Yeager: This is the Friday, March 31, 2023 installment of Market Plus.

Welcome back to the table, Ted Seifried, Matthew Bennett, Naomi Blohm.

I always appreciate your flexibility watching this at home and I know we go completely off script to what you're used to and these three are always so good about, whatever Paul, Ted never listens to my question anyway, he always wants to answer something else.

So, Ted, I'll give you the first question.

I'm going to tell you, you already know what we're going to talk about.

What's the headline of the first three months of '23 in commodities?

Seifried: Yeah, okay, that's interesting because last year it was Russia and Ukraine or inflation.

I think this year it's the Fed, how aggressive the Fed is being raising interest rates.

But also in the last couple of weeks they've had to inject a ton of money into the banks, which is inflationary.

So, the tight rope that they're going to be walking going forward and the effects that that has on our overall economy I think is going to be the biggest headline between now and the end of the calendar year.

But, as usual, let's not forget that Brazil that had the largest soybean crop the world has ever seen and they're trying to produce the largest corn crop the world has ever seen.

Yeager: Ted goes rhyming, Ted says the Fed.

What does Matthew say?

Bennett: Well, I agree with that but I want to answer in a different way or a different type of pattern, if you will.

I want to talk about the producer this year is very hesitant to do anything because the last couple, three years they haven't had to do anything and they've been rewarded by sitting there and doing nothing.

So, coming into this year I think all of us were in agreement that we've had really strong prices for a long time, don't get complacent and then the bottom falls out of the market.

And as we sit here today we all feel a little bit better about what is going on.

I think the story of the year for me is don't forget how you felt the last couple, three weeks, especially if we take off on a rally here because absolutely I still feel the same way that profit margins are not going to be what they were the last two years.

I feel strongly about that.

If we get close that'd be great or if we just lock in half of what we did the last two years that'd be great too.

So, I think the main thing is be okay with a really good situation, you don't have to hit a home run every year.

Yeager: Nice opening day reference, I like that.

Naomi, what's your headline for '23 so far?

Blohm: Just a reminder of what the funds can do if they want to be sellers how quickly the market can fall apart for prices and if they should come back in, Monday is a new month, it's a new quarter, and their books are balanced from first quarter now.

So, what are they going to do?

Are they going to come back in because now we've got a story to tell potentially in agriculture again?

But they follow charts, they follow seasonals, they follow what is happening in the world.

And so, if they follow the seasonals and this market works higher, great, everybody is going to be able to make some cash sales as Matt was referencing.

But just remember, they watch the seasonals.

So, come June, early June they are going to take their ball and they are going to go home and it is going to fall, this market will fall quickly.

It happens every year.

So, don't be surprised by it, be disciplined, know when you're going to pull the trigger and make the sales, get the orders working with your elevator, start thinking defensive in terms of a put option strategy down the road, not right now because the story is turning friendly again here short-term.

But don't be complacent.

Just keep an eye on the funds, the money market moving and be ready for capturing opportunities.

Yeager: All right, I'm going to let the three of them ask a question to each other in a moment.

But first I want to get to a couple of questions that came in.

One, let's go with Husker Fast in Nebraska asked on Twitter, Matt, should we market nothing and listen to yacht rock all summer and sell off the combine and clean out the bins by Christmas?

Bennett: Yeah, and that's what we've done the last, even 2020 -- '21, '22 -- Yeager: For those not listening in the back.

Bennett: Right, and '20 obviously when the derecho hit it changed everything.

China stepped in and bought corn.

In '20 if you did nothing that was the best thing you could possibly do until late in the year.

'21 same thing.

Same deal in '22.

The problem with that is that we've already got really strong prices.

We've had the rally.

People say, well stocks to use under 10%, that means we ought to be rallying, well look at the board.

Good Lord, we're still already at really strong prices.

And so, I think what you have to do is you've got to divorce yourself from the last two years' mentality and you've got to say okay, what is my profit margin if I get back to $5.95 Dec corn or $6.15 Dec corn, whatever it might be?

