Welcome into the Friday, December 15, 2023 installment of Market Plus.

Joining us now, Dan Hueber.

Dan, I'm going to do a tease here for a minute.

Okay.

I'm giving you time to think about this.

I'm going to ask you at the end of our discussion, okay, which market?

Where have the bull or the bear influence the most and not gone into hibernation?

And yet.

Okay.

Because it's been a warm December here.

Think about that.

Okay.

Let's start with corn, though, instead of animals.

Okay.

Ron in Iowa wants to know with the current corn carryover, the current demand, if we achieve trend line yields in 24, will there be a three starting the corn price?

I think there is no question about it.

So, I mean, we even today, you know, 2.2, 2.3 billion carry out from last year.

You had a record crop on top of that.

You know, we're sitting at 16 6 billion corn.

You know, if you increase that again next year, I don't see you know, granted, the only thing that would really throw that off would be a major disruption somewhere else in the world.

I don't know where that's going to happen.

So I'm going to I don't necessarily argue with that.

Okay.

But I want to throw in something that we've talked about a couple of weeks here, the weather.

Last year at this time, a lot of the grain belt had good subsoil moisture.

They had fall rains.

Those have gone away.

If you look at the drought monitor in different areas around I mean, the Mississippi is low.

I know that doesn't there's no crop in the Mississippi, but the basin has been dry.

Do you anticipate that the weather story will be a little more sensitive given our low conditions of subsoil moisture and some of the corn growing areas?

Not necessarily.

You know, and again, those are all probabilities.

I mean, absolutely no question about it.

The same token, I think we have we have never really, I think, adapted to how well the hybrids of today sustain themselves through stressful situations.

And do you think that the market and those who trade will look at it and go, now, you said it was dry and you were going to have the worst crop ever and look what you did.

I mean, I think that is in the back of the minds at this point.

I don't think we react quite as much as we used to.

Plus, I think there is a fire.

Not that there isn't emotionalism in the market that will always be present.

And part of the world we live in.

But I think it's reduced from what it used to be.

I think there's a lot of computers making decisions.

Computers don't get emotional about the weather.

So.

Yeah, computers and emotion, a program that in exactly gray.

I think that I.

Guess on a follow up to that three.

Sure.

High three, mid three, low three.

Well you know anything in the threes is going to be disastrous unless we're looking at it at record yields.

So I would tend to say mid to high threes, you know, so.

So what do I do.

Not saying you're not saying that's what's going to happen or what do I do if that is a possibility right now, today with those three scenarios that are possible?

Well, you know, today I guess we have the luxury at this point in time that, you know, we're dealing with the uncertainty of what our next crop is going to be.

And at this point, nobody knows.

There's already discussion that we're probably going to lose some corn acreage which may shift back into soybeans.

So you tend to want to build some risk premium between now and at least in the end of March, until we get some kind of an answer on those figures.

So, yeah, I don't think you start panicking and selling at current levels, but I think 10 to 10% rallies from where we stand in any of the any of the corn months is something of a reward at this point in time.

Well, then I guess that rolls into Mitch and Iowa's question Are better prices ahead for those still holding corn?

What's your exit strategy?

You know, two things to keep in mind in the corn market is, one, yes, I think we have a some rallies ahead here.

Yet again, I don't think they're going to be substantial rallies ahead.

I think your greatest risk is not taking advantage of the carry.

You know, when you when you look at where July corn was versus where December expired this week, you've got a 45 cent premium.

That's your risk.

I mean, if corn was worth for 50 years of expired in December, why is it not going to be worth 450 come next summer if the demand has not shifted at this point in time?

So if you're not taking advantage of that 45, $0.50, you know, there is your risk to the downside at that point.

We don't have to take nearby corn a lot lower than it is today.

But, you know, you're going to lose a lot of opportunity by not taking advantage of what's out there.

You know, even at today's prices.

Yes.

If again, I think if you get a 10% rally, you sell, but you sell the month, it's got the best amount of carry to it.

Sell the month.

That has the best.... okay.

Yeah.

High highs premium.

Yeah.

Yeah, that makes sense.

Yes.

All right.

We talked a little bit about feed with that corn for livestock.

Well, let's go back to the hog market for just a little bit.

Robert in Minnesota, I had a question for you.

And it's a little deeper than what we did on the television show.

