Market Plus with Chris Robinson

Paul Yeager: Welcome back to the table for the Friday, February 14th, 2025 installment of Market Plus. Chris Robinson, back with us here after the TV show. And we talked about whether a little bit here, when it comes to weather, Chris. But let's start with Jeff in Kansas because it's a wheat question. And winter wheat specifically, is the U.S., will the  wheat ever play a major role in world exports?

Chris Robinson: Well, as soon as you say never. So I'll just say no right now, and you can thank me when they come for our wheat. Bottom line is a lot of that business goes to, you know, we've gets done out of the Black Sea, with what's going on now and Ukraine, if they come to an agreement, you know, more or less. We'll see what happens. Australia and Argentina both have been picking up a lot of that, slack. I would have to say it's probably going to be something either political or something. Some sort of weather issue where they would come for our wheat. The good news is we've got plenty of it. So when they come get it and I, and I wanted to mention winter wheat. Right now with this little spike we've had in this week. New crop was all, I think KC was 35 or $0.40 over the insurance price. Chicago again, might have even been more than that, but, it's a good rally, something you want to take advantage of. And we've seen in wheat for the past two years where we get these rallies, people get pulled up and then they can disappear very quickly.

Paul Yeager: I didn't, it's not in the question that's about U.S. But when you talk about world of wheat, we always say we haven't mentioned Ukraine or Russia. There's the discussion of this war may end. We're coming up on three years of when this thing started. What does that do to the overall wheat picture?

Chris Robinson: I don't know, you know, it's interesting, I think a lot of us, myself included, when this first started going, we thought, oh my goodness, wheat's going to go, you know. And what happened? We had a two year slide in wheat every time you thought the lows ran every weekend you went home, something bad is going to happen. So fundamentally, you know, wheat is very well supplied. And wheat somewhere in the world every month is being harvested. It's not like, corn, wheat, corn and beans. It's a little bit different. So I think that it's if we get a drought situation that obviously turns it around. But we'll have to see. But I think that it's the number one problem with wheat it's well supplied. And every time you turn around also to this is going to be interesting to see you leave of this. We're going to find out exactly how much wheat is still over in Russia that was being held on to during the war, because if the war is suddenly over, you could get a big surprise in supply. That's what would be my fear if I was hoping that that's going to make things better. You may see supply come on board. We're like, nobody knew we had that.

Paul Yeager: You don't see it going the other way, that maybe they've overinflated the number?

Chris Robinson: Well, we'll see, we'll see.

Paul Yeager: Because it is. And the reason I said that Ukraine usually was better at reporting and we had a better, but we never really, truly it's like China with Russia. You don't know.

Chris Robinson: You don't know. It's just yeah, it's like you know. No. And lots of times they'll make an announcement. We get a little blip and then it's, you know, it magically goes away. So that's a very hard market to trade. That's a market that's based on information. But at the end of the day, Mr. Market wins, right? So so when you get these rallies, reward them.

Paul Yeager: I told you too much already. I just hold on. You can't use that phrase yet. We also can talk about drought in a minute. Let's go. Louise in Kansas. Let's talk political, shall we, Chris? Are farmers going to have a hard next couple of years because of tariffs, or at least the tariff talk?

Chris Robinson: It's a double edged sword. Yes, there is. And a lot of this we've seen where it's been. It seems to have been a negotiating tactic as opposed to an actual tactic. We'll see what happens. Already. They've kicked some of these tariffs to April. And now they're going to take a second look at them. I would say this the tariffs are like every other unknown risk. You don't know what it is. So you've got to defend against what can hurt you. You know I've got end users that, you know, by a lot of our bakery or somebody, they're worried about prices going higher if the tariff situation goes away. So whatever your risk is, you need to defend against it. I don't think you can blanket say it's going to be good or bad. Human nature would say it's probably not going to be good. But, lots of times. Again, at the end of the day, what matters is price. So it's not a good thing, but I don't think it's automatically something. No, it's got to be like, well, you can't blame it on that. Supply and demand wins in the end. And I think that's more important than what's going on with tariffs.

Paul Yeager: All right. Let's talk about the outlook in corn. We talked about flirting with this number. But Mark in Iowa wants to know is $5 corn possible come October.

Chris Robinson: New crop corn?

Paul Yeager: Yeah we'll go new crop.

Chris Robinson: We're going to get through $4.75. But yeah it's absolutely possible. A lot of people are hoping that we get back to where we were. You know, last summer that $5.08 level, that's probably a good target to keep. But if we have any sort of, weather issue, not so much from South America, but the one good thing is to. And I can't emphasize this enough. We've had really good exports, surprisingly good exports of our crop.

Paul Yeager: And who is that? Where are the destinations for that?

