Market Plus with Don Roose

Paul Yeager: Welcome to the table for the Friday, September 20, 2024. It's all about 20s anymore, Don, 2024. I've been saying that for a while now here and did you think that you'd ever trade in the year 2024 and in the 2020s, when you were little Don, did you think that you'd be working at this time?

Don Roose: Well, you know, I always tell people I enjoy the commodity business so well that I'm going to get a job someday. So. So I guess, yeah, I keep working along.

Paul Yeager: But you've had many, many jobs, which I do appreciate. You you put up with a whole bunch of my questions at the Iowa State Fair this year. If you haven't gone back and watched that podcast, the MtoM, Don, told us all sorts of great stories. We covered many of your jobs, but commodities is the primary one. I'm going to make you talk politics here. But first I want to talk tariffs. So I guess you could say we're talking politics. Let's go with Trent off of Facebook on this question. Don, how likely are Chinese tariffs on U.S. AG goods. And if so, does this mean we are more likely to see soybeans with an eight in front instead of a ten?

Don Roose: Well, I think if you look at it, I think, you know, you talk tariffs. But I mean, we know the Trump administration is very interested in tariffs. They talk about that at the same time, the Biden-Harris administration hasn't really canceled the tariffs that we have. So if you look at it, I think the policy from the US looks like tariffs continue. And does that level the playing field. And does China when they have two places to buy soybeans basically South America and the US. If South America has a problem that looks like we're the last people standing. So, I think it's just a matter of how to coerce them that overall, we level the playing fields and, we'll, we'll have a fair trade poll.

Paul Yeager: Are tariffs part of this inflation issue?

Don Roose: I think part of the inflation issue, you know, you hate to say it, but it's the government. It started with COVID. Of course, it was an issue, when you put, what, 3 or $4 trillion of new money in a market? certainly you're going to expand, you know, everything. And that's what happened. And we just can't get off of that so far, Paul. I mean, from the government job creation to spending more money in every category. And it's not just one administration. It's both administrations talking the same.

Paul Yeager: Keith in Illinois wanted me to ask this for awhile, and you're opening the door for me. Don, does one presidential candidate offer hope for bullish commodities?

Don Roose: Well, you know, I always think it's not just one one administration that it really makes the difference. I think Congress has a lot to say with it. The weather, we know that 80% of the market, turns out to be what happens with weather. And we know in the big picture things are domestic. The exports are the little difference its our domestic demand that is really the key. So biofuels going forward I think is possible. And I think both administrations want, biofuel expansion.

Paul Yeager: Because we're not going to create less grain. Right. We're not going to cut down on the supply. So we need more demand.

Don Roose: Well, we know what happens when we've seen that over the years. When you cut down, our acre production, what happens is the other, countries around the world expand. So, you know, in the end, it really hurts you. It doesn't help you. So I don't think we're going to go down that path again. Paul.

Paul Yeager: That's how Arlan Suderman answered that question a couple of months ago. He says, if you want to give up those acres, put him in the CRP. Brazil will gladly take your place on the dance card.

Don Roose: And I think he's right. I mean, because we've seen it before. We've seen it a couple times, you know, not only from the CRP, from the PIK, from, from the storage years, so just hasn't worked.

Paul Yeager: All right. Well, let's we're at harvest time. Roger in Minnesota has the next question for us, Don. And it's a common one. And we've had maps and things like that. But are the harvest lows in?

Don Roose: Well, I think when you look at this I always say this like a card game, Paul. And it depends, you know, how the cards come out. But I think so far the cards that have come out has said, yeah, probably. Oats and wheat scored a seasonal low odds favor that, corn and soybeans scored a season low. you know, and this is a typical seasonal market. I mean, sometimes we make these markets too complicated, but, typically we top out in the spring, and we put our lows in the fall, and we can put them in early if the prices are too low because the producer doesn't sell. And we have concern with weather around the world, which we have all those things, Paul.

Paul Yeager: Do you agree that we are back to seasonality more than we have been since pre-COVID? Because 20, one, two and three have all been a lot of counter seasonal things don't make sense. You feel we're back to pre 2020 right now with understanding and being able to follow seasonality.

