Market Plus with Matt Bennett

Welcome into the Friday, July 12th, 2024 installment. This is Market Plus. Matt Bennett is with us. I said during the TV show, this is the most questions we've had in a while. I'm not saying negative news brings everybody out, but there's certainly great concern in rural America for a number of reasons. And it kind of starts with the size of the crop.

Paul Yeager: Let's go to the first question. Glenn in Ohio, who was going to ask you? We'll get into the Glenn's question in a moment with today's corn genetics. How large could this crop be without any drought stress in the large corn producing states? Big crops always tend to get even bigger after harvest.

Matt Bennett: So touchy subject. Well, because obviously, you get northwest to, here, ways and there's some folks that had excessive flooding damage. I understand that you get along just south of I-80 in Nebraska and, absolute, devastation with the hailstorm last weekend. And so when we talk about this crop being fairly large, people get ouchie. Okay. But here's the thing, Paul, I've talked a lot lately about Eastern Corn Belt could prop the corn market up because you saw that drought index continuing to expand in Illinois, Indiana, Ohio. And then Beryl comes in and Beryl comes in and dumps 2 to 4 to five inches throughout. Basically every area that was dry. we can no longer say that that that dryness could prop up the market. In fact, Paul, you know, I, I think we're looking at an awfully large crop in the Eastern Corn Belt to where Indiana and Illinois could be records. And I would probably bet someone that, you know, a bottle of water that we're going to we're going to see both states see a record deal. I think it's very possible. And so obviously there's going to be offsets here and there. What's what kind of what kind of yield to get to the answer. I think you could see an above trend line yield potentially as of today. I know no one wants to hear that, but I do think you're gonna have to finish. Well, I mean, it takes a lot like, right now, it looks great. Things are great. What if you get into a hot and dry pattern and you don't finish? Well, maybe you go from a 182 potential, you know, to a 178 or 9. Regardless, Paul, this looks like it's going to be a very large crop.

Paul Yeager: Boy, 179 that's a big loss for a heck of a good start that we have.

Matt Bennett: Yeah, I don't think that it happens unless you finish very poorly. All I'm saying is, is it's not in the vent. We got to be cautious.

Paul Yeager: Well, last year at this time, July 4th, post fourth, that was the last rain we had in Iowa. And a lot of the corner. Yep. For weeks. Yeah, it got hot. It got dry. We still had a really good crop.

Matt Bennett: Genetics are certainly impressive okay. But the bottom line again is that it's not necessarily the heat during the day that concerns me. When you're trying to finish your crop out and fill out the air. It's hot nights. You don't want hot nights. And so if you can avoid that, Paul, I think you've got an awfully, awfully good chance at a 180 plus yield. I don't want to commit to anything above trend right now again, because I don't know how we're going to finish.

Paul Yeager: But we're going to know a lot here, more in the last two weeks. Okay, let's get to Billy in Quebec. Two Canadians in today's mix. Thank you. Billy. ‘We hear rumors that Brazil still has a lot of soybeans on storage to make pressure on their government to cut the export taxes. Is that true? And will it have a big impact on price when they finally sell all their beans?’

Matt Bennett: I mean, we've certainly heard the same thing. They haven't exactly been out of the export business, but as far as competitiveness, we've been pretty competitive. Whenever you look at farm prices at the Gulf. We're pretty competitive right now. China comes in for the first new crop purchase this week. Excellent news. Nice to see. But overall, do they want to purchase from us or do they want to purchase from Brazil? I think they've told us and the rest of the world how they feel. Absolutely. If the Brazilian grower lets go of all the beans, it's going to be a tough row to hoe. And so I do see a fair amount of headwinds there. We're building world stocks on soybeans. That's all there is to it. The Brazilians are growing more stocks of soybeans than the Brazilian or the number one exporter in the world, both corn and beans. And we have to understand, as a U.S. grower, the tables have turned here.

Paul Yeager: Well, that sounds bearish. How about this question? ‘It would seem bearish sentiment is winning the day. And the grain markets. Are there similar years in 20 as 2024 that can provide light on the way forward at these cheap prices? Are we building demand or do we need to slide further?’ Asks Phil. In Canada.

Matt Bennett: Well, Phil always comes up with good questions and this is a good question. But are there similar years? Absolutely. My team has touched on this very heavily. In 2014. When you look at the charts. Talk about mirroring one another over the last several weeks. Last year we were talking about ‘13 and ‘23, and then what's it going to look like going into ‘14 and ‘24? And quite frankly, we've mirrored one another. And we haven't been neck and neck, but we've been neck and neck lately, Paul. And up until the report on Friday. boy, I would have told you that we may continue and actually plummet this market into that September time frame. I do think we, you know, bought some time with this report. We got a little bit of a lifeline, so to speak, and maybe the funds aren't going to just ram forward. I mean, we didn't talk about this in the main segment, but right before we came on here, I saw our commitment of traders show. This is an all time record short in this corn market. And so are the funds going to push it? Do they have the money to push it? Yes they do. Will they decide to push it whenever. You just got a bullish report. Time will tell. But by all means I didn't see the reaction I would have expected. With the 200 million bushel missed by the trade on Friday. It just shows me that the funds are committed to their position. Well, they pile on, I don't know, but they're committed. So if you follow 2014, you got all the way down to three 18th September. I don't expect that to happen. I don't expect it to happen. But then you built from there. my personal opinion is if you, if you plummet into September, I don't think you see an October average of $4 at this point. I just have a hard time believing that that will happen. I think you see sub $4 on the board between here and there, though.

