This is the Friday, April 28, 2023 installment of Marketplace.

Back, again at the Table.

Don Roose, Ted Seifried, gentlemen, thank you for the double dose.

You know, we're really want we want everybody to be paying attention while they're a come by or planting because, you know, they're not busy enough in the fields.

Right.

All right.

So a couple of weeks ago, we had this discussion of, do you just sit on things and don't worry about anything, just go plant.

We'll look at the markets later.

We're going to start Ted with Paul in Minnesota.

How much more lower are we going to see from corn and soybeans?

Let's talk about that crop going into the ground right now.

Okay.

So first of all, after a 75 cent slide in a nice reversal higher on Friday, hopefully the short term damage is done.

Hopefully we can find some footing and bounce back.

I think Don was suggesting we might do something like that.

I'm hoping that is the case.

The problem that I have is that after multiple years of high prices, we get demand destruction and we pull supply out of the woodwork, i.e.

that second season corn crop down in Brazil right now looking fantastic there.

So the prospects for this fall, I think are pretty scary unless we have a major weather issue this year.

So I think on any sort of bounce and any sort of seasonal rally into the first part of of the growing season, the first half of the growing season, you need to look at that very closely and get some downside protection, whether it be making cash sales, you can choose to own calls to reown the upside potential i.e.

create a synthetic put or just buy a put or sell the board.

There's a lot of different tools to use.

Talk to a guy like Don or myself to understand how to use those tools and figure out which one is right for you.

But you have to be rather aggressively marketing this year because we are in a much different scenario, a much different macroeconomic scenario than we were this time last year or the year before.

Ring, ring, Don Roose, what do I do?

Well, I think when you get in that phone call.

Yeah, yeah, I know what you mean.

But I tell you, the good news is the producer, at least this year, has insurance of $5.91 on corn and $13.76 on soybeans.

Next year, he may not have that same blanket, but, you know, like Ted was saying, you know, since May of '‘22, we've been actually going down.

We retrace, we go down, we you know, so it's in a market that moves forward.

And if you look at the AG Forum, you know, you talk about long term projections that are taking us this year, $5.70 on corn, then $4.90, then for the next eight years you go to $4.30 if you believe them.

Same thing in soybeans.

So, yeah, sharp rallies.

We've got a study that says you still have a chance to go back to three up to $13.90 on soybeans and $5.95 on Dec corn.

So let's see if that happens.

You're going to have to have some weather problems probably in Brazil.

And, you know, who knows what strange things can happen.

But once the funds it's an all in all out in this market and you better know your technicals because once it moves or starts moving fast, Paul.

Well, Ted, I saw this week online a couple of people discussing the technical saying those who buy the technicals, I guess I shouldn't use the word buy.

Those who live by the technicals are confused on what to do right now, that the charts don't match up.

But then the fundamentals say, no, you don't know what's going on.

This is out of whack.

You talked about during the show about the calendar is off.

Calendar has been off for like three years where nothing seems to match up.

We also hear the last time your store and ignore there's all these phrases.

People are out there wondering what on earth to do.

I asked Don what we should do.

You've kind of said what we should do.

Do you have any other advice?

Yeah, if you want to.

Shut the Internet off.

Yeah, I don't like cliches.

The only two that I use on a fairly regular basis are high prices of the cure for high prices because that one is a tried and true message.

Right.

And the other one is that predicting the future is a S.O.B., right?

Because it is.

And like you said, we are in unprecedented times, Paul.

We have news stories, things that are outside the normal realm of green fundamentals that are coming at us in a fast and furious pace and have been for the last seeming seemingly five years.

Right.

So that can throw seasonality and charting things like that off.

Now, that being said, I think charts have worked fairly well.

The buying that we saw on Friday was buying off a double bottom from the July corn contract, hitting support that it had back from last June, last July, even.

Yeah, we've had some wide ranges as we talked about during the the normal show.

We had the big drop in the middle of last month.

We came all the way back and now we're having this drop again.

You know, a lot of times the second time you do that is a problem and that would be kind of counter seasonal.

And everybody saying that we can't do this now, we have to bounce back.

We have to put weather premium back into the market.

Well, the market likes to do things that people aren't expecting.

And what that would be would be continue to go lower.

That's what I'm afraid of.

I really hope that's not the case.

I hope we get back to almost $6 corn and almost $14 November beans.

I don't think you can take that for granted.

Right.

So then you have to figure out what do you do now.

Is weather the only thing that can take us back to $6 corn?

Well, you just don't know what it can be.

I mean, domestic demand, I think, don't lose sight of the fact that we're going to have some rationing.

Supplies from the southeast are the southwest.

I mean, they're just plain going to have tight supplies.

But, you know, you talk about the technicals in the market.

You know, Paul, these have been hugely trending markets.

I mean, once you get a trend going and then they they've been kind of predictable, they get these big trends go and then you get deeply oversold.

You run out of gas.

I don't care if it's on the grains or the hogs and who's left, and then you start to go the other way.

Something comes up for cattle.

So we don't have a catalyst yet.

Never do until it is.

Okay.

Ted, it's a question of this is Bob in Missouri, have the wheat buyers gone back to hand-to-mouth because of their economy?

