Market Plus with Sue Martin

Paul Yeager: Welcome back to the table for the Friday, August 30th, 2024 installment of Market Plus. Sue Martin is with us still. Sue, I always have to cut you off and I'm sorry. And I've said that time and time again, but you get going on certain topics and I know there's more to flush out. We're going to get to a couple of those topics, but one that started here was kind about, you know, buying and selling, holding, storage, interest rate. Let's start with Matt in Wisconsin here because this is about 25. You talked about 25. But he says nobody likes these prices however. Should a person be looking to lock some small sales into 25 for the fear it will get worse?

Sue Martin: I think I'd give the market a chance to have a rally here because of that. Elliott Wave five I talked about on the weekly. However, I would use that rally when it comes here and you might get these corn to $4.20. It could happen. I would take advantage of that. I would also take advantage of next year's December corn if that rally occurs like I'm looking for. I would also then lock in some bushels for 2025 and in December of next year. will you live with that all the way through? Maybe not, but I think I would look at it. But the one thing about here, from what I'm hearing, is basis may improve as we get into harvest. And so that should be helpful. And maybe if you're thinking about selling some of the combine and we get this rally, why would bells basis rally. Because nobody's selling.

Paul Yeager: Well. Isn't that been kind of one of the only bright spots? There's been a lot bigger spread. I'm sorry. Spreads wrong word to use in this scenario. There's been a lot more places with better basis than normal.

Sue Martin: Yes.

Paul Yeager: So you're saying we could see some expansion in current good places or wider?

Sue Martin: Well, I think it's maybe more wider too, but I think check your basis as we go through into harvest, because I think there's concern and the demand for ethanol, the crush is awful good. And I think that and they're profitable. So I think the demand is going to be good for corn. And as we get into harvest and we're pushing watch that basis. It just may be that because of the basis you're able like say you get the futures up to say for 20 and all of a sudden you've got a really nice basis there. Take advantage of it and just move it then into the elevator.

Paul Yeager: I want to go back to also something you just said. If you like, if you see $4.20, take it. You're not saying if you see $5, take it. You make it sound like we are in this close to $4 low $4 range for the foreseeable future.

Sue Martin: Yeah. I think, what? We. It wouldn't even shock me if we get a nice surge here, and then the market turns and comes back and looks at this low and again. 350, 325, something close to that is a wave four and that it should be a major support. I don't think corn goes lower than that if it happens. And I've got parentheses on that. If but if you get a rally on that for 20. Take advantage of it. Because we could also still come back and look at 380.

Paul Yeager: All right, let's go to livestock for a minute. I'm going out of order here. guys, I'm going to go Pete in Minnesota. but Pete's asking what opportunities that the protein markets to be profitable. And could it be that swing lower in feed costs or is it something else?

Sue Martin: I think it's the swing lower in feed costs. Also, if interest rates start to dip, you know, if the Fed starts to lower rates that depend on how fast the lender wants to bring it down. That should be helpful as well. Not only helpful to the livestock producer, but and feeder, but also for our letters of credit for foreign grain being bought from the U.S. it should help us all the way around. And then we have a dollar. Yes, a put a low in this week, but that dollar needs to be watched because we have seen a nice correction out of that dollar.

Paul Yeager: Yeah. Stronger dollar this week where we'd been weaker for a little bit. So I want to explain I cut you off in the livestock discussion about our next question, Ronald in Iowa, why is there such a spread between board and cash cattle right now? You were talking, futures and cash. But let's first answer his question. Why is there such a spread between board and cash? Cattle right now?

Sue Martin: Well, the reason for the spread that we had, and it's been narrowing appreciably here lately. The reason for that spread, I believe, was because we are, beef cattle slaughter was down all year has been. And therefore, because that's down and beef cattle slaughter goes into ground beef. And ground beef is something that everybody buys, especially if you've got families. And so I think what happened is they were having to compensate and take product off of steer and heifer carcasses and put it over to the ground beef. And so that propped that market up. We are also getting a fair amount of tonnage because we're feeding cattle heavier. And so that came into play as well. And then the Packer managed to get himself on this break here recently. Back to being profitable. And seasonally, it's not uncommon to see cattle break into August, maybe September. Stick a low and try to rally in October, maybe November and December. So I think that the market has gone. The Packer’s gotten back where he's black and profitable. He's not going to want to give that up very easily. And so he's taking advantage of it. And I think he's lowering the cash market. And I wouldn't be surprised where lower again might be steady next week. But after that I think we're going to see cash still weaken up a little bit more.

