Paul Yeager: Welcome to the table for the Friday, December 20th, 2024 installment of Market Plus. Don Roose over there. I'm over here. Don, I talked about bird flu at the end of the program. California issued a state of emergency. California is a large producer of dairy. We're we've we've seen it in Iowa. Kind of work through a little bit in dairy. And we've talked about it. What's the bigger impact here in the next quarter? The dairy industry. We also have Iowa have more positive cases in this fly area for turkeys and for chickens. Is it going to get worse before it gets better?

Don Roose: Well, I think it makes everybody nervous. That's in the industry. Of course we're talking more in the birds right now. But you know we're milk is a concern. And you know, the hogs just seem to have disease after disease issue. And so I think, you know, the hog people are very concerned also. you know, when it could it move into the hog industry. So, and then that's the supply side and then the demand side is what does that do to the image on people eating the, the pork, drinking the milk, and such. Paul. So it's a big issue.

Paul Yeager: Yeah. And it's one that I'm sure we'll cover a lot here in the New year. And one thing that we're also going to talk about in 25 is what trans question is any good marketing windows for ‘25 crop on the horizon that we should be ready for?

Don Roose: Well, you know, I think the thing you're always watching for is if you have a weather change or a big spike. but I mean, from a producer standpoint, what you're really looking at is if the basis levels are too tight, we've had some good basis pushes on corn. You know, those are probably your window to take advantage of and change your ownership. Get your money off the table and change it to another item that can give you a push to the upside and not expose yourself too much.

Paul Yeager: Protection is important right now. I think you mentioned it in livestock. your comments there. But it's the same in grains.

Don Roose: Well, in the grains, you know, three years until this last year and a half, we were marketing for dollars. Now we're marketing for dimes. So, I mean, you know, it's a lot different. You're watching the bases closer, you're watching these carries closer. You're watching the seasonality, closer you're watching for places where you get some weather scares. You add premium to the market, you know, look at it right now. The funds are adding premium to the market. They're long, you know, probably 150,000 contracts. so you got to be careful as they start to get out of those positions. So use those, those pushes to your advantage, Paul.

Paul Yeager: Let's talk weather because Jim had a question about whether that is important. But again, it's a huge speculation, Jim, in North Iowa's question is some predictions are for historic drought setting up for 2025. Will the traders respond to forecasts like this?

Don Roose: Well, you know, I think, probably what he's alluding to is some of these big, long term cycles, you know, going back to 1936 and, you know, they're out there, people are talking about them. But, you know, I think you have to take it more day by day and funds really don't get involved. and the market doesn't really get too premature. it waits for a real signal. And so far, we don't have a signal, so I would say it's possible. you know, I always hope a drought happens to somebody else like South America. So that's the real problem.

Paul Yeager: Well, given what you've said about, you know, the dimes, not dollars, we can grow more farmers are thinking, I mean, they're the ever optimistic bunch if I can just grow more and counter lower prices. But if it's dry for me, I'm not able to grow much. But we've proven we can grow at least the trend line. So where's the optimist and the realist when it comes to the farmer? When it's trying to plan and protect against the weather?

Don Roose: Well, you know, you're right. You can partially produce yourself out of bad prices, because you get the volume. But at the same time, you still have to do a very good job, of getting the crop sold on a timely basis. And you really have to use a lot of those seasonals. You have to use a lot of those technical. So I think you just have to be on your game more than you ever were. At least the last, you know, the few years ago when it was easy, when you had $7 corn plus and all this and that.

Paul Yeager: And we used to have, you know, we had better than $5 wheat not too long ago. And Bryce in North Dakota wants to know. That being said, Don, is there a more bullish play out there for wheat compared to beans this year?

Don Roose: Well, I think the one thing about it is the, the wheat market is down here at such a low level and you've got Russia, you know, that is on its heels with production. so I would say that is possible. It's a lower cost crop to put in. So, it's kind of, again, you know, we talk about the best of the worst. I think they're tied.

Paul Yeager: It's supposed to be a little more optimistic than that. I want to spend the last couple of minutes here on South America, and let's open up the discussion. let's start with Robert's question. If we could, how long after the South American harvest will the world come back to the US soybean export market?

