Welcome into the Friday, September eight, 2023 installment of Market Plus, joining us again, Kristi Van Ahn-Kjeseth.

Second time.

Still nervous?

No, actually, I'm not like the first time I was nervous, but I just talk a lot, so it might seem like I am.

But it's amazing then that the two of us can sit here at the same time.

Talking is like my favorite activity.

Yeah, well, you and me both.

Okay, let's talk about corn, because I had a couple of follow ups I wanted to do from the show.

But we also have a couple of questions.

We're going to start with our friend Phil in Ontario.

And Phil wants to know via the social media network we call X, December corn is approximately 470.

It's a large discount from a year ago for farmers who have significant unpriced corn going into the fall.

What pricing strategies should be employed?

Yeah, I think right now the biggest thing is what has to go to town at harvest.

What doesn't have to go to town at harvest.

So let's just separate those two.

If you can store it, I'm not a store and ignore, but I'm saying let's not deal with this quite yet.

Let's focus on what needs to go to town at Harvest.

What needs to go out to town at harvest is a little bit tricky here.

There's good carries in the market.

And so if you're close enough to maybe they're rolling to a March contract, you could take advantage of that.

Overall basis levels aren't that great if it's not at a ethanol plant right now.

So if you have to be pricing it right now, that goes to harvest, I would just cash it out and you can buy a call option and they're very cheap.

I think that you could easily get out to a March one and satisfy your needs to get you through some of these key levels.

Like typically, like I said, and it's September coming in to October, and that's the way I'd handle it.

Any deferred corn that you can actually bin for now, take advantage of carries.

There are some great carries in the market.

So I think looking at it and trying to get all the way to that March HCA time frame and delivering towards the end of the year, I think that once harvest is done, once what's delivered, I think the bin doors are going to be locked.

I think commercials are short and I think you could see some pushes on basis.

I was going to steal your line.

Let's go back to the first thing you said.

Those that still have corn in the bins.

Yes.

From previous years.

Yep.

What are they to do?

Okay, so if you have corn in the bin right now, the first thing I would do is call in.

If.

If you have corn, the bean and you have sales for harvest, the first thing I would do would be to call your elevators and see if you can deliver that old crop on your harvest delivery contracts right now.

That's that's my best option out there right now.

Other than that, you're pretty much looking at trying to roll the dice.

And I think at this point, you've pushed it long enough that there is no magic fix.

There is no Band-Aid that you can say things are going to work out.

You got to lend on the seasonals and hope that we find this bottom.

But if you get above 507 like I said, the targets are pretty tight.

Unless we see something drastic happen through USDA and corn has a lot of carry out to burn through.

I'm not trying to rub salt in wounds for some, but one of our friends who appears on this show wrote this week We had 33 days to market corn north of 650.

We had over 140 days to market corn north of $6.

Will we see that any time soon?

I think if you see that it's based off of basis pushes, you know, not so much the futures price.

So I think there are some areas that short corn.

I think that there are some areas that you're going to get tight enough and have stubborn enough producers that they're not going to sell it, that you might see short term pushes on basis and the basis, if you can get those over basis, I think that is what could get it to.

I have a hard time believing that we can get futures there unless we start to have issues in South America.

And you're looking at a solid four months before you're really going to start talking about the realistic ability to have issues with corn.

It's a long time for some people to sit, so I know all basis is local, right, like politics.

But are you seeing any general basis, locations, fundamentals where it's rallying?

Is it somewhere around an ethanol plant?

Is it somewhere along a river?

Is it somewhere along a rail?

Are you seen anything like that?

You've started to see some pop up on social media of some pushes in some locations.

Right.

That they're they're kind of caught short and it's going to be a little bit before you get your harvest bushels in there.

I think those are some of those areas.

I think you're looking at some issues.

You know, ethanol profitability is there.

So I think you could see it in some ethanol plants, but I honestly think you're close enough to harvest that people are going to buy out the time and wait it out and probably not going to see those really big pushes until you can get a stubborn enough producer or get past that onslaught of of harvest activity.

All right.

Let's talk about maybe one use for the corn and that would be feeding.

Bradley in Nebraska wants to know, is USA wheat to corn ratio or price ratio close enough?

The cattle feeders are adding some wheat to their feed ration.

And you can you can cross out the word wheat and put corn in there.

If you want to.

Yeah, I think that corn is such a superior product.

I'm not so sure you're seeing broad based on people bringing in wheat into that ratio.

So I don't necessarily see it except for localized areas where maybe the crop is not there.

For the corn crop, you're coming off winter wheat harvest.

That was okay and you're able to have that availability.

