Market Plus with Kristi Van Ahn-Kjeseth

Paul Yeager: Welcome back to the table for the Friday, January 3rd, 2025 installment of marketplace. Kristi Van Ahn-Kjeseth Is with us. I can't speak, they want me to say some words today and I can't even get through your name. That is how this piece is going to go.

Kristi Van Ahn-Kjeseth: This is, my last name is a very easy last name. I can't believe you can't say that.

Paul Yeager: I remember the first time we had a conversation. I said, okay, tell it to me. Seriously, how am I to say it? And I have anytime I say people around me, I go, how do you say your name? I said, and Van Ahn-Kjeseth, it's a lot. I got it. All right. Let's, But I want to talk about words first. You said two things during the program that I just didn't get a follow up on that I just want to explain, because this is a difference. You mentioned managed money. We hear about it in the grains, but you were mentioning in the livestock. What does it mean in livestock? And is it different than what it means when we talk about commodities?

Kristi Van Ahn-Kjeseth: No, it's the same when you talk about fund movement. As far as those investment funds coming in and being buyers or sellers. So managed money can be both long or short commodities.

Paul Yeager: So that means define that one two for me.

Kristi Van Ahn-Kjeseth: Yeah. So they can either be not holding long positions or buyers of a commodity or not holding short positions. So for example, they were record short holding not that long ago and then have bought almost 500,000 contracts of corn over the last, you know, six, seven months. And when you see those large swings one way or another, they can really affect the market. And I was talking about manage money being long cattle. Now that's live cattle right. They do I think track feeders to a degree. But when you're talking cattle you're really talking live cattle. When you're talking wheat, for the most part, you're talking Chicago wheat. But that is what kind of the general consensus around the market. So if they're holding long positions, they're friendly, they're bullish to the market. And so the fear is that they have all these long contracts. And if they get to a point where they feel like cattle have ran their course, they have a lot of room to sell cattle. And that could suppress prices, especially in thinner markets. So that's where it becomes concerning where commodity index traders can only be long, but they're how long they want to be can affect the market. But for the most markets managed money is that focus. And you get that every Friday. And the CFTC comes out with that every Friday to tell you what happened last Tuesday to Tuesday. And sometimes it's just the general trends you want to be watching. Are they starting to kind of slip? Are you starting to see them shorted or buy it. And that can give you that confidence behind the market for a certain movement.

Paul Yeager: Going from one end of the boat to the other? Yes. And you don't want to be surprised and you really have to pay attention because a gradual movement, you could get caught on the wrong side of that trend.

Kristi Van Ahn-Kjeseth: Yeah. And exactly like when they were as short as they were for corn market, that was the one silver lining that everyone was so bearish corn at that point. And you're saying well managed money is now record short. So how long do they really want to hang out here. And typically on those big peaks they don't hang out for a long time. And that was that first kind of spark. Remember when I talk about saying I really want to see a spark into the wheat market, that's an example of what you could see for a spark of saying, hey, we needed that. We needed that to change the trend.

Paul Yeager: Well, what we need is some bullish news on ethanol. Let's start with, Chet in South Dakota for this question. With the carbon pipeline looking doubtful, SAF production will likely go to Brazil. E15 got pulled from the continuing resolution. It doesn't look like it will go mandatory. Infrastructure is not there for voluntary E15. Ethanol demand looks bearish. Is there a good reason to be bullish ethanol right now?

Kristi Van Ahn-Kjeseth: I don't know if you really want to be bullish. Ethanol right now, I don't think there's a reason to be bearish either. I think ethanol is kind of found its niche. It's finding its support. I don't think corn can survive obviously without it. But for some reason we see that grind still happening even though ethanol profitability is not there right now, they are still grinding and you're still seeing those productions, higher than a year ago. And so I think that's supportive of the market. But in general, if you're looking at the corn S&P and saying, hey, where could we see the the surprise cut, in carryout levels, where is that increase in demand come from? I would say you might be seeing it in exports before you would see an increase in ethanol, just because of the way everything's going. We're running ahead of pace for exports, though. The US dollar does concern me that we could make that more, you know, tail it back to where it's average. But I would say if you had to pick between them, exports are friendlier right now than ethanol is.

Paul Yeager: Let's talk real and Brazil in the dollar. I didn't get a chance to do that during the program, but Gary in Wisconsin wanted to know the Brazilian real is lowest ever versus the dollar. China's economy is still struggling, with no 45EZ tax regulations in sight. What is keeping bean prices from plummeting?

