Market Plus: Ted Seifried

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Yeager: Welcome into the Friday, February 25th, 2022 market plus here's Ted Seifried. We had 2, 2, 2, 2, 2 this week. Yeah. Did, do you get into that thing? No. Of all the numbers your numbers

Seifried: I think you were supposed to eat tacos that day. It was also a Tuesday

Yeager: And it was also I think like a national margarita day too. Oh, yeah. Right. Was all In that same.

Seifried: Very festive

Yeager: In vain. Yeah. Um, there wasn't much to celebrate, uh, globally, as we talked about at the beginning of, of your segment, but in this segment, um, there was reason to celebrate for a couple of things and we'll get to those in a moment, but first let's talk about USDA. Normally that's the big thing we point to as this gets us by what's the speculation. And we'll start with Kyle in south Dakota's question here, Ted, with the latest drought map, showing so much of the US in some degree of drought, he's asking, how does USDA come up with record corn yield projections so early in the year? Yeah. And where do prices go if we don't see timely spring rains?

Seifried: Okay. So- the USDA number that we see in, in, uh, the ag outlook forum is a, is what's called trendline, right? So at this point of, of the year drought monitor or not, I mean, they don't look at that because there's a lot of time for that to change. In fact, any really good weather forecaster will tell you that anything forecast more than 21 days out is just complete garbage. Um, I mean, it's like less than, uh, 20% accuracy, something like that. So the USDA doesn't take weather or drought monitors, or any of that into account. When they're giving these ag outlook forms, it's just the trendline yield. And we're at this point of the year, even well before planting the they're just expecting trendline yield. Now that being said, there are a lot of people that are a lot of weather forecasters that are getting concerned about that drought monitor.

Seifried: It has some similar looks to it, to some other bad crop years that we've had in the past. In fact, maybe some of the worst, right? So if that, that drought where it's at right now, um, does start to move north and east. Then it's going to be into some, the major growing areas and that's gonna be a big, big problem. So that is a potential on the horizon, but it's too early to get very worked up about that. That's not something the market's going to get worked up about quite yet. Uh, but if we don't get those rains over the course of the next two months, and drought does start moving north and east, then we will start to see a lot more concern. However, traditionally I'll say, and you can even go back to 2012. We generally don't get really excited about a drought until about June.

Yeager: Well, that's what I was gonna say. You said during the program, you talked about, you know, high prices for January, February. We don't normally see the highs, the next potential for a run up absent, anything world going on is weather. And it is that March, June, July timeframe. Sure. Does that still hold, do you think, even in the wackiness of what we've seen over the last two years,

Seifried: Well, again, for corn, we're watching weather for that safrinha corn crop. At least I am. So we're still in a weather market in South America, but yes, that is, you know, not only weather for what our growing season is gonna be, but weather for planting, you know, I mean, we've seen years, not that long ago where we just couldn't get a corn crop planted. So yeah, we'll be watching weather. I mean, that's what we like to do. If, if we can get back to grain fundamentals, I mean, this week just completely ignored the outlook forum numbers, but, uh, yeah, no, I, South American weather still watching that very soon. We're gonna be really watching, uh, our us weather here very closely.

Yeager: All right, let's talk acres. Uh, we, we, we covered Ukraine a lot in the main program. So if you, if you want to hear Ted's insight on Ukraine, go to the beginning of the market analysis segment, but here in plus, uh, we needed to play a little catch on that outlook forum, but let's go to Gary in Franksville, uh, Wisconsin, his question came in via Twitter and every Wednesday, Thursday and early Friday, we ask for your commodity questions. And this is the one that came in. Uh, he asked which commodity needs to step up the most to get acres. He hears rumors that a lot of hay was fed this winter. And that will be, is that going to be the non talked about crop to gain acres?

Seifried: I mean, everything wants to gain acres, everything that you can plant is profitable, but

Yeager: Nine of them fighting for acres.

