This is the Friday, July 28th, 2023 installment of Market Plus.

And joining us now, Matthew Bennett.

All right, Matthew, you drove through you live in Illinois, you drove through Illinois, parts of Iowa, to get here.

What did you see on your drive?

You know, crops are pretty good from the roadside.

You know, I would say that what I notice the most is what's the grass look like?

You know, So if it looks like we're starting to brown off a little bit, that tells me that there is some stress going on.

And there's certainly a fair amount of places that you see that between here and there.

But overall, you got to say that the crop looks pretty good.

I know that the drought monitor looks pretty rough and I know that the areas that I drove through, a lot of that is in some level of drought.

We've got like 59% of the corn producing country, if you will, the in some level of drought.

But overall it looks pretty good.

Okay.

Well, what about I know you didn't see wheat on your drive.

I don't think you did, at least.

But the wheat has in some parts of the country has also really been impacted by by the drought.

How much is that impacting the markets and is it is it severe?

You know, I think in places, of course, it's going to be.

But at the same time, you know, the soft red had wheat in my part of the world and south was actually quite impressive.

We heard of folks that were hoping for 70, 80 bushel wheat that cut 100 and 120 bushel wheat on soft bread.

Now, that's not a huge market, I understand, just in in that part of Illinois.

But overall, I think the wheat crop is going to be decent.

Okay.

And the thing is, is that we don't have this shortage, if you will.

And I think that it's not bad enough that you're going to see a big price increase.

That's just my personal opinion.

I just think we've got plenty of wheat on hand at this stage of the game.

And so, yeah, I really don't see a big story there.

Okay.

All right.

Well, let's go to social media.

So we had a question from Carl in Elwood.

Has the dollar softened enough to keep U.S. grain competitive on world market?

Yeah, that's a good question.

And so the dollar had softened for several days in a row and we got under 100 on the index this week.

We pushed back up to around 102 and then backed off just a little bit again.

But bottom line is, is that we got back over 100 and a lot of folks thought we were going to break some long term support and really head south like into the low 90s.

If that would have been the case, I think that would have kind of played into this question that absolutely it would help us to get more competitive on the world market.

Now beans have been fairly competitive.

Corn, we've been a little bit out of the mix, if you will.

And then wheat, of course, we already talked about that in the last segment.

You know, Russian wheat is pretty cheap out there.

But of course, there's a lot of dynamics there, too.

But you would certainly like to see the dollar get cheaper.

It would help us whenever it gets into this export game.

But right now, it doesn't look like we're going to break these long term support lines.

It just looks like it's going to hang right in there.

Okay.

Well, speaking of economic news, our recession fears at this point all but gone.

That's a really good question.

So you had a couple of quarters in a row that that were negative growth, you know, and then that was called a recession in the past.

But for whatever reason, we didn't call it a recession.

And quite frankly, we bounced back.

I mean, it's really been impressive.

You know, the jobs report has been good, you know, in the face of these higher interest rates, we're keeping that economy in a growth pattern, which is actually been remarkable.

I've been a little bit surprised, quite frankly.

But at this stage of the game, the question would have to be, yes, I mean, it kind of feels like talks of recession or something that aren't happening like they were.

I don't really look for that to to be the case.

I don't think we're going to have a recession right away.

But I am very mindful of the fact that higher interest rates, especially with, for instance, the U.S. average person, they seem to enjoy, you know, credit and debt.

And there is a lot of borrowing that goes on.

And so with that being the case, I'm a little concerned, you know, that, for instance, housing starts, you know, by just going out and buying stuff if you have to buy it on interest and all of a sudden you're paying, like we said, the producer with their operating notes, if you're having to pay higher interest rates and you look at what that does to your payment, it drastically changes.

Your buying power isn't what it was.

And so I do think that that will play in I just don't think we're looking at a full on recession like we were talking before.

All right.

Well, what is the big story next week in the commodity markets?

Yeah, that's a good question.

I think when you come in on Monday, you've got to think that Kraft condition ratings are going to go down.

I'm not a big crop condition ratings, you know, saying that, hey, just because they're down, we're going to have this awful crop.

But what I'm saying is, are conditions are exactly great already, you know, and so I think that you're going to see those come back off just a little bit.

