Market Plus with Chris Robinson

Paul Yeager: Welcome back to the table for the Friday, August 23rd, 2024 installment of Market Plus. Joining us now, Chris Robinson. That is a mouthful to say. But Chris, we had a little longer time in the TV show. I know, you know, it doesn't fly by, but there were two questions that stood out to me and something that you said. One was about volatility to me. I'm not you, but it looked like we given over the last I'll say eight weeks. Volatility has been limited. Yeah. Throw out the last 2 to 4 years where volatility has been crazy. It looked like this week we had volatility back. But you say no. Why?

Chris Robinson: I'm more concerned about what happens in the next 2 or 3 months. We're going to have busy days. We're so overdue for some fireworks. I agree with you. but I think people are really coming to grips now with the fact that it's a big crop. It's a big carry out. And boy, you know what? It could have should have. Which it is. That's hard to do.

Paul Yeager: All right then. That's my other question. What happens if people don't sell and they hold on and they just sit and wait? Would the end user panic and bid things up? That's the conspiracy theory presented to me this week by friends.

Chris Robinson: Well, if I'm looking at the world as a farmer producer, I sure do hope that's what happens. But most end users are doing two things. They're going hand-to-mouth, which is they're just buying it as they need it or they're going out. And I just worked with a, client today where they are a big end user. And, we're going out now and buying three months, six months, nine months, really, really cheap out of the money calls. Because they don't know either. They don't want to be left behind either. They're used to paying you know, $4 for corn. Now they don't want to go back to paying $6.50. They're used to paying, you know, $5.50 for wheat. Now, they don't want to go back to paying 9 or 10 bucks. So they are hedging their risk as well. So, I think that we're going to probably have to wait till January to see if we really get a big, recovery or if something changes politically and, we see a big spike in demand because we do have, especially in soybeans. We have burdensome carry outs. That's the word I have to use, borrowed from some other people. And, China, China, those that we grow 4 billion bushels of, soybeans. It looks like we're going to go close to 5 billion this year and trying to take, you know, a billion of it, or they take 25% of our crop.

Paul Yeager: Well, let's let's go to the questions then, because Glenn in Iowa is going to be where we start off. And he has trouble with yields around the world. But his question is how big will our demand end up being? Where does it come from?

Chris Robinson: Well, I could just mentioned China takes one fourth of our crop. ethanol takes one third of our corn crop. Thank goodness for ethanol. And we'll see, you know, if, if, depending on who wins the next, election, will they push for even more ethanol? Because that is a natural demand for producers. And that's a big deal.

Paul Yeager: But it hasn't in fuel use. And miles driven leveled off to the point that there's maybe not as much even if that happens. Yes. Does that give you pause for concern?

Chris Robinson: It gives me pause for concern because if suddenly they don't they're not taking 5 billion bushels of a 15 billion bushel crop. That's what that's more supply. So that there's a risk there for producer and for an end user. They can see the same math as well. So if I'm a farmer, if you want to go back to the question and I've done nothing, I, I've sold nothing. If you can store it you have to. It's just a math problem. But if you store it, you have to give yourself a floor and there's a cost to giving yourself a floor. some people that I think if you do have to bite the bullet and say, I'm just going to, you know, sell X percentage, then, get it done and then look for an opportunity. And there are strategies out there, where you can reopen it for the next three, four or 5 or 6 months, spend $0.13, $0.14, $0.15. You don't have to go out and spend $0.25 or $0.30 and you can stay in the game. So, if you're in that boat, if you're like, you know, I don't want to sell, but I have to sell, make sure that you, look at a reownership strategy.

Paul Yeager: Well, that's a little bit of an answer to this question, Gary. In Wisconsin, should farmers be selling all their beans and holding corn? So that's a specific scenario that I've seen. And I've also seen the inverse of that. 

Chris Robinson: My experience working with producers now for 15, 16 years, they farmers are more apt to want to store corn and soybeans. It's pretty much what it, what. So, most people stay with their patterns. I would say this, no matter what, you're if you feel like you have to sell. I don't care if you're selling corn, wheat or beans. Here, take a look at strategies to run them. If you're going to store it, make sure you really do the spreadsheet and realize, okay, what's my risk? What's it cost me? You need to know those numbers, because those numbers may tell you what you need to do. Those numbers may tell you, you know what you're better off selling here. And, re-owning, but I think it's an individual decision for everybody.

Paul Yeager: William has a question in Iowa that came via X that is aligned with that. 2014 to 2024 charts have been trading strikingly similar all year. Should we be eyeing ten 50th January Beans as possible sale price point, harvest or price post harvest before the end of the year?

