Market Plus with Matt Bennett

Paul Yeager: Welcome to the table for the Friday, November 8th, 2024 installment of Market Plus. Joining us again, Matthew Bennett. We reported on the election. We talked a little bit about the election. Let's start with William's question before I open it up to you. And this is the one that's, I think, on many minds. And then there's the Pooh poohing of it. So William wants to know, will Chinese tariff talk return soon to the commodities.

Matt Bennett: Well it’s already been in the commodities. I mean, there's no doubt that there was concern about this fear in some circles. And so you look at the night of the election and again, we talked about this previously. But, you know, as soon as the tide seemed to really turn and, you know, and results came in and you saw that some of these swing states were going Trump's direction, you look over at the markets and you down $0.17, $0.18, you know, and there was a lot of folks that were thinking, gosh, you know, this is not going to be a fun road to go down. This is but the thing is, is the talk is already there. Is it going to happen? And I think that it's clearly could be a negotiation tactic. By all means I sure hope that we have learned you know what does and doesn't work because we have been down this road. But I don't know I really don't know what's going to happen there.

Paul Yeager: But we're in a place. The Trump tariffs were kept. Biden kept them in place. Right. And so now it's a matter of do we extend them. Do we relieve them. I mean, China was always a big talk. It was a big discussion point this summer with, Republicans on the stump with people about China land ownership, foreign land ownership. I mean, China is always one of those issues that everybody's concerned. But you and I have talked numerous times over the years. China has not been as big of a buyer as they used to be, whether it's tariffs or not. Yeah. And has our market adjusted to that fact

Matt Bennett: Okay. So what we've seen is a trend, if you will, of them buying more Brazilian soybeans. They feel like they can source them easier cheaper. They've built billions of dollars worth of infrastructure to try to make that continue to happen. They're looking towards the future with South America. So as a U.S. grower, which I've got to put my grower hat on here, there's some concern there. Paul, is China going to buy as many beans off the U.S. in the future? Probably not. Or so are we going to build out, renewable diesel? You know, the crush plant is going to continue to come online. Are we going to get behind that and use more of our beans domestically? That's that's paramount, to us not getting in a situation where we've just got this burdensome supply of beans every year. Right now, it's somewhat burdensome, right? But if the crush industry would continue to evolve, I've got to think that a lot of growers would feel good about us using our beans domestically and not being so reliant on, a political discussion that affects exports.

Paul Yeager: But a political discussion could come into that renewable, where there might not be as much of an appetite to fund or relieve some of the burden that the farm replaces, and renewable loses some of its political support. I know it's possible it could happen.

Matt Bennett: It's possible what happened could be kind of a double whammy and that wouldn't be good. So one thing I've talked about, you know, over the last year, last winter I hit on this pretty heavily that I foresaw, as most of us did, Big Bean carry out for this particular growing season, this marketing year, and that we need to have a domestic use for these soybeans. And so if we don't have that, Paul, that's problematic to say the least.

Paul Yeager:Then it gets into a couple of our other questions. Let's do Zachary in Iowa then, because he's wanting to know how many acres are coming back into production in his answer or his part of his questions. With no farm bill in place, are they tied together in your eyes?

Matt Bennett: I mean, the farm bill, I believe will end up happening. I mean, clearly it's it's been a frustrating discussion for a lot of us when you look at, for instance, the, you know, the baseline numbers, USDA is saying if everything plays out the way they think it is, corn acres would go up. Being acres would scale back. That makes sense. And I believe that will happen. In fact, 92 on Corn Acres is probably shortchanging us a little. Paul, when you look at Corn Acres in 22, we were 94 six. So it made some sense that a lot of corn and beans, beans, the corn guys would get us to that 90.7 that we planted for 24. So what would we look at for 25 and I misspoke when I said 22, 23 acres were 94 six. So here's the thing. We might have 93 and 94 million acres this next year if things stay status quo on soybeans, I don't know. We've had a little rally here, but a lot of the time lately, you couldn't even get a fall bid for $10 and above for ‘25. That's a big problem. Even with beans being a lower input crop. That's a big issue for a lot of growers.

Paul Yeager: The majority of the people sitting where you have over the last several weeks have had a hard time finding any excitement for beans, and just because it gets to be 1030 1040, that doesn't really change the discussion.

Matt Bennett: Yeah, no, it doesn't change the discussion much at all. And quite frankly, Paul, we've worked with some growers that their break-even are a dollar above that. You know and so yes in Illinois I'm blessed that we've had just phenomenal bean production over the last several years really ramped up this year. 65 people were disappointed statewide yield though 65. That's a pretty good deal to be disappointed with. But some growers don't have the luxury of their environment, of their soil types being able to sustain, you know, 75 and 80 bushel beans like you do in a big section of central Illinois. And so if a growers more use of 50 bushel beans, you know, you take 50 rows of beans times 1030 basis to board 1040 basis the board. Paul. That doesn't look good at all. That's it all year. Like, hey if I've got cash on hand and we know liquidity ratios don't look as good as what they did before, but if I've got enough cash on hand to put the corn in the ground, I do believe that there's going to be some folks that are going to opt for corn. I don't think corn on Corny Acres get out of control, but I absolutely think that corn is going to win the day pretty easily next year.

