This is the Friday, January 12, 2024 installment of the Market Plus, I'm Paul Yeager, joined by Naomi Blohm and Matthew Bennett.

We didn't talk about it in the show at all, Naomi, but we're not in the same room.

We haven't done a big virtual thing like this in a while.

No, we havent.

But I have to tell you, I really kudos and thanks to you and the team there for just being so respectful about this ridiculous snowstorm that's coming through and being ready to just embrace the technology so we didn't have to drive or kind of be in Iowa for an extended period of time.

So thank you so much for making that happen.

And it's really appreciated by my family.

Well, two years ago, Matt, we had a big snowstorm, but that hit after, during and after we started taping, not before you were able to make it here.

Your drive home two years ago.

Your home office said, I think you're staying put, Mr. Bennett.

Yeah.

So two years ago, you know, it was snowing to beat the band.

We got done recording and I said, I'm heading home.

And Naomi's like, What are you doing?

Like, Ted and I are staying in town.

I said, Well, I drove my truck, so I'll be fine, you know, And I of course, I get out east to town on wonderful I-80 in the middle of a blizzard, and that was just fantastic.

But usually it takes me around 6 hours to get home, and it took me a little over ten to get home.

But I got home once I got passed all between the Quad Cities and Peoria.

I got into better weather, you know, and so it wasn't too bad.

But boy, it was treacherous until I got there.

All right.

Let's start with some commodity questions here, Naomi.

It looks like Trent is giving us our first one and he wants to know when and if 24 crop pricing gets back closer to target levels, what percentage should we try to get marketed?

So if we can get a nice recovery rally here, you got to pull the trigger on it.

As we were saying earlier in the show, we might be heading into the pitfalls of lower prices and be stuck there for a few years.

If the world has larger production, watch out.

I mean, we know demand is good here.

We know that demand is good globally, but it would take a dramatic production issue to really get the market to have a substantial rally higher or some sort of new demand led rally, which right now I don't know that we're going to see.

So if we can get to answer the question, I would get up to 50% sold pretty quick.

If we can get a rally, both new crop corn and beans, lock it in, because again, going from here, it's going to take a disaster with Brazil or something bad to happen here weatherwise in the summer to get the market to have a huge rally higher.

Matt, I'm going to have to have you follow up on something Mark Gold said last week.

He thinks one of the reasons the market wasn't moving is because farmers were sitting on so much grain.

If this prices is low and farmers say, gosh, it could go lower and that puts some liquidity back in the market, does that change this picture at all or is this just a different story that a little farmer selling is not going to change it?

You know, typically people say when the when the farmer doesn't have the corn in his hands anymore, the crop in his hands anymore, that's when a rally can occur.

Right.

And so, you know, you're in a situation right now where the farmers got, unfortunately a higher volume or a higher percentage of corn maybe than most, most years that I can remember.

And the problem is, is this the biggest crop we ever raised?

And so, you know, yes, if the farmer comes in here next week, throws their hands up and says, you know what, I'm over it.

It's going to take a little while to recover from that, because the amount of hedge pressure you're going to see in the market is going to be significant.

And so, you know, I do think that if you can come down and find some support, you know, as Naomi was talking new crop corn, you're support at 4.50.

Well with old crop corn I mean the problem right now is that you're kind of fluttering around below all of your moving averages.

You can look at some long term support, but bottom line is it looks kind of rough.

You know, if the farmer steps in and sells a whole lot of corn.

At some point, though, what's going to happen is, is that you're going to be able to liquidate a fair amount of that corn and you'll be able to start to turn this thing around.

At some point, you get corn cheap enough, demand will improve, demand will get better.

A corn grind for ethanol has been fantastic.

We talked about it earlier in the show and the only talked about it, 75 million bushel increase in demand.

We are calling for a 100, but it was sure nice to see the USDA increase demand because I think it was warranted.

I think disappearance was really good in the first quarter of a marketing year.

The problem is that stocks came in high because we raised more corn than what we thought we did.

Yeah.

Naomi, there's another question that is kind of a follow up to the one I just asked Matt.

It's from Tim in Minnesota.

He says, I got bills to pay.

Should I borrow money or sell some crop at these low prices?

Pencil it out for you with what works, with what would work best.

