Market Plus: Angie Setzer and Chris Swift

Sep 25, 2020  | 14 min  | Ep4606 | Podcast

Podcast

Yeager: This is the Friday, September 25, 2020 version of the Market Plus segment. Joining us now Angie Setzer and Chris Swift. Chris, nothing like a good baptism by fire because Angie was out buying steaks. Thank you for your flexibility during the program.

Swift: Absolutely.

Yeager: You are in Nashville, Tennessee. We talked to you on the MTOM podcast about a month, month and a half ago and you told us a little bit of background. If memory serves decades covering livestock. Give me your elevator speech back when we still rode elevators.

Swift: Sure. I started my professional career in 1990 with JC Bradford and Company. I moved to Rosenthal Collins Group where I branch managed an office for close to 14 years. And then after 2014 I founded Swift Trading Company, a GIB with Rosenthal Collins but clearing for Rosenthal Collins Group.

Yeager: Now, if anybody goes to Nashville and travels there's a good chance they maybe have walked by your office or at least seen it real close, right?

Swift: It's very possible. I'm on 16th Avenue, which is considered Music Row and a tremendous amount of history. And if you're a Ken Burns fan when he did the Country Music publication on there, 16th Avenue was a large part of that.

Yeager: See, he's done his homework, Angie, about what we air on PBS on Ken Burns. That's really good, isn't it?

Swift: Absolutely.

Yeager: Chris, we have an African swine fever question we'll get to you in a moment. But Angie, I want to get back into the grains just a tiny little bit. I brought up, I was texting with some people this week on their progress, they're flying along. It was a sprint to put this crop in, it's going to be a sprint to take this thing out. There's going to be no breather. In two weeks some people are going to be done looking around going what harvest low? So my question, which came from Roger in the Milky Way, he was asking us via Twitter, what if any correlation is there between harvest lows for corn and beans and the national harvest progress percentage of those said crops?

Setzer: Oh goodness, that's for someone with a lot of Excel spreadsheet background because I don't really have that. I think it's something, it's pretty obvious when you're rolling right along you're going to see some continued pressure on futures. I think harvest progress this year is going to be a little bit of something that is hard to pin down just simply because in Iowa if you don't have that much of a crop to harvest it does move a lot quicker. And so I think you are going to se that in a lot of those places that have been impacted by the drought and the derecho is that you are going to go through that crop a lot quicker than what you ever maybe have before.

Yeager: Case in point, here in Iowa and parts of Illinois, it was two weeks since we last had any significant rain. There's not another significant chance of rain above 20% other than this weekend for another week. So just in that sense it's drying down in the field and that is also another way to speed things through. You're sitting there at an elevator. What is the average moisture level coming through there?

Setzer: We're behind. I don't even want to come off like I'm bragging because we did catch some rain there the last half of August into September and then we pulled down. Beans have been coming in though, the last two years we've been having beans come into the elevator on Thanksgiving at 23% moisture and so this year we're celebrating that the wettest we've had come through so far has been 15%. I have had some folks say that they definitely need rain because they're trying to get beans off at 8% to 9%. You run into shatter, you run into a lot of issues, it gets really just frustrating without a little bit of that breather. So I do feel for folks that are out there with two weeks of harvest and not really much in the way of rain ahead of them. And obviously you've got to get that crop out but just make sure you're being safe about it and giving yourself that time if you need it to take a breath.

Yeager: So there are stories of maybe more people selling their crop right off of the combine. Can you confirm?

Setzer: Yeah, we have a lot of sales going on right now, it makes sense. The market is definitely not incentivizing holding soybeans at this point in time. There's very little carry. Basis is good, it is strong and it has been strengthening at least locally here as of late as a lot of commercials, you start to see combines roll as an elevator and you're not full so there's this moment of panic that you're not going to be full and so that's the opportunity that we're really seeing from a basis standpoint here locally. I think they're seeing the same thing in some areas where no one is full, no one is choking on the crop yet but they see progress happening and so they're getting nervous. And so that's the sweet spot to be locking in some basis opportunity. with the recent rally we have fallen off 15 cents on soybeans but we're still up $1.50 from where we were the start of August, throw in a little bit of that money and you're not doing too awful bad. And so I think you're going to see some continuation of selling right now soybeans especially, I think corn may get put away for a while just to see what happens there with export pace with ethanol and feed demand.

Yeager: Chris, here's one of the fun things we like to do on Market Plus and that is give you questions that come from either Twitter or Facebook. This one came via Facebook and it's from Justin in Ithaca, Michigan. Is there an update on African swine fever in Germany and Europe? Is it still having an impact on the hog market?  I believe this week we went up to maybe a dozen hogs that had been found in Germany. What is the impact there on the market?