Paul Yeager: Well, we could talk about field work, on things, but let's talk this one instead, though. Jeff in Kansas, Matt wants to know how do other countries grow grain cheaper than they do in the U.S.?

Matt Bennett: I mean, it comes down to currency. There's no doubt as well. You look in Brazil, they're not looking at $20,000 an acre for farm ground. You know, you walk outdoors here and you get to farm ground. And what's it going to cost in an auction? And you know as well as I do, if it's close to town, it will be twice that. But if it's out in the middle of nowhere and I were Illinois and it's good ground, you're talking 20,000. So their land costs, first of all, is one of the main things. The other thing of course, comes down the currency and the dollar versus the real was pushing a a multi-year high just this week. And, absolutely some of these Brazilian growers were probably rewarding the market, I'm assuming, and doing quite well with it.

Paul Yeager: Because they have the optimism that the rains came and that the crop that they were planting was going to get moisture.

Matt Bennett: Right. I mean, it looks like they're in significantly better shape than what people were worried about before. And again, I don't want to be, you know, a smart aleck about this. But the dry season was very dry. There's no doubt, Paul, but it was the dry season. Yes, they got rain in October and that's something that we all expected to happen.

Paul Yeager: All right. Let's talk about exports to another country. Let's talk about Mexico Bradley in Nebraska wants to know can corn exports to Mexico continue to grow at the current pace? You talked about this on the program a little bit. Whether they will still be a partner. There still are one of our top two partners. Do they continue to be?

Matt Bennett: 

Here's the thing. Mexico probably frontloaded their exports for this year. We know that. Okay. Can they sustain what we've seen so far in this marketing year? Can all corn exports sustain what we've seen to this date as far as sales are concerned? No, it's not going to happen. But the question is about Mexico. And what we got to remember is that we have infrastructure, we have a rail system that very cheaply and effectively and efficiently gets corn to Mexico. I understand that there's been talk, as you know, that we're going to tariff Mexico, correct. You know, with equipment coming back in, that's.

Paul Yeager: Production that's moved from this country.

Matt Bennett: Down there. And then if it comes back in...

Paul Yeager: So their retaliation is what you're talking about.

Matt Bennett: Correct.

Paul Yeager: Okay.

Matt Bennett: And so you've got to ask, could there be some trade barriers there. Absolutely. There could be trade barriers. But again is that a negotiation tactic? I don't know, you and I both know that there's a lot of things that are said that don't ever end up coming to pass. So I believe that our system with Mexico is going to be very hard for them to be able to as efficiently and cheaply source corn as what they can off of us without any major sort of situation with them trying to tariff our products.

Paul Yeager: And this has not been floated. But we have to remember, eight years ago, one of the President Trump's biggest things was blowing up NAFTA and redoing that to the USMCA. I would imagine it's up for examination or if it's possible let's look at that. Is there anything we could do to benefit the United States better? I've not heard anything like that. Yeah. But you know that it's out there.

Matt Bennett: I'm sure that it's out there. I've got to think that there are people and hopefully, objectivity is in the discussion, and they can sit around and say, what did we do good before and what did we not do good before? Now, I know that people watching this would probably say, remember who you're talking about. And President Trump does seem quite abrasive, there's no doubt. But he is a businessman, so you've got to hope that he can stop and take a look at what this would do to us if we start slapping massive tariffs on everyone that we're doing business with because, as you suggested, Mexico, that's one of our top two on corn. Obviously China gobbles up most of the world's soybeans. We need to keep decent relations with these folks. And we've got to hope that that happens.

Paul Yeager: Crystal ball on fertilizer. Do you have one of those? That's the question for Matt Wisconsin as we close up shop here. Does your crystal ball give you any indication where fertilizer is headed?

Matt Bennett: Yeah. I mean and so I've looked at this of course, as a grower over the course of the last 3 or 4 months, I did not like the price of phosphate. Nobody'd like the price of phosphate this fall. It didn't come down. Most of your folks that are in this fertilizer world will tell you it's not going to come down. That's the analysis that I continue to read. I'm not a fertilizer expert, but I study it and I study it very closely. Potash is pretty cheap, which is nice to see. So the big question is your nitrogen source. And most of the people we're talking to say if you can get your nitrogen on this fall, you should. They're afraid that UAN, urea, they're afraid some of your nitrogen sources could get completely out of whack with some sort of black swan event, any sort of world disruption, because supplies are already pretty darn tight. So, while I'm reluctant and I don't really like what my total fertilizer outlay is, I'm probably going to get most of my needs covered this fall, because I think that, most of the indicators are telling me that's what I should do.

Paul Yeager: And the indicators are telling me we're done. Is that okay?

Matt Bennett: It's just fine.

Paul Yeager: No mention of four straight losses to the Illini.

Matt Bennett: Yeah. No, I'm not going to bring anything like that. But Illinois won the corn thing this year. That's right.

Paul Yeager: You got to make sure you get that in. I think that's a win’s a win.

Matt Bennett: Wins a win.

Paul Yeager: Matt Bennett, good to see you. Thank you sir. That's Matt Bennett. Reminder to get signed up for our new free newsletter. Do that when you go to the website market to market dot org. Next week the competition for bragging rights in the world of the giant pumpkin, and we'll have the commodity market analysis of Shawn Hackett. Thank you so much for joining us. Have a great week.

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