This is the Friday, April 14, 2023 installment of Market Plus.

Mark Gold is back with us.

Mark, we flew through a couple of things and there's a whole lot of follow ups and I had a whole lot of week questions.

We spent more time in wheat.

I guess I'll just start with Judd's question.

In South Dakota, you talked about the northern plains and their mud, their winter crop.

Judd wants to know, will the dry areas of southeast Colorado or western Kansas affect the winter wheat market?

I think it's affecting it right now.

I mean, Kansas City, we traded up to nine bucks not too long ago.

A week and a half ago, it broke and this week came back strong on Friday.

And I think that's a direct result of what's happening.

It's getting worse in Kansas, not better.

So I think ultimately the winter wheat crop, the hard wheat has got a story there.

Soft wheat, maybe not so much, but the hard way is going to eat it up, in my opinion.

But I've known people who've sat out here and said it doesn't matter what the United States does with wheat on a global market that we've had this Russia story, this Ukraine story.

Who's China buying from?

Wheres the Russian grain going?

Where it seems like that the markets should be going down, but it's responding mostly to weather, not politics.

Where are we right now in the wheat market as we talk about are we responding more to weather or to global factors?

Do you think its...

I think a sum of both.

I mean, Putin's come out and said, you know, are we going to do?

The grain deal again?

Maybe we will.

Maybe we won't.

We want concessions from the United States.

They're not going to get the concessions from the United States, in my opinion.

So every time he talks about this, in my opinion, he gets a good rally.

He sells.

It is nobody's fool.

And I think long term it's in his own best interest to have a deal and let the grain move freely.

So, you know, when he makes these comments, wheat tends to be firmer.

I think that's one of the reasons we were stronger on Friday.

And, you know, certainly the weather is an equal, if not more important for here in the United States.

Where are we going to get the milling wheat from?

I don't know.

We're going to import it.

The Russians are going to sell it to us.

And I think so.

So I think the both have a significant impact into the wheat market.

Id missed this headline that you told me about before we were rolled today.

He says that China said they're not going to sell weapons to Russia and they're going to stay or Ukraine or Ukraine.

So they're stay neutral.

What does the market do in response to that Sunday night?

I think well, it was out during the day, so it's in the market already.

But I think it's positive from a trade standpoint.

Everybody's so worried about China and the trade issues, them surrounding with a blockade around Taiwan.

You know, that's a little scary stuff.

But I think when push comes to shove, the Chinese did the right thing here.

And I think they did the right thing because they know they want supplies of grain.

They want a steady supply and they don't want to jeopardize that with the United States.

All right.

Let's talk China, but let's talk corn.

When it comes to math, you and Napoleon, Ohio, asked us on Twitter or Facebook, should a farmer use China as a reason not to sell corn if they are buying it?

Well, farmers want to find any excuse not to sell corn.

So, you know, you want to use China.

Is China I mean, is the question is, does he need to buy the corn?

Is he a producer, livestock guy or one guy that needs to buy some feedstuffs?

You know, I don't know the answer.

It's not clear from from the question, but the fact of the matter is, China is going to be buying more and more corn from us, particularly with what's happening in Argentina.

Again, if you need the corn near term in the next 4 to 5 months, I'd be buying call options to keep the upside open to manage that risk.

If I'm wrong and the thing tanks, you'll lose $0.20 on a call and buy your corn a lot cheaper.

A couple of weeks ago we had our panel.

After the last big government report, Matt Bennett said, I don't know if anybody really selling corn.

And then he had said that before.

And then we were there was chatter on line afterwards of, why would anybody sell corn right now?

Because the way the market has responded the last two or three years and the panel was kind of like, yeah, I think you need to be selling.

So you have 20% or 20, maybe 40% of your old crop left in the bins.

When are you selling that mark?

Well, I'd be selling that today.

Why?

Because the basis is so strong in so many areas.

There is no carry in the market.

And when they roll these bids from May to July, you're going to lose $0.30, right off the bat.

So you've got to incredibly strong basis sell the corn, but keep the upside open with that call option.

You know, again, I don't want to be selling anything old crop, you know, new crop.

I don't really want to be selling it, but I'll put on a cheap put to protect it in case I'm wrong.

But the fact of the matter is there is upside potential in this corn market.

So what does the Goldman role have to do?

Define what that is and what that plays into some of your maybe your thinking.

You know, the Goldman role is when Goldman rolls out of one month, I don't, for example, make May corn and beans into July corn and beans.

And what we've seen here in the last couple of days, despite the role where they would be selling May and buying July, you would expect the spread to come in, spreads gone out.