Swift: From a perspective of export it halted all of their exports so that was the biggest reason why we thought we saw a little bit here in the U.S. a boost of the hog market as Europe has been a large exporter to China, that cuts off a large swath of Europe with Germany shutting their borders down to China's exports. I don't think it's a major outbreak like what we saw in China. There is such a significant difference in how hogs are fed between the two countries. We know that China pre-ASF approximately 60% to 70% of their herd was still fed a swill. So we know they didn't have large compounds of hogs where they could control the feed sources and with that combination of those hogs being able to root around into wild areas where they could be exposed to the wild boars as well as being fed swill feed that might have already been contaminated from another pork product of some kind. So I think there's a big difference between the two that you probably won't see the size of the outbreak in Germany because it can be greater contained, that pork production there is under a much more controlled environment than what it is in China.

Yeager: There was a story this week about supplies in China that they might be out of cold storage. We never really truly know what's going on there. But, what is going on there? Are they running low? What do you hear?

Swift: I don't know. Honestly I don't pay a great deal of attention to it because most of it is hearsay. And we were privileged to know a few people that knew quite a bit about it but as time goes by and the stories begin to fade so too does the news. We saw the abrupt news that came out because a lot of it was having to be sneaked out of the country. They have tightened the grip now on any kind of publications going out so we really don't know so I don't try to outguess that.

Yeager: It is hard to guess. Angie, there's this other little thing in the news called an election. The House, the Senate, the Presidency are all up there and there's a question from Jonathan. He asked us via Twitter, he's in Wisconsin. He says, is the November election volatility built into the market or is there more to come?

Setzer: I think there's a lot more to come unfortunately. I feel like I think we've seen it a couple of different times this week where there's questions about whether or not we'll even know at the end of Election Day what the results are and whether or not they will be recognized and I hope that we wake up in the middle of November and everything is kind of back to normal whatever that is. But I think that as we work through October you're going to see that election volatility really, really pick up. I'm really nervous about some of the economic things that we're going to see. I think there's some long tails that are really going to start to impact what is taking place from COVID. I've had this feeling for a while now I don't know if you remember 2008 pre-election it was beneficial to certain parties to have that sort of impending feeling of collapse with the residential housing market. What does it look like with commercial real estate and some of those things where we are seeing these places saying we're not going back into the office until the middle of next year? We are seeing some real struggles on that side of things. So I think it has just begun. Honestly I don't think it is factored into a real level and probably won't be until we're a week beyond the election and feel comfortable that the results will be recognized and are what they are.

Yeager: You alluded to this a little bit at the end of our broadcast portion and Russ in Postville, Iowa and there was a little back and forth here with another commenter. He says, is China buying a result of them conceding that President Trump will be re-elected and trade reforms will continue basing this on knowledge that markets are anticipatory? And I assume that the Chinese are too? That has been, it's like anybody, it's like a producer hedging their bets, you're playing both sides if you can. The Chinese are no different. Remember on Election Night when the polls told us Hillary Clinton was going to win and then all of a sudden through nine, ten o'clock at night when it looked like Donald Trump was going to win the pre-market indicator just flipped and it wasn't necessarily saying it was going down or up, everybody was just readjusting. So the question is, is this why China is buying?

Setzer: Yeah, I think they are hedging their bets. I think there is a certain level that they are in line with what is taking place. They are following through, they're giving in, they're working through their Phase 1 trade deal agreements because we're going to have to start working on Phase 2 and he's not going anywhere for four more years. At the same time I think they have a need for those bushels. So I think that I've always said, I feel COVID was what changed and modernized how their food was looked at in their country. And so I think there's a level of that that is taking place in general. They're also hedging their bets with La Nina, what happens in South America from a production standpoint. And so I think they're speaking for supply and making sure they're ready no matter what happens and they know they're going to need the supplies but they also know that they can say, never mind we didn’t need as much as what we thought and so we can kind of move on, kind of see an ebb and flow from there.

Yeager: All right, real fast, 30 seconds on cotton. I made you do the homework. That one has been chopping kind of steady. Where are we headed?

Setzer: Right now it looks like there's going to be some strength. It makes you wonder what is going to take place. You can't help but wonder if it doesn't take some strength from softs, there has been some questions about some production shortages and obviously there's still some questions as to whether or not we're going to ban some of those imports of cotton goods from China.

Yeager: Chris, I guess I'll let you do a 30 second answer too on politics and livestock. Does it matter?

Swift: Politics absolutely it does because it impacts the consumer and as the supplies of cattle seem to be pretty steady going forward even with hogs going forward for the next three to six months there's not a great deal they can change from the supply side. So anything that is going to impact the consumer discretionary spending habits is going ot be of great, great importance to us.

Yeager: We had one consumer in this broadcast buying steaks during our time. Thanks, Angie.

Swift: That’s right.

Yeager: Angie Setzer, Chris Swift, thank you so very much for joining us here. Chris, I hope it was okay and you’ll come back again.

Swift: Absolutely. I thoroughly enjoyed it, Paul. Thank you for having me.

Yeager: Angie, we'll see you in a few weeks. Thank you both.

Setzer: Thank you.

Yeager: Next week we'll bring together a four person roundtable, you thought this was a panel, well we're going to bring four. We've got Naomi Blohm, Ted Seifreid, Elaine Kub and Matt Bennett. They'll break down the quarterly grain stocks and look at the trends that are also happening in the commodity markets. I'm Paul Yeager. Thank you so very much for watching, listening or reading. Have a great week.

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