Welcome into the Friday, June 16, 2023 installment of the Marketplace.

Joining us again, Don Roose.

Don, when I say Friday, June 16, 2023, are we going to look back at this date and say, what?

That was the high watermark, the beginning of an even higher mark.

It's hard to predict the future.

Well, two things you know about this market right now is very few people aren't concerned with the weather that are traders.

You know, the media is all over it.

The technicals are extremely overbought.

And if anything goes wrong from a weather standpoint, in other words, if we have a weather pattern change after, what, almost two months of a dry pattern and, you know, that's a long time, if anything changes with the weather, yeah, you're going to look back and say, man, that was my catch up risk management opportunity.

You're saying the traders don't realize it's dry?

Is that what you just said?

No, I said very few people don't.

Oh, very people don't.

Okay.

Okay.

That makes it.

Almost everybody's in.

Okay.

That's what I thought.

El Nino was supposed to arrive last week.

There was the stories are two weeks ago that it's here.

It's like that bad winter storm that we think it's going to start snowing at 11.

It doesn't snow until 12 hours later.

El Nino is supposed to hit now.

It's going to be early July, maybe September.

Does that matter?

Well, I think when you look at you're right.

I mean, you know, and that's just proof that, you know, the weather is very unpredictable, actually, Paul.

You know, there's all kinds of more science than we've ever more.

We've got more science than we've ever had on weather.

And I don't know in my career, I'm not sure it's a lot different, you know, with all the nervousness that we have.

But, you know, in an El Nino, you're supposed to have a very wet south.

Well, guess what's happening, really?

I think what's happened is a surprise is we've got this blockage in Canada and, you know, we just can't get the Gulf moisture to come up.

It's there.

So any time any of these this high pressure system moves around, which, you know, over time it does historically you're going to see the moisture come.

Now, is it too late?

That's going to be the question.

It's very critical.

The next 2 to 3 weeks, most of the people tell you we need some change in this pattern immediately.

Well, I asked you yesterday about someone asked me about the smoke from Canada, if that was impacting anything else.

But there are times when these I think you said volcano was an issue before in a previous weather story.

Yeah.

You know, I've been through all of these darn things.

You know, it seems like every which way.

And, you know, the one I can remember, you know, but similar.

I don't know if there's but in in in my situation is where a volcano erupted and it put the ashes into the atmosphere and it actually cooled down the atmosphere.

It kind of blanketed it.

So it didn't get as hot and it was favorable to the growing conditions, Paul.

Well, think about last week when we had a lot of the smoke.

And I know there's still poor air quality in some parts of the people that are watching this right now.

The temperature has been cooler.

Just think, if we had added another 5 to 10 degrees last week or this week, we'd be probably much further down the road in dry conditions.

Well, exactly.

You know, what we have so far is we've had a luckily we've had a cool, dry situation and actually that's part of the problem, why we haven't been getting the moisture because it has been too cool.

But exactly.

So the market is kind of on ice, if you will, kind of waiting, sitting in, see if this pattern changes.

Let's keep talking weather.

Let's get, excuse me, to Kevin in Iowas question he says I hear people say that you can market your crop up to your app.

What is the best way to do that when you don't know if you will have a crop to sell due to weather conditions?

Well, that's a good question, because there's always a strategy that can be flexible to what you need.

What we're seeing people do is some of these big window contracts, if you like, $6 by $6 puts, if you think I don't think we can get to 7, sell $7 calls.

And if you say I don't think we can get 5, sell a $5 put.

So in other words, you have a range 6 to 5, up to seven.

Is that good enough for you?

That's what we're seeing some people do.

So you have to ask yourself, Paul.

Well, again, back to my topic over the discussion over the weekend was my inputs.

I'm still not making money on this.

Are people who know their dollars and cents of their inputs going to maybe look at $6, $6.40 on July corn or $5.97 on December corn and go, Yeah, it's time.

Well, if you look at it from a producer standpoint, he's not going to have two crops in the barn at once.

So you've got a window of a year to market your crop.

So do you think a dollar seven rally is a place that you should think about it?

How many times you're going to get that over the course of a year?

And then remember, we've got we were stuck in the winter at $6 all winter for a couple of months.

So now you're back there and you got a chance.

Just use a tool that you feel comfortable with.

Paul Even by and for contracts, buy inputs way out of the money.

