Market Plus with Ted Seifried and Matthew Bennett

Paul Yeager: Welcome back to the table for the Friday, January 10th, 2025 installment of Market Plus. Still with us. Thank you so very much. Matt Bennett, Ted Seifried I honestly and I want to say this, I mean this and I said this between the programs. I like it when you two ask each other questions. And I want because I want it to just seem like what did you say, Ted? We're having a conversation.

Ted Seifried: Yes, conversation. You're leading the conversation, but we're having a conversation.

Paul Yeager: So you had a question when you came in that you asked, and I was really happy, you said it, because you were talking about it before we started rolling. What was your biggest question of the day that you, I think you kind of just wanted Matt’s, I don't know if you wanted his endorsement or just did he think the same way you did about the reaction to the report? And if people are selling.

Ted Seifried: Okay. I think I know which question you're talking about, but I'm not 100% sure. So was today the culmination of everything that we've been talking about for months?

Paul Yeager: Yeah. And I wanted to know and I wanted to add on to that. Thank you. That is the question. Sure. We always talk about you always say that things are baked into the markets before when the actual report happens. Right. So why this the different reaction today if that's usually the case.

Ted Seifried: Well, because you have algorithms that trade against trade expectations. And I don't think that trade expectations are indicative of what markets have factored in. Let's just get that out of the way. Sure. I think analyst guesses are simply what 16 guys are, guys and gals, are thinking the USDA is going to say on this report, 16 or 21, depending on which news agency you're looking at. What the market is factored in is a completely thing, completely different thing that comes from an amalgamation of thousands and thousands of traders. And when you get a report like this, the initial reaction, the day of reaction is the algorithms, the black boxes, the funds, you know, the things that are saying, well, this is the number that was expected and this is the number that it is. So I'm going to assign a positive or a negative number to it. And how strong of a positive or negative number to it. And now my algorithm is just going to take over. So you see funds react to that. They don't know what they're looking at. Their box says okay it's this was expected. This is we've got an off to the races. Over the course of the next few days or even few weeks, the market itself will say, you know, this is what we had been thinking. This is why we were buying. Going into the report, even, you know, since going back to November or even September.

Ted Seifried: Middle, end of August for corn. And now that I've seen that come to fruition and I've seen it printed on the USDA, and we know that they're not going to, well, it's supposedly a final number for production. The USDA is nothing ever final, necessarily, but this was the final production number. So we're not going to be talking next month about, oh, what's going to happen with the yield and what's going to happen with production that's done with now. Right. So your trades now come to fruition. So was this a report that tells you I need to stay long because this is a game changer of even what I was thinking. Or is this a report that says, hey, I finally got what I was looking for, now I can get out and maybe I should really start selling more aggressively in the case of the producer.

Paul Yeager: Okay, Matt, you said during the show then to add to to follow up to that one, you're going to see selling. I thought I heard you say a couple of days. Is that all the longer you see maybe either a rally lasting or be sales happening from a farmer?

Matt Bennett: Yeah, I don't know that that's all the longer that the rally is going to last. But what you got to understand is, okay, there's a lot of indications that today was going to happen. Okay? The spreads did not indicate that we had a 2 billion bushel carry or 1-9 or a one 8 or 1 seven, spreads indicated that we that our carry was going to be much tighter basis indicated that our spreads are going to be much tighter. You go back to that November report and I posted a picture on Twitter today because I it stuck out to me and it was six I saw the last six years, you know, is ears per acre versus yield. And there was one that stuck out like a sore thumb. Now granted we had a lot of rain in July, but we're are years so gargantuan that that year was going to stick out that much from the other five. And so I, in my infinite wisdom in my teams, you know, we did a 182 to, you know, so we thought yeah yields are going to come down. Did I think it was going to come down 3.8. Yeah. No. But I think moving forward now to kind of get at what we're what you're talking about is that now you've quantified this thing. It's a 1.54 carry. That's what it is okay. 1.5 for carry 10.2 stocks whose ratios actually going to be a supportive number in my opinion. But how many acres of corn are we going to have. That's the focus. Where the where the focus is going to start to shift is an acreage discussion. And now, you know, you're going to carry in a 1.54. What if you have, you know, a high one 70s type yield again, you know, with 96 million acres of corn plain. And if that happens then all of a sudden you're right back at that. That's why in December didn't really right reacts.

Ted Seifried: As much today. But but even before we get to the acreage we've got or in the same time that we're starting to, you know, talk about the acreage because this is this is national. Hey, let's move on to the acreage conversation there. But at the same time, we're looking at that second season crop in Brazil for sure. Right. And like I said, with what happened today and the recent strength that we've seen, the real versus dollar and you know, the biggest winner is Brazil because of the currency exchange. They are going to really max out their corn planting. And they're going to max out inputs. And they're going to shoot for the moon on this one. So if they don't have a major weather problem that second season corn crop, well, that's going to be a problem. Now the roadmap for corn though is right now that's a friendly thing because we have weather risk. Right. And what if the dryness in the south creeps into the north? And what if the second season corn crop is a disaster? We don't know. We can't say that it isn't. So while we have this question mark of that second season Brazil crop, there's still reason to be positive corn. From an acreage standpoint, there's still reason to be positive corn. But if those things happen, big Brazil, crop acreage is big and going in, well, we still need to plan it. You know, we've had rain delays that cut out with the 19. We lost 20 million acres of corn or whatever. Yeah, not. But either way, there's still risk. There's weather risk in corn for the next few months. That probably keep it from falling apart.

