Market Plus with Don Roose

Paul Yeager: Hello, everybody, and welcome to the May 24, 2024 installment of Market Plus. Back with us, Don Roose. Don, we could have spent the full, you know, market analysis segment talking about the weather. We have some questions about whether in the first one is about weather forecasts. And we're going to start with Kevin. Via Facebook. Kevin, just tell me where you're at, what state? Next time you submit a question. Thank you. Just I'm not able to tell what are the summer weather forecasts for China, India, Canada and the United States?

Don Roose: Well, the number one thing is we're in a La Nina. So that means that we're supposed to be warmer and drier. But it looks like, for the most part, China so far starting out not in that big of a problem. You know, I think the big area we're going to watch going forward is what happens with Brazil's crop next year as they're supposed to have a much larger crop. Again, as far as an acre standpoint.

Paul Yeager: World weather. Did you expect what happened in Russia and Ukraine with weather to be as big of an influence in wheat like it has been this year?

Don Roose: Well, I think when you always look at the largest producer, you know, you have to be very careful. Russia is the largest producer. So, you know, right. I think they're on guard anyway. From a watch standpoint, they've got a lot of geopolitical problems, as you know. But, you know, we're the largest corn producer, so we're going to be watch very close here. Of course, Brazil's the largest exporter, so we're going to watch them. They're just starting to harvest their very early corn. The guts to go all the way into July, early August.

Paul Yeager: You want to spell that word? Gut slide? That's a good one. Let's let's go a little out of order here, because fill it. Ontario has a good one. That's a little bit about Russia and Ukraine and it's about the wheat market here, Don. The wheat market, Phil says, has shown some buoyancy over the last few weeks. Is it because of Russia, Ukraine production problems or is there something else spurring wheat prices?

Don Roose: No, I think it singlehandedly is. The funds were short. I mean, that's where it started. You know, you had the structure wrong. If anything went wrong, then Russia gets hit with two freezes, then they've never been able to move out of their dry drought condition. And I imagine next week, that's what it's going to be, is what do they start to get moisture in some of these areas in eastern Ukraine and in Russia? So I think that'll be the the move and we're back to weather again, Paul.

Paul Yeager: Mid-week, we kind of wobbled there. It's seven and then Thursday some strength came back in on Friday. And so I had a question on Wednesday is is wheat a champ or a chump say weather improves quickly in Russia? Does your outlook on wheat change?

Don Roose: Well, I think, you know, when you're looking at it now, do you want to be real positive going into the early harvest in harvest is going to pick up in the United States, basically starting in Texas next week and going all the way up to the spring wheat area. And the rest of the world is going to be harvest in two about the same time. So you really need to see these crops smaller. And so I think what we're seeing is a lot of producers doing catch up marketing right in here, pull.

Paul Yeager: U.S.

Don Roose: Producers, U.S. producers.

Paul Yeager: Those that grow wheat in other countries. Okay. Let's talk about weather again, this time with M.T. in Missouri. And looking through his Twitter feed, he was kind of stuck. Like many others, Wet springs don't equal big crops is 160’s in play?

Don Roose: Well, I think 160 would be a real stretch. I mean, what's happened is trend line yields are going up this year. 181 in the summer is going to do a lot to tell us what the real yield is. Good. Excellent ratings are going to be very strong coming out. But, you know, we still have a big debate, the June 28th. What's the acre going to be? Does it go up or down from here? And then we know a late planted crop, if you look at it, You know, historically, Paul, after May 30th, we'll say that we have 90% of the crop planted. You lose 3/10 of a bushel on each percentage. So in other words, if you're at have 10% yet, the plant May 30th, 3/10, you lose about three bushels off the trend yield. We'll see how that works out. But that kind of is a number historical. So let's just say even if he's saying 160, let's just so you take 181 and take three bushels off of that. But then the summer can improve.

Paul Yeager: That also would there's there's a potential for the weather pattern another round over the weekend, then that moves through, then the pattern looks to change. There's still a chance you can get that thing in before the month flips to June. Given that scenario, given what you're saying historically, but haven't we seen some short crop corn perform pretty well the last couple of years and maybe throw a little water on that historical data?

Don Roose: Well, exactly. And I mean, some of that is just because, like we said, you had a better summer conditions than here than you thought. But no, I mean, I go back to this Memorial Weekend is a dangerous one. We'll see how it floats out on Tuesday. But historically, you know, it's a market that has real trouble going up. Paul, You know, like we were talking in the regular show, down corn down $0.10 last year, 41 on beans the year before, down 24 on corn and down 49 on beans, wheat down 70. So even in the wet year, the last what year that we had prevent Plant Year record prevent plant year 2019 was the last year actually went up.

