Market Plus with Naomi Blohm

Paul Yeager: Welcome to the table for the Friday, October 11th, 2024 installment of Market Plus, I'm going to stop shouting because Naomi Blohm is here. Do you want me to keep shouting? No, don't laugh at anything I do that just encourages it and makes it worse. You do realize that, right?

Naomi Blohm: I feed off of it.

Paul Yeager: Okay. You said and I'm serious, I really do listen, when people are here, I write notes. And I've talked about this, before you said something in corn that really caught my attention. I want to start with you. We had a question about the piles. Yeah, and you said it was more about pace. So my follow up to that is is it pace over production? Is that  the issue here?

Naomi Blohm: Actually that's a good point. So I would say it's probably a little bit of both because there are definitely some phenomenal yields out there. So that we're going to result in piles anyway. But because the pace is so swift, it is just exemplifying the pile potential and how the basis reduction has been at play. So it is a big crop out there throughout portions of the Midwest. And there's definitely spots where it hasn't been great, especially where those early rains were across eastern South Dakota, some portions of southern Minnesota into Wisconsin. I know where I live in dairy country. There was a real issue with some of our corn, to where some of the dairies were, scrambling to find additional silage and had to ask because some of their customers that they buy from some of their farm customers, can we buy more of your corn acres to put in as silage? Because we just were not having the yield that they were hoping for. So it's, it's hit or miss, but most of the Midwest has been pretty fantastic.

Paul Yeager: Speaking of dairy country, you look at all the hay, all this alfalfa that has gotten third and fourth cuttings way better. I mean, I've heard from hay people who are like, this is really good. Does that have any factor, especially in your area?

Naomi Blohm: So again it's hit or miss. So we have had some better hay, but we also have had people scrambling and planting, like a savanna grass kind of a thing that I saw in my neighborhood. And I'm like, I haven't seen that in quite a few years. so it's, it's hit or miss, depending on where you live and, it'll be interesting to see just how it all pans out, because I've heard different soybean yields in portions of Wisconsin. Not great. But then you hear different yield results in different parts of Minnesota, where it's been some of the best soybean yields that they've ever had. And then some people are still just in the low 40s. And it just all depends on how that early rain happened. and then if their, their plants were able to establish that good root system. And then that was late August heat that we had definitely zapped. And I think the thing that's most surprising to me is how the moisture content at harvest here is so low, already 9% moisture on beans. You know, there's a little concern of quality. If the beans could, you know, shatter that kind of a thing and corn, corn moisture, it's like, I mean, kind of a blessing. Farmers aren't going to have to dry down their corn because it's already so dry in a lot of these fields. So that is, you know, a cost saver as well. But it's a good crop.

Paul Yeager: Well, we have something about timing, Mark in Illinois asks or first starts out saying early planting high yields later planting not so much. What will the ending yield be? Our farm was 30 bushel to the acre difference. Early to later planting. Are you hearing that same thing?

Naomi Blohm: Oh definitely. Definitely. The earlier planted grains are faring better than the later planted, there's no question about it. and I think the bigger takeaway is ‘what is the market going to do with that information?’. And the bottom line is that in the country, it's a big crop and that weighs on prices. So that's the ultimate issue here from the perspective of the seat that I sit in, is that the crop is big, the world knows it. And that's why we're not going to be able to have a big grain rally necessarily in the shorter term. But also we're at that time of year where we're so focused now on South America, we need to make sure that they're going to have a good crop. So it'll be hard for prices to, in my opinion, totally fall apart from here. Probably go a little lower because there's not much for fresh news right now, but it's going to be hard to see a big rally because there's enough supply in the country right now.

Paul Yeager: I think about, do we, as the United States farmer, lose our position in the spotlight if this crop gets harvested so early? We see that. Will we get it in? Will we not  have weather? I mean, if that thing's in the bin by October 20th, October 15th, way ahead of pace, does that change the narrative at all in markets? And I think you've talked about no news we could fall lower.

Naomi Blohm: I think what that does eventually is helps basis later on. And so there's a pretty strong seasonal tendency for corn and soybeans that after Thanksgiving, the market then has a pretty good rally into Christmas because the bin doors are closed. We're focused on South America weather. Basis improves. Some folks say, well, I don't want to produce anything until the new year because of taxes. So you start to see basis, you know, just start to improve. You see some wheeling and dealing behind the scenes. So I think that you're going to have this bad basis play now because there's so much supply on the market. But down the road, once the bin doors shut, they're going to stay shut and you're going to see a basis improvement later on.

Paul Yeager: Well, let's ask Tia’s question then, because that ought to be fun right now. What are your year end price targets for soybeans corn and wheat?

