Welcome into the Friday, September 1st, 2023 installment of Market Plus.

Joining us now, John Roach.

John has been on the road farm progress show.

You've had a chance to see some crops up close, people up close.

What's your biggest take away from this trip here on what the farmers tell you?

Well, first of all, I have to back up a little bit.

I live in Florida, so I don't see that.

I see the Midwestern crop very often.

But I spent a couple of weeks in June and another week in July up in Minnesota, in northern Iowa, and it was really dry and they were really hurting.

And they finally got some rains.

When I came back in July, they were feeling better in some areas and not so good in other areas.

And now I came back and the good news is that there were rains across most of the areas and we had a really good August in most of the areas in July in other areas and and until the heat finally came.

So there is a crop out there.

It doesn't look bad from the road.

Driving down the highway doesn't look bad.

You can sure see the the light areas of the field.

And we're sure seeing a lot of difference between the soil types and stuff like that.

But there's a crop out there.

But what we don't know is we don't know how much damage that crop had before rain finally came.

And then in other areas, how much damage there's been since the rains have quit and how much the heat did and how much the heat next week is going to do to it.

I mean, so there's so many things here on a crop that's sort have been threatened all through its growing season.

So here we are a week, two weeks, three weeks away from harvest, depending on your area.

And we're going to find out exact only what kind of yields that we have out there.

And so that's where the market is at this point.

And so where I'm at is in exactly that same spot.

I can drive by a field, I can look at it.

I can stand with a farmer next to the field.

And when both of us try to estimate the yield in that field, we have no idea.

I mean, oh, we'll put a number out there.

But we both know we're both guessing.

And that's where the market is right now.

And in that situation, we have slid the corn market clear down to the bottom and we filled the bean market up near the top.

We're worried and uncertain about crops.

We have a couple of questions that get to those points.

I want to get to cotton here.

That's put on almost five, $6 in two weeks.

What's going on there?

Well we've seen China be a buyer of of of everything, actually.

I mean, we saw some export business finally kind of come through and we and we had crop problems and dry weather and then hurricane.

I mean, so really we really just have had enough different things threatened the cotton market this week.

It caught and ran up and it cleared some resistance.

We had a really strong close on Friday.

It's going to trigger a sell signal.

We're going to we're going to start selling into this market a little bit.

And we think that's what cotton producers need to be doing.

Let's talk about fertilizer.

That's another question you wanted to discuss.

Paul in Iowa asked to be a Facebook this week.

Is it time to get spring fertilizer prices booked and bought booked in and buy them?

Should you do it right now?

Yes.

We put out an alert today.

We write in a letter on fertilizer out and people maybe don't know we do that.

But we we write a letter for fertilizer and we put our letter out today and we recommended finishing up your purchases of of fall fertilizer needs.

And we maybe, maybe wouldn't wrap everything up.

When you look at the phosphorus, we might just go a little slow with that.

But then the and we'd also like to get a little started next spring.

And if you're finding some bargain offers out there, we think you need to take advantage of it.

So we're we're aggressively on the purchase side of fertilizer.

If you're if you're a dealer has followed these price declines to the downside.

I guess it'll come up in a moment.

But I guess I'll spoil it a little bit.

Do you think that this early harvest, maybe a drier field is going to lead to less expense for farmer on dry needs?

Because it's been a story the last couple of years where it's been later and they've had to spend a lot to get this crop out.

Any factor in.

That?

We're going to dry the corn down further this year if the corn reacts the way it normally does with this warm weather and dry conditions, we're going to dry down faster and we'll spend less money on drying.

I believe.

Okay.

All right.

Let's move into a question here from Kody.

He'll open up one of our other questions here.

And this one is about storage with low corn prices and no storage.

Do I sell my corn, take the money and run, or do I pay to store corn, bank feed corn needs over the next year?

Well, the idea of holding corn in commercial storage just doesn't appeal to me very much at all.

But we may end up being stuck in that if we don't get some sort of a bounce back in the market.

I think there's going to be a bit of a contest here between the grower and the buyer.

The buyer has nothing bought in corn or very little anyway, and the seller has very little sold.

And so who's going to come to the trough?

First is the buyer who's going to start bidding to get inventory or is it going to be the seller who says, okay, I've got a crop that I'm going to harvest, I've got to get it sold.

And right now it's a waiting game.

And so there may be an opportunity here to get some decent new crop sales with decent new crop bids right at the beginning part of harvest.

And that might be your best opportunity if you don't have storage.

