Paul Yeager:  Welcome into the Friday, December 22, 2023 installment of Market Plus. Joining us now is Jeff French. Again, I'm going to say we should probably start recording the conversations between I do need to tidy up something. I'm sorry, you have something on your face. The beard is, you going to keep that? Do we want them? Do we want the people at home to vote?

Jeff French:  No, I don't mean it's.

Paul Yeager:  Family voted.

Jeff French:  Already. Yeah. It was 3 to 1 to keep it for today's taping. Okay. It's deer season. It's just get tighter shaven.

Paul Yeager:  I get it. I get it. I do want to talk about something also obscure, and that's orange juice. What's the what's significant going on there?

Jeff French:  Well, about a month ago, I mean, our shoes had been right on rally in here for a while. A couple of things. Hurricane Ian wiped out a ton of orange groves, obviously, last year in Florida. And then they've had some diseases. I mean, it's a 100 year low supply. So it went up to I think it got it to $440 per hundred weight. But here in the last three weeks, it's just come down and now it's $100 off of the contract high. So big run up, big sell off. Classic commodity market again, though, a very thin traded commodity. I was trading it and you would see maybe 1200 contracts traded a day. That compares to corn, usually typically about 150,000 corn contracts traded on the day, not during this time of year, but physical. So very thin market. Be careful you can get in, but sometimes you can't get out.

Paul Yeager:  Which is a theme we kind of talked about in the in the main program is it's just lighter trade. So the easier direction to move is everything lower. But we have some specific questions here that might be a little more forward looking. Let's start with Trent from Facebook. He wanted to know once the new soybean crush plants start coming online and get rolling, how soon after will we see the market fully react to show the longer term demand picture?

Jeff French:  You know, that's going to be interesting. I mean, I don't think it's going to be instant. You know, it takes a while for these plants to get up and running. But one thing you have to remember, too, I mean, yeah, you crush all these beans and we've crushed a lot of beans. I mean, the crush reports have shown record crush, I think, for about five months consecutively. But when you crush beans, you get meal and then you got to sell the meal and right now we're sitting right at meal 380 a ton. We're down here at two and a half month lows. If we get below 350 in the meal, that's where you could get much lower prices. So it's a double sided sword there. It's going to bring more demand for the beans, but you have the byproducts that you've got to move as well.

Paul Yeager:  So there's one factor, as we show you, the November soybean contract moving at 1258 on the week. Phil in Ontario has another side of this discussion that is of interest that he asked us on. We all know the weather narrative about South America going forward affecting our grain prices. What's the latest take on that? Will the USDA have a bullish or bearish surprise come January 9th?

Jeff French:  So for the weather market in Brazil right now, I mean, the trade right now, I mean, the top has come off. I mean, the trade right now probably has 155 million metric tons for Brazil alone. But you got to remember, there's other countries that grow soybeans down there. Argentina, I mean, they grew 20 million metric tons. They had an awful drought last year. They've actually had too much rain this year. And they're going to double, maybe even bigger than double their bean crop from last year. So in general, we should have pretty good area. And you got to remember, Brazil planted 110, 112 million acres of beans. So, yes, it is dry. They've gotten some relief a little bit in the most important Mato Grosso, but they are forecasted to get 2 to 3 inches here in the next two weeks. So we'll see if that that falls. Now for the January 12th final production report. You know, my gut is I think you're going to see a higher corn yield. I mean, not too much maybe 3/10 or 4/10 higher. And that is simply from just talking to people throughout the country that just had phenomenal cornfields with the little as rain as we had. I mean, to 30 to 40 to 50 to 60 was not uncommon. And this these are in places that were nine, ten inches below average rainfall for the year. So I just would say that I would I wouldn't be surprised if we see a little bit of a higher Corneille number come January 12th.

Paul Yeager:  Well, that that has become I'm not saying ho hum, but this one could really have some surprises if it does go higher. Is that what would that be a surprise?