Paul Yeager: Okay, well, Justin and Iowa, then is, I think, a common question. ‘Do you believe there is as much old crop grain out there as they say, with the basis getting stronger and stronger?’ because and the reason I ask this right now is, given what you're saying, it still sounds like there's still corn to be sold because as you said during the main show, no one wants to win, lose, to, to unload something that they're going to lose money on. But what you said is, yeah, but you could lose even more.

Matt Bennett: Right now in north central Iowa this past week, some folks got bids, I believe around 450. A couple of guys I work with called the guy and said, ‘hey, you know what? Could you push it another dime?’ He said, ‘Sure. Why not? We need the corn today’. He called me and he was freaking upset because he's sitting in a line all day. You know, a lot of corn broke loose, and that's the whole idea. We're going to pop this basis and shake some bushels loose. Now, it's been interesting this year. You shake bushels loose, and then, of course, the processor kind of backs off of things. I, I understand how this works. And then it's, it's, it's a ghost town the following week. Okay. So is, is there that much corn out there still? Paul. Yes, there's a lot of corn out there. I've talked to a lot of growers. We feel, we feel like the growers are sitting on too much old crop corn, especially for the time of year that we're sitting in. It's been hard. It's been frustrating. I certainly understand their angst. But the bottom line is they got to make a decision. They gotta make it here before too awful long. Yes, I do think there's a lot of corn out there.

Paul Yeager: Let's look ahead to ‘25.

Matt Bennett: Right?

Paul Yeager: Because Roger in Minnesota asks a question. And I have this because you like to talk fertilizer. And this is what his question is. And I apologize to Brent, Kevin and Julie as I'm going off of order. And this is the last question. ‘My retailer told me fall 2024 applied fertilizer prices went up this week for P&K. Will we see less corn acres in 25?’

Matt Bennett: Most likely right now. Paul, if you look at fertilizer prices versus the price of corn, it doesn't look pretty, you know. So 23 was not profitable for a variety of growers unless they hedged the heck of a lot of grain ahead of time. ‘24 is going to be less profitable overall for growers. We just did some math the other day on ‘24. If you hadn't sold any corn yet and you use the Uvi numbers, just add a $300 cash rate. You need 285 bushel corn just to break even. I mean, that's tough. And so you start doing the math, you know, with 450 DS 25 that's on the board, you know, and fertilizer hasn't come down. It makes no sense. and so if you see the current events continue, two things are going to happen. In my opinion, you fly way less fertilizer, when, than what you have in years. And I'm afraid that's a possibility. Okay. The other thing is, is I can't see an avenue where you increase corn acres in ‘25 than what you did in ‘24. I just don't think it happens.

Paul Yeager: When you see ‘25 on the board. Are you pulling any sales at the price that it is now? And do you think the same thing about ‘26, knowing that the next two years could be pretty rough?

Matt Bennett: We've been locking in some worst case scenarios. For instance, using in November short dated. It keeps us protected through about October 25th. Okay. And what are we doing there? We're saying, listen, if I'm going to buy all this fertilizer that I typically like to prepay or book, then I want to have a number to book it versus so that I feel good about it. And I don't really want to say 450 get away. Now, after Friday's report, maybe we see a little bit of a bounce in here. if we would have had a bearish report on Friday, I felt pretty confident that we would have marched significantly lower across the board. And so thank goodness we got, you know, again, we got a lifeline thrown at us.

Paul Yeager: But just remember things this has to be put into perspective. Yeah.

Matt Bennett: Absolutely.

Paul Yeager: Life is, we're in the middle of summer and you've had a rough week. Yep. And if you want we can talk about it or we can close.

Matt Bennett: Yeah. I mean, basically, you know, people are so frustrated with the markets, but, you know, we lost three kids in my community this past week, which it's hard to explain. You know what the devastation is. But I can tell you this, Paul, sometimes perspectives are really important thing to do. And the report, I don't think anybody in my community give a rats rear end about the report on Friday. And I don't think anybody cared about the price of corn either. So perspective is a very interesting thing. Sometimes we've got to realize it's been super frustrating lately, but there's more to life than this.

Paul Yeager : I wish the best for that family. All three of those families, and those are tough. Matt. And I know that your family and I appreciate you powering through.

Matt Bennett: Yep. Absolutely.

Paul Yeager: Thank you Matt Bennett everybody that's going to do it here for our market. Plus next week we are going to honor the tradition of cheesemaking. And we're going to also hear from Arlen Superman. He'll join us for the economic analysis section of the program. Thank you so much for watching and have a great week.

Trading in futures and options involves substantial risk. No warranty is given or implied by Iowa PBS or the analysts who appear on Market to Market. Past performance is not necessarily indicative of future results.