're talking that near-term, I think today was a perfect example of you can only get so far, before you hit those solid retracement counts.

Paul Yeager: Cattle market is kind of it's that wait and see. Right now we're trying to figure out how much we consumed, how much was purchased. But that already seems to be in the background. And there's buying happening.

Kristi Van Ahn-Kjeseth: Yes. So when you look at the cattle markets, you're actually looking really swell on the charts. so it looks good. but the problem is that you're starting to get into some resistance points or resistance points. So let's talk live cattle. you're at two standard deviations away from linear regression. For a technical, your upper price counts for the fourth price counts are 200 to 202 for live cattle. And that is not far away. And so that makes me nervous of how far can cash drive this. You also have managed money very long cattle. So you know, are they going to continue to add length or are they going to go to record length. But you start to get a little bit worried in this area that, can cash do it alone to support that? We're making new contract highs, which is great to see. seasonally we have, until, you know, February time frame, but I get a little bit nervous past that point that can we see the numbers improve into that? You know, March April time frame. Pair that with seasonals. Pair that with the fact that we're at third and fourth price counts. And two standard deviations. It gets me nervous. And I think even if you are friendlies something should be done here. Just to kind of put a floor underneath you because there's a lot of a lot of money into that.

Paul Yeager: And a lot of money in feeders too.

Kristi Van Ahn-Kjeseth: Yes. And feeders are a little bit different there at third price counts versus, you know, approaching those fourth price counts, but kind of that same situation that you have a lot of money on the table. You've rallied back so well, you do have a couple more months of seasonal tendencies, but I wouldn't risk at all in those seasonals.

Paul Yeager: Do you get the sense that market is very independent of cattle or is it dependent on other factors?

Kristi Van Ahn-Kjeseth: Yeah. So for the longest time I really thought they were dependent on the stock market. And just so tied closely to any kind of concern that we might have. when you talk recession or any of those situations, but cattle did a phenomenal job shaking off the stock market last week. You know, there was one point that the Dow market was down 700 points and cattle was able to still be slightly positive. And typically that can't happen. And so you do have that cash trade being able to shake off the rest of those outside markets at the time. but, you know, eventually we're going to get into this next president's and I think tariff talks are going to hold such a huge amount of information for agriculture in general.

Paul Yeager: Same for hogs. I mean, is it dependent on what presidential action is?

Kristi Van Ahn-Kjeseth: You know, hogs right now we need exports to pick up. Exports have been horrendous for hogs. You have managed money, record long hogs. So I think that you're probably starting to see some liquidation there. But I think the most part is that exports have been so poor. I think you can relate it back to the US dollar, how strong that is. I think that's going to shut off a lot of our exports, but we're already seeing it with the pork and I think that's been the most detrimental to pork. the one positive when you look at that is that pork is at, hovering around the 100 day. Really not far from the 200 day moving average and some retracement counts. So we should be starting to see some support.

Paul Yeager: All right. Thanks Kristi. Good to see you.

Kristi Van Ahn-Kjeseth: Thank you.

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