Jeff French:  I think the surprise would if they lowered it because the USDA has been on this trend for three months as taking up that Corn National corn yield. So I think if they were lower it, that would be a big surprise because the market is kind of anticipating. But the fact is we have a 2.1 or 2.2 billion bushel carryout. You know, that's going to act as a kind of a wet blanket on any type of rallies and go back to weeks ago, wheat rallies, 90, $0.95, corn rallies, 22. So, you know, you get 20, 30 cent rally in this corn market. You ought to be selling some cash, buying some puts on strength because like we've seen here in the past, the rallies just don't hold. And March closed at three and a half year lows here today.

Paul Yeager:  Hold on. I have a couple of cash questions in just a minute. I have one more on soybeans that I want to ask. And this one is Bradley in Nebraska. Also on ex, are the soybean market spreads telling producers that there are higher prices in the near future?

Jeff French:  The spreads are firm and the spreads are strong, but the flat price just doesn't really want to get off the mat here. I mean, beans in the last 30 days are down a dollar per bushel. January get up to 1398, a month ago today. And now we're down here right around $13. So the trend is lower psychologically. We've held these big round numbers $13 a bushel. But if we start closing below that, especially coming in the new year, you know, we could be down another 40 or $0.50 pretty easily.

Paul Yeager:  Let's get to a couple of questions about corn. And Paul in Wisconsin has one for you about relation to another market. You kind of mentioned wheat there a moment ago. Why doesn't corn follow crude and the market swings?

Jeff French:  Well, crude here the last two weeks has been really a transportation rally. The Red Sea between the Middle East and Africa has pretty much been shut down for vessels because of the terrorist lobby and lobbing missiles at our ships. So they are going to have to transport from the Middle East. They're going over the Cape of Africa. It adds ten days to two weeks on transporting. And that is why the oil is higher right now with interest rates. You know, time is money and it adds cost to everything. So that's why you're seeing the rally in the crude oil. You know how that relates to corn? You know, I don't know. I just think, you know, if crude would get over that maybe $85, then you would probably see some more influence on the corn. But I think at these lower levels, it doesn't quite influence quite as much.

Paul Yeager:  Well, then what about in relationship to Diesel? I guess that would be a question. Matt in Iowa wanted to know on why is and diesel going down? Same answer.

Jeff French:  I think demand has been phenomenal. I mean, you know, look at the weather that we've had. There has been no weather hiccups, especially in the Midwest here. We've had ample times to get fertilizer on, Do all the tillage hog rain farmers, they can't sit still, especially when it's 55 degrees out. So they are out there, they're hauling grain to town, they're doing things, they're working. But I think the demand has just been that good.

Paul Yeager:  Do you anticipate then maybe demand could fall off just for those things you're talking about come spring?

Jeff French:  You know, that's going to we're going to have to see. I think, what happens here with the stock market. I mean, this week, the stock market traded up to new all time highs. It certainly wouldn't point that a recession is coming. I mean, you just look at it, go out Christmas shopping in the stores. I mean, they are not alone. Their apps absolutely slammed. So we'll just have to see. Come here in the first quarter.

Paul Yeager:  All right. I teased a cash question. We'll finish with the cash question. This one is Mike in Iowa via Facebook. Is there a possibility to see $5 cash, corn and $13 cash beans in the fall of '24?

Jeff French:  Well, I mean, depending on your basis, Dec corn 24 right now is, I think 502 on the board. So certainly we could see $5 cash. I mean, that's not far away. There's a long growing season upon us. And you look at the last three years, I mean, and I'm talking Iowa specifically, but it definitely goes to Nebraska, Missouri, Minnesota. I mean, we are dry, you know, not severely dry, but I mean, it's it's been an awfully dry 3 to 4 years. So, yes, we'll get a plan in. But what happens after that is going to be the key. So a lot can happen. But no, I $13 means cash means, you know, we're 1250 right now on the board in November. That's not too far away. So, yeah, we could absolutely see that.

Paul Yeager:  As long as we maintain it.

Jeff French:  Well, you got to take advantage of it. Yeah.

Paul Yeager:  You don't have to stretch your neck as hard either, because a volatility. Jeff French, appreciate your time. Thank you so much. Thank you, Paul. That'll do it for Marketplace. Next week, we are going to look at the year that was 2023 and how it impacted rural America. We'll also have the commodity market analysis with Kristi Van Ahn Kjeseth. Thank you so much for joining us and have a great week.

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