Market Plus with Sue Martin

[Paul Yeager] Welcome into the Friday, July 14, 2023 Market Plus. Sue Martin is with us. Sue, I always have to cut you off because you give us a whole bunch of things to think about.

I really should have just, you know, the record scratch came right at the end. When you're talking about feeders. You mentioned in your newsletter yesterday that we've seen the better rains in parts of Nebraska, Kansas, Oklahoma. I've talked to people in Oklahoma and Kansas. They're saying, yes, pastures are getting green. You're saying that is going to be a big bullish factor.

What's the time frame and why?

[Sue Martin, Ag and Investment Services - futurescashinfo.com] Well, I think we're going to continue as we go in through the fall to see more rains hitting through that area also. And what's going to be interesting is with the price levels that we have and the price of feeders and the auctions were strong this week, I think what we're going to see is, is the desire to hold back heifers for, you know, for breeding purposes, and then they'll put the animals out on pastures this winter.

And even wheat pastures might be good this year. So I think that will then tighten our supply of market ready animals again. It'll tighten our supply of beef production. And that's kind of in the old days called the whiplash effect. So what happens is it creates the market go screaming higher. And then all of a sudden when those reports start showing these animals to be coming, the market just peaks and drops.

But I think what you're going to have is new all time highs again and probably all the way through the first quarter of next year.

[Paul] You see the hogs having that same type of rally.

[Sue] Well, I don't know about quite that type of rally, but I think it'll be good. The hog market normally, you know, the Hogs and Pig report other than maybe the the pigs or the breeding intention, the pigs per litter, I would have to say that that report was negative. But the market rallied, which told us, and then all of a sudden the product's getting better and everything.

I think what happened is they were buying the market because they were going to do just like they did in the cattle market ahead of time. You know, we didn't get to the bull market and they were already buying meat like no other and putting it in the coolers. And I think we're seeing that in pork as well, that they're preparing for this tight supply of animals next spring.

So you're going to have contraction in beef, contraction in pork, poultry, maybe. So proteins are going to be on a downhill step. But and you look throughout various, you know, what was it been in May, maybe Smithfield said they were going to really sharply reduce their herd.

[Paul] Their the number of sows.

[Sue] Yes. And of course, my take is they wouldn't tell you that unless they'd already done it. But there's other entities even in Iowa, pretty decent entities that are reducing their herds. Some say, well, they're going to do new buildings and expand. Well, it still takes time to get there, if that's the case. So I think we're and if we're doing that in Iowa, where else are we doing it?

Lots of buildings up for sale throughout Iowa. I think we're looking at a contraction that's going to come tighter supplies. And lot of times the hog market will try to lift into the weekend past the 4th of July and then it starts to turn south. I think we're still going to have a traditional traditional set back into October, you know, pork month.

And then I think we start working our way, meandering back higher as we go into February of next year.

[Paul] All right. Let's get to some of these questions that came in via Twitter and Facebook. Thank you all. Not going to quite get them all. We're going to hit a couple of really good ones. Let's start with Emily in Ohio: “With the grim outlook for U.S. exports, why is local basis continuing to improve on old crop beans and corn?”

[Sue] Well, in the situation of beans, the crush is very, very profitable and demand for ethanol is still very well, too. So and then if you look at the beans on farm, the stocks on farm, it was down, what, 3%? And commercials were down, what, 17, maybe 18%. So supplies are tight as far as corn. Farmers are not happy about these corn prices.

And so they're just kind of hanging on. And especially when we keep hearing talk of weather and these scattered rain, schizophrenic rains, you know, if you're under the right cloud, you could get dumped on. Otherwise you might get a tenth to a half, something like that. But amazingly, the crops look pretty good in a lot of areas. So now we just need to see how we perform.

[Paul] We're showing the September we topped above five, closed above $5 on Friday. Does that open up the door, anything or do we have a I'm just going to summarize, Susan in Illinois question. Are we going to see $7 corn again this year?

[Sue] No, I think that when you came out with all those added acres, I think that that blew us out of the water. Yes. We dropped the yield four bushels, and we should have, but we still have more to go. We have to see how pollination finishes kernels per ear, how many rows around the size of the ears. That's a still question mark, but I think that we could still take yields down and have a market that's inclined to be negative as we go into the fall.

