Welcome to the Friday, August four, 2023 installment of Market Plus.

Naomi Blohm back with us.

You were on a road are on the road this week, had a speech yesterday to a group of folks.

What's the lead question you're getting this summer?

What are people wanting to know from you?

Well, I think a lot of questions, of course, price outlook.

But from the standpoint of, you know, we've got tight old crop supplies.

What about the new crop supply?

Does that really justify a huge price move lower?

Should we be pricing ‘24 crop?

Looking ahead, and I think a lot of people were, I don't want to say caught off guard, but surprised by how much production South America has the potential to be coming up and the upcoming crop year.

That was really eye opening that, you know, Brazil is the number one exporter by far for soybeans.

And how now for corn, they are surpassing us for exports as well.

So that was, I think, just good to have that base of understanding about how global things are right now.

And, you know, keeping track of other outside market influences and how that all affects the price at home and how the funds just haven't been market participants lately, you know, compared to the last two years.

So just really learning to balance all of those factors.

But ultimately, of course, where is the market going to go, as is the biggest question.

The funds are on vacation.

They are.

Well, you would be, too.

I mean, because they're getting higher, you know, return of investments with interest rates being up, they can put their money other places.

So they are not in commodities like they used to be.

Outside markets up 20% on the year 21%.

I think I saw this this year.

What's that mean for commodities?

Well, you know, a lot of times it seems like in history when the stock market looks like it's getting iffy, people want to explore other avenues and they come and put their money in commodities instead.

But, you know, we're just not seeing that even with the headlines that we've had.

People are putting their money other places.

Part of me is also noticing how particularly with wheat, the funds are really trying to send a message by staying short that the world is not interested in higher food prices right now.

So there's that to contend with also.

There was a story in one of the main street presses just this morning that said food inflation is possibly going to return in the United States different than around the world.

Oh, I didn't see that.

The Wall.

Street Journal said that.

Oh.

And so that would, I would imagine, catch the attention, the most of whom.

Well, big traders, big money markets like that, right?

For sure.

So that'll be interesting to see what is going to transpire in the coming weeks or how we end third quarter, how we start 4th quarter.

So always you have to watch what the big money is doing because they have become their own market fundamental in our agricultural space.

Right.

And that was actually part of the discussion in the program about land values and who's buying the land.

Is is the outside money has been coming in to buy some land because they see it as an investment.

Let's get to a couple of questions that came in and then I'm going to kind of dive back into some of the other things you said.

Let's start with Eric in Ohio, where if you saw the drought monitor there looking pretty good with not rain, but I'm sure I'll hear that things are could be better.

They could always be better.

Right?

Who has the wheat market or why has the wheat market declined so sharply after Russia destroyed the Ukraine grain ports?

Talked about this in the program.

We didn't get a chance to flush it.

Yeah, probably enough.

But tell me why now.

Yeah, it's a lot of it has to do with just the fact it's a couple of things.

The world still wants to send a message to Putin that says you keep trying to do these nasty things, but we are going to get this grain out of Ukraine one way or the other.

And other countries around the world are trying to help and step up with that process.

So Croatia, Romania, they're doing their part to say, okay, we're going to we're going to help.

You can use our waterways.

You know, we're going to try to do it via railroad.

And so it's going to take I don't want to say it's going to take something really horrible because we don't want anything really horrible to happen.

But the market is only using these overnight explosions for a grade, like a 30 cent pop.

And if you're up in the middle of the night and you can be a day trader and take advantage of that, that's all it's been good for.

So, I mean, it would take something really bad to happen.

Or if someone were to attack a Russian port to then say, sorry, Russia, you are going to not be able to export your wheat to India or get it to China.

We're going to try to stop you.

It would take something, you know, just really catastrophic.

But where have these other countries been in the last year and a half?

Have they been helping and we just didn't know it?

Well, it's no, because of the Black Sea deal.

Grain was able to go right.