So I think maybe it's localized, but for the broad base side of things, I don't think that the price ratio is there to justify any changes of feed rations.

All right.

Let's stick with beef for a little bit.

And this one's more of a consumer.

Read to a couple of economic questions now.

Ron in Iowa wrote us on Facebook and said, Once beef supplies rise.

Do you think consumers would still pay these higher prices?

The herd's going to take years to rebuild.

Could cattle, as in the past, be entering a new plateau?

Yeah, I think that people are pretty comfortable paying the price that it is.

So I think that a lot of of activity right now when you're looking at it is like a lot of people like to say how high groceries are, how high beef prices are at the grocery store, but they're still buying them.

And so you still have that demand there.

And so unless something changes, unless you start to see people not buying it, I don't think you're going to have a whole lot of change over that.

So I think people are are used to doing that unless we see some sort of economic turn.

I think that you're probably seeing these elevated prices in general for food for a while.

Well, Ron and I had a conversation then back and forth this week, and he was he was saying the inflation wasn't necessarily the reason beef went up.

It was a supply issue, but it got wrapped into everything else.

Right.

Do you buy that?

Yeah, I think so, too.

You know, you look at when Beef had its big push here a while ago and that was had that same situation.

It was not so much beef prices as it was your your truck in your.

Your issues on crude oil.

All of those costs were wrapped into it to get it there.

So I think that's something that's going to consistently look at beef employment to employ somebody and keep them.

That's just so expensive.

So all of these issues of trying to have these expensive wrapped in, I don't see those necessarily dropping away.

That changes the end game as far as the price at the grocery store.

All right.

I said economic.

We're going to do one more.

This one's about interest rates.

A couple weeks ago, the Fed has their retreat in Jackson Hole.

Then there's another there's a jobs report that comes out that says we're still hiring when you talk about employment.

Have we hit the top of interest rates for the near term?

For the most part, it seems like they're pretty comfortable where it is and they want to smooth this out and they want to see how we handle this for the next little bit.

They said that they don't expect any cuts for a long time, that there possibly could be another rate hike down the road, but they feel really comfortable with it.

And so I think this is an interest rate that we need to find a way to deal with and work with and and get to be the new norm.

And that's another thing when you're looking at cash, when we talked about would you sell soybeans right now?

I think that plays into the role as well.

Is that the cash in hand?

So you're not paying those interest rates on operating loans I think is better served saying, hey, we're not going to pay that.

And if you want to still partake in the market, there's ways you can do that.

But at least you're not paying those interest rates on portions of your operating loan.

Are there any other items that producers need to pay attention when it comes to interest rates?

I mean, you make a great point about, you know, sell something to pay down a principal note.

Yeah.

So I think when you look at it, the prices that we have, especially for soybeans, looking at the opportunity there, if it's profitable, I think that you could look at cashing that out.

So you're not extending those operating loans for a really, really long time, getting all of those payments wrapped into them.

And I think if you were to pencil it out and say, hey, what am I paying on operating loans or versus what can I take cash in hand and maybe look at a call, I think you would be surprised to see the difference and you can still ride that out as far as you want for those options and gets you all the way through, you know, next summer.

You wanted to talk about corn in the carry the basis, the interest rates.

What else?

Yeah.

So I think basis is one of those huge things to focus on is that I think you're really actually going to have opportunities come knocking on the door sooner than you thought.

I really think that this November, December timeframe is going to be friendly for basis.

I think we had some strong sales coming in this year that I think cash flow purposes, you don't necessarily need it.

I think that you're looking at just what a year it's been.

It's been all over the place for growing conditions.

I think that some people are just not really all that satisfied with the price right now that the bin doors are going to get locked.

I think there's going to be that push.

And I really think producers need to be ready to take advantage of those when they see them that I think that can really elevate your bottom line for your cash prices.

So I think that's one of the biggest things to focus on.

If you are storing the crop, you know, the carries for soybeans right now between November to January, November to March, those are great ones.

And we need to look at this situation and say, hey, if Brazil is getting in the crop early and we are potentially looking at the availability of beans sooner rather than later, now our demand might not be sticking around as long as we're normal.

So I think that just keep it in mind on the first half or the first quarter of 2024 basis opportunities are like the biggest thing for me right now.

Good to keep an eye on.

Thank you so much.

Appreciate your time.

Good to see you.

Thank you.

You too, Kristi Van Ahn-Kjeseth.

Thank you so much.

Next week, we are going to look at land owners who are pushing back on a proposed pipeline.

We'll also have the commodity market analysis with Don Roose.

Thanks for watching.

We'll see you next time.