Welcome in.

This is the Friday, September 15, 2023 installment of Market Plus.

Don Roose back with us.

Best of the best is how we ended that show, Don.

I want to discuss something about this crop.

We have a couple of questions we'll get to in a minute.

What's the real story right now in commodities, in your mind?

I think the real story with all the inflation that we've had, with all the weather problems that we've had.

What is the real value of corn and soybeans and wheat?

And I think that's why we're just on hold right now.

We're trying to figure out is corn four or five or six?

You know, is soybeans, is it ten, 12, 14 or 15?

I think that's what we're trying to sort out, Paul.

And I think we're going to get a good idea this year with the corn carry out the way it is, what the yield ends up with.

And same thing with soybeans.

Let's get to a few of the questions that came in.

And I have some follow ups there.

I don't want to waste all my follow ups where we're going to ask a question where you have.

I appreciate everybody that submitted.

Let's start with Dennis via X. U.S. soybean stocks are projected tight world ending stocks are record high.

What's the next big move in soybean prices?

Well, if you look at it from the next big move, we just went through some big drought areas and we found out what we did to the upside.

We were like, what, 1448 and a half?

So we need to take that out soon.

And that's going to have to come from the yields going down and soybeans demand going up or South America having a problem.

So we know 1450 is a tough market.

If you don't go up, you go down.

So you've got to be a little bit careful with that.

Seasonally, though, Paul, we usually sock in the low harvest, low on soybeans as we hit the first week of October.

And you had said during the program you were talking about I know yo Those lows have been earlier and earlier.

Are they early because of drought or something else?

Usually what's happened here lately is the end user starts to cover before we get into the gut slot of harvest and in short crops, you know we always hear short top crops long tail.

And that means that right as you're harvesting the yield isn't there.

The end user chases it and we push it to the upside.

So, you know, it's just plain it's a wrong time of year to be overly bearish on the grain market until we can see what happens with the yield, what happens with the demand.

Ethanol margins are the best that they've had in years.

The cattle people, the livestock people are still making money.

So it's only our exports that are poor and that's the real issue.

Well, we're having export issues with Mexico.

We've had China maybe not buy as much as they used to.

There's been.

So maybe we are using what we have here at home.

Yeah, we are.

I mean, as a domestic market, just to put it in perspective on the exports that we just ended, September one, corn exports were down almost 850 million versus the prior year.

You know, if we had the same as the year before, we would have a 600 million carry out.

I mean thats too low.

Well, let's we have a couple of carry questions but let's do Bradley in Nebraska assuming USDA corn numbers are correct.

Brazil has a massive safrinha corn crop and Chinese demand continues to decline.

How much could December 24 corn prices decline from current levels?

Well, and I think that's what we're trying to sort out right now.

We're on the ledge at 4.73 and a half.

You know, if we get under that, probably four fifty's the target.

On the other side, there's a gap at 525 and a half on December corn.

So I'd call that the range 450 to 525 and a half yields are going to determine it and user buying is going to determine it.

And then like it alluded to, what's going to happen with the Brazil corn crop, they are going to export 2.2 billion bushels of corn.

This next year, we're going to export just over 2 billion.

Does their early planting do anything to alter strategies times of year when we traditionally see movement here?

Well, Brazil mass will starts planting soybeans till the 15th of September.

They planted some early, but if we figure it out at the end of December, they're going to have some early soybean harvest.

So that's going to be in the north.

So we're going to watch the weather there pretty close, I'd say, the next couple of weeks, weather it's going to come on the radar pretty fast in South America.

And you can see when basically South America will say that 8 million bushel crop and we have just over 4 billion.

They raised basically twice as many beans as we do.

Let's move on to another question that came in.

This one is from Matt in Wisconsin.

How much longer, Don, do we have to wait until we need to pay someone to take our wheat?

Well, you know, like they always say, nothing's enough if nobody wants it.

So he's got a good question on that.

But, you know, it comes down to a world market.

It does.

There is a break even where people just won't plant.

We're not there, obviously.