Paul Yeager: Boy, 2019 seems like an eternity away from what had happened but Prevent Plant is actually our next question, Don. I need to stop sharing him the questions there right over my shoulder here. This is Matt in Iowa. Wants to know how many prevent plant acres and corn and beans is enough to turn the Kerry out. Bullish in the trades eyes.

Don Roose: Well, you know what I see as I think prevent plant acres are going to be low usually the big prevent plant acres are up through the Dakotas and up in the northern plains because just from the way it needs to get in early and timely to beat all of the season. So and the other areas, I think guys planted it they prepared to plant so I don't see the I don't see the plant acres as being anything out of line this year.

Paul Yeager: Paul Okay, I saved this one because I want to put this at the end about the top. Rob in Saskatchewan wants to know when is our top most likely coming? Because this is kind of like the last question of the quiz. Given everything you've just said, what are the signals of when this top is? Because there has been historically, given what we're going through with right now?

Don Roose: Well, I mean, it's all about timing. And I always say, Paul, that this is like a card game. You know, as the cards come out, we'll be a lot smarter, you know, and they're coming out pretty fast. If you look at the Memorial weekend, this time frame was our first weather rally. This is your catch up marketing and that's what we're seeing people do. You may get more you probably do in the summer where you get some more weather problems. You know, we always say we lose the crop two or three times. Well, we started one already. So does it back off, like you would say, traditionally after Memorial Day? And then do we get more problems going forward, do you think? The way the crop went in, it's not going to take a lot of hot, dry weather to spook the market again?

Paul Yeager: Paul I'm hearing you say that we may have been given our first gift to market some crop if we were behind some of our old crop, corn and beans. Is that my hearing you correctly?

Don Roose: That's what we're seeing happening. You know, we're seeing people catch up on their marketing, you know, focus on new crop, get stuff sold, but on a percentage basis that you can't store and start to prepare, that you're going to get a crop.

Paul Yeager: Looking at old crop, not quite the same with China. China has been buying some of our old crop. There are, but they're absent in one big market. Where is that?

Don Roose: Yeah, the soybean market. China has not even bought a bushel. A new crop, soybeans yet. I mean, that's really unusual. And because they're our largest buyer, what has really done is our exports on soybeans are at a 19 year low. So, you know, truly amazing. Just the opposite on corn, Paul, is Mexico's turned out to be our bigger by biggest buyer in our exports on corn are picking up and global supplies on wheat and corn are tightening which is a good news.

Paul Yeager: Help me out because is there a benefit if we sell more to Mexico and maybe I'm not even saying politically, but in sales, just because of the distance that's traveled and the chain, you always say it when you come. The Chinese taught us all the trade techniques to the Chinese, teach the Mexicans about buying U.S. grain, and they're they're cashing in on this this opportunity.

Don Roose: Well, we have a pretty tight relationship. And I mean, we're so close that we have a transportation advantage and we have a tight relationship with them, not only in corn but in feeder cattle, hogs that are getting to be a big buyer of pork that we export. So they're a big player for us. Paul.

Paul Yeager: I cut you off when I was asking you about crude oil, so I cut you off again. Or do you want to finish your thoughts and say, was, what do you think about this? Because again, you talk about the holiday weekend. That's always one of those factors of where gas prices I know it's not directly tied to crude oil, but it's in that ballpark.

Paul Yeager: What do you think about crude right now?

Don Roose: Well, I would say, you know, what's the government think about?

Paul Yeager: That's all we have time for Done. Okay. Sorry.

Don Roose: Because, you know, the government's not really not restocking the supplies here yet. So apparently they're not panicked with stuff. We know that we're moving more into EVs and such, But, you know, you can't rule out anything can happen pretty fast, Paul. And remember, crude oil around the world is traded in US dollars still. So the dollar's going to be it's going to be highly dependent on what happens to the dollar, too highly dependent.

Paul Yeager: You know what you are. You're highly dependable. Thank you, Don Roose.

Don Roose: Thank you, Paul. Great to be back and happy Memorial Day.

Paul Yeager: Happy Memorial Day to you as well. Thank you so much, Don Roose everyone. Next week we are going to work on that story that's connecting the dots on AI in the dairy parlor. And we're going to have the commodity market analysis with Shawn Hackett. Thank you for joining us. Have a great week.

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