And so I guess I would have to say, and exports other than with China, you know, pricing in 1.3 million metric tons out of the Pacific Northwest. You know, I'm just curious how much of that North Dakota crop is going to make its way over to the Pacific Northwest? You know, they were talking about how rail and trucking and barge are all down as far as, you know, the traveling or the expense of traveling.

So and it's because of less crop out there. But I think farmers have been reluctant sellers and I think that's part of that push or pull.

[Paul] Are they reluctant an old crop and new crop or just one or the other?

[Sue] I think they're reluctant and both in both.

[Paul] Yeah, I think you're right. The new crop reluctance is is crazy and in a couple of instances. All right this one Sue wanted to really hit. This is from Chad in Minnesota. “I bought calls for 20% of my expected production this week through my merchandizer for corn and beans. I have a decent crop coming along the northern Minnesota.” “Should I be buying more?”

[Sue] And I was in shock when he said calls. I thought, that's the Texas hedge. And I thought, okay, so you're looking at a decent crop and you're buying calls with the thought process of prices going up. Have you already priced? That's the other thing. Otherwise, you're just adding bushels to yourself. To me, it would be floor your crop on this rally.

We're getting a nice enthusiasm. We're already $0.30 off the low by Friday's close. So and we I think we'll be higher this next week. Both beans and corn, but beans will be struggle a little bit because they're unwinding spreads between corn and beans. But I think that I would use this rally. You might get up to $5.25, $5.35.

I'd probably do a little pricing. I think that this market still, if I was to expect something real extreme to the downside, it would maybe be $4.60 ish $4.70. And we weren't super far from those levels, just too far, too fast. The market's given us another reprieve. But it's not bottomed.

[Paul] It's giving us one more chance. And I have one more question. This one is from Bradley in Nebraska. “Carry is disappearing from the soybean market. Should producers consider making sales of November 24 and 25 soybeans?”

[Sue] And I was licking my lips when I when you told me that one. Remember, I'm the $30 bean girl.

[Paul] What? You are? Since when?

[Sue] So would I sell November. November. Beans of 24 and 25? Absolutely not. I wouldn't even do it. Wouldn't nickels. And because one. You don't work. I believe we're in a time similar to the 70’s. And if you go 50 years before that, you were in the twenties. And those were the Roaring Twenties. And I think we aren't done yet with this inflationary pull, push the demand.

You look around the world, supplies are tight. One thing I noticed on the global on the world numbers, you know, they always start off with the world and then they say less China. What I noticed was ‘20-’21, ‘21-’22, ‘22-’23. Those numbers were down nicely and then ‘23- ’24. Of course, they're going to expect the best.

But if you look at China, they need food and they haven't got, in my opinion, have not gotten themselves back to where they need to be. Why wouldn't they attack the whole world and make deals? You know, trading in yuan, these countries like South Africa, Brazil, they only jump they can't jump high enough to just accommodate the Chinese for what they're getting.

But but to keep in mind, have they been did that totally because they were upset with the US? No, they needed food and they're spreading their wings and not keeping all their eggs in one basket. And it's smart because if we have a problem and what happens if Brazil was to come back and have a problem, all of a sudden we need Brazilian farmers to plant more beans because we haven't planted as many as we should.

[Paul] Right. Right. Yes. Yeah.

[Sue] And next year we'll plant more beans. But I think that you don't know what your input costs are going to be. You we're at a time when we came out of the pandemic in the ‘20s, I went back and kept looking at those years. And the first year or two we were negative. And then we took off and we roared.

And in the ‘70s, you know, the grain robbery, which was Russia with the US. This time I think it's China, but I think they are working everybody in the world to make sure they have enough.

[Paul] They're going to India. Absolutely going to Brazil. They're going to Australia for any product anywhere. They're going through the Black Sea. How many times we don't even mention that in this program. But you know, the Putin this week said, I might not do that deal. We've heard that song and dance before, so it wasn't even worth mentioning. So. All right, you get just a couple of words to say. What's the biggest story in the next three months that you see the producers need to be paying attention to?

[Sue] It's the weather between now and the end of August.

[Paul] Fair enough.

[Sue] I think it's going to be hot.

[Paul] All right. We'll see how it all plays out. Thank you, Sue. Good to see you again. Thank you. Appreciate the time. Sue Martin, everybody. Next week, we are going to see how drones are delivering unusual packages that help producers. And we'll have the commodity market analysis of Elaine Kub. Thank you for joining us. Have a great week.

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