Market Plus with Dan Hueber

Paul Yeager: Welcome back to the table for the Friday, February 21st, 2025 installment of Market Plus. Dan Hueber is still with us. Dan, I'm looking through my notes here. Yes, making sure I didn't miss anything one thing that I did miss kind of ran out of time. Cotton. Cotton has been very, very low. There's this concern that cotton and rice acres are going to lose here very soon. Do you agree?

Dan Hueber: I agree, I agree. I mean, there's really when you look at it, it doesn't matter if domestic or if you look at the global picture, there's just nothing that looks good in the cotton market. So it and again why we continue as much as they push for natural products in this type of thing. Why we continue to lose demand in the cotton is kind of beyond me. But it, but at the same token, it's, I, there's no incentive to, to really if, you know, particularly versus what you can do with the bean crops and, and here, you know, soybeans are, you know, tremendous as far as looking at the new crop. But it's got to be a better alternative to cotton, particularly since cotton is a very expensive crop to produce.

Paul Yeager: And soybeans, almost every person that has sat in that chair for the last month, months on months have not been real optimistic about soybeans.

Dan Hueber: I better change my tune.

Paul Yeager: Well, you're saying even more positive than cotton, right?

Dan Hueber: Well, I think more than cotton, certainly. You know, again, how much acreage are you going to shift. I can't say. And it's not that there is zero demand for cotton, but boy, as far as expanding acreage, you know, very little incentive that I would see to do that.

Paul Yeager: So do you see any scenario where beans can make a run and defend some acres, or is it really all going to corn this year?

Dan Hueber: Well, I think I mean, they'll always be a, Well, I shouldn't say always be. Yes. I think there is some scenarios from the financial side. We know it's a lot cheaper to produce an acre of soybeans. So if you're already financially stressed and your bankers putting pressure on you to make some changes, certainly, you know, why not plant soybeans instead of corn? But I think if you have the wherewithal to plant the corn, particularly in the upper Midwest states, you know you're going to go to the corn at this point. 

Paul Yeager: So then let's get into some questions about corn. Let's start with Mike in Iowa. We're going to answer this, with corn on your mind, are we getting to the top for old crop and also for new crop?

Dan Hueber: I would say yes and yes.

Paul Yeager: How about soybeans?

Dan Hueber: Soybeans as well. I mean, soybeans have really struggled, but new crop soybeans, don't forget. I mean, we've actually pushed up to some, some, some nice levels on the new crop soybeans. This is the highest we've been since probably October of last year. So in both categories, all three categories, I should say yes. I think you want to reward it. And this is not to say that we get out in the summer months. We could have some weather issues that give us another roundup. We could have some, some demand resurgence, but, you know, wait for a first quarter rally, you know, and yes, a lot of times you think into March, you know, before we, you know, really start pulling the trigger too heavily. Yeah. I think it came a little bit earlier this year. So I think it's time to go ahead and reward it, and then we'll worry about it in the summer later.

Paul Yeager: We kick the can down the road. We're always doing that. Yeah. Bradley in Nebraska has a pair of questions. Let's start with the first one. Why is there $0.15 of carry between the March and May corn contracts, but only $0.03 between May and July?

Dan Hueber: Well, you know, probably partially because of what we're expecting as shipments over the, over the months here ahead. I would think there's probably as much a transportation as weather related, you know, we can't move as many things because of winter, winter obstacles as we can, you know, by the time we get into the spring. So, I mean, it's, I would tend to think that will begin to narrow here at all of them pretty, pretty quickly.

Paul Yeager: So we've talked carry let's talk basis now. Sure. Bradley has another question. Are Mississippi River levels still low enough to increase freight costs and hurt river terminal basis levels? Could this record cold hinder river traffic?

Dan Hueber: Well, temporarily, certainly it will hinder, hinder traffic. I mean, of course, I came across in Mississippi today. There was quite a bit of ice, still floating around on it. So, but here again, we're on the downhill slide of that one. And I mean, if anything, we're going to be, you know, as we're looking to the temperatures here in the next week and beyond, you know, we're back above, well above freezing in most areas. So that that should help free that up. From where it's been, you know, it's still probably more a processor market than anything. But, you know, when you look at the shipments of corn, I mean, and and granted, barge traffic is probably hindered that to a large extent. And, you know, last week we had a record for the year, new record for the year, 1.6 million metric tons of corn moved out of the Gulf. So it's, you know, the demand should be there if we can get it down there. But here again, it's, if you have freight restrictions in that type of thing, you know, that that provides that hindrance into the basis levels.

Paul Yeager: Demand. Who's interested in our corn right now? I mean, because Mexico had been a really good customer. They seem to be buying.

Dan Hueber: Still is. Yeah.

Paul Yeager: Are there other suitors for our corn?

Dan Hueber: Recently, probably some of the best demand has been the Far East, Japan, South Korea, Colombia is consistently a good buyer of corn. So, yeah, I mean, there's been good demand for it, you know, and really, the only other alternative in the world right now is Ukraine. And, you know, we know all the problems that we have getting corn out of, out of there and of course limited crop. So it's I mean, for the time being, we're the only game in town, at least until the South American corn becomes available and that, you know, and that’s still weeks ahead. So.

