Welcome into the Friday, June 30, 2023.

This is Market Plus.

I'm Paul Yeager.

That's Jeff French.

Glad to have you back, Jeff.

Thanks for having me.

Okay.

Little secret.

I talk to the analysts each week and almost all of them always say I'm so excited.

There's a lot to talk about this week.

Jeff French was no exception.

You said there's a lot to talk about.

And that was before Friday.

Have you ever seen a week like this?

Such a dramatic swing for different reasons.

You know, I I've been doing it since since 2007.

I mean, we've had big moves while I've been in the business.

They just happen quicker now with the computer trading.

You know, last the week before this week.

You know, corn rallied $0.85 in three sessions.

So it went straight up.

Unfortunately, this week it did the exact opposite.

So it's, you know, June into July in the world, crops world is always typically exciting unless you're just getting downpours.

But yeah, this is this is historical.

I mean, it's some very violent price movements that we've seen.

Well, Tim in Minnesota was late to the field.

Then it was dry that he maybe finally got some rain.

But he's been looking at some crops and wants to know crop prices are falling faster than their yields.

What does a farmer do that's looking at below average crops?

Because, you know, there's people who have not picked up the rains.

Well, I would tell him, I mean, if you're coming on a client to be a client of mine today, right now, we don't sell into down market.

So on the corn, instead of selling cash corn, we're going to go out and buy some September short, dated for 80 corn puts for $0.20 a bushel.

That way you lock in your floor.

Obviously, you never want to buy puts after a $1.30, $1.40 sell off.

We would have had those done earlier before this on the beans.

We're going to let this thing play out.

I mean, I want to get into August, see what the weather is.

But for all the clients that have underpriced beans still out there growing the field, which is, you know, 95% of the farmers were buying the September short, dated $13 being put for $0.40 a bushel.

That way you lock in your floor for the next two months at $13.

If beans go to 17.

You're still you're still selling $17 beans.

But if we have a set back down to 12 that put, instead of being worth $0.40, is worth a dollar.

And it's possible given, you know, like you were just talking about these dramatic moves that have happened.

I mean, I think at one time I looked it was up 92.

Yeah, I mean, I saw 85, but I mean, I was very busy.

It was you know, it's a friendly number.

I mean, it personally, I, I would have liked to see it take out the highs from May 13.78.

But again, very good action.

There is going to be limited selling and this is from the investment side, unless demand really just starts to fall out of bed.

We need a record national bean yield number just to have pipeline supply.

So we got some things to work out here in the bond market.

Well, we have crop insurance and that's what some people have actually been leaning back on for some of their decisions.

Derek in Iowa wants to know, despite the drought, what percentage of your crop insurance guarantee bushels should you have priced?

So on the rally, I mean, we we preach I mean when the world and end users are scurrying around and they want your product, they want your corn, they want your beans, that is exactly when you want to be sell it, even if it's uncomfortable.

You know, we're not going to sell 100% guarantee, but we got up to 40% sold on the rally, the other 60% of expected bushels.

We got them locked in to the downside on the corn, anywhere from 5.90 down to 5.70.

Even 5.60 puts.

And you know, look at the close here in these corn now down at 4.94 here.

So 14 month low.

I mean it just you got to have a plan because it happens so quick.

You know, we only spent about 48 hours, 56, you know, about two and a half days above $6 corn in December.

So it can change quickly.

And you got to have a plan and you got to be able to execute it.

That's looking ahead.

Let's look back.

Mitch in Iowa with the question.

Please don't use any specific names here, because, you know, there's many of you out there for those still holding old crop corn.

What is the exit strategy from here?

And, you know, they're out there.

Oh Yeah, I know they are.

It's a head scratcher for sure.

Sitting here, you know, exit strategy.

I mean, you've held it on this long.

Depending on if you need the storage this fall, let's see what happens.

I mean, right now, the forecast is showing rain.

That's why it's all buried up.

But if these don't if these rains don't fall, we're probably not going to be moving lower here in this corn market.

So I'd wait here a little bit.

But, boy, I that's a hard question to answer there.

So you have the opposite.

You had an opportunity.

But let's just look in recent history, 2022, 21, 20 people that held on to old crop were rewarded in July and August.

Yup.

Is it possible that we could get there and they're going to look like the smart ones?

It doesn't feel like it right now.

If the rains completely shut off here for the next 60 days.

Anything's possible, but right now it feels like things are shifting potentially a little wetter, maybe a little cooler.

But again, the rains have to be verified.

They have to fall.

But, you know, you can go out there and buy some cheap puts on the old crop.

But, boy, I mean, it's it doesn't look good here on a Friday.

Let's go to Phil in Ontario via Twitter.

He always has a question for us.

And Phil wants to know the grain narrative is up.