Chris Robinson: I would say this. I would say keep score and look for any rally we get. We haven't had much more than a 50 cent rally in a while. If we get a 50 cent or dollar rally, here's the key: make sure you actually make the sale. Well, I've seen it too many times in my years doing this, where we get to our sale point and say, well, I'm going to wait. I want to wait because you're talking about volatility. Sometimes it's there for a day or two, then it's gone. I mean, we saw that this summer. We had that one little blip up in corn. We had a nice $1.25 rally and beans, you know, beans were north of $12, you know, and and then when because when it turned to turn. So yeah. Have a target, target price that you're comfortable selling that defend what you own until you sell it. When it hits that target price, make sure you pull the trigger. Make sure you don't hesitate, which is it's a hard thing to do. Most people, if you're a human being, you tend to second guess yourself and everybody does it.

Paul Yeager: You've kind of answered this, but I'm going to ask a very specific Phil in Ontario, in lieu of a black swan coming out of Russia and Ukraine and grain prices, what they are, what do farmers do with, price grain and harvest looming? You've mentioned a number of strategies, but I guess I want to ask a specific part of his add to his specific part. What's your percentage right now that I should leave on priced?

Chris Robinson: It depends. It's an individual question. the most, most, risk managers, myself included. Some people are anywhere from 30 to 45% sold. Right. And we did that earlier in the year. Some people will be more sold, some people will be less sold. But everybody else has had an opportunity to either protect for 80 corn, for 50 corn, certainly $10 beans, $11 beans when we were at $13. If you've done nothing, I would say so what? You have to protect what you can, you don't want to be, spending a whole lot of money on, puts when we're at four year lows, because. What are you defending? We just broke $3 already in beans, right? Or is there another $0.50 or dollars worth the risk? Yeah, but. So don't spend a fortune to defend that risk. Same thing with corn. Corn's dropped $1.10 already. Don't spend a fortune to protect the next $0.30 or $0.40. But absolutely, positively keep a floor until you sell it. Because nobody can tell you with certainty that we don't keep grinding lower. And, I would look back to 2014 where that happened. You kind of covered this one about the size of the crop when we started. But what do we do? Like William's question, what are we going to do if we do have massive crop because the market thinks we're going to have a massive crop?

Paul Yeager: It's both good and bad. So what are we going to do?

Chris Robinson: Well, again, it depends on some people. Some people are in a different situation. It depends on are you paying cash rent? Do you own, how long have you been farming? Do you have to actually move that crop? It's never fun to make decisions when we have four year lows. So I would say this rather than making an emotional decision, get together with your banker. Get together with not just, you know, me as a risk manager. There's a dozen guys out there that are good at what they do and help them. Ask them to help you get a plan because everybody's in a different situation. I don't want to sound like I'm not answering the question, but for me to tell you and say, do A plus B for C and you'll be fine. It depends on everybody. So. Right, you know, if you have to sell, I will say, I will say this with open arms. If you feel like you have to sell here sometime in the next 3 or 4 months, look for an opportunity to reopen it because we may get a recovery and reopening it will allow you to participate in that, rally. You know, if we get it.

Paul Yeager: I just needed you to say it for the fifth time. That's all I keep asking. I know you've answered it, okay, but. But it's important because you do need to hear it. Yeah. What about diesel fuel? Unleaded fuel. Is that a bright spot?

Chris Robinson: It's a bright spot. And it's also maybe a sign that, you know, inputs have stayed high. Maybe inputs by the time were rolling in April will have readjusted the way everything else has readjusted where they're like, okay, we can't charge as much for that. And what do I talking about? We've got diesel at 15 month low. You've got unleaded gas at about a, I think about a one year low eight months like it's so it's, that's rolling over. You have crude oil which is dancing right around 70. It's a lot better than when we were at 95. So that may be something also. Lastly, natural gas. Natural gas had a little bit of a blip, but it's still at decade lows. It's at, you know, 10-20 year lows. If you take a look at that. And I'm not talking about the price maybe exactly today. But big picture if you look at where we are in the big picture scale. And then lastly the US dollar, US dollar is going lower because the fed has indicated they're going to cut rates. The dollar is moving lower. That's going to help our exports. It's not going to hurt it. And I don't know if it's going to be 100 mile an hour wind. We're all that. The dollar is lower. Let's step in and you know buy all my other grain. But it's going to help. And I think from a farmer producer standpoint, I think it's always better to see diesel fuel at $2.10 and $2.20 than where we were two years ago. So there's a silver lining.

Paul Yeager: See? Will end on something positive. It's all right. All right, Chris. Good.

Chris Robinson: All right.

Paul Yeager: All right, all right. Chris Robinson, thank you much.

Chris Robinson: Thank you.

Paul Yeager: That is going to do it for our Market Plus next week. We are going to begin our series of look backs at the first 50 years of this program. And we'll have the commodity market analysis of Sue Martin. Thank you so very much for watching. We'll see you next time.

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