Chris Robinson: A lot of stuff has been going through. I think it's almost like pre-gaming, the possibility of tariffs. But our typical partners, a lot of it's been going to Mexico and you know we've not seen China come in at all. Obviously they're not a big foreign buyer. But you never know how these things will turn out. So, but yeah, you've seen really good. Continued demand kind of across the board. Our usual, our usual, trading partners there.

Paul Yeager: You mentioned drought a tiny little bit, but let's talk about the weather picture. Brian asked us online, when will the Midwest drought affect grain prices?

Chris Robinson: Well, I don't think it's going to matter until we've got to get through at least, you know, pollination or something like that. First we got to get through planning delays, right? We'll see. Is it going to be too wet to dry? I know there's areas, have issues with some soil moisture is. But I don't think that's really gotten ahold of the market yet. I will tell you this. It wouldn't hurt. You know, and the good thing is, if you're talking about new crop corn, which is what we're looking at, what you have to defend against is $4.28. You don't have to worry about if we go to $5.28. So, you know, $4.28 we've gone from $4.28 to $4.75. I think if we get one more push up, and everybody now apparently knows that $4.30 is the number everybody needs. So we're probably going to hang around $4.30 for a while. If we do get the drought, it always comes in during pollination. And then also that July 4th weekend, are we going to go home on, you know, for the weekend and come back and we're going to bloom it up day? That's all in the hands of Mother Nature.

Paul Yeager: All right. We're going to go out of order here Julie, I apologize. We're going to go. This guy. Let me see if I get this right. Chris in Illinois wants to know, is this the best that Mr. Market can do without a weather market in SA, as in South America?

Chris Robinson: Is it the best we can do?

Paul Yeager:  I don't know, it's your question, Chris, in Illinois, what were you trying to accomplish with this today?

Chris Robinson: Well, I think the number one thing is if you've got old crop corn and you've been holding on to it, you should really double check and say, you know, what's your risk here? Because we've rallied $0.96 lots of times things can change and all sudden we lose half of it. So don't give away $0.50 without a fight. New crop corn. And I've been talking with my producers as well. We've used this rally to, to get to about 10% sold. So don't be afraid to make some new crop sales there. Don't go bananas. But a 10 or 15% into a $0.40 cent something rally, $0.50 cent rally. I know it's not a dollar rally, but I don't think that, you know, you can't be too careful right now. So reward the rally, with corn. $4.75 there are some strategies out there now, you can protect $4.60 or $4.50. I think that's key. And if $4.30 is your break even, you know, there's an old expression nobody needs, practice farming, right? You want to make sure that you're you are making money. And this could be another one of those years. We're in a knife fight, so it's a good start. It sure is a lot better than we thought. We're going to be back in December. But I told you, we're going to be a dollar higher in corn back in Thanksgiving. When I was with you, I think you know.

Paul Yeager: I think you'd have been probably laughed off the tape. 

Chris Robinson: Exactly. Yeah. So it's been a gift. I'd like to say, you know, taking advantage of it and hedging is not calling the top. What you want to do is protect as much of that revenue that you possibly can. I'm not going to sit here and say we can't go higher. Well, I hope we do, because it's a lot more fun to trade. $5.50 corn, that is trade $4.50 corn.

Paul Yeager: Because only one person gets the top.

Chris Robinson: Yeah.

Paul Yeager: And you just always hope you're close to it. Right. All right. Lastly, quickly, the dollar weakened here a couple weeks in a row. Is that factoring in yet into commodities?

Chris Robinson: I don't think so. I think it's kind of a back story. People kind of use it as a fallback. We've already had a pretty big, the dollar one up 10% already. So we had some big key talk about was I think it was a multi, you know, a couple year high. So that was we've already had that kind of baked in to see it pull back a little bit. I think that's going to depend on what happens with inflation. That's probably the number one driver. And we get that hot inflation number. What does that mean. Well it means that if inflation is at 3%, the fed certainly is not going to be cutting rates anytime soon. They may say they want to, but that's going to affect kind of the overall picture of money flow. I will say this. There are people out there who are still concerned that inflation is going to be a problem. Inflation is usually good for commodity prices. So, you know, if we go back to where we were, we have stagflation in the 70s. Those are some pretty good years for producers, because the investment community will flock to commodities because they want to hedge against possibly higher inflation. So watch that carefully.

Paul Yeager: All right. We'll watch what you say carefully as well Chris. Good to see you.

Chris Robinson: Good to see you.

Paul Yeager: Right. Chris Robinson, thank you very much. Reminder to get signed up for the Market to Market Insider newsletter. It is free. You can sign up today at Markettomarket.org. Next week clothing manufacturers who survived when others unraveled. And we'll have Dan Hueber. He'll be here to talk about the commodity markets. Thanks for joining us and have a great week.

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