$5.40 We were at $4.91 range, you know, who knows where you go to the downside.

Remember, the government said in the June report $4.90 was the average cash price for this next year on corn, $12.10 on beans.

I think we're doing a little bit better, but that's not my specialty.

Gayle in Iowa wants to know, Don, why are some daily bounces so extreme?

Well, it's really not as extreme as we've had in the history for the prices that we have.

Actually, you know, we're at much higher prices.

So these ranges are going to be much bigger.

And the big reason is, is because the market really is trying to sort out in the end, what are we really going to have for a yield?

What are we going to have production?

And as we run up, how much demand do we lose?

Say it again for those in the back.

We're in a supply driven bull market.

You said the supply and the demand are finding out right now.

What do you mean by that?

Yeah, most definitely.

I mean, this is our demand is soft.

Our demand is poor.

South America in some of these other countries are beating us to the punch on price.

So what we're doing here in North America is we're running up because our supply is shrinking.

And by that, you know, the yield, we don't know.

We think it's going down good.

Excellent ratings.

Corn and beans keep going down.

Tells us our crop is getting smaller weekly, which is what we watch.

But, you know, I still believe you can't pull a bull up by its tail and that means you can't have new crop in a big bull market.

Lead the way up and that's what's happening.

Can't pull a bull by his tail.

Okay.

I'll read that in the transcript.

That'll be fun.

So Scott in Wisconsin wants to know, Don, do we reward this rally and sell some new crop beans or corn?

And I guess I'm going to say let's not just look at ‘23, but let's look at 24.

Yeah, most definitely.

If you're really spooked on the market, you know what we see people do and go out and look at 24 and market it.

It's around $5.25.

Beans are sitting around $12.28, something like that.

But there's no excuse not to do marketing.

It's just a matter of the how you do the marketing, the tools that you want to use.

Do you feel comfortable with a tight sale or a loose sale?

You know, but historically, these are nice numbers.

Sure.

You could have numbers bigger.

Could you have?

I think the market's really trying to sort out.

Paul, are we worth $6, $5 or $7 right now?

And we're kind of in the middle and you can shoot either way.

It's going to get tougher going up because you're going to lose demand and eventually you dial in a big loss.

We were talking about it earlier.

You lose ten bushels off this crop on corn, ten bushels.

That's a lot.

That's under last year's yield.

You lose 840 million bushels.

You still have a carry out close to, what, 1.5 billion?

That's where we're at today.

And there was discussion there's been discussion in the studio for year the last year or two about we needed to have a pretty darn good crop production year.

And now we're standing at we might not have a great year.

What at what point do we know that that story changes?

Because if it's too dry and we never pollinate, there's no matter what how much rain you get in August and September, it doesn't matter.

It doesn't.

But eventually, you know, I always say this enough and enough.

Nothing's enough.

Nobody wants it.

And so you get high enough where you lose enough demand that you ration the limited supply that you have.

Are we there?

No.

I mean, we're really trying to sort this out.

You know how many bushels?

I would ask the producers, have you lost in June?

You know, usually that's not the big time frame.

You lose a lot of yield.

And I know we're setting the girth on corn right now and some of the in soybeans are stalled out waiting for a change.

But, you know, it's hard to define how much how much you've lost, Paul.

All right.

I'll ask this last question here.

You kind of talked about some options and some strategies.

Let's go.

Kevin in Missouri here.

He says, Should I be cheap or not buy corn or being put options for price protection right now?

Well, I would say this, that there's alternatives to and at the very least, after this kind of a rally, a $1.07 rally, even if you buy like $5.50 puts closed like at $0.27, we'll say on December corn.

And we were just 1st of June our first yeah.

1st of June under $5.

So we're seeing people do that, Paul.

Nervous for the next three days.

I don't know if you call it nervous.

I think you're focused and make sure you stay nimble because these markets, whether markets are fast and furious and they end when nobody thinks they can, Paul.

That's why they're called Black Swans.

Right.

You don't see them coming.

Exactly.

But we did see you coming and we're glad that you did.

Good to see you, Don Roose.

Thanks for asking people.

Appreciate it.

Thank you so much for your insight.

Next week, we are going to take a look at why scientists are sounding the alarm over the lack of genetic diversity in livestock.

And we'll have the commodity market analysis of Arlan Suderman, thank you so much for joining us and have a great week.