I know some of the price targets we've been looking at and selling a little bit before you get to $6 I think makes a heck of a lot of sense because who knows when this thing might turn around.

But bottom line is know what you're making and whenever you know what you're making it makes decisions so much easier instead of getting wrapped up in the emotions of it.

Yeager: That goes back to I think the very first time you and I ever talked, it still sounds the same.

That echoes in my head.

Ted, you can answer that one.

You doing the yacht rock or are you -- Seifried: I don't see why we can't do both.

You can yacht rock and make sales at the same time, I feel like.

Bennett: Maybe it makes it sound better.

Seifried: Yeah, right.

Yeager: It could, everything needs a soundtrack.

Seifried: There you go.

But no, I absolutely agree, which is kind of weird, but absolutely agree.

I don't think we are going to be at these price levels in the fall.

Whether we go and make new highs by a little bit or a lot or not at all, I don't know, but I really don't think we'll be here unless we have another major weather issue and that all goes back to what we talked about on the regular program is yes, we like to talk about supply and acreage and stocks, but demand has suffered at these higher prices.

It doesn't usually take this long to kill off demand.

We've had supply issues that have helped keep prices up here.

But if we come online after Brazil with a massive first season soybean crop, if their second season corn crop is even anywhere near what we're expecting and then if we have a good growing season well then we've got to go back and find all that demand that we lost over the last couple of years and we're going to have to do it at much lower prices and that is the concern that I have for this fall and beyond.

Yeager: Okay, I know you've mostly answered this, but let's do Glen in Ohio's question for Ted.

Seifried: Hi, Glen.

Yeager: Should a producer be more reactive or proactive and take that type of approach as they attempt to market the '23 crop?

Because I'm hearing, if I'm hearing you, we need to be more proactive, we've missed our reactive window.

Seifried: Yeah, proactive, reactive, you just have to be active, how about that?

You could have been proactive in front of this report and then you saw the market go sharply higher, well then react to that and average more sales in is kind of what I'm thinking there.

But yeah, you are proactive as in you make a plan but then if things change in the market, which that happens every day, then you also have to react.

So, you've got to do both.

That's it.

The thing is, don't be complacent.

Don't not be active, because again, to Matt's point, one of these years, the year you're complacent is the year that you're going to get a very, very difficult with your bank at the end of the year.

Bennett: Exactly.

I think the reactive thing, so old crop, I've had people call me lately and say, I went in and threw in the towel at $6.85 cash.

I'm like, are you complaining?

Seriously, are you complaining?

You're reactive in that situation.

So what, you didn't get $7.

Come on.

I know some of these folks that averaged $2.30, $2.40., $2.50 and if you're selling at $6.80 I'm no math major but that's not hard math to figure out, you made a lot of money.

So, I'm with Ted, I would say proactive in that I want to make sure that I know my situation and I know what I'm latching onto because there's been times here in the last couple, three weeks where we've had folks that are really, really getting tight as far as their profit margins go at normal yields.

Obviously we all want 240 bushel corn.

What if you have 200?

200 for some folks is phenomenal, for other people it's kind of a disappointment.

If you have 200 bushel corn and you plug that into your profitability spreadsheet for some of these guys with $1100 an acre wrapped up in a corn crop that doesn't work very well, especially at $5 cash.

So, you have to be really cautious as to just sit on your hands and think that you're going to be able to be reactive and still make money like you are on old crop right now.

Seifried: Most expensive corn crop we've ever planted, i.e.

the highest risk corn crop we've ever planted.

Bennett: Easily.

Seifried: Don't be complacent.

Blohm: Yeah, and I would add that I think we've got probably two, three weeks before planting gets going for places that are going to be able to get going.

And I think all the producers right now need to start brushing up on okay, where is my cash sale target?