Don Roose: Well, you know, if you look at it, were the export windows closed right now on soybeans for the US after the first of the year, you're going to switch to South America. Pretty fast. So, for our next export window is probably starting next fall. so you've got a long ways to go and you've got your biggest buyer in the world, China, continuing to hug Brazil closer and closer. So somehow we have to get those guys back to, talking with us and, hopefully shut down the production in South America.

Paul Yeager: All right. Trying to go with everything. Gets all their business from Brazil. There's other customers around the world. Is that an opportunity for the United States?

Don Roose: Yeah, but we've got to grow that business. And you know, it's you know does it grow slow. So that's the problem because you got to set up the, you know, the whole shipping structure, the consumption structure, our biggest growth area, actually in the soybeans and I and I'm afraid I hate to say it, but I think that's the way the corn market went, where our biofuel was the big winner and taken, you know what?

Paul Yeager: So are we using more soybeans domestically than we're shipping right now?

Don Roose: Yeah, we're using more domestically, you know, right now.

Paul Yeager: And so.

Don Roose: It's to continue to.

Paul Yeager: Grow. So then how do you, you talk about you can't build markets overnight. Can you build more demand overnight?

Don Roose: Well, we are building Paul. We're building biodiesel plants, you know, pretty aggressively. and I think that's going to have to continue, but it's going to have to it's going to have to just like ethanol. It just didn't grow on its own. The government gave it a big boost. And I think that's where it's going to have to come. The government's going to have to get involved, realize that we've losing our, our, demand, to, South America, and we've got to do something to increase our domestic demand. And we got to do it, you know, timely, like it's got to start, now.

Paul Yeager: Again, let's go Brazil for a moment on this large crop that keeps getting bigger, which will probably lower the price further, not just because nobody's buying from the United States like they once did. But what's the currency discussion in here that we need to pay attention to when it comes to the real and the dollar?

Don Roose: Well, and it's a big one because the real the Brazil currency is down 20% this year. So that makes them much more competitive. They're selling in US dollars. And at the same time their inputs are and their currency. There was one time this last week where our soybeans, were down $0.40 and theirs weren't down at all. They were unchanged just because of the currency fluctuations. So it's a big deal. you know, particularly when you have the biggest producer of soybeans in the world and their currency is the weakest in the world this last year, down 20%. That's pretty big, Paul.

Paul Yeager: And I've heard economists tell me that a weaker U.S. dollar is good for commodities. So that's why it's better for Brazil right now in selling their soybeans as well to China?

Don Roose: That's exactly what it is, is because it makes their product around the world, cheaper. So they can sell it easier. But then they're also selling in the US dollars, which we want the same thing crude oil is, is traded in US dollars around the world the same way.

Paul Yeager: Crude oil is. Let's see this week we do to do we lost again. We're back below 70. What does that mean for the ethanol market?

Don Roose: Well you know I think the you know and that's another one because you know we've our consumption is going down, not up on gasoline, consumption, which is what the blend is. And then at the same time, so far, it doesn't look like we have a green light for E15, around the year. so we will see what happens with that as we go forward to, Paul.

Don Roose: But as of right now, that looks like it's dead year round.

Paul Yeager: E15 but let's hope everything's alive and positive in 2025.

Don Roose: Well, and I mean, you know, that's you know, agriculture is ultimately is, optimistic, business. And I think, you know, there will be changes and there'll be opportunities going forward, Paul.

Paul Yeager: I appreciate your time and your insight on this all throughout the year. You did a lot for us this year. We had you at the State Fair. We've you know, we had here several times. So Merry Christmas and happy New Year to you.

Don Roose: Thank you. Paul and I always like to be here. And I hope you and all listeners have a great Christmas.

Paul Yeager: Don Rose, everyone, thank you so much. A reminder to get signed up for that Market to Market Insider newsletter. It's free. Sign up at Market to Market Talk. You can find out what we're going to do with Don next next week though. We're going to look at the year end economic report. We're also going to have an eye on the future. Chad Hart and Jeff French will join us and make sure you keep an eye out on our social feeds for the release of that program. That's a big, big wink, wink, nod, nod to watch our socials. Thanks for joining us and have a great week.

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