Market Plus with Ted Seifried

Paul Yeager: Welcome back to the table for the Friday, September 6th, 2024 installment of Market Plus Ted Seifried. Still with us, Ted, I know, I'm sorry I cut you off. You got going on demand. sustainable aviation fuel, ethanol. Something you talk about, mateys? We're going to talk about fuel, oil in a minute. But I need to talk about you mentioned crop tours and Glenn in Iowa wants to know since the pro farmer crop tour, how much yield loss did we have with the disease and lack of rain through the corn belt and the heat coming next week?

Ted Seifried: Yes, a good question. I think that's a question we get every year. Right. Or people that go on the tour or the pro farmers themselves. you know, what I'm going to say is, you know, look back at last year, right? Last year we were out during crop two doing crop tours in 120 degrees. And then it didn't rain for the rest of August. And yet, yields really held up. I think we have to understand the genetics we're dealing with. And in particular, I'm going to harp on soybeans again. You had a whole lot of pods on bean plants. Well, more than what we did the previous year. And you had these on big leafy green plants. So when you have a little bit warmer temperatures, certainly not what we had last year. And when you have a little bit of dryness, although we did get to okay rains that came through last week, these plants are going to sacrifice themselves to push all of the moisture they can into those pot pods. And I think we're in store for a big, big surprise to the upside on soybean yields this year. I think they might actually be better than one pro farmer suggested. I'm not saying that's going to we're going to see that on this upcoming was the report. but I really I really feel pretty confident that the bean yields going to be a big surprise this year. I think corn did walk back a little bit. And, you know, it's going to lead into another question I think.

Paul Yeager: But it will in a minute. But Stone raised their yield this week on beans to 53 and their corn to 182 three. So they think the crops getting bigger. Pro farmer you mentioned in years past the crop is usually bigger than what you find on Pro farmer. And you're saying that's likely going to happen again this year for soybeans.

Ted Seifried: Yeah, although there being number was really big I think it could even be bigger. I think we're approaching the 54.6 54.7 area. for corn, I do think I mean, for  what I saw in southern Minnesota was a bit of a shock to me.

Paul Yeager: and which part? When you say southern Minnesota, are we the western side of the state? Eastern side of the state? Central?

Ted Seifried: Well, so I'm starting in Spencer and going pretty much straight north and then running just right along the border all the way into Rochester. So through like Blue Earth, for example. Yep. yeah. Wow. Not good. No, I mean, definitely the flooding problems earlier in the year were very evident. The replant wasn't coming along as it maybe should have. Yeah. It wasn't good. So I do think that the corn you'll make may fall in below the USDA's last estimate. I think you might see reduction on the September number and it might walk back. I don't think it drops into the one 179 area. You know, I think it's a 181-182 somewhere right in there. But again, I think the end of the year when we finalize production, you know, in January or even sooner than that. And I think we're all going to be surprised how well beans perform.

Paul Yeager: Let's take your question, Scott in Minnesota and this is on test. Wait, I cut you off before you had a chance. This is the official question. Does test weight matter?

Ted Seifried: Sure, absolutely. Yeah. and that's the thing that I don't think we're adding on to corn as much, since crop two or, you know, whatever. But, the end of August, in early September, corn had an opportunity to potentially really add a bunch of test weight. It didn't happen. So, again, I don't think that necessarily walks the yield back aggressively, but it just, it kind of, it did shave off a little, a little bit of what the potential might have been.

Paul Yeager: Speaking to corn, stick in the corn vein a little bit here. let's see. This is Mitch in Iowa. For those with nothing sold ahead for new crop delivery corn, what is your recommendation? Should producers be locking in some sales now or just. You waited this long? Continue to wait.

Ted Seifried: Yeah. I guess that always depends on how long you can wait, right? I mean, if you can wait till January, February timeframe. As I said earlier, I do think there could be a healthy recovery for corn. I think corn needs to really try to pull out a few million acres. Well, 2 million acres. Maybe. that being said, I do think in the near-term there's more downside. And I think this recovery rally that we had that I think ended on Friday, that was your opportunity to take another $0.30 on corn. And so I do think corn, but even more so on soybeans. I think if you've, if you're going to have to be selling either old crop beans before harvest or, beans or corn and beans off the combine, I think we just saw our best opportunity.

Paul Yeager: But producers are stuck in this weird spot because they're being told, don't sell, don't sell because that's the only way to get the market to rally. And then you also hear sell, because this is the only chance you're going to get. Yeah, yeah. I mean it's a tough spot for somebody to be in right now. Oh yeah. Good advice to that average producer right now.

Ted Seifried: Yeah. No, it is a tough spot. I mean compared to what we have enjoyed for the previous, what, three years? This is a much different animal, right? I mean, we, I said it before this last crop was planted. This is the most expensive corn crop we've ever put in the ground. And you know what happens if we're getting something below four by the time we get to harvest? And here we are, Paul, that was a big risk. And to not be marketing that corn was a big risk. Now you're just kind of stuck in this position where it's just like, well, this I'm not gonna say this can't be happening. It's just, oh, wow. You know shellshocked right. The thing about that though is a rally between now and, you know, mid October could be possibly one of the worst things because you know there's your crop insurance kind of fading away too. And then also, you know, things like I said, I think things could get worse before they get better. So there's different marketing strategies that you can use. There's re ownership strategies, you know, I mean, you can sell cash and if you can afford, you know, picking up some calls to try to recapture another $0.40 to the upside, if we get that rally that I'm thinking is possible between now and the end of, say, February, that might be a way to add pennies to bushels. But at this point, I mean, I think you just have to understand where we're at in the fundamentals of how things have changed. And this is just I'm going, say, the new reality because like I said, I'm optimistic for corn once we get the low end. But, I don't think the lows in yet.. Oh Grrrrr!!