Call your elevator, make sure you understand the contracts that they have, remind yourself what it means to buy a put, talk to your broker and ask, if the market does go up to $6 what do I think a $6 put is going to be trading at, maybe get the orders working in place now so that way you have more of a strategy ready to go because it's not normal for markets to last more than two years, it's just not.

Seifried: One real quick thing though, everybody was fascinated by soybeans being up 30 cents today.

What I think gets lost in that whole mix is that December corn was actually down.

Yeager: Okay, Ted, real quick, what is your question for the table to discuss as we close here?

Seifried: Right, who wants it?

Bennett: I don't care.

Seifried: All right, Matt, when does China invade Taiwan or do something to really, really cause a problem between us and China?

And what happens when that happens?

Blohm: Oh, I want the question.

Seifried: Then you should have said so.

Bennett: You passed it off.

So, obviously Xi says we're preparing for war, he's already said that.

And I think a lot of people are like, whatever.

Maybe we need to listen to him.

When does it happen?

I've got to think that, I don't want to shift it too much, but for instance, when is Russia going to dial up the tension in Ukraine?

When the weather gets better.

And so I am almost of the opinion that the two could be towards the same sort of time period.

And so when you get into better weather I would be very concerned if a person has got a lot of risk whether it's in the capacity we're talking about with your ags or whether it's with your portfolio, I think a person needs to be extremely cautious as to have too much risk on the table.

Yeager: Do you have a different answer to that?

Blohm: I think it'll happen.

When it's going to be?

It will be about six months before the presidential election because by then they'll have our crop, our soybean crop from harvest, then they'll have the Brazil crop coming in, so they'll be covered for food.

They'll have knowledge of what they're going to be planting and hopefully they'll have then enough food to get by until their harvest comes.

And if they do it six months before our elections that's enough just to make Americans go bananas and Facebook go crazy with ads and everybody going to fight.

Seifried: Will they still have to/want to import soybeans from us when they do that?

Blohm: I think that's a good question.

Probably Brazil could supply them with what they need but then Brazil's regular customers also would have to come to us.

So, I don't know, we would lose some business but I think we would pick up some of Brazil's.

Yeager: Matt, your question for the table?

Bennett: My question for the table is, what do you think the high is going to be for Dec corn and November beans between now and September 1st?

Blohm: $14.50 for November futures because then everybody can get $14 cash.

And I think everybody is going to get a second round of December corn futures.

I don't know what that means for cash.

Yeager: Agree or disagree?

Blohm: $6 futures.

Seifried: $13.95 November beans and maybe just shy of $6 or just above or just under $6 for corn.

Yeager: Okay, Naomi, question?

I know you were not excited about this so I waited until the end.

Blohm: No, it's okay.

I would say more my question would be with when our summer high occurs, how many business days will the crash erase everything that we've gained from the spring rally that we are potentially going to be having here?

How many days will it take to deplete everything from a gain that we've had?

Seifried: It depends on how high we are.

But I would say we'll do it in two weeks.

Bennett: I'd say two weeks at most.

The thing is with the bean market, let's say we do get in a situation where, for instance, we're going to plan 88.5, 89, people start plugging that in the balance sheet and then the growing season starts out good enough and someone throws a 53 in a balance sheet or 54 and we've already imported some beans into the southeast, I don't know.

What if you take the bean market down a dollar in one day, all of a sudden panic sets in and then the funds, the door is not big enough for the funds.

I think the bulk of that loss could happen in two or three days and then all of the loss over maybe the course of two weeks.

Yeager: Hop onto the roller coaster, we have some fun, I'm sorry, I shouldn't say that, I shouldn't mock it.

Matthew Bennett, appreciate your time, thank you so much.

Ted Seifried, good to see you, thank you.

Naomi Blohm, thank you so much.

Appreciate it, thank you so very much and thank you for watching.

Next week we are going to talk about using technology to monitor weather stress in near real time and then we'll have commodity market analysis with Sue Martin.

Thank you so very much for joining us.

Have a great week.