So, you know, that's been a question historically, But we'll get down to a level where we're a very efficient producer in the US, Paul.

And so I would say that the other countries would be out before we'd be out, but we only produce 7% of the world wheat.

So we're not the big elephant in the room there either.

We've played it safe long enough, Don.

The last two questions are going to get us both in trouble.

So here we go.

Bear with me, Boyce in North Dakota.

It has been said that there are more corn acres.

The more corn acres we plant, the lower the yield tends to be because the extra acres are lower yielding fringe acres.

So then on the WASDE report, did they even really change the yield on the core corn acres that look questionable, or can the lower yield just be attributed to the increased acreage?

No, I think when you look at it, you know, look at Iowa, for example, we have a do you think the yield in Iowa is at 200 when we're in the middle of a drought?

You know, some of these Midwest states that are big producers are, I think, very questionable.

We'll find out as we go forward.

We're going to find out in a couple of weeks, you know, what's really there.

But but I want to I want to poke at that a little bit because this drought.

Talking to my mother yesterday, older I'm not going to say her age.

I'll get in trouble.

She's seen a few crops.

Yep.

This.

She says it's one of the driest she remembers.

But I took it to the point of it's one of the later droughts a lot.

2012 drought was earlier.

The 90, the 88 drought was earlier.

This ones later we got through pollination and a lot of places.

Is that what we're hanging 200 bushels in Iowa on?

Well, I tell you, I think what we're hanging on is we also had a very dry finish.

And so I think it's going to be the test weight is going to be the real key, Paul.

I mean, if you take a 60 pound test weight or a 54, there's 10% right there.

So test weight is going to be a key going forward, I think.

We had about five questions on this last one, and I pick just one.

So if you asked a similar question, I know some of you wanted different directions.

I'm sorry.

We're going to go this way.

Ryan in Iowa wants to know, since almost all of corn country has been in a drought, how can we be raising such a large corn and bean crop?

Yes, I know we've already asked this several times.

Yes, we have good hybrids, but there's no carryover corn for sure.

Feedlots have been begging for corn.

Everybody wants to know, well, what do we do?

Well, one, we've got a carry out this looks like it's going to get hard to get under 2 billion, you know, 2.2 billion is basically where we're sitting last year ready to carry out like 1.4 billion.

It's a dislocation of the grain, the southwest, you know, a short basis levels tighter.

The Midwest has adequate to surplus supply.

So that's a real issue.

No shortage of corn.

That's the real problem because our exports were a drag.

Okay.

What if I are the people holding the grains still in the bin?

Are they in the camp that there's not as big of a crop out there?

Therefore, I think the price is going to rise.

Well, if you're still holding grain from last year, you probably have enough of a cushion that you're not really that concerned about it.

But I think what they're looking at now, if you didn't sell it earlier, it's close to the cost of production.

So I'm going to hold on and see if we can get a post-office rally.

Okay.

But what if what if we do have a good crop and we do we exceed what that USDA number is?

What happens then?

And it's possible.

And I mean, that's the risk for not doing timely marketing.

You know, you hate to look at it, but we had 630 June 25th on corn, something like that, in December corn, and now we're sitting more like 475.

So you hate to look backwards, but, you know, there were there were chances.

So just it just seems like the wrong time of year after this kind of a slide to get overly bearish.

So I guess I would rather think, let's see what can happen to the upside and maybe the downside is there.

But you can always buy some March put options to protect yourself, and also protect the carry.

So there are some things you can do for risk management.

So that sounds like one option is the other one to just put my head down and go about harvest and come back up in November and see what's happened.

Well, I'm never you know, like they always say, no decision is not a decision.

So I would rather be proactive and do something.

Okay.

Don Roose, good to see you.

Thank you so much.

Thank you, Paul.

See you in a few weeks, we put you on a panel again, that's always fun to see you defend yourself.

That's right.

All right.

Thanks.

Thank you.

All right, Don Roose, everyone.

Next week we are going to look at the nation's first almost forgotten female veterinarian.

And we're also going to have the commodity market analysis from Chris Robinson.

Thank you so much for joining us.

Have a great week.