Yeager: This is the Friday, March 24, 2023 installment of Market Plus.

Joining us now is Dan Hueber.

And again I always say, if you could only listen to what we talk about between the show.

We were just discussing Saturday Night Live hosts or Chris Farley.

If you think Chris Farley is funny please hit us up in the Twitter comments.

If you think he was overrated, let me know, just curious.

Dan, I mentioned during the program a bunch of questions about soybeans.

We're going to pick three because we talked about it first, we felt so strongly about it we needed to discuss it first.

Hueber: It's the topic du jour.

Yeager: That's right.

Let's start with Gary in Franksville, Wisconsin via Twitter.

China has bought -- this is corn, sorry, but it is tied to beans -- China has bought corn seven of the last eight days.

Argentina is at 50% of early expectations.

Russia rumors no more cheap wheat.

Is this time to go back to trading fundamentals?

Hueber: Well, again, fundamentals are all in how the person wants to interpret them.

Fundamentally we don't have any abundance of corn, soybeans, wheat in the world.

We have very tight levels.

But we have adequate stocks.

So, fundamentally we're fine, we're fine with these price levels as long as we don't have any kind of a crop issue over and above what we've already factored into the market.

So yeah, I think it's going to tend to be more of a technical market for a while and I think technically the good side is we're oversold, we're probably due for a rebound.

Yeager: Okay, you mentioned technically, but you talked counterseasonal and seasonality of some things.

I say seasonality has been thrown out the window the last three years since COVID.

How will we ever know, except five years after it happens, that we're back to trading what normally happens?

February is a little lower, March continues a little lower, then we start to rally through planting.

When does that return?

Hueber: Or at least until the end of March.

Again, flip a coin.

Again, seasonals are just averages over a specific amount of time in history to begin with so I guess this will all fit into that historical average and if we have to adjust those seasonals down the road we do it.

But for now it just seems to be a little bit out of whack from what we've grown accustomed to over the last 30 years.

Yeager: And you could make a case that we're going to take out '20, '21, '22 in all of historical data studies of some of these things.

We can't look at such wide swings that we had there.

Hueber: Well, it was an outlier certainly.

It probably -- I always equated what we saw post-COVID and some of the crop problems more in line with what we saw in the mid-to-late '90s, particularly in the corn market, just out of the blue we had spot corn traded $6, it might even have been $7 that year and wheat had kind of an exceptional year but it was an outlier.

That was outside of the normal cycle, outside of what we would consider the 30-year commodity cycle.

I think this one fits into that same category and that we'll probably kind of go back into that same period where we really shouldn't be looking at those kind of exciting highs until the latter part of this decade, maybe into the early 2030s.

Yeager: That will be, that's your history assignment, early 2030, put it on the note.

Robert in South Dakota is asking us via Twitter, China's buying spree took place at the same time that Xi was in Russia.

It doesn't seem like a coincidence.

What correlation can be made about that fact?

Hueber: The only thing I would correct there is the announcement didn't come until he had been to China.

This corn was probably purchased before he took his little trip, his little friendship, however you want to call it, trip to China.

So, yeah, I think China basically does their business when they think they have an advantageous time to do it.

So, political things, not that they don't come into the picture, but I think when they see a bargain they take it and I think they needed corn, they knew it's not going to come from Argentina at this point.

Yes, Brazil maybe will be able to pick up some of the slack this year.

But for the most part we're going to be the corn market.

Yeager: So maybe we can say corn is headed higher because China sees an opportunity?

Hueber: Well, if I was going to try to read something into the Russia, maybe Chinese situation, would be not very favorable for production in Ukraine this year.

If they feel that the next target for Russia, over the winter months what have they hit, they've hit infrastructure, they've hit electricity plants, if their next phase of their war is to start hitting agriculture there is where you can really disrupt the corn trade around the world.

Yeager: And one of their financial income sources.

Hueber: Absolutely.

Yeager: Let's go to the favorite question of the week.

Matt in Amherst, Wisconsin.

This is a Dan Hueber question if I've ever heard one.

How much longer will the beatings continue until morale improves?

Hueber: Well, the question is that morale improved.

So I would say probably not a whole lot at this point.

Again, we've beat these prices down for the last two months now, been a couple of good, solid waves down.

Again, beans finally played a little catch up here over the last four to five weeks.