Hi, Bob.

Oh, yeah, yes.

But also death doesn't just it's not just unique to wheat, right?

When you have high interest rates that mean storage and things like that, that precludes you from really going too far out in time.

When prices are really high, especially when the trend is down, you kind of pull back and you try to go hand to mouth.

So I would say that is a weak thing.

But also you could see that in corn from both the feeder and the exporter point of view.

I think for soybeans, not quite as much, but still I think that is sort of the case.

And that's what happens when you're at times when you're on the historical high end of prices.

Now, if we go back to $3.30 corner, go back to when we were at $3.30 corn, you guys had book guys booked out for nine months because we were at very low interest rates and corn was cheap.

So yeah, why not?

But these are different times.

So yes, the definitely the case.

I have Phil in Ontario that has a question for you, for you, Don, and it's grain prices have retreated almost unabated over the last few weeks.

Did somebody say we're going to have that spring rally or did we skip that this spring?

Well, actually, we had a counter trend market because typically we're going up this time of year and then we kind of peak out around the middle of May and then we start our track lower.

So actually we've got a counter-trend market going for all the unusual things.

But, you know, I think is probably his real question is where do we go from here?

And I think the one thing you know is, is no, at these price levels, after thi you know, it certainly is one that you wait for selling opportunities down the road is what we're seeing producers do.

Ted, I have a question from Robert in South Dakota for you.

In February, he asks, we always hear that the markets are buying acres.

Is the recent drop in spring wheat a sign that enough acres were bought for a new crop?

And if you want to cross out any other commodity there, answer wheat first and if you have another commodity.

Yes, sure.

Hi, Robert.

You know, when we talk about buying acres, it's usually when we have lower prices that are trying to rally into planting.

The thing is, we were already at some really elevated prices.

So you would think that this was a year where we didn't have to buy acres.

Those acres were being bought already.

And then you get a U.S. WASDE report showing a bigger carryover and that suggests maybe not.

Now, personally, in the bigger picture fundamentals, I think that, yes, we should have been buying wheat acres rather than watching the price continue to go lower and the funds continue to build a massive record short position.

But that's not what happened.

Now, does that mean we're going to see lower acreage?

I kind of don't think so.

I mean, that's really going to be depending on the weather, whether we have the spring acreage in or not.

But we were already in position to have ownership of those acres.

And I think that's the best way I can put that.

I think Ted said he saw something like 17 planters.

Okay.

Where's the status of your clients, how they are planting?

And did they say anything to you about they flipped acres or something made them change because they were.

Well, I think the South is pretty aggressive.

You know, like 60% planted Missouri South.

But in, you know, many more than that.

But I think when you look at it, the calendar, it you can get this crop in so fast.

I think you could see this last week.

Trade is not worried about it.

Getting the crop in is going to get in the government at very low prevent plant acred 6.1 million.

We'll see what happens there.

But yeah, I think the crops are going to get in, Paul.

There's some agronomists who say May 1 to May 15, pretty good time to plant corn.

We're not.

We're not there yet.

We will be on Monday.

But let's talk corn really quick.

Okay.

Go ahead, before we get political.

So you know, interesting thing about corn, if you paid a lot of money back in October in the fall for inputs.

Right.

And now you're going to plant corn and you're looking at input costs being quite a bit lower, not in every area, because some of the distributors are still having to pass along those higher prices and they haven't run through their inventory yet.

But if you are in a spot where you can go out and pay a lot less for inputs than you did back in the fall, do you get do you buy more inputs, average your costs down and plant more corn in the scenario if the weather in the calendar allow that?

I'm wondering if you might see an increase in corn acres as long as the weather allows for it.

Okay.

Well, maybe that can also temper your answer in this one.

Joel in Oklahoma, he wants us to be a little bit political, but what's your opinion on the ethanol long term?

Yeah, right.

You know, I've had a problem with how the EPA has treated ethanol for the last two terms, but E15 year round Biden administration passed it on Friday saying that, hey, you know, that'll help the summer gas prices.

Well, you know, whatever.

That's fine.

That's that's a win.

I've always been a proponent of trying to push E85.

I have reasons, you know, car performance wise, octane wise, why E85, I think is a great thing.

I think ethanol continues to grow.

Right.

I don't know if it's going to have the the sharp growth that it saw in the early to mid 2000.

But I think that ethanol does continue to grow, even though it's kind of flatlined over the last couple of years.

A lot of that has been because we've been driving less, there's more work from home, things like that, pandemic and all that.

But hopefully I see more upside potential in ethanol.

The biodiesel is just a big growth area.

Bean oil, you know, sitting down in here are some pretty good support areas, but that's the big growth area.

And you know, back to ethanol is kind of that old story.

If you build it, they will come.

And I think we build them and I think they'll be used.

All right, Don.

Appreciate it.

Thank you for coming to see us, Ted.

Same to you.

Thank you very much.

Make it all the.

I. I couldn't pull it off.

Thank you very much, gentlemen.

Good to see you both.

Next week, we look at an immigrant farm boy who ended up being the longest serving cabinet member.

And we'll have the market analysis of Chris Robinson.

Thank you so very much for joini