Market Plus: Sue Martin

Sep 20, 2019  | 11 min  | Ep4505 | Podcast


This is the Friday, September 20, 2019 version of the Market Plus segment. Joining me once again is Sue Martin. Sue, welcome back.

Martin: Thank you, Delaney.

Howell: Sue, I feel like we didn't quite give the cattle enough attention during the main program. But we have a very good question coming to us from Letts, Iowa saying as a feeder do we need to lock in our corn needs now?

Martin: I would say probably yes. If you're looking to lock it in I wouldn't go beyond July of next year. And I will say that the market is, on the indicators I follow, you maybe don't have to hurry just yet. But I would say probably in maybe as you get into mid-October or something like that you might want to be starting to look at getting some prices done, some locking in because probably more than anything it may be basis that really does a number on those that need to use corn for feeding. So I would say yes. But I think you can give it a little time because the combines aren't going to roll in force and it's the eastern Corn Belt that we're really interested in as to what those yields are going to be like, South Dakota too, which is kind of interesting because there's an old study that goes back to 1929 and in years when Sioux Falls, South Dakota has record rainfall in the fall, which we're going into, there tends to be a drier summer ahead. And so we need to keep an eye on them.

Howell: Sue, since you brought up the corn markets there we're of course all watching in anticipation to see really what numbers are going to come out of this year's harvest. We've got a question here coming to us about this corn question from John in Kansas wanting to know where is all this poor corn that everyone keeps talking about? And what is the downside potential for corn barring that there is no disruption?

Martin: Well, I don't see as much of a, it will be a later harvest, depends on your fall weather. If we turn wet, which we could, that would be kind of a concern and would support prices. Other than that I could see the market coming back down, taking a look at the $3.52 and maybe double bottoming it, $3.48 something like that. I just think we're into a rangebound affair. What's interesting is looking back at years of a 9 were very typical this year. Normally you'll put highs in, in May, June, July and emphasis more on June and July and this year it was June. And the harvest lows tend to come more in towards October, November. So we are pushing and with the lateness of the crop I wonder if that harvest low isn't going to come a little bit later.

Howell: Okay. When are we thinking as a little bit later?

Martin: Probably more of an October timeframe I think.

Howell: Okay. Sue, I want to ask another question here looking at the rallies or maybe no potential rallies but Austin in Belmond, Iowa would like to know how much upside potential is there now for new crop soybeans? If any, what timeframe would there be to see some sort of action to start?

Martin: Well, beans are really reliant on some news coming out of China and you can tell that in how we responded and we do have a key reversal month going in beans. But I think that we need to see the market close firmly and I think the other thing is the fear was underlying or was supporting the market as to a frost/freeze and that is being shoved out. So that has kind of been pulled out of the market as well. The next thing we have to keep our eye on is South American weather and a lot of times when our weather is good theirs is bad. So I would look at South American weather. They're very dry and been very warm, especially in the center west of the country. But they are forecast even all the way through the fall here and into the turn of the year to remain pretty hot and dry. If that occurs that is going to put support under this market psychologically. It might also bring the Chinese around a little bit quicker too.

Howell: How much psychologically could it add to the soybean markets, new crop?

Martin: Well, beans did not make higher highs this year and they did take out last year's low. So I don't see us coming up for an outside range year. I would say if you got back around the $9.40 area, $9.30 that might be the extreme. I just don't see, in fact even November beans of 2020 are around, well they were coming into Friday around $9.47. So if that market was to push up into the $9.63 area keep in mind $9.71, $9.72 was the November bean high this year. So I don't see us taking out those highs without a Chinese deal but on the same token because the attitude is even at 640 million bushels carryout we still have enough beans to kind of work around. But if you start working over the South American production, which as you start to plant you always have to have the best expectations, and right now with the dollar high and their real so cheap it's the ideal situation for them because they sell their beans in dollars but they get paid back in real so because we're around 4.4 I think this week to 1 reals to a dollar therefore that means that many more reals they're getting so it's like a pay raise to them. In the meantime I would say Mato Grosso has been very aggressive starting to sell for the new crop, the crop they'll be planting in corn in January and February. But they have also been starting to be more aggressive in selling new crop beans as well and they're over 80%, I want to say almost 85% sold in Brazil on old crop beans.

Howell: Sue, since we're talking about South America too the real and that transition there that they're getting more dollars really put back into their pocket along with some other global factors going on down there we've got a question here from Shannon in Iowa wanting to know, will South America increase acreage after the Amazon fires? And if so, is there any numbers on how much they will increase their acreage for 2020?

Martin: Well, I talked with Fernando from Ag Rural today and he is estimating maybe 1%, 1.1% increase in acres. That would equate to about 89.6 million acres planted in Brazil. The idea of production, and they have been pretty on target, their idea of production will be better than this last year's, this last year here in 2018-2019 was 115 million metric tons and they're looking at, they're estimating that they'll hit around 119 million metric tons. As far as the fires in the Amazon very little ground is taken from the Amazon to put into grain production so I don't think that's going to have much impact.

Howell: Even with the new President in Brazil that is maybe a little more pro-agriculture?

Martin: Well, there's been a lot of negative rhetoric about it and I think because of that people are just, there's been a lot of news coverage and what have you, I think the farmer is going to be a little apprehensive at least for this year pushing acres into that Amazon at this time.

Howell: Okay, so maybe it's a further down the road kind of event.

Martin: It could very well be.

Howell: Well, in other global news, Sue, this week we had some excitement in the oil industry. We've got a question here from Lucas in Lyons, Nebraska wanting to know is there any chance the attacks on the Saudi Arabian oil fields will increase ethanol demand?

Martin: I think it does because if you notice all the talk was about how much gasoline prices were going up. And as we go down the road into next year the increase of 10% is what is being talked about by President Trump that for blending over and above what we already have for 15% that's positive and so I think, and even on the waivers for the Renewable Fuel Standard you didn't see demand change on ethanol. So I think what we're going to be seeing is the opportunity to have a situation here where demand does hold good for ethanol and be very competitive against gasoline prices.

Howell: Should I be concerned then if I haven't locked in some of my fuel needs in lieu of this week's events?

Martin: I think you're going to -- we had such a dicey move. One thing about crude oil is that it has not taken out last year's highs nor last year's lows. And this move push does almost make it look like we're looking at a potential key reversal month here as well. And so in October you could maybe meander a little bit but I would not be surprised to see, if I was a producer and concerned about my costs for fuel I probably would be looking at trying to get some locked in, if nothing else maybe buying some calls on the board and protecting it that way because you've already had the move but let's face it, a lot of these suppliers, they've already had their stuff booked, so chances are they're still reasonable I would think.

Howell: Okay. Sue Martin, thank you so much, always a pleasure.

Martin: Thank you.

Howell: Join us again next week when we’ll look at the flipside of spring’s bomb cyclone in one region of the country and Don Roose will join us at the Market to Market table. Until then, thanks for watching, listening or reading. I’m Delaney Howell. Have a great week!

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