Seifried: Yes. Right, right. Well, and it depends on where you're at, but sure. Yes. I mean, whew. Um, look, you look at the outlook numbers, 92 million acres of corn, 88 million acres of soybeans. And based on the USDA's balance sheet that they put out with those numbers, it seems that 92 million acres is gonna be enough for corn to get us close to a 2 million or 2 billion bushel carryover, which is comfortable. We, I don't, by the way, we can't, we can no longer say that it's 2 billion bushel carryover, uh, is excessive. Uh, I think that that is now what I would consider comfortable. And then in soybeans with 88 million acres and a 51.5 national average yield trendline yield, their carryover is 305 million bushels. So that's really rather tight. That's suggesting that we need to have an absolutely perfect growing season for soybeans to have a, a carryover that's actually going to be less than what we're looking at this year.

Seifried: So if anything needs to, to buy acres, and really I'm just focusing on focusing on corn and beans here, right? I mean, cuz we can say, oh well, spring wheat really needs to make okay, fine. But no, the beans are the ones that really need to buy acres. If the ag outlook is, is an accurate representation of what farmers re uh, farmers are really looking to plant. I don't know if it is everybody was expecting more bean acres, but, and, and that was a little bit of a surprise, but no, I, I really do think that guys wanna plant corn at these price levels and, and beans are the ones that, by the way, with that ag outlook number are of 3 0 5, that's including a 350 or 325 million bushel carry in number, meaning this, this this current marketing years, uh, carry over. If we keep making these export sales, like we have been, we're not gonna bring 325 million bushels into that.

Seifried: So that already nothing left yeah. That we might not have any beans left, uh, over the course of the next couple months. So that already cuts away at that 305 million bushel. The USDA's also only increasing exports by a hundred million from year over year, uh, with all the exports that we've seen already for, for new crop. I'd say that number should be a little bit more, they're only increasing crush 35 million. I would argue with crush margins where they're at and, and, and, uh, you know, companies opening new facilities seemingly every couple of months, I would say that number is low. So I, I, I think the 325 million bushel carry over for this current marketing year in soybeans is too high. And that 305 for next year is maybe way too high. So soybeans desperately need to try to get more than 88 million acres. That's the bottom line. And

Yeager: Yet you're still bullish on corn. Yeah. You're making a heck of a story for soybeans right

Seifried: There. Yeah, absolutely. I

Yeager: Mean, uh, you mentioned, uh, fighting for acres, cotton had been buying a bunch of acres. Do you think that will be followed through, or is the market saying that maybe it's lost,

Seifried: It's so hard to tell, right. I, I mean, cuz I like you were just saying with the major rally soybeans have had, you know, a lot of people are saying, well, soybeans have bought acres, especially with high input costs and you know, so you could say that about cotton too, but then you do a poll on Twitter or something like that and guys still wanna plant corn. So yeah. Cotton's gonna be interesting in the south. I, I do really feel like there's a, a real want to, to still plant corn like Texas. And so I don't know, I, I don't think cotton is actually gaining acres. I, I think it's, it's corn. That's that's doing it. Let's

Yeager: Go back to the hay side of that previous question from Gary because we kind of skipped over it with, with the feed issue, with the, I mean, are you hearing numbers backing up the cattle coming off of, out of the pasture into the lot early, there's not going to be a pasture to go back to in a couple of months. Yeah. Are you hearing the same thing, right?

Seifried: That's yeah. That is the concern. And you know, so the thing about, you know, Hey, and that being the, the crop that, you know, nobody, well, you know, so hay does take a lot of feed away or feed, demand away, other things, corn soybean meal and so on and so forth. And you know, if we chew through that hay crop, you know, quickly then pun intended, then that's going, that's going to cause more feed demand for other things, even wheat, uh, and vice versa. Right. I mean, if it's a, if there is a lot of wheat, a lot of hay, but yeah, I mean that it is, you know, again, I, you, you look at that as far as how much it costs for input costs for, for cattle. And then you also look at that as how does it, uh, affect feed demand for other things too.

Yeager: All right. Real quick, uh, we've danced around it, but Tim and Iowa asks is this our Black Swan event.

