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Welcome into the Friday, November 24, 2023 installment of Market Plus.

Joining us now again, as we continue our discussion, Chris Robinson and Ernie Goss.

Gentlemen, good to see you both.

Good to be here.

We've we've turned this into like a Thanksgiving tradition with the two of you.

I appreciate you making time for us.

Yeah.

We're proud to be your turkeys.

Gobble, gobble.

That's you.

Mr. Goss, Dr. Goss told me a number of years ago something that has stuck with me about the dollar.

And it's going to be our first question.

Tony in Nevada is going to get us started.

He asks, will the weaker dollar make U.S. grain markets more attractive to foreign buyers?

I seem to remember someone at this table saying a lower U.S. dollar is good for commodities.

Do you still stand by that statement?

Absolutely.

Other things equal, as we all we economists always say.

I thought it was on the other hand.

And you ran.

That's right.

That's right.

That's that was President Truman said that.

Give me a one armed economist or one handed economists.

One is tired of all the other hand.

So will this weaker dollar.

I mean, we're still, though, at high level.

Yeah, we are.

And and yes, a weaker dollar is very positive for agriculture and commodities and agriculture commodity prices.

So it's going to be good.

But again, there are other issues.

You know, as long as our interest rates, the gap between our interest rates and other interest rates, that supports the of the dollar.

And that's what we're seeing now.

As we talked about in the last session, we're going to see probably some downward pressure on US interest rates.

So that will tend to weaken the dollar a bit.

But relative to other currencies, we're still going to be fairly strong.

Well, there's a country that wants to go to the US dollar after an election last week in Greece and Argentina.

The new president has said he wants to flip to the dollar.

What does that mean?

Well, we'll see that to say that they have to actually get it done.

There's a long road to go there.

First of all, it's very expensive.

They have to come up with $50 billion because they're already $10 billion in the hole and they owe the IMF 44 billion.

So what they're trying to do is rein in inflation because he doesn't have any favor over, you know, the election there.

They don't have faith that their their government can stop spending.

That's really what it comes at.

Their inflation rate, I think, is 110%.

128%, something like that.

And other countries down there have done it.

I think three or four of them have done it where they've gone to the dollar.

Basically, what they do is they turn over the monetary policy to us because then they can't print their own money anymore.

So we'll see if they do that.

I think when when there is uncertainty like that, probably what will happen is the farmers that own grain that they haven't sold yet are going to hang on to it because if you don't know how it's going to turn out.

Last thing you want to do is take a get rid of a physical asset too soon.

So I think you'll probably see them hang on to it as long as they can.

Do you anticipate, Chris, that policy change that's in the works, the presidential change that's happening, what does that do for the agriculture side of things?

Because we talk about not just Brazil, but we do talk about Argentina's production.

Yes.

What does that do for a farmer in in Nebraska trying to make decisions about buying or selling or disease?

Because, you know, if you has been they've been in a drought for the past year and a half, so they've had problems there anyhow.

Brazil's been okay.

But that's been the the the the and now it's sort of flipping that's now you've seen the the drought started to move, you know, further towards Brazil.

So if that can continue to be an issue, I would say that it's something to watch.

But I don't think it's that big of a deal because, again, they've been dealing with 110, 120% inflation anyhow.

I think it's more of a political issue down there because a lot of the landowners are are more influential, let's say, than than your average person.

They are here.

Do you get on the phone much about Argentina politics?

Not a lot, but it's certainly it's been in the news lately and currency is is a huge issue right now.

I mean, we've got El Salvador which sanctioned or adopted the Bitcoin as a Fiat currency.

We've got BRICS which met in South Africa in August, August 23rd, talking about displacing the US dollar as a reserve currency.

In other words, the opposite.

Brazil, Russia, India, China and South Africa.

BRICS, BRICS.

That's very important.

What?

And we're in the US where we're looking at maybe we need a go back currency, not this fiat currency, which is backed by just the good faith of the US Treasury.

And of course, as Chris is saying, we don't.

Argentina, look at what what's happening in the US we're talking about this year depends on the budget.

This that goes through Congress and signed by the president.

We're talking about government spending on a deficit a deficit of maybe $2 trillion, a budget of 6 to 7.

I don't know where it come in there, but that's that's really pushing putting undermining the US dollar, the US dollar.

And there are a lot of folks that want to say, well, we need to look at some of the digital currencies, are are we need to go back currency.

So there's a lot of movement going on in the currency market.

That's huge.

There's also movement in trying to buy some things.

Another question that we have here is from Tim on Facebook.

Do you see the farmers paying down debt or investing in the farm machinery, infrastructure, etc.?

And I'm going to put in etc.

and write the word land.

I think if my experience after being in this business, as long as I have any time a farmer can buy land, they'll they'd rather buy land.

Not so much with machinery, although that's an issue as well.

But I think that if if you're in your thirties or forties or fifties, you see what happened to people that said no to buying land 15, 20 years ago.

Here it is today.

And they're like they look ahead and say, if you get a chance to buy it, buy it.

So I think that that's the number one thing.

And and all of these sales we were talking about earlier, not all of them, I shouldn't say that, but a large percentage of them, they're cash sales.

So it's not like they're borrowing the money to do it.

That's right.

You were saying in the our main discussion, talking about a lot of these same factors.

Are you lining up with what Chris is?

Absolutely.

That is.

We're talking about we asked the bankers, our bankers in ten states, rural areas, forget that farmland prices over the next six months to a year, they said flat and it hasn't been flat.

And then they come back the next month and they tell us what's actually going on.