And so now and some of those countries, too, were saying, well, we don't want Ukraine to bring their grain through here because it might get dumped here and then affect our local market.

So it's been a very delicate dancing act with all of these countries and the U.N. And I am I'm learning more and more and more each week.

Of course, to follow.

What's the most important aspect.

I would guess, also, one country has to be brave enough to kind of step forward and the other one kind of gets a little more energy and intensity to say, ‘yes, we're going to stand up to them.

I mean, that's just pure speculation.

But strength in numbers in the in the herd, if...

Okay.

Mike in Oklahoma has a question.

We haven't talked about drought in Oklahoma much.

So he wants to know about feeders are feeder cattle deferred months of ‘24.

Looking for that $2.80 range very specific I know but let's talk 24.

Well they have every reason to keep inching higher.

But I think it's going to be a cautious step because we are at such high values right now.

I would be hesitant to put a number on it, but I can't argue why they wouldn't continue to inch higher overall, because there are as one of my Missouri clients says, ‘there ain't none out there.

So and I mean and the the cattle inventory report second that motion with 1.3 less feeder cattle than a year ago.

That's that's a big deal.

And it takes time, obviously, to get those numbers built back up.

So that's it's a it's a friendly story yet for the feeder market.

What's been nice you know some areas are having pasture improve so that's been helpful.

Grain prices coming down in general too is is supportive.

But until we see signs that the industry that the herd is starting to expand, it still is a friendly story.

Coming into Friday, corn had eight consecutive lower closes closed higher on Friday.

Dead cat bounce?

I think it was more profit taking out of the weekend for people who had been sellers earlier in the week.

I'm I am a little bit cautious.

You know, people are like, ‘yeah Naomis going to be on the show, she's optimistic and she's happy and she'll tell us something good.

She's wearing black.

But I but no, it's funny.

I don't have that news right now because while you know, the stories of tip back are real and we see it and we know it's not a record crop, when does the USDA say it isn't a record crop?

And that's what we're up against.

And I haven't really heard a lot of satellite imagery come out and say anything substantially lower for the market to really get excited and for corn prices to go back up, we need yields to come in at 172 or less.

And I don't think the USDA is going to give that to us on Friday.

So, you know, I'm also watching what the funds are doing and they are they're not interested.

They took their ball and they went home and they are just on the sidelines with this.

So I'm a little bit realistic for the short term that prices are probably going to go slide a little lower until we actually know for sure what is happening in those fields.

I can't argue with any of that except one thing we've seen a lot of can kicking, until the last USDA report, which then surprised a lot of people.

Do you think there's a stomach and what happens if there is?

What if the news does come in and say, you know what, fine, I'll give you a number.

We're going 174 one 173 When you said a big number during the show, what's your big number that would really shock the market.

If they came out at 174 or 173, That would give us probably a good easy 30 or 50 cent bounce.

Without a doubt.

That that would not be anything that the trade would expect the USDA to actually say.

They're usually, you know, a little bit more baby step one, you know, a little bit at a time.

So if they came up with a number like that, great farmers would love it.

Okay, Final few days ahead of the report.

What do we do?

All of our grains.

How do we prepare ourselves?

Well, you know, really keep an eye on your local cash levels.

Keep an eye on basis.

If you are at a situation where you're feeling more comfortable with your crop and you want to make cash sales, then then do it.

You can always rely on it down the road if you want to be defensive.

Just in case we don't give get any friendly news, then I would take a look at buying.

Just I would go straight out.

December puts $5 puts, $4.90 puts, $4.80 puts, just to give yourself some assuredness until we get a better a legitimate better handle on what's growing in the fields.

Thank you.

Appreciate it.

Always good to see you.

Good to see you, too.

Thanks for having me.

Thanks to hear what you have to say, Naomi Bloom, everybody, thank you.

Next week, we are going to look at how one producer is finding additional revenue on the dairy farm.

And we'll have the commodity market analysis with Shawn Hackett.

Thanks for joining us.

Have a great week.