Seifried: Uh, which one are we talking?

Yeager: Ukraine let's go Ukraine. I mean, we knew this, we saw some of this coming. Does that make it still a Black Swan?

Seifried: I Black Swans ha uh, trade war, uh, pandemic, uh, Ukraine, Russia, Black Swan, Black Swan after Black Swan. I mean, it's a whole flock of them, right? Um, we've come out of the trade war really quite well. We, we came out of the pandemic really quite well when it, when it comes to grain prices and grain demand and livestock prices, livestock demand, uh, I think this one too, we will do the same. The exception to that would obviously be if it does trigger another well cold cold war round two world war III, you know, if there is a massive, uh, conflict that comes out of this between the Western world and, uh, Russia, China, uh, Syria, north, North Korea and Iraq, I don't think that's where we're headed. I'm not a political analyst. Um, so from now I think it's okay. Uh, I think the inflation that was created from the pandemic and all the spending that the, that we did, I think that's gonna linger for a while.

Seifried: Even after, after we start raising interest rates, uh, and inflation doesn't necessarily mean we have to go higher in things like grains, but it does mean that if we get to a price rationing scenario, like soybeans are on the verge of that price, rationing happens at a much higher price than what we would expect. Uh, I think corn could be in that situation at some point again, very carefully watching that second season safrinha corn crop. Um, but this is not a good event, right? I mean, this is a humanitarian crisis. I mean, this is a country losing its freedom. It's not okay. Um, but what is the rest of the world going to do about it so far? It doesn't seem like much. Uh, so I don't know. I can't say this is a good thing for right. Anybody. I don't know if it's going to have a profound impact on commodity prices though.

Yeager: All right. Uh, let's wrap up with one final question. This one came to us Instagram and it's, you kind of were talking about it right there. Lonnie asked me, are you selling more older, new crop, corn and beans right now, given everything you've said,

Seifried: I don't know all a whole, a whole lot of guys that have a whole lot of old crop beans to sell anymore or, or even corn for that matter. Um, I mean, look, we've had a number of chances at some, at some really good prices and believe it or not guys tend to sell when those prices are going down. Um, so after the first run up, you know, I think there are a lot of bushes sold after that. Um, but yeah, no, I mean, look, we're at some really fantastic prices. When I talk about selling crops, you know, I, I talk about percentages, right. And, and so let's say if you are 80% sold, 90% sold on old crop then. Yeah. I don't know if you really have to, because again, there's that explosive potential into the first half of the growing season, uh, that you wanna keep some bushels around.

Seifried: Some people call 'em gambling bushels for me, I just, I like to have some old crop going into a growing season. I always do. Um, but if you, if you're only 20% sold on old crop, then bless you go sell more. Now's your time right now? Okay. Uh, new crop. That's the one, that's the one that everybody, everybody really should be, uh, focused on at this point. Uh, you know, by the time we get planting, I would like everybody to be close to 50% sold or 50% sold on both corn and beans. Because if we do end up having a really good growing season this year, and we start to raise interest rates and the global climate changes to less of an inflationary situation to more of a deflationary situation, prices could be a lot lower by the time we get to harvest. But I think between now and when we get into planting and probably for the first month or two of the growing season, I think there's some pretty, pretty interesting potential. So be making those sales, I like the re ownership strategies as you know. Uh, but yeah, by the time we get into planting or shortly thereafter, I, I would be happy to have half my new crop, both corn being sold.

Yeager: Sounds like we've only just begun. All right, Ted Seifried thank you so much. Good to see you. Appreciate you making the time.

Seifried: Pleasures mine, Paul, thanks for having me. All right.

Yeager: That will do it for Market Plus. And, uh, we are entering the time when public television stations like this one are asking for your support. If you value the work of this program or the station in your area, please consider making a gift of support. Now, next week, we take a look at the bottle next that continue to squeeze the supply chain and Don Roose will join us to analyze is the markets. Thank you for watching. Have a great week.