Paul Yeager: I'll see how that one goes out in the transcript. this one's on the demand side of things. Eric in Wisconsin wants to know as the bricks continue to get stronger, how will that impact our exports and the US dollar?

Ted Seifried: Yeah, right. And then it kind of goes back to the sustainable aviation conversation that we were having at the end of the, the, the main show. you I've been saying for years now, I've been on the show for a little over a decade. but I've been saying, since like 2019 that we need to do things to strength in our domestic soybean crush. We needed to we need to have the value add here in this country. And we weren't really talking about sustainable aviation at the time, but that is the opportunity that's now presented itself. So, I mean, going back to when we were having the trade war, and at first the trade war was really negative for us. Turned out, China bought a whole lot of soybeans after that. But, when we got into that, I was saying that, you know, I'm not big on government intervention into markets, but if you're going to have a trade war, I can justify intervening on the opposite side to try to even things out. And I said at the time, it would be great to have some tax incentives to either increase, efficiency for a lot of these crush facilities or to build new infrastructure. And we didn't do that. And now we're we're at a point where we would love to do more on sustainable aviation. We'd love to, have that be a much bigger share of our overall soybean balance sheet, but we just don't have the infrastructure. And in order to have that infrastructure, you have to entice private companies to go in and build that infrastructure and to do that market some markets. Paul, you have to offer them really good profit margins for a long period of time. So they feel very comfortable about going in and doing that. And that means that eventually sustainable aviation will be a sort of a savior to offset the exports loss by BRICs and Brazil in particular, because we'll become more self-sufficient, on our own demand. But the path to get there, I don't think is a comfortable one. I think that's low price soybeans for a period of time.

Paul Yeager: Well, we can't ship right now because we have a water issue again. Again, which is the question James in Oklahoma wants to know is how will low water levels on the Mississippi River or in Brazil affect the grain prices? We've alluded to Brazil's issue. Yeah, a tiny little bit about their dry conditions, not necessarily on their shipping. Right. But what is that impact here?

Ted Seifried: Yeah. So low water levels in the river seem to be a yearly occurrence nowadays for, for this time of year. and it's the worst possible time of year, right. Because we're trying to get as much product down to the Gulf as we can to get the rest of the old crop out the door and start with the new crop. So it's unfortunate. The best thing we can hope for is that the same thing is happening in Brazil, and it's just, you know, okay, we're both sort of handcuffed, but, yeah, I, you know, as we get into the fall, that usually changes. I mean, weather patterns change. Hopefully it comes in time to really get a lot of that new crop moved. But it, it's just not helping things right now. And I'm actually going to say, I think that, you know, when I was talking to in the main show about how our soybean export sales should have been better last week, I wonder if that might have something to do with it.

Paul Yeager: Oh, that makes sense. Yeah, I get you there. Let's talk crude oil to close. Took, pretty big dive. We've seen fuel prices low. We've seen ethanol margins or ethanol stocks, high. Why is crude falling like it is?

Ted Seifried: Well first of all seasonally we are getting to the tail end of the peak driving season. Second of all, you had OPEC, talking about increasing production, which really put a lot of pressure on the market. And then they walked that back saying, well, maybe we'll wait on that. And so you had crude oil trying to have a recovery. But in the meantime you've got the stock market really falling apart. So now there's these big demand concerns. and, and so it really comes down to the overall strength of the economy. I don't think OPEC is, I think, they've now had second thoughts about increasing production. I think they will leave things unchanged for now. but the big concern going forward has to be demand has to be overall economy has to be if we get into this double dip in the stock market, are we moving towards a bigger slowdown? domestically but also globally? I mean, there's a lot of concerns about China demand, when it comes to energy, when it comes to agriculture, when it comes to really everything, because we're worried about the Chinese economy as well. so, yeah, I think crude oil is just in a really tough spot right now, regardless of what OPEC does, I, I think the big concern has to be on the demand side.

Paul Yeager: I'd like to finish with something positive. Yeah. You mentioned corn. potentially once we get through an initial thing, you got anything else positive to end on?

Ted Seifried: You know. Yeah. I don't want to be so negative and specifically on soybeans, and I do I do want to say that like, look, all of these things, all these changes that are going to happen, I think for, for a move to a more domestic market eventually are going to be a really good thing for us. Right? It, just, change can be uncomfortable and I think that's the problem. But longer term, I think there's good reason to be optimistic.

Paul Yeager: We just have to take time, take time takes time. It takes time and it takes time. And we appreciate you taking time to talk with us. Ted, good to see you.

Ted Seifried: Great to be here. Thanks, Paul.

Paul Yeager: Ted Seifried everybody. Next week we will look at the early impact of California's Prop 12 on the hog industry. And we'll have the commodity market analysis with Kristy Van Ahn Kjeseth. Thank you so much for joining us, and have a great week.

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