Kristi Van Ahn-Kjeseth: That's a really good question. I'm not sure. So if I'm going to be honest, I think that, you know, while we obviously moved on marketing for soybeans, so that says enough right there. $10 has been tricky. I just don't know what's going to keep beans realistically supported. World carry out are so horrendous right now. I think maybe you got that, that little bit of news that it was going to be dry and hot in Argentina and it was meal driven, like you had said earlier, that that buying came in to meal and kind of spilled over to the rest of the complex. So I think you saw that situation as well. And I think you went through $10 with a little bit of force. So you, you brought in some buyers saying, hey, we got through that. Let's, let's be buyers and then risk it back, you know, to say, can we, can we sustain above that? But in general, I am nervous. Soybeans. And you know, we have this crop report obviously one week from day to day, but then, you know, 17 days from now, we also have a new president and, a new president that has been in this seat before and doesn't need to get reelected. And so I think a lot of people have these thoughts of how this next four years will go. And I'm not so sure that's how they're going to go. You know, he doesn't have to please anyone. He doesn't have to get reelected. And so I think there'll be some surprises along the way with President Trump. And I don't think they're all all going to be bad by any means. But if I would say that one market has a lot of volatility ahead of it, I'm worried about soybeans.

Paul Yeager: Just one, just one volatile market. I mean, that's the thing that I remember from the first four years, the volatility. That was also a combination of just the general factors of the world. We were dealing with a lot of different things at that time to that's it. Just the two coupled together for very volatile times.

Kristi Van Ahn-Kjeseth: And you actually have that right now I just feel like we've become desensitized to it. You know, Russia, Ukraine is still a very big issue. And I feel like none of that premium is built into that market right now.

Paul Yeager: Well, look at the story that Dave did. About the look back at Jimmy Carter, ten years, Russia and Afghanistan, where, I mean, that Russia was in Afghanistan. We're in year what for many, it's going to be this year, I think, in Ukraine. So yes, things can go long and have an impact all right. Let's get to, 25 now with Trent in Iowa for old crop soybean cash marketers. Is there a downside trigger number to be watching to give up? Just throw in the towel. Should we be using the same thinking on the 25 crop? So I guess if you have anything left on 24 to say, say it. But otherwise let's focus on 25.

Kristi Van Ahn-Kjeseth: Yeah, I would treat $10 if we can stay above $10 for soybeans. I mean, we had such a brutal day today, so you're not looking very pretty. And I'm giving you a very tight window. But I would say that if beans break $10, futures cut the losses and you can always defend it if it looks like it's going to come back through.

Paul Yeager: Given what you said about beans and the downside, I think you also make it sound like there's a small window to start doing some stuff on beans in 25.

Kristi Van Ahn-Kjeseth: Yeah. So I think, you know, you have a short window here and then I think you need to really be looking at the bigger picture. And so my hope for 25 would be for 60 to for 70 on December. Corn is my hope that we can get there. And I would say I'm very nervous about corn's acreage number. So we have USDA outlook for them in February. That's your first hint. It is not an official number that's there kind of hint at what we could see. And then March 31st is your planting number. And I'm just so worried you're going to see a very, very large corn number out of that, which would be friendly beans. And given an opportunity rate, I'm hoping we can get to 460 to 470 Dec 25 corn before March 31st to be able to do marketing. Otherwise as far as like, downside price corn, where you would say, hey, let's throw in the towel. I don't have those for 25 because it's so early in the season. We had an opportunity a long time ago to do some marketing. I hate when you have people that come into corn, so please don't think that I'm doing that by any means. It's a small fraction that we were able to, but enough of a fraction that gives us confidence to just be patient and wait for that, before we really do anything major. So I would say there's not really a line in the sand for 25. And shortly in February we start to generate those insurance prices. And that makes things a little bit easier, that you can kind of say there's a floor on a small percentage of your crop.

Paul Yeager: But the acreage fight, I mean, we're really good at growing corn in the United States. The beans have really Brazil has become in and really taken a lot of this business. Corn's their second crop. We love to plant corn. It's the easiest thing. Mark Gold just told me a couple weeks ago, we're really good at planting corn and doing corn. Is that what the default will be? Is planting corn in ‘25?

Kristi Van Ahn-Kjeseth: Yeah, I think so, without a doubt. Because honestly, I think you're looking at a situation right now for a producer that looks at the corn prices, says, well, I'm not happy with it, but on a decent yield I can make money. And then I think they're looking at soybeans and being like, I can't make money. And so I think that alone is going to push the acres. And then you put on the fact that I think producers are natural gamblers. I mean, that's so much of their story that I think you see a producer saying, I'm going to bet on the chance of getting a good cornfield. And I had a conversation the other week with a producer that I thought was so well-spoken when it came to it, and he goes, I don't mind paying more for my seed costs. Like, I don't want to pay, but I don't mind paying more when I see the returns I'm seeing in my cornfield. But when it comes to beans, I'm consistently paying more and I'm just not seeing those returns there. And I think it's that frustration factor, and I would be frustrated as well of seeing that happen.

Paul Yeager: You set optimist. I think as a gambler, optimist farmers have always been that way.

Kristi Van Ahn-Kjeseth: Put it that way.

Paul Yeager: All right Kristi, good to see you. Good to see you too. Thank you so much. Yes. Kristi Van Ahn-Kjeseth starts our 2025 year here on Market Plus. And I do have a reminder to get signed up for the Market to Market Insider newsletter. It is free. Sign up at Market to market.org. We send it out to you each and every Monday. Many of you found that secret. Now join us next week. We are going to look at a pair of government reports with two of our market analysts. We'll have Matt Bennett and Ted Seifried with us. Thanks for joining us and have a great week.

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