Then it's down where are we at now?

With consideration of declining crop ratings with yields, is 185 or 181 and a half bushels to the acre on corn and 52 bushels per acre soybeans long in the rearview mirror.

I don't know if it's long, but it's definitely in the rearview mirror.

I mean, 181 you got to remember that was four and a half, five bushels higher than the best that we've ever done, ever.

So that was a little bit of a reach.

And you got to have rain.

I mean, there are a lot of dry places out there now that can change, too.

But we have definitely started out on the drier side.

So, you know, I can tell you that, you know, the private guys that I follow, I mean, they're in that 175 to 177 camp right now.

So they're coming down and they're down to that 50 and a half on the beans.

Again, that's a moving target.

But in the next 60 days, we're going to have a much clearer picture on that.

But yeah, it doesn't feel like we're going to have record yields right now.

Okay.

We're sitting on the last day of June when we tape this.

It has been dry on the 4th of July before and we either go up or we go down.

Getting some rain the last week of June does not ensure that a crop is there.

So how do you protect that notion any different than what you've talked about already?

No, I mean, we're sitting pretty good.

I mean, we sold some higher prices, especially in the corn here the last ten days, two weeks.

You know, we're going to let this thing play out.

You know, the bond market, we're going to see, you know, I anticipate if we do miss the rains here next week, you know, the beans are going to probably be tested $14 in November pretty quick.

But again, it's going to be that tug of war that I'm watching with corn and beans.

You know, historically, they don't travel in opposite directions too long very often.

Does anything get them back together for this year?

Well, I mean, again, I think if the rains come, I think you'll see the beans soften up.

But again, if it turns hot and dry here for the next 60 days, these beans take off.

They're going to pull corn right up with them.

Okay.

Well, there's always the thought of this.

Bradley in Nebraska wants to know via Twitter was this week's selloff in corn, beans and wheat overdone?

Yeah, I mean, it's from a chart standpoint, from a near term, it's way overdone.

I mean, that is a big move.

I mean, you're talking five trading sessions down a dollar $40, 35 in the in the corn.

Yeah, they overdid it.

But the thing of with markets, they can become more overdone.

Again, though, Friday last Friday of the month, last Friday of the quarter, it felt like the funds were really piling on.

So we'll see the first couple of days of July, see how the prices react.

But again, if the beans stay up here, how cheap are the is the corn going to get to the beans?

Do you we're not a long weekend because we will trade Monday.

We won't have Monday night's trade session.

We're off Tuesday, back Wednesday.

Is it?

Maybe that's why some longs piled in there at the end.

Yeah.

I mean, yeah, and you got to think so.

We're going to open Sunday night at seven.

Trade until Monday at 1:15.

We're all we're closed until Tuesday and then Wednesday at 8:30.

And we have a hard open.

So you could see some of the traders actually take Monday off, have a four day weekend and then come back ready to go on Wednesday.

Okay, Two couple of questions left.

Let's let's get into the weather of Thursday.

Supply in Illinois wants to know he posted a couple of good pictures here.

Do you think wind damage from Thursday's trade show will knock down yields like the one from August of 2020?

It has the potential, no question, But I think Illinois is sitting better because of the time of year that it happened.

It happened on June 29th, not on August 10th.

You know, that year is much smaller right now compared to here in the next six weeks.

So I think that's going to help the trade.

We'll look at wind damage minimal as of right now.

They'll look at the rain that came with it as more beneficial.

And that's that's certainly what they did.

Then we have the cotton market.

It is one that has danced sideways for a long, long time.

But it's starting to break out of a range.

Right.

Well, it's 77 and a half.

Up to $0.85 is $0.85 has just been a glass ceiling for the last four months.

And everybody wants to talk about supply acres.

But cotton market right now is all about demand.

Right now, China has about 200,000 bushels excuse me, 200,000 bales of cotton bought from the U.S.

This time last year, they had 2 million bales booked.

So China has gone someplace else.

Brazil, Australia, their crop is much better in the cotton, but it's all about demand, very low demand in the cotton right now.

I had the sense the last couple of Fridays people sitting in that chair maybe were exhibiting some signs of they weren't going to sleep too well on this Friday night.

You're going to sleep all right.

Compared to the previous couple of Fridays, knowing what's ahead?

I yeah, I'm going to sleep well tonight.

I'll sleep well.

I'll sleep a lot better tonight than I did last night, that's for sure.

Yeah.

All right, well, get to it.

You're done.

Thanks, Jeff.

Thank you very much.

Paul, Jeff French, appreciate your time.

Next week, we're going to check the holiday crop progress and we'll have commodity market analysis with Kristi Van Ahn-Kjeseth.

Thank you so much for joining us.

Have a great week.