Market Plus with Kristi Van Ahn-Kjeseth

Paul Yeager: Welcome to the Friday, June 21st, 2024 marketplace. Kristi Van Ahn- Kjeseth Is Here. We're going to talk windshield tours where you started, where I've been, where you've been. We'll get to that in a moment. We got all sorts of questions. the first thing, though, is the next two weeks. There's average weeks, right?

Kristi Van Ahn- Kjeseth: Yeah. Easiest two weeks of my career usually is right around this, like, end of June, report into 4th of July week. It's always very peaceful, calm. But no, it's a big report on the end of the month. And we have to remember that you get two sets of information, you get acres and you get quarterly stocks. So then we take that information and eventually put that into a report and use those updated acres if they choose to. And then from there and that was the report. They start maybe talking about yield and can play around with those demand numbers. And so the next two weeks are such a big market. And really they dictate it. You know what you get for acres. That's hard to argue with as far as where it pencils two weeks later. So you can say, I don't believe it. You can say I don't want to trade it. But the general consensus is the market trades it and that's what you have to work with moving forward. and will be those numbers, they can fine tune them, but it's going to probably be the number they use for a while.

Paul Yeager: Let's pick on numbers and let's do Phil in Ontario's question first, because it's very germane to what you're just saying. Phil wants to know. He says, tell me how big this U.S. crop's going to be. Corn in 181, soybeans at 52. Will the USDA report on June 30th make it bigger, or will we get a surprise?

Kristi Van Ahn- Kjeseth: Yeah. So we need to mark this on the calendar. I'm going to be a little bit on the friendly side of corn out of this, which doesn't always happen that way. I tend to be kind of that risk management side of things when I talk about corn. but when you look at the acreage, as far as that goes, I do think that 90 million is going to be somewhat close to what we get. I think I didn't believe it, obviously, in March, but now that we've had the spring that we had, I do think that that's going to be close to our expectations. Let's say you even go down to 89, right? 88.5 if you do that and then you're look at kind of the conditions. Now, we're not going to get yield out of this report, this next one. But you look at conditions and say last year we had a record corn fields with okay conditions. Right. I would say probably a better start than where we are.

Paul Yeager: As Elaine said a couple of weeks ago, drought in Iowa. Right? And you still put out that big crop.

Kristi Van Ahn- Kjeseth: Yeah. And I think one thing we're going to really learn this year is that we've spent so much time on seed genetics for drought tolerance. This is such a different year. We haven't had this really, really what year you're going to see the drought conditions in the Eastern Corn Belt most likely. But we haven't had those wet conditions, those shallow root systems I think is going to be the big question we have. But if you start taking away, a little bit of acreage and you start saying, hey, maybe we're more like last year, which was a record yield in corn, you start to really dwindle down that carryout number. And I do think that you have the potential to paint a little bit of a friendlier story for corn. And I do think that you could get that to give us to those recent prices that we had an opportunity to market out over the last month and a half. Now, beyond that, I think, you know, you're starting to say, could we really extend much more than that? do we have the demand structure to handle that? Because right now USDA has a lot of demand built in, and I think that's feasible at lower prices. But if we start to cut the supply, there's plenty of room to cut the demand side to give us, hey, we're going to find our way somewhere around here, maybe A18 to A21 somewhere in there where you can get those rallies. But the ability to the for them to extend, I think, takes more of a firm story. And I'm not sure we have that ability.

Paul Yeager:Given that information. Yeah. What do I do in the next two weeks to be prepared. Right. Old crop, new crop because it can both be impacted by this report.

Kristi Van Ahn- Kjeseth: So it's kind of tricky because we had these opportunities to be moving on marketing. And I don't want to say you should have done it. And now you're kind of out of luck. But what I would say is that I would focus on old crop first. If for some reason you have old crop around, I would probably look at a short term put prior to the report just to make sure there's a floor underneath you. There's this is such a big report, I can't stress it enough of saying at least have some sort of risk tolerance underneath that. From there, if you're looking at new crop, I really, call me naive, but I'm hoping that we can see a bounce off of these levels. We're very close to support lines for corn. We're very close to that low of that 446 that, let's say sometime between now and next Friday, tight window. But if you could say, hey, if corn could put back what it kind of gave up this last week or week and a half and you got $0.20 on it, I'd probably be looking at some form of downside protection on it, because as much as I want to call myself, like cautiously optimistic on corn, I still think there's a lot of risk on the table for the corn market. Look at what we did. I think that what we did has to be such a wakeup call to all of these markets, that we can't say that they can't bleed out real low.

Paul Yeager: All right. So George in Kansas then wants to know because speaking of that, what strategy would you recommend with this wheat crop when it is the best you've seen in the last ten years? And I'll add and you just had a $1.30 bump in the last two weeks.

Kristi Van Ahn- Kjeseth: Yeah, that's really tricky that, you know, not a lot of people talk about the good crops. And I would like to see more people do things like that that talk about on social media. I think one thing that's so detrimental to producers is that the negativity is what gets talked about the most on social media. Look how bad my crop is. Look at what it looks like. I can't believe I haven't gotten any rain. And so when you start to hear people talk about that, I think that's what you need to hear more, is that there are places with good crops. So this guy here, sitting here with one of the best looking wheat crops he had, my first question was be can you bin it. Right. Is it going in the bin or does it have to go to town. And I think if it has to go to town, that plays such a different role. But if if it can go in the bin, I'm not the type to say store and ignore. But I would say with what you've seen for a slide and we give it a little bit of time.

