Market Plus: Angie Setzer

Dec 23, 2016  | 13 min  | Ep4218 | Podcast


Pearson: This is the Friday, December 23, 2016 version of the Market Plus segment. Joining us now is Angie Setzer. Angie, welcome.

Setzer: Hi, thanks.

Pearson: Glad you made it down safely in this snowstorm.

Setzer: I wore my helmet. Actually I slept, my husband drove. I woke up in Boxholm and the roads were much better.

Pearson: That's what it's all about. Now, we did not get a chance to discuss the cotton market on the show and I know that has been kind of just an up and back market. What is your take on it looking forward into this New Year?

Setzer: For me from a grain and corn standpoint I'd love to see a nice little rally going forward just because maybe it will encourage some acreage to look in that direction and I think you will see that anyway. I don't know from an overall profitability standpoint what guys are seeing but at the same time compared to the other alternatives you're probably going to see a continuation of strong cotton production without a weather issue. Questions that arise of course will go with the drought that we're currently experiencing in parts of the southeast. Do you see that move westward and kind of impact our Texas production or anything like that? So at this point in time from a global standpoint, from a synthetic fiber standpoint, from all of the things that have been weighing heavy on cotton for the past year or two you're really not seeing a significant change in that direction and just as in corn basically we're hoping a weather issue develops to kind of push that market higher unfortunately.

Pearson: Tread water for the time being until we get some news.

Setzer: Yeah and just know that if you're at the higher end of the recent range and you have some sales to make take advantage of it. We're in a bear market overall until something happens weather or inflationary wise. So it's somewhat easy to make sales decisions when you see the market dragging towards the high end on the chart.

Pearson: Right, use those trend channel as the guide, exactly, it's training wheels.

Setzer: Exactly.

Pearson: So now we've got a number of questions from our followers both on Facebook and on Twitter and our first one comes from Tye in Washington, Iowa @TyeRinner, he's asking is there any chance of seeing $10 or higher soybeans for 2017?

Setzer: I'm going to imagine he's talking cash because we did see $10, $10.35, $10.40. Of course there's a chance. But every day that goes by that the South American crop looks to be on par with what expectations are pointing towards that kind of dwindles a bit. If we see a continuation of talk of 88 to 90 million acres of beans and South America starts to take over on the sales side you're probably going to be just as happy with $9.90 or $9.75 or $9.50 or even $9.25 perhaps depending on where we end up settling here in the long run. I've heard a lot of people say, well last year everyone said that beans never were going to rally, but last year when people were saying that we were $1.60 below where we are now. So it's important to remember where we're at when we're discussing the likelihood of the market moving lower or lack of rally potential. And in beans when you're on the higher end of where they should be based on stocks to use ratios both domestically and globally you want to be paying attention to sale opportunities.

Pearson: Alright. Our next question comes from Tim in Crookston, Minnesota. We're talking beans again. Tim wants to know, will I be rewarded in 2017 for holding my 2016 beans?

Setzer: You'll probably see better basis than what you got at harvest time but I can't tell you if that's going to be based off of $10.60 futures or $9.60 futures or $8.60 futures at this point. I don't think we'll go that low by any chance but I guess it depends on what reward, what your classification of reward is. I can tell you this much that if you're holding beans in commercial storage I probably wouldn't be paying to gamble much more than that. When we saw beans trade up toward $10.50 I had commented to a customer of mine that it's like having 19 at the blackjack table and telling the dealer to hit you. You're really kind of pushing it in the direction of which way you want to go but it's hard now to make a sale when you watch them drop 70 cents or so and I understand that. And the likelihood of us seeing a pop for some reason after the holiday is probably there but I'd be taking advantage of it.

Pearson: Yeah, and you hate to, again, gamble everything on a pop that may or may not come especially when we get post-New Year and the folks who have been holding beans for cash flow reasons or for tax purposes, call the elevator and go hey, we're still at $9.70, let them go, we're at $9.50 cash, let them go.

Setzer: Crush is great. Crush is going well. So if you've got a local crushing plant then you'll probably see some basis significance again. But the same thing comes into question where does it feel better to sell a 35 under when your futures are 70 cents lower than it was to sell a 75 under? I understand, the elevator side of things, harvest basis this year stunk on ice but there was nothing we could do about it. We had a lot of beans and elevators, our end users were full and you couldn't really move them. But then you had a secondary opportunity to sell $10 cash, $10.10, $10.25 for some guys depending on where you were so it probably, you might get rewarded but if I were a betting woman I would say to let them go on a rally if you get another chance.

Pearson: Now one of the stories we've talked about on this program quite a bit and it has certainly been a player here these last two weeks is the strength of the U.S. dollar. Now, for folks who maybe haven't heard you before, you live in Iowa but you work in Charlotte, Michigan and in Charlotte, are you dealing with a lot of Canadian sellers of grain?

Setzer: Yeah, yeah. Well I'm dealing with both buyers and sellers.

Pearson: What's the general, are they pretty excited to see this strength in the U.S. dollar?

Setzer: They are. I'm not. Yeah I was really enjoying it when the loonie was gaining traction and the dollar was losing traction here a few months ago just because. But yeah they're excited. We've started to see they're calling and wondering, hey do you want to buy some of my wheat or do you want to buy -- the hardest part right now though is the Canadian seller, the Canadian farmer is not in a big hurry to let go of his crop. So a lot of the Canadian end users over there, and there's quality concerns, so a lot of the Canadian end users over there are finding themselves kind of forced to try to pay up to get grain moving that way.