I tend to think we've done enough for the time being.

We're going to need to kind of stabilize, probably rebound as we start to get a little better look at planting and what the summer weather is.

If we don't run into any issues, probably somewhat temporary.

So it's really just going to be a weather market moving forward from this point.

Yeager: You get the advantage of being ahead of the report next week for planting intentions.

You mentioned the corn acreage.

What is your pick on soybeans?

Hueber: Again, I was a little surprised earlier, particularly when we had November beans north of in the $13.50 to $14 range.

I really though -- which is really when the USDA came up with their numbers -- I really thought we'd see a little heavier switch to beans.

Maybe people are keeping it in their back pocket just in case we have some of the wet springs as we've had over the last couple of years where you can still switch over to beans.

But right now trade is looking for 91 million on the corn, just a little bit over 88 million on the beans.

I've seen some private estimates that don't think the corn is going to be quite so strong, that we could still see a little more spring wheat and a little bit higher in the beans.

But those numbers, like I say, if they come out it's all going to hinge on our weather situation, which I'm not one that is going to be able to predict that.

Yeager: I need an exact date and the time too.

Mitch in Hull, Iowa wants to know, Dan, will this cash soybean market come back or is it time to throw in the towel on remaining old crop bushels?

Hueber: I would say if you don't have the old crop sold at this point, sit tight.

Again, I'm not looking for the new bull market to start, but I think after the shellacking we've taken here over the last few weeks we're due for a rebound, probably after we move into the month of, get past these reports, a lot of times you'll see markets turn course around that first week of the month so I wouldn't be surprised April, May could have a little bit brighter picture.

Granted, we're too far along -- yes, you may deteriorate the Argentinean crops a little bit farther, Brazil no, Brazil is in great shape on soybeans, harvested beans is 60% to 70%, probably 70% overdone at this point in time.

So, to think we're going to see a raging bull market in beans, no, but a nice corrective bounce from where we have been destroyed here in the last few weeks is definitely going to be in line.

Yeager: Let's go back to the economy for a little bit.

The Federal Reserve news this week, Kurt in Fort Atkinson, Iowa, with interest rates rising another 25 basis points will we continue the strong demand in the cattle market?

Hueber: Well, again, I think that is a, it's going to be difficult.

I think the further we go on with higher interest rates, the further we have questions, granted the downturn in the economy is more psychological than anything else at this point in most sectors.

If you were in the real estate sector, well you're probably in a recession already.

If you're in the tech sector, you're probably in a recession already.

So, if you count on those people for your demand things are not going to be so good.

But I think for the average citizen right now they're kind of chipping along, they haven't slowed down a lot, although you are starting to see a possible slowdown in some of the spending at the retail level and higher interest rates are ultimately going to, not to mention higher credit card debt, which we continue to see escalate, you reach a point there you can only stretch that rubber band so far and it has to start contracting again.

Yeager: Well, let's talk cotton to close because sometimes cotton is also tied to that interest rate.

Hueber: Was that a pun?

Yeager: In a way.

Hueber: Cotton to close -- okay.

The cotton market is looking a little sour.

Again, broke down into new lows at the lowest level we've seen since last fall this week.

Probably in its last leg down of the current drive.

But that said, on a worldwide basis cotton is in a very adequate supply.

Domestically we have some issues but I don't see anything positive other than short-term on the horizon for cotton.

Yeager: I've pretty much written the same thing down for cotton for months, bear trend.

Hueber: Bear trend.

Yeager: You don't see that changing any time soon?

Hueber: No, other than corrective rebounds.

No, I don't think that's much in the offing here.

Yeager: Acreage battle?

There was that little blip in February I think maybe around the USDA economic forum but that's not a time you plant, we've already planted the cotton we're going to plant.

Hueber: Sure, sure.

And like I say, since that time things have not improved so if anything you're going to lose a little acreage there, which long-term could help out but not over the next few months here for the bigger picture.

Yeager: Dan, good to see you.

Hueber: My pleasure, thanks very much.

Yeager: Thanks for coming.

Dan Hueber, everybody.

Next week, we get into the panel discussion mode with Naomi Blohm, Matt Bennett and Ted Seifried to dissect the planting intentions as well as the quarterly grain stocks reports.

Thank you for joining us and have a great week.