And it's pretty good growth.

And as you're saying, Chris, they're there.

The investment investments there, you look out and you sell, what will it happen is going to continue.

But we're seeing in say, Iowa, the northern Iowa, prices between 23 and $30,000 an acre.

You know, and that's that's historically that's very high.

And who's buying the land?

Well, it's borne by a lot of folks think it's Chinese is not.

And they may be buying some, I don't know.

But it's mostly farmers next door.

And it's with cash.

I'm still we're not even talking.

We're not even talking banks.

So how do you get a sense then, with these bankers that you discuss of.

Well, they're not even in the they're not even in this deal.

That's right.

That's right.

So how do you get an accurate sense of then what's happening?

Well, I don't want to say they're inaccurate.

It I don't think they know.

For me, I didn't say inaccurate.

I just said get an accurate sorry.

Maybe I didn't quite.

I so I don't want to undermine my own survey.

But you're right I don't I don't survey the farmers and they don't survey the farmers, but they actually deal with the farmers and I think they get a pretty good handle on.

But we've all everyone's underestimated the price growth of farmland.

I don't know anyone.

I mean, my goodness, in my I would have bought some farmland three or four years ago.

I should have bought farmland instead of that stock I bought.

You know.

He must not have been listening when I said the time machine was broken.

That's right.

Right.

I see.

It's back there.

They're working.

They're working on it.

They're working on.

All right, Chris, I have a question about cattle on feed last week.

Let's see, this is from AG wants to know the cattle on feed was neutral to slightly positive last week.

Will it incentivize the funds to start building a long position in both feeders and live cattle?

Well, part of the problem, part of the big sell off that we've had in the are certainly live cattle.

They were long a chunk they they're still long about 40,000 as of right now, but they were long, close to 60 or 70.

So they they already cut a lot of that.

But you got to remember they made a ton of money.

They were long for three years, basically.

So they they hit the cover off the ball with that.

At the end of the day, I think there's also if the stock market, you know, we talk about of earlier, there's a correlation between cattle in the stock market stock market rally the other day and that was another reason we saw a little bump in the cattle.

Sometimes these guys can't buy enough S&P futures, they buy live cattle futures.

It So I think there's a correlation there.

But yeah, I think that at the end of the day, these guys are looking for another asset to hold.

And, you know, if they have a reason to buy the cattle, they will.

The problem is if we keep going lower, we're at historically high prices and then you start getting into the technicals.

And are these are they where is the trend?

This is not going to change.

Nobody can really know.

Nobody called this top.

And I can tell you, nobody's going to call the bottom either.

That's why we hedge.

You know, that's really why it is.

And anybody that told you that they know where it's going, I would take it with a grain of salt.

Just hedge if you're long the cattle.

Great.

Ten years ago, we were excited about protecting 80 cent cattle.

Now I've got guys saying I'm not so sure I want to protect 140 or 170.

It's so it's all relative.

Everybody's got to make that decision.

But yeah, I think the funds see an opportunity to be long.

They will get long.

What do you want to jump up on and say for the last six months of 20, 23 to make sure producers here at home this is your chance to get on the chair and yell again to those in the back.

If you learned anything from this year, it's when the price hits a good level.

You've got to do something thinking about it or hesitating about it.

You can't do it.

We were north of $6 for for quite a few days for corn.

You had a chance.

I remember going back to 2014, 16, 17, we get to 430 for two days and then it was gone.

We were in that 50 cent trading range.

So that's it.

That's the take away.

When the market gives you a good price.

Nobody sells the top, but make sure that you're catching the meat of that move and planning ahead for next year.

Next year.

You know that right now you don't want to be you shouldn't have a cash sale or hedge under $5 corn for next year for soybeans.

New crop soybeans are are $13 right there.

Really good level.

You know, you should pick a line and say, okay, I'm not going to have anything lower than 1250.

And then, boy, if we get a summer rally, if we get an issue in Brazil, that would be great.

We'll go with it.

But protect, protect, protect.

I think that's what 2023 taught everybody.

And it was a and a lot of cases was a hard lesson.

Dr. Goss.

Yes.

Final six weeks of this year or seven or five.

I mean, I can't count.

What do you see will be the biggest story that we need to follow economically?

I think in terms we're going to be looking at interest rates and getting used to higher interest rates.

The idea that the idea that we're going to somehow we're just going to start interest rates are going to move lower.

That's what investors are counting on.

And I think we as we talked about in the last session, we are going to see lower interest rates probably middle of next year, but we're going to get used to these normal interest rates.

What we got used to and as Chris said earlier, what we got used to as normal was not normal, 2008 to 2020 2 to 2021.

That was not normal.

Are you talking about zero interest rates?

Zero on the funds rate I'm speaking of, we're talking about people were saying, where do I put my cash?

Where do I put my cash?

Now you can put your cash in bonds in US Treasury bonds.

I'm speaking of you can put in.

But but the idea of this free money is over for you.

Get it?

Here's one more idea.

Favorite Thanksgiving side.

The cranberries, but the cheap ones.

Okay.

And your favorite Thanksgiving side.

Deviled eggs.

All that is both.

Go ahead.

Chris Robinson, very guys.

Thank you so very much.

Appreciate your.

Time.

Thank you.

Thanks for that.

Thanks, Chris.

All right.

Thank you.

Next week, we are going to look at how U.S. poultry producers are working to handle recent outbreaks.

We'll also have the commodity market analysis with Arlan Suderman.

Thank you so much for joining us.

Have a great week.