So that's telling me whatever Goldman selling in the front in May, somebody is buying it because they really want it.

That to me is pretty friendly to this market.

So that also backs up your argument from the last question.

Yes.

Okay.

All right.

Let's move on.

We, couple of livestock questions and it it is impacted.

You talked about the consumer.

And I know last week, my my my hamburger was again, back over $5 a pound at a grocer.

Douglas in Iowa wants to know, Mark, how high will fat cattle go?

How many weeks will Packers reduce the kill?

Will it be one week?

Will it be two weeks?

Well, again, from what we've talked about before, I don't think it lasts, you know, much more than really to the end of the month.

So that's a week or two.

When you look at the spread between April and June, cattle, the market is anticipating more cattle coming in.

Can something happen?

In the first couple of weeks of May, the cattle put cattle at new contract highs?

Are we going to take feeders to 240, 250?

I don't see it to me, let it go there.

We'll have puts on underneath relatively tight puts.

We don't want to give away a lot here because we're at such high prices contract highs.

Let's get the puts on, hope were wrong and we do have an increased market in May and the market keeps moving higher, but we just keep bucking up against some of these high prices, as we talked about with this hamburger price is is the American consumer, as mom going into the grocery store, going to say, well, you know, that those those lamb chops or pork chops are pretty cheap out here, Maybe we ought to buy some of that instead.

I think that could be happening.

Well, the pork I saw this week was cheap.

Very cheap.

And the chicken was back at a price I hadn't seen in a while on back to back weeks.

So, yeah, I think the market, at some point the consumer is going to sit there and say, I want that.

Yeah.

And generally when you get in these kind of runaway bull markets like we've seen in the cattle and the feeder cattle, it's the demand that will shift, that will really put the brakes on the thing.

So I think that's what we're seeing here in the next week or two.

Yeah, the numbers are going to be down.

We know that.

But I think when it's all said and done, this is a great hedging opportunity and people will say, well, why do I want to sell June cattle $5 under protect them $5 under the April.

Don't they have to go back to where the?

No, they don't have to.

And the only reason that June are at this level is because the the April's went to this level, they dragged it up.

So now you've got an opportunity in June, August cattle to go protected out here and some great prices.

Are you landing planes at O'Hare?

I've got you so riled up today here, Mark.

This one's on fat calves.

Cannady Farms in Iowa wants to know this one's a calf.

Question If you were sitting on 3 to 5 weight fall calves, would you be better served to take advantage of the higher market now or wait until the end of summer when historically prices trend higher?

You know, like we've been talking about the if the consumer demand is shifting, you've got great prices out here.

Why wouldn't you sell it?

If you think there's more upside, then go buy a feeder cattle call.

At these levels, I ain't going to be cheap, but if you're still convinced you're going to see higher prices in the summer, buy yourself a who knows a September feeder cattle call.

Do something out there to keep the upside open.

I don't think those calls will pay off.

But if it gives you the the gumption to pull the trigger on your cattle prices out there, go ahead and do it.

Or the ability to write you and say, I told you so, Mark is going higher.

Yeah, that's what they're really doing.

Yeah.

Let's close with Chad in Missouri.

And he wants to know about cotton.

Why is cotton at $0.82 right now?

I think cotton's at $0.82 because for the moment, it's just not in the highlight reel.

And that's because mainly of poor demand.

We've seen cotton demand waning out here.

There's no real acreage story out here.

There's no real weather story out here.

So right now it's focusing on demand.

And demand hasn't been great.

Natural gas.

I'm sorry, control room.

I do have another question.

Natural gas dropped again this week, but then rallied for the week.

Crude oil has risen.

What's energy going to do here in a little bit?

I mean, we're talking about OPEC cutting output domestically.

We're not producing as much oil.

I mean, what's the story that you see moving forward here in the next three weeks?

Everybody's talking about higher energy prices and in crude particular.

You got to remember what OPEC does.

OPEC sets a standard and they don't have to comply to it.

And yeah, maybe the Saudis will because they're the leader.

But all those other OPEC nations, when they start seeing 83 and $85 crude, are they going to pump up the the works a little bit, pump some more oil out here?

Don't be surprised.

It's happened in the past frequently.

And I wouldn't be surprised if this would be another case for it.

Mark, good to see you.

Good to see you, Paul.

Appreciate the time.

Thank you.

Mark Gold, everybody.

Thank you so much.

Next week, we are going to look at how water quality remains a challenge for Iowa utilities and farmers.

And we'll have the market analysis with Shawn Hackett.

Thank you for joining us and have a great week.