Take advantage of the early shipment premiums.

I asked Dan Hueber I think last week and maybe the last two weeks we've talked a little bit about basis levels.

Do you hear that those are fluctuating wildly?

Yes, they're there.

Depends on on your buyer and it depends every day, because nobody wants to go out and accumulate a big inventory, but they need enough for today and this week and maybe next week.

And so that's all the further they want to pay premium.

They're having to bid up to get it.

They have to, you know, so in some areas, I mean, you know, in geographic areas, you can have a 50 cent difference in basis in basis for spot corn, and that's going to translate into harvest.

And depending on just who blinks first and who comes after the market first.

All right.

So that's one side of that equation.

Let's go to the other side of the equation.

When it comes to this discussion with Joe in Wisconsin.

He wants to know John, with November beans making new highs and the December corn making new lows, how should we be looking at the corn to soybean ratio going forward?

Where does that play into this one?

Well, I think at the moment what we have is we have the bean market and in a positive situation caused by buying from China, China has been purchasing and over the last 30 days more than people figured at this time frame and and at the same time worry about the the crop in the field.

So there's two positives at the same time the commodity funds buying.

So we've had all three of them and farmers on the other side very reluctant to sell anything.

Now we've finally got beans up to $14 and farmers said, okay, okay, okay.

And so farmer sales this week stopped the market and turned it back down.

But until we turn this market into a downtrend, the funds are going to continue buying.

And and until we know what the yield is, we're still going to be worried about yields.

But we're going to get past that in a little bit.

I think we're going to get past the fund buying part, maybe pass the yield, whereas in the corn market or the bean market could have a pretty nasty slide here.

So we want to be careful in failing to sell beans on strengthen here if we don't have good storage to take it into the fall.

So maybe Thursday, Friday's action is a wake up call.

If you really should want a price on beans, you need to be calling Monday or Tuesday.

I guess you need to sell the heat next week.

Okay.

Gotcha.

All right.

Speaking of heat, let's talk Ryan in Iowa with his question.

With crops turning brown earlier than normal in parts of the Corn Belt.

Any chance the USDA will drop their yield estimate and then the price will react to it?

Is there a chance the USDA drops the yield estimate?

Giving you a wide exit on this question.

There certainly is.

Is a good chance.

I think there's a good chance, yeah, because we didn't have normal weather from the 1st of August until today.

We had we had pretty good weather that turned into pretty bad weather, you know, And so it would seem to me that the number needs to come down.

Okay, now let's play into this next part of this discussion.

And we've talked about it a little bit.

Williams Question now, please, will harvest be done by October 15?

Hmm.

You're asking a boy from Florida.

No, I'm actually not Florida.

Not from Florida, but Iowa.

Yeah, I know.

I'm just I'm I don't know.

It's going to go fast, I would think.

Okay.

Which is my then follow up to this, because it is this is significant.

This is kind of based on what you said during analysis.

I think.

Does the price action change dramatically once we figure out what this corn is, say it's quick to come in and October 15, we're sitting I say the say the crops bigger than we thought.

Okay.

Are we going higher?

We're going lower.

If crop is bigger, think or thought.

See, there's something about prices and prices not determined based on supply and demand.

Price is determined based on people's idea of what to do with that supply and demand.

I think farmers are going to be tough when it comes to selling this fall.

I mean, I think they'll sell what they have to sell and but once the bins get locked up that I think the users going to have trouble buying anything.

And so that's the reason I think the users going to start anticipating that.

And it's just a matter of time here.

Who who who blinks first?

Is it the farmer who blinks first by getting in the field, getting sales made?

Or is it the user who says, I don't own anything and I'm getting scared and and we're coming right up on that timeframe.

And so far, the farmer has been a tight holder, except last week when we got beans up to $14.

And then last week they had a price out.

The delayed price in bushels to, not last week, this week.

When will we know that something has changed dramatically at that scenario?

When we get the combine in the field.

That's that's what it'll be.

That's the next thing.

There's we won't know enough about demand in the next 30 days.

We won't know a lot about any of the international, a lot of the things, but we will know what what the harvest looks like.

We will know what the crops look like.

And that is a that's a major key ingredient to a pricing structure.

And I think we have discounted the big crop idea.

And and that's what we saw last week.

We quit going down.

We also know to say thank you for your time.

All right.

John Roach.

Next week, we are going to look at how duck producers are hitting economic curveballs and we'll have commodity market analysis with Christie Van Ahn Kjeseth.

Thank you so much for joining us.

Have a great week.