Naomi Blohm: Yeah. So let me answer it this way. Corn, soybeans and wheat are on a very big teeter totter point. So just use like a teeter totter or a balanced scale example. Things are perfectly balanced right now and we have the funds who made that point clear. They exited their short positions and now they're on the sidelines. They're going to wait and see. So what are we watching? You know, we're waiting to see how our harvest results are here. But that leans negative because it's a bigger supply. We're waiting to see how South America weather actually is. Could be friendly, could be negative depending on what goes down. For the corn market, we have the global situation setting up where we might have lower global production next year because we know that Argentina is going to be planting about 15% less corn because of the leaf hopper issue. We know the Ukraine crop is lower. We know that, just in general, there's not as much global corn out there. So it's good that the United States had this crop. So now we are this, again, perfectly balanced scale, and we're watching to see geopolitical news. We're watching to see U.S. elections. We're watching to see Chinese stimulus. We're watching to see what our Fed does with our interest rates. And it's going to be who blinks first. Which piece of fundamental news becomes friendly or bearish to tip this one way or the other. And whichever way the fundamentals dictate, the funds are going to jump on through, they're going to become buyers and push this higher or sellers to push it lower. So if the news leans friendly, you're upside targets on corn for the front month contracts, let's say the March contract. You might be able to see that go up to about $4.75. If the weather in South America is bad, maybe $5. I'm going to give that 10% odds right now. And on the flip side, beans, if things lean friendly, we could see the bean market, maybe get back up to that like $11.50 area if the news becomes friendly. But if we don't get the friendly news, then eventually you're at the point where you could see corn prices go back to $4, maybe $3.75. If we don't get the friendly bean news, you're going to see $9 soybeans. So you got to pay attention. The next three weeks and four weeks are going to be so critical to this marketplace. And I know you're busy with harvest and everybody's praying for a rain day because you're so exhausted right now. But don't forget about your marketing because there's so much happening right now and it's all intertwined, so much happening.

Paul Yeager: For not thinking you were going to have an answer to that question. That's one whale of it. That might be one of the best answers I think I've ever heard in recent times about what's going on?

Naomi Blohm: Thank you.

Paul Yeager: That's incredible. But this follow up a little bit to what you're just saying, then, is Trent bushels in commercial storage this fall? Do you take the money and run?

Naomi Blohm: Bushels in commercial storage this fall. I would say if you are going to be delivering to town, price it. You can re-own it later on. If the stars align to make it look like it's going to go higher from here. But if things just kind of maintain a wholehum situation, take the money and run. I know that, like, okay, if you don't excited about your basis, maybe you could consider a hedge to arrive and do the basis contracting portion of it later on. But there's again, to the previous question, there's so much happening. There's it's not a slam dunk. Perfect answer that I can give right now.

Paul Yeager: All right. This was a topic we had last week. Both Matt and Ted kind of wanted to talk about this. This is Kevin in Missouri in order to buy corn acres for ‘25. What does December 25 price need to do or I'm sorry to move to?

Naomi Blohm: Well, I think that depends on what is soybean price doing. So if the soybean price drops, maybe corn doesn't have to do anything except hang out near $4.50. If the soybean market is moving higher, if the wheat market is moving higher, maybe you see something where that December corn sneaks on up towards the $5 area, but that's if the stars are aligning to the friendly side. If the weather in South America is perfect and that being price drops, Dec corn can just hang out near $4.50 and sit there for a while and be attractive. So that would be my answer with it.

Paul Yeager: Okay. So let me see if I get this right. We'd have to probably do a graphic. Wheat and corn sometimes are always together. Sometimes corn and soybeans are together, sometimes corn. But you know, there's all these factors. How do you keep all this straight? If I'm super tired from 27 straight days of harvest right now, trying to make sense of what we're saying, give me two things that I need to watch here in the next couple of weeks to help me put in position in case something happens that I can be best positioned.

Naomi Blohm: Okay. I think the biggest thing right now, South America weather is, is, is really important because that dictates global supply. And then you're going to have to watch the geopolitical issues. There are the two things that are the most important. We know it's a big harvest in this country. Old news. We know that basis is not going to be great. Old news. We know that our export market has been okay. Old news. The USDA accounted for that today. Now what the question is, you know, are those demand markets going to get stronger or not. But that depends on the value of the dollar. That depends on what the Fed doesn't do with inflation. That depends on who wins the presidential elections. So tangible things in the short term: global weather. And then just keep an eye on all the geopolitics.

Paul Yeager: Sorry, I'm not going to ask her what does it matter which presidential candidate wins. Save that for plus plus plus. All right. Thanks, Naomi. Good to see you.

Naomi Blohm: Thank you.

Paul Yeager: All right, next week, we are going to put the recent weather systems into perspective. And we'll have the commodity market analysis with Jeff French and Ross Baldwin. Also, I want to remind you to subscribe to our Market Insider newsletter. It's on our website. Thanks for joining us. Have a great week.

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