Pearson: From the U.S. into Canada?

Setzer: From the U.S. into Canada to cover some of their needs in the short-term and a lot of people don't realize that. We have two very large ethanol plants that are within a half hour or 45 minutes of the Michigan/Canadian border right there, Ontario. And so we've shipped, I've shipped personally hundreds of thousands of bushels. I didn't drive the truck, that's way too dangerous, but I've shipped hundreds of thousands of bushels into Canada in the past. Of course a stronger loonie makes that a lot easier. But right now we're sitting there kind of trying to weigh what that means. For the Canadian farmer a year ago though that meant that they were able to sell $5 corn, $14 soybeans with the convergence that we saw and so it's interesting but right now we haven't seen the amount of movement from Canada into the east side of the state that we saw a year ago.

Pearson: So it hasn't been a flood of Canadian grain.

Setzer: No. But quality concerns have been the big issue, Vom in the Eastern Corn Belt and things like that have really kind of stumbled that market up. But usually after the 1st of the year, harvest was delayed for us too, so it's kind of hard to get a sense as to what's really going on just because a lot of guys are just wrapping up or trying to get wrapped up over there and we're dealing with snow and all of the other things.

Pearson: Winter weather in the upper United States. Our third question comes from Former Farm Boy in Central Iowa. And as we're talking exports, his question is, what is your thoughts on export concerns after Mr. Trump takes office?

Setzer: It's such a can of worms. It's hard because I'm really happy, I was really nervous at the start of the month with the Chinese conversations that we were having. We have seen it in the first 100 days President-elect Trump, or President Trump now after the Electoral College perhaps, I'm not sure --

Pearson: I think he's still President-elect until January 20th.

Setzer: Okay, so January 20th then. But President-elect Trump has come out and said that in the first 100 days he is going to name China a currency manipulator. And I do say that a lot where are they? Yeah. But do we say anything about it? Well a lot of our power will rely a lot on what happens with South America in my opinion. And right now it does look as though they'll have a decent crop. So the last thing we really want to do is get into a trade war or a moment of discontent with China. A quarter of our beans are exported to China at this point in time. So it's a big deal. With Branstad coming in I think that's helpful. He knows, he has good relationships with China so that should help. But just from an overall standpoint we haven't even talked about Mexico and Mexico is our big buyer of corn and pork and all of these things. So from an overall standpoint I'm nervous. It is one of the things I've been nervous about throughout the campaign.

Pearson: And given your geographic location in Charlotte it's hard to imagine two people with different personalities than Canadian Prime Minister Justin Trudeau and President-elect Donald Trump. It could be interesting.

Setzer: It's going to be very interesting. We've already seen, we have the tweets and we have things like that, and even the populous has been divided somewhat, the farmer, because not only do you have the trade issues that we have to contend with now with President-elect Trump coming in, but we also have the RFS issues that we have with President-elect Trump coming in. And so that was part of what you saw this week with soy oil kind of stumbling. The people he's putting around him are not big supporters of the RFS. Now, throughout the campaign he said that he was a big supporter of RFS. Vilsack has come in and questioned how that's going to work. We do not have a Secretary of Ag at this point in time. It's one of two major placements that we haven't seen. So that's somewhat troubling. So there's this whole scope of things with agriculture. And yes, we are the backbone, the American farmer is the backbone of the country, but we are only about 3% of the overall populous. So when it comes down to it, is it possible to see some promises made and have them kind of be a little bit more wishy-washy? So it's an unknown and unknowns are always scary so it's something you want to kind of keep in mind when you're looking to gamble on old crop soybeans or you have cattle that need to be sold or something of that nature. With all of the unknowns out there sometimes it's best to just take the known, which is profit if it's available.

Pearson: Right, if it's available, yes. Take it when it's available. Angie Setzer, final question. The Christmas holiday is coming up. Are you a turkey, ham or prime rib person for Christmas?

Setzer: In honor of the huge amount of corn sales to Mexico this year we are doing a fiesta.

Pearson: So a lot of ground beef.

Setzer: Yeah, there's going to be a lot of ground beef. We are going to have some chicken. And on Christmas Eve we're going to do pork loin. And the day after because now this holiday is three days because we get the 26th too, we've got a prime rib that's ready because -- and bacon for breakfast every day.

Pearson: The triple threat.

Setzer: You know it. It's how I maintain this girlish figure.

Pearson: Angie Setzer, thank you so much for taking the time to join us.

Setzer: Thank you.

Pearson: Join us again next week when Dan Hueber joins me at the Market to Market table and watch the broadcast portion of our show where we'll take a look back at 2016, a year filled with Earth, wind and fire and a presidential race where rural America had a starring role. So until then, thanks for watching, or listening. I'm Mike Pearson. Happy Holidays and have a great week!

Trading in futures and options involves substantial risk. No warranty is given or implied by Iowa PBS or the analysts who appear on Market to Market. Past performance is not necessarily indicative of future results.

Market to Market is a production of Iowa PBS which is solely responsible for its content.


More from this show

Grinnell Mutual Insurance