Paul Yeager Many of the farmers I've known for decades never tell you how good it is. They'll always tell you how it's so. It's not just a new thing for social media. It's just out there easier for me to see the information in Ohio, Pennsylvania than I used to before. Right. Fair enough. Okay. All right. Let's do Dan in Iowa. Now I'm going to go to the top of the line. I've really messed things up for Julie. I'm sorry. Dan in Iowa wants to know what are the soybean and corn spreads telling us and what a farmers should do to profit from it?

Kristi Van Ahn- Kjeseth: Yes. Let's start with soybeans. There is an inverse in the market right now for soybeans. And I think you're looking at it and saying, okay, if everything is so doom and gloom for soybeans, why are we seeing this inverse here right now? I want to tell you that that inverse is a gift for marketing. If you have old crop beans around, you are looking at a higher price. Right now than what you could get two months from now. And so that gives you the opportunity to be able to sell the beans now and buy a call at a lower price to give you yourself time. So any time there's an inverse in the market and you're running into a time crunch that you need that crop out of the bean, take the cash. That's what an inverse is telling you. Take the cash in your hand. Stop paying the really high interest rates on that money, and then go and look at a deferred option. If you think that this market can rally that if you think there's longer term, because right now you can get all the way out to November options and have it at such a discount that you can be able to look at call, call, spread some form of it to keep your foot in the door and you are taking that cash right now. Corn is a little bit of a different situation. Obviously. I think that's one thing that is surprising me right now. on the corn market is that we are near our contract lows, or recent contract lows, I should say, and the spread from December to July has really stayed flat and hasn't widened out. So typically when you see this situation, you start to see that carry happen. We saw a very large carry from DC to July last year for corn, because the interest rates where they were abundance of a crop. And so that has been surprising to me that you haven't seen that starting to widen out typically on a seasonal chart. This is kind of that narrow time for that spread. So I'm watching that spread to say, hey, if we don't continue to widen out, if we stay here, there could be a little bit more of a story. But right now, what it's telling you is that you're being a little bit cautious around the market. now, if we were to get to these large carries, for example, the carry question didn't involve wheat, but that was one of the biggest things on wheat is not only did we see this huge rally in wheat, the dollar 30 rally and wheat, but talking to the spring wheat guys right now, there was 25 to 35 cent carry from Sep to March, and that would have been a January delivery on wheat. That alone is such a huge value. And so if you did go after marketing and you see those carries right now into the wheat market, even though we are lower, there are opportunities. And I would say that carry right now, to roll out any FTAs that you have for wheat would be a very, good opportunity.

Paul Yeager: Well, Rich, then let's take the opposite of that. Rich says, I think we've been advised to sell on many rallies. Question is, has that ship sailed, though? 

Kristi Van Ahn- Kjeseth: Yeah. You know, I felt like for a while we were talking like we were broken records. I feel like we are very hard on being disciplined. you know, and I never want to be that person that's come up here and said, we did this or we did that because I feel like that's just such a disservice. But there were opportunities to be out there. And now you're looking at such a sizable pullback. Are there still opportunities out there? There are. But they're a little bit riskier. Now that you're looking at them.

Paul Yeager: Do you think there's a better opportunity in the next two weeks or the two weeks after that end of the month report?

Kristi Van Ahn- Kjeseth: It just all depends what we get out of that report and that I cannot stress that enough that this report is such a big deal to the market. Right. It sets the tone. Not only do you have that, you come in and then you have that holiday trade over the 4th of July. 4th of July is on a Thursday this year. So really you're probably seen traders trade that report Monday, Tuesday and then probably be away from the market for a while. And a lot of movement can happen. You're going to start getting into pollination. comments right away for the corn market. And so everything gets rolling so quick out of this. but what I would say is I would be prepared for a move in any direction coming out of that report.

Paul Yeager: Let's close with windshield tours. I took one into central near southern Illinois this week, and as I went south it got a little tougher, but parts of Illinois looked fantastic. Iowa has improved. You came down from Alexandria, Minnesota, to Iowa, said, by the time you get to central Iowa, give me that recap again. And what does that mean?

Kristi Van Ahn- Kjeseth: Yeah, I would say that it took me all the way to central Iowa before I said, this crop looks good, right? granted, we have a lot of time left. but I think the thing that concerns me the most is that where I'm from in parts of southern Minnesota, you don't have forever to grow this corn crop. And so if you're starting and you're so far behind, you're talking about growing degree units already. I get a little bit concerned when you start to talk about that. There's a lot of drowned out spots. So it just that. Nothing looks really great to me right now, to be honest. Beans never look great to me until I can get a little bit further in the season. I just can't ever get a good read for them. but when you look at the corn market in the drowned out spots that you have, I think that's enough that you can start talking about it. However, it's going to be two weeks from now, and those drowned hot spots are going to be very tricky to see from the road. And you're going to lose that story even though they're still there. They're not going to get talked about as much. And so we really need to capitalize on those stories now, or we're quickly going to lose them just off of the chatter.

Paul Yeager: And guess what? We're out of time to chatter. Kristi Van Ahn- Kjeseth: Thanks. Thank you.

Paul Yeager: Appreciate it Kristi Van Ahn- Kjeseth. Next week we are going to have a roundup of new laws aimed at limiting farmland ownership and commodity market analysis with someone else who likes to chatter. Ted Seifried, thanks for joining us. Have a great week.

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