Paul Yeager: Yeah. And there weren’t, since that's not as large of a crop as the main, as the first crop that's not as big of a balance sheet on the world stage. Right. And especially if it's delayed the South American crop. You talking about Brazil, Brazil in particular, right? I mean, Argentina, you know, you're still looking at 46, 47 million metric ton crop there. And of course they tend to want to export that maybe a lot would go back into Brazil for that matter. But the Brazilian crop. Yes. The planting of the second crop is significantly behind where it was a year ago.

Dan Hueber: That window of opportunity closes pretty rapidly as you move into March. Not not that if they don't have the financial incentive to do it, they'll kind of push the border on that, you know, which is of course, the other part of the equation with the dollar. You know, the dollar's been backing off in relationship to most currencies. And of course, a strong dollar, a strong dollar is great for the Brazilian farmers. A weak dollar, not so much. So yes, they have even less incentive to try to really squeeze that second crop in. So again, I mean, that's a benefit for us, but not necessarily immediately because it's still all about the immediacy of when the product hits the world market. And everybody knows, you know, for the U.S. can be the storehouse for everyone else, which we've kind of tended to be that role.

Paul Yeager: Well, we haven't talked about wheat. Still have one question, Phil in Ontario wants to know. Sure. Wheat is quietly gained in price from last summer's post harvest lows.

Dan Hueber: Yeah.

Paul Yeager: The unusual extreme cold weather surely had to affect the U.S. wheat country. Is it time to price wheat now or should we wait? Partially considering the ongoing geopolitics in the Black Sea region?

Dan Hueber: Well, the, first, I mean, first and foremost, yes, I think you should reward the rally. You know, again, what I sell 100% out there probably probably not the, the damage, you know, as we even spoke about in the earlier part of the, of the, show that, we really won't know that until we, to move out, a little bit further domestically, we have a very comfortable supply of wheat. I think we were back over 900 million, maybe on that last estimate, you know, not not a billion bushel carryout, but still a very comfortable supply of wheat. Yeah. If if there is a, and again, I mean, everything's in flux, of course, with what's going to happen with Russia, Ukraine at this point in time, you know, not to mention even what the weather situation is in those countries. So yes, there could be some opportunities down the road, but I think this is a case if you have one in the hand versus two in the bush, you know, take the one in the hand.

Paul Yeager: So okay, let's talk Russia, Ukraine for a minute. Sure. Because if this story changes, which it looks like it did this week, that there is more U.S. support for Russia than Ukraine. Sure. What does that do for the global grain picture, if not saying the U.S. picks a winner, but it appears that Russia gets more of what they were after, then what does that change anything?

Dan Hueber: You know, it's certainly not enough to make a major shift in the world markets. You theoretically would maybe make shipping a little bit more affordable, coming out of the Black Sea, a little a little less treacherous than it is right now. But that’s probably more insurance rates and some freight rates than anything else. It doesn't change the production pictured, you know, right now. Yeah. Yes. If, if, if well, I mean we're kind of behind the eight ball on that one anyway. I mean the winter wheat crop is going to emerge. I guess there could be some spring wheat in there. Boy, you know, to affect things this calendar year would seem pretty unlikely.

Paul Yeager: Okay. And then the other thing that I put my pin in, I got to pull it out because it's due, back at the library desk. Let's talk about demand for U.S corn. There's the push again for some states, some federal E15 year round where there's. Is that enough generation of new demand for U.S corn that can impact the market or be a market changer? A game changer?

Dan Hueber: I you know, it's a nicety. You know, it's nice to see that. Yes. The demand could be a little more steady on a year round basis. I don't think it would be a rise to the equation of being a game changer. You know, it's just a nice positive.

Paul Yeager: It helps. Yeah. It helps. Is there anything. And you're and I think you said the main show, let me see if I get this right. We haven't had any fundamental, major change in any of these grains right now to make a significant...

Dan Hueber: Correct.

Paul Yeager: But things can happen and change.

Dan Hueber: Well, but they happen over years. You know, when you look at the ethanol situation, which was really the last major fundamental shift in U.S. agriculture, you know, from 2000 to 2008? Yeah, we went from maybe 200 million, ethanol corn used for ethanol to 3 billion. That's the kind of change it's going to take to really move us into that next super cycle. And I don't see where that is on the horizon here at this point in time.

Paul Yeager: You know what I do see?

Dan Hueber: What that, is that?

Paul Yeager: Is the end of our time.

Dan Hueber: Why that's too bad. It goes fast..

Paul Yeager: Yes it does, it does. Dan, good to see you.

Dan Hueber:  Likewise.Thank you. Very good.

Paul Yeager: Dan Hueber everyone. A reminder to get signed up for that Market to Market Insider newsletter. It's free. Go to markettomarket.org to sign up for that newsletter. Next week we are going to take a look back at the 90s in the early aughts for this program. Lots of big stories to come. We'll also have the commodity market analysis from Sue Martin. Thanks for joining us. Have a great week.

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