Don Roose: I think we are, but I think the seasonality, Paul, has gradually been adjusted because the big seasonality is where we're really at is we didn't have this competition from South America. You know, when you look at this year, another typical seasonality you get into the spring, we're not sure. Well, we don't know what happens with Brazil, South America. That's what's going on now. Then we get into our planning. You know, if they have a good crop, maybe it's here. But then if we round the corner and you get into the summer, Brazil's with a monstrous export program. and they paced us. Well, that's what happened around the clock. South America had a decent crop. They sold a lot of corn. Now we're down at the lows here again. Let's see what South America has in a La Nina a year. Do they run into problems? And then I think the card game starts again.

Paul Yeager: Let's talk options. We got a whole bunch of things right now, to think about. Mike in Iowa has a question, Don. It looks like the bottom is going to fall out of corn. You don't have to agree or disagree with that one. But the question is, should someone just sell now and look to re own later?

Don Roose: Well, I think, you know, there's a lot of moving parts within that because if you have your own storage, to me it doesn't make sense. Try and use the carries to your advantage. See if you can get a better basis. So if you have your storage, I would say no, but try and use some kind of a hedge program out there. if you have to pay commercial storage, you know, look at the rates, look at the return is hard to beat. let's just call it $0.07 a month or more storage on corn. And, let's just call it 12 - 14 cents on soybeans a month. So under those cases, you know, you're probably better off to sell the cash grain off the combine, cut off the, expense meter and then re-own with some kind of options or futures or however you feel from guidance.

Paul Yeager: I think I asked you this in August, but did you hear any reports anecdotally of people who they didn't bother to empty the bins and they are just selling stuff straight out of the field this year. And holding on to what's already stored, save that time and labor.

Don Roose: Well, I mean, we've seen some of that. Some of it goes to a quality issue. You know, you want to turn it. But yeah, there there are, carryover bushels. I mean, I think on a whole, I would say the producer feels that he could have done a better job last year on marketing. We really didn't get a weather scare. Paul, which we typically do give you a chance to, do some better marketing in South America, you know, kept coming at us with the sales and China wasn't buying as aggressively. So, you know, I think those are the issues that we faced.

Paul Yeager: Now, I'm going to make you comment on anecdotes and innuendo. Here's a question from Bradley in Nebraska via X. This is the story that he heard. A soybean processor in the Eastern Corn Belt would be shut down longer than expected because the word is they're doing repairs and maintenance because they couldn't. The theory is it's because they couldn't source product. Is this a supply shortage issue, a low price issue. Just something to move the market?

Don Roose: Well, one I would say I haven't heard that from that standpoint, but what is true is that, typically this is time before you start harvest that, you know, you'd go you have downtime not only in soybean processing ethanol plants, you know, because they're going to run hard and long for, a good amount of time. So, if there's profit in the business on crushing, which there is, trust me, they'll source soybeans from some place.

Paul Yeager: And that's been the story part of this whole, the rail, the port issues that have been going on. We've had a couple of strikes, some sales. There's the soybean capacity that's been coming on in the Dakotas and in southern Canada. I mean, we are growing crush capacity in this country. But not everybody is bullish on soybeans anymore. Even with this new crush, is it? Is there something else at play that I'm missing?

Don Roose: Well, Paul, you're never bullish until you're all bullish and you know that you'll turn bullish if South America as a weather problem I mean no doubt about it. You know and I think the fact of it is we can always produce faster than the demand picks. catches us. So we always have that gap where we need a little weather problem and demand comes on slowly because we can add more acres, but it takes a little longer to add a crush plant or an ethanol plant.

Paul Yeager: It also takes time to have a conversation. And we're glad that you came in to be with us today.

Don Roose: Thank you Paul. It's always fun being here.

Paul Yeager: And thanks Don Roose, everyone that's going to do it here for Market Plus next week we'll look at the reductions in rural health care options. And Dan Hueber will be in with our commodity market analysis. Thanks for watching this market plus and have a great week.

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