Is the bottom in on the hog market And when do you believe we will start to see numbers drop from liquidation in the salad?

The first question, I think we're probably at that bottom in the hog market.

You know, two days ago, if you asked me that ad said 5050.

You know, we may be close, but we weren't there.

I think the performance over the last two days of this week probably said we've seen enough to the downside and we can start looking for that normal kind of seasonal response higher into spring, summer months.

That said, I don't know, with the price of feed ingredients coming down, particularly if meal continues to deteriorate.

I don't know if we really start seeing a lot of liquidations, maintain most of the hog production.

This commercial at this point in time, they're geared to their packing in their packing plants and I think it's going to be a lot of a lot of red ink before that happens.

We were discussing this a little bit before we rolled, and I had heard back this summer, and I think a lot of people had is that there was sow liquidation already happening in the United States.

Sure.

You think there's sow liquidation happening in China or.

Absolutely in China.

And what does that mean then for us here?

Well, it could be a boost for our export trade and it really hog exports or pork exports, I should say, have really been fairly respectable all year long.

We're seeing the cattle turn in the opposite direction here at this point in time.

So.

So granted, China, it's a balancing act for them.

You know, of course they, you know, pushed and pushed and pushed to rebuild their herds after the African swine fever debacle over there.

Of course, they expanded dramatically and with these mega farms and now they've hit the wall.

They don't, you know, they just have put too much pork out there at this point in time.

The government is trying to do all they can buying a pork to trying to stockpile to try to alleviate some of the retail pressure.

But they've gone to record low prices over there.

So absolutely, you're seeing some of those mega farms become smaller mega farms at this point in time.

So, yeah.

Two more questions on commodities here.

Let's finish up with King in Texas.

Will the funds finish the year net short corn for the first time in 16 years?

I think the odds are, you know, considering the length of time we have to finish out the year, I think they will be still short, but it will be have reduced significantly.

I know they were big buyers again this last week.

I didn't see the total fund numbers.

I know the large spec was it was a large buyers still maintaining a short position, but I think two weeks ago they were 145 150,000 contract short.

But you know, they could have that knocked down to less than 50,000 by the end of the year easily.

Well, what about the outside money?

That's maybe not necessarily the commodities the commodity fund folks normal.

But the those that look to park money.

The stock market had another good week.

Oh, sometimes that money, if we're up and one, we're not enough in the other.

Right.

Well you tend Yeah.

Money's going to flow back and forth.

We tend where they think they're going to get the best return.

So yeah.

Could some of that be moving and exiting over to the equity markets?

Certainly.

Certainly.

But it you know, that would not tend to be the short player.

I don't think, you know it's you know, nobody's going to go over that many are going to go over trying to short the S&P 500 is that point.

No, not the way it's performed.

Right.

Let's talk with Charlie in Ohio and his question, by the way, thank you for your questions each and every week.

Let's appreciate them.

Look for them on Facebook and also on X where we ask for them.

And Charlie says, Do you anticipate the basis on corn or soybeans to strengthen faster?

Which one?

Oh, one.

Or the other.

Why we other which I would tend to say, I think I'm a favor corn and just in the respect I think there's a little bit of better we have a little bit better chance for demand on corn once we get after the first of the year.

You know, not that the processors still won't be interested in soybeans, but the demand side of it, could we just fall off a cliff because South America will take over the market again.

So.

All right, your bears and your bulls.

We've had a warm fall.

Yes, hibernation hasn't started.

Not quite for the bears.

Yep.

Is the bear market the biggest and needs to go and hibernate?

I think the bears are probably going to hibernate Most rapidly in wheat, at least for a while.

Secondly, in corn, they may not go to hibernation to the soybeans.

So.

And you see.

Okay, so maybe the bear hibernate in the wheat market.

Does the bull come?

Or is it just there's no.

Well, not there.

There.

You know, again, we're seeing enough demand.

You can see the bull.

There is some bull there.

But extended bull.

No, I think it's more of a short covering of, you know, those who are just laying on the shorts that already.

So.

All right.

Thank you, Dan, for playing along.

Oh, my pleasure.

Good to see you again.

Dan hueber Merry Christmas to you as well.

Next week, we are going to showcase the latest winner of the World Food Prize, and we'll have the commodity market analysis with Jeff French.

Thank you for joining us.

Have a great week.