Paul Yeager: So put some positions and protect yourself a little bit here.

Sue Martin: There's nothing wrong with that. I would say maybe buy put spreads if and do at the money strikes for puts and then sell a further out of the money put and then yes you've got to manage that lower one because you've sold the right to be short to someone else.

Paul Yeager: Can't set it and forget it. You got to pay attention. You got to stay in school, kids. let's go, let's go. Dillan in Iowa. And this is a question we haven't been talking about it as much, but how much China buying would it take to move the needle higher in soybeans? It looked like the last couple of weeks they have been.

Sue Martin: They have been buying. And I think they're going to be taking overall for the whole, crop year. I think they're going to end up needing to take 110 to 111 million metric tons of beans. it's thought that their production is better, but you never know with them. They're they're not transparent. But I think China has done a very good job of spreading their, they don't keep all their eggs in one basket anymore and smart on their part, but just because they have a, and what I want to say, an economy that is looking vulnerable because of the housing and what have you, I think China's still going to manage to kind of tread their way through it. They still have to eat, and they have a large population. They have also been building a lot of new, reserve facilities. And they're going to fill that.

Paul Yeager: And that's just that. We've been talking about that for a long time. Yeah. You're saying it's getting closer. Yes. Reality. Okay. All right. Well let's go, let's go Eric in Wisconsin let's talk about fall field work and spring field work here. Sue should I lock in nitrogen this fall or wait until spring?

Sue Martin: Nitrogen hasn't really come down much. And, if anything, it maybe is starting to firm up just because of the seasonality of the use. I'm going to say Hail Mary, full of grace. I'm going to say spring. Okay. And the reason I say that is because now, granted, we had a beautiful spring this last year, but the reason I say it is because shipping costs might actually end up coming down to help compliment the conversation.

Paul Yeager: I had a talk this week with someone about the margins, various things, farmers maybe putting less nitrogen on less fertilizer here a little bit. They're trying to muscle through this lower commodity price. Are you hearing any of those same types of anecdotes?

Sue Martin: I have I have heard some of that. But I also think that, you know, this is the first year I would expect that more next year, because next year is going to be a tough year, too. It's not going to be easy. And this year I think they were still making money. Last year I, I would see them doing it more so next year. And fertilizer would probably be one of the areas they would cut back. But then you know, when you've got low prices, you need all the crop you can get to dollar up on that, that acre.

Paul Yeager: And you don't need 90 degree temperatures at the end of your growing cycle. Taking back, what yield what looked really, really good.

Sue Martin: No, you don't.

Paul Yeager: So let's close on this one. So I'm going to give you a chance with Scott in Wisconsin here to look high for the next three years. Specifically we'll start with corn and then we can go to wheat and soybeans. Is this the start of a long uptrend in corn over the next three years? 

Sue Martin: No. Next year will be a low.

Paul Yeager: Low low next year? What about wheat?

Sue Martin: Well with what's going on around the world, I could see where we could be trying to put a low in wheat. The problem for wheat is it's also got to compete against as a feed. So that sort of keeps it in check a little bit. But I think wheat has had a horrific break and the farmer has moved more weight than what the corn farmer has moved. And so I think the wheat got a little better stands.

Paul Yeager: And soybeans.

Sue Martin: Oh, that soybean market. One thing about corn and soybeans, both we have to keep in mind the biofuels and soybean oil. It's ended up getting more lively late in the week. I mean, it was down Friday, but it was at a good Thursday and what have you we are looking at exports are picking up on bean oil. We are also, I believe, with our biofuels industry looking at utilizing quite a bit more. I'm wondering if that numbers around 33% more. Canola also got approved in 2022 for biofuels. So I think that and that was one thing about canola is it produces three times the amount of oil per acre than what soybean oil does. So canola is there to kind of compete a little bit. But right now bean oil is the cheapest of all of your edible fats and palm oil. We won't even go there. You know.

Paul Yeager: That's a whole another podcast for another day. Yeah. Sue, good to see you. Thank you so very much. Appreciate the time.

Sue Martin: Thank you.

Paul Yeager: All right. Sue Martin, next week we are going to begin our series of look backs at the first 50 seasons of this program. And we'll have the commodity market analysis of Ted Seifried. Thanks for joining us. Have a great week.

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