Paul Yeager: Well, let's talk about risk here. Paul in Illinois is a guy who has a question about risk. And this is maybe just kind of something to think about a little different than what we've talked about today. Paul's question is, do you see a lot of risk between now and insurance discovery enough to consider any action?

Matt Bennett: You know, coming into the report today? I'd had the discussion with guys that said, hey, guys and gals that would say, actually, if we take this price down much more on the November, I can't really stomach it, you know, for an insurance price. And so we would look at doing stuff similar to cattle trade, I think that we talked about earlier where, hey, let's just put a floor in right here and maybe a sell call up here above the market. And guess what? If you get locked in $0.20, but above where the market is for your insurance price, you're going to be happy because you got a really strong floor underneath you. But at this point, is there a lot of risk to me? I did not like the way that December corn acted today in relation to your old crop. Okay, we still rallied somewhat, but could there be downside risk? Yes, but I do feel like the whole corn complex had a real shot in the arm, if you will, a booster shot. And the bottom line for me is that this, this, this corn market is probably going to have a level of support under it. Now, I don't think that December corn is going to fall out of bed. I really don't think it's going to rally substantially either. Right now either. I think you're looking at Rangebound trade.

Paul Yeager: Stay the course. Okay. Let's talk about usage down a little bit domestically. Husker fast question again, I apologize for going way out of order, but Matt brings it up here. Husker wants to know what would be the wish list he's talking for. New policy moving forward here in the next couple of weeks. What would be your wish list? Head for? Ethanol, biodiesel, soybean crush, aviation fuel.

Ted Seifried: All right. You know, new, UCO, like, completely, you know, ban, UCO coming in. Right. Domestic UCO. Fine. But, I don't know the, the scores that are needed to hit the CSI scores or whatever that needed to hit corn to be applicable for ethanol, are unreasonable or unrealistic. That needs to be completely different. You could say the same thing about, soybeans and soybean oil for biodiesel. I think I think we just need somebody who understands the industry to help make policy rather than as random pencil pushers in Washington. But, yeah, make it easier for corn, domestically grown corn to qualify for, for the higher amounts of the, of the benefit. Same thing for soybeans. And then. Yes, big tariffs on incoming UCOs from China and other countries too, but mainly from China.

Paul Yeager: Okay. Well do you want to answer that one. You different.

Matt Bennett: Yeah I agree with what Ted is saying. I think that just take it a step further. If we look at the amount of, you know, world export share that we continue to lose, and I expect that we'll continue to lose, quite frankly, as Brazil grows, it's paramount that we have really strong domestic usage of both corn and soybeans. And so it's really important, quite frankly, we should not be importing used cooking oil or sugar cane ethanol to produce renewable fuels here in our country. That's my personal opinion. I think that the U.S grower needs this. We've got to see people in Washington that understands what it will do to rural America if we continue to lose world export share without domestic consumption going up, it would be a major problem. Yeah.

Paul Yeager: Okay. I have two questions. I want to merge kind of into one here. That came at the end. And they're both global issues. One is about China. And if they're going to even buy any corn. But the other one is from not Bob. And there's a little bit of history here of if we are done with war. That was one thing President Trump ran on was, you know, there's just not disagreements under on my watch, you know? So the question is, if Ukraine and Russia come up to a peace agreement, where do you see grains going?

Matt Bennett: Well, I mean, you know, obviously whenever we got the conflict started, the wheat market was all over the place, but mostly higher. Correct. But if I look at wheat, for instance, I've got a factor in that. If they get this all ironed out, I still have to look at our largest grain exporter in the world, which is Russia, which doesn't really have a very good crop going.

Matt Bennett: So I don't know that the market would fall out of bed by any means.

Ted Seifried: That might be a longer term thing for wheat and for Russia specifically. The corn portion of this is interesting for me because if Ukraine starts producing another 10 to 14 million metric tons of corn, their longest and dearest friend for corn trade is China. And China sort relationships with Brazil on corn to somewhat offset what they weren't getting from the Ukraine. And last year they took almost 20 million metric tons from Brazil. So if now the Ukraine comes back online and they're shipping a lot of corn to China than Brazil, all of a sudden who's really ramped up their export, corn export program. Well, now they've got a whole bunch of corn on the shelf to, to send to other places. So now they start looking at our normal business partners. And then you look at Mexico, I don't know, I it's I think I think it's really not a good thing for corn prices for our domestic, or our, for our, share in our global export market. It worries me for corn longer term, but I don't know if that resolution comes as easily as is, like anybody thinks. Just not like.

Paul Yeager: It. It takes time. Yeah. And it also takes time to get good points out. And I appreciate you both giving up your time and, insight today. This was I have to admit, this was, a the time went fast and B, I'm going to have to probably watch this three times just to make sure I got all your due ones that you said. Ted.

Ted Seifried: Thanks. Well, you know, I try.

Paul Yeager: And Matt, you do appreciate it. Thank you, Matt Bennett. Ted Seifried Thank you so much, guys. And I want to remind everyone to get signed up for that market to Market insider newsletter. It's free. Sign up at Market to market.org next week. A professor hunts for the unintended changes from genetic editing. And John Roach will be with us to break down the commodity markets. Thank you for watching. Have a great week.

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