Now, the biggest question, what's the biggest story going to be is are we going to get rain?

You know, are we going to start to see this weather pattern shift somewhat?

Some of your longer term forecasts are trying to bring some rain into some of the drier areas.

You know, Eastern Corn Belt has actually done pretty good on rain this week.

But as far as Illinois and Iowa, there's still a lot of dry spots.

There's still a lot of areas that are looking for that soaking rain to finish up the corn crop.

I think that if you get it, it's going to be tough to rally our markets, you know, because if you do get it, then soybeans are also going to take a look at that and say, hey, we're starting to change this weather pattern.

Now.

I don't know, I'm not a weatherman, but bottom line is we need some rain.

We need it soon.

If we're going to have a big being crop, if we're going to finish this corn crop and get it even close to that 175, 177 area.

Okay.

All right.

Where do you see or do you see a place where there may be a break in hay prices?

You were talking about, you personally have been struggling with that or are farmers be facing these really high prices for a while?

Yeah, that's that's a tough one.

Okay.

So obviously the Western Corn Belt has healed up somewhat in places.

Not everyone.

I understand that, you know, but there's a lot of areas that have gotten more rain than they've had in the last three years, probably combined just this year.

And so, you know, hay is it was extremely tight in that part of the world.

You get into a state like Illinois, we don't have as much livestock down downstate.

But I will say there's not much hay available.

There's not much hay around.

Hay is expensive.

You talk to growers in other parts of the country, it's the same thing.

Hay is expensive.

Do I look for a break in hay prices?

The way that it looks like we're going to finish this growing season, right now, it seems like it's going to be on the dry side.

I don't look for a break in hay prices now.

The only saving grace, if you will, the cattle herds, you know, 65 year low, so, you know, you don't need as much hay is what you've needed in the past.

But at the same time, I'll tell you, it's a tough game because, you know, we need some hay because our pastures we typically as what all that's all that we rely on, you know, is our own hay.

We don't go out and buy a bunch of hay.

We need to buy hay this year.

And what a terrible year to have to buy hay.

Yeah, no, just kidding.

Another expense.

Yes, absolutely.

So the problem you get into is if it's excessively dry, you have to buy hay in your own pastures.

Your cattle regionally might not sell as good because everyone else where you're at in the same position.

And we saw that happen in Oklahoma and Kansas last year.

Cattle got bought really cheap because there was more sellers and buyers that showed up.

I hope we get some rainfall and that's not how we end up the year because I could see portions of the U.S. seeing some liquidation that really don't want to have to liquidate cattle.

Yeah.

All right.

So do you have a pick of the week for next week or too soon to tell?

I think it's too soon to tell, but I mean, it's a fair question.

So yeah, I would just say I'm watching the corn market very closely.

You know, we broke under support this week, but at the same time, we're hearing a lot of producers that are saying in certain parts of the country, my crops toast, you know, like Missouri, think Wisconsin, areas of Minnesota.

And I got to think that that's going to play.

And if you do get crop condition ratings, for instance, come down to three or four points, which is possible with 75 degree nights in 100 degree daytime temperatures.

If that's the case, maybe this corn market gets a little bit of rejuvenation.

You know, it wouldn't hurt if you had some sort of a story out of the Black Sea region.

I don't I don't want anything bad to happen over there.

But if there's still unrest, it will still provide underlying support.

You throw in some weather with that, maybe we get a little bit of a bounce.

But that would be my that would probably be my pick.

Okay.

Last thing.

Anything else on your mind?

Yeah, the main thing on my mind for producers is whenever we get a big rally like we've had over the last couple of weeks, obviously we've pulled back a little bit from there.

But you know, we've had $14 plus bean chances.

We've had the chance to sell corn for fall delivery well over $5 in many parts of the country.

I don't want to lose sight of the fact that I can still manage my risk without locking myself into physical bushels.

We have to be mindful that these markets can move significantly lower, even though we can't necessarily make money down there.

The market doesn't care.

And so I want to be able to at least manage risk when profits on the table.

Okay, Matthew, thank you.

Thank you.

It's always a pleasure.

Well, next week we look at regional land values and have commodity market analysis with Naomi Bloom.

Thanks for joining us and have a great week.