I mean, if you're selling, obviously it's potentially one of the lower values of the year.

So if prices rally, you're going to be frustrated.

I think you have to pencil out how much storage is costing you, especially with higher interest rates.

Does that warrant maybe instead of paying interest, is it worthwhile to sell the cash?

And reown with a call option strategy?

But then if you do that, you have to really take a realistic view of how how how high could prices go to know if it's something opportunistic to see a return on your investment that way as well?

Every situation is going to be a little bit different.

I don't think I have a clean cut answer for you, but I will say this.

We we hit a technical objective lower today after the report.

The funds are really short in the marketplace.

And if there is any news going coming after the three day weekend, if there's any news in South America that their weather is not great, the market will be ripe for a nice recovery bounce.

Seasonally, there still is that tendency for prices to have the ability to work higher and into February.

You know, usually they're supposed to they were supposed to work higher after Christmas, and it didn't happen.

So maybe we finally see some seasonal rallies here into Valentine's Day.

Well, I think, Naomi, you wrote about it.

I think I saw it somewhere else.

Talking about the seasonality is just not there right now, But we haven't had that for the last couple of years.

I mean, since COVID, things have just everything.

I'm not talking just commodities.

General markets have not matched what we normally see, but that's for another discussion on another show.

Matt, I want to ask you what Mike in Iowa has for a question, and that is, are we going to see a three in front of the corn price before we see a five?

Hmm.

That's a really good question.

And so here's the thing.

A lot is going to depend on two different big things, in my opinion.

One is, is the Brazil crop going to be a normal type of production as far as yield, we know acreage is lower.

They can't really afford to see yields substantially lower, in my opinion.

I mean, that would be supportive towards the market, whereas I would maybe lean towards more of a $5 scenario around some U.S. weather.

But guys, it's going to be really hard to get to.

I mean, the boy that cried wolf, right?

That's what I thought about today whenever I saw the 177 yield.

Horrible weather this last summer.

Okay.

We had a couple of really well time rain events, if we're honest about it.

But I'm telling you what, we had a lot of stress and so we had all this stress.

You come in here with a well-timed rain event and you produce almost a record sized yield when you're carrying that many acres.

That's what's even more impressive to me.

So if you had to basically ask me right now what what do I think is going to happen, I would say I've got to manage the risk of it going to three before five.

I mean, I'm going to say three just because you ask the question.

I mean, I don't want to answer it too much.

I'm I am concerned that it could be three on the long term standpoint.

Now, I would say going into this report, if I'm totally honest with you, I was short term friendly.

I thought that we'd get a bounce in here.

I really did.

And I still think we could.

I like hearing what Naomi said.

A Brian Split on my team has been talking about the same thing today is that we went down and we filled some objectives and with that being the case, you know, this time of year as you sort out acreage, as you sort out February crop insurance, a lot of times you step in here and get some sort of a rally.

But what's concerning to me is that, you know, we've got carry in this market.

And so what's happening whenever this corn went off the board, well March went down and probes for where Dec was, what's going to happen in March goes off the board.

I'm afraid that may may try try to go down toward March was and that's a lot of times how carry market works.

So it's tough on re ownership.

It's tough on a lot of things because if you buy a call out there with a carry market, you know, you've got your work cut out for you, especially whenever you're paying storage, you know.

So I don't know.

It's just a tough ballgame.

We had a little discussion.

I kind of asked you mad about acreage in the main program, but Naomi, we have a couple of questions.

We're going to kind of mold some things here together about buying acres in the States.

But I really want to go Bradley in Nebraska's question to kind of sum it up.

Fertilizer prices have followed corn prices lower.

So will soybeans still win the acreage battle in 24?

So let me just be straight up.

I don't have a clue what's going to go on with this acreage battle in 24.

No clue, because when I was in South Dakota in December, I asked producers there, you know, are you going to do more corn, more beans, You know, what's going to happen this year?

And every town I was in, the answer was different.

So I am not sure what's going to happen with Acres.

You know, going back to the discussion earlier on the show, corn can lose 3 million acres and we're still going to have 2 billion bushel carryout.

So that's a little nauseating.

But let me give you something friendly.

So let me give you a little excitement, something to think about in the next coming years.

If all of these crush plants come online like they're supposed to over the next 2 to 3 years, the new demand for crush should entice.

We would need 10 million more soybean acres to be planted in the country.

Now, granted, we'll lose some export demand along the way and we'll probably be exporting some soybeans and saving product.

But the crushed demand is still a friendly story of things to come.

So maybe we see this more demand for soybeans.

We see more demand for soybean acres and corn can lose.

You know, it's okay.

Corn could afford to lose, you know, three or 4 million acres and go to the beans and the bean story still stays friendly on the U.S. side of things, but no clue on what the acres are going to be this year.

But I will echo what Matt said on the show when we get to the USDA Outlook Forum in February.

They're going to come up with these crazy acre numbers.

They're going to come up with huge yield numbers and make everything just really bearish.

So be ready for that at the end of February.

Man, I don't know how to top that with any type of question from anyone, but I'm going to make you top that.I had you ask I asked you in the last part of the program, you know, something on the line of the title and positions.

I asked you to start this about some type of positions this year again proved we can grow a really good crop in bad conditions.

Stressful conditions, as you said, I go to the weather story just this week from dry, no snow to a week where the whole upper Midwest is covered and things can change quickly.

So, Matt, help me out again.

Say it for those in the back of the room.

What do I do in the next two weeks for protecting myself.

After that, Can I talk about acreage a little bit?

Because I do.

I do.

I would like to address that if possible.

But what do I do in the next two weeks?

I mean, boy, that's that's a pretty tough question, Paul.

I mean, the thing is, is that we have to understand what our what our cost of production is.

Okay.

You look this week, for instance, the farm dog team from the U of I put out a very interesting piece about what an average cash rent operation would look like in the state of Illinois.

And if you haven't seen it and you're not depressed enough after the report on Friday, you may as well go read that, too, because, I mean, it looks tough.

Now, here's the thing, though.

The fertilizer prices, if you prepaid, was significantly cheaper than what it was for the 2023 crop.

And so, you know, that that is very interesting to me as far as a profitability standpoint goes.

If I'm a producer and I look at my bottom line, you know, if I'm not a high cash renter, so to speak, or if I'm maybe a crop chairperson or I own my ground, I can make money today.

I mean, it might not be a homerun, but I'll take base hits any day.

So as I kind of expand on the acreage thing, you know, last year, corn was 11 million acres higher than soybeans.

And I think now and I say the easy button is that they're going to be closer this year.

I mean, how much closer is the big question?

My personal opinion is if you if you planted, what, 178 and change last year, I don't think you plant that in 2024 whenever you're looking at such a disparity as far as profit margins are concerned.

And prevent plant was low this last year.

So I think that your combined acreage will be lower.

Corn still beats soybeans most likely, especially with those cheaper fertilizer prices this fall.

But I think that it could be a heck of a lot closer than anyone would think.

And so right now I'm using 91 and 87.

That will change as we see what crop insurance prices look like.

But I do think that there will be some growers this spring that did not put anhydrous on that are going to say, you know what, I think I'm going to go with the cheaper alternative as far as what it costs to put in the ground.

Now it'll be interesting to see how that occurs.

I don't know if Naomi said this, I don't know if I've said it yet, but one thing to remember is that a lot of those acres are determined, though, because we had one heck of a beautiful fall this last year.

So I don't know if we've got as many swing acres percentage wise as what we typically see.

But, you know, I hope I address your question.

And the other one, I.

Do have a pretty strong opinion on acreage right now.

And I am running up against time now.

Is there anything in the few seconds here that you want to wrap up?

Are we good?

Well, I think we're good.

Oh, wait real quick.

Sorry.

Taiwan elections this weekend.

So that could be something to get.

Are the world three day holiday weekend with Martin Luther King Jr.

So that'll be effect trade when we come back on Tuesday.

Keep an eye on the outside market news and what's happening in in the Middle East so that so many things happening globally so outside markets matter.

Make sure you're watching those, too.

Naomi Blohm, thank you so very much.

Matthew Bennett, thank you so very much.

Thank you for your patience.

Everybody watching this little we're back into the the days soon to go virtual, but thank you for your patience and thanks for watching.

Next week, we will look at a small bug that's creating a big problem.

And our guest will be Sue Martin in the studio.

We'll talk to you next time.

Thank you for watching.

Have a great week.