Market Analysis: Chris Robinson

Market Analysis: Chris Robinson

Nov 27, 2020  | Ep4615 | Podcast

Podcast

This program is being produced on Tuesday ahead of two trading days. So we're going to give you the closes for two days, March wheat gained 18 cents on the week while the nearby corn contract added 4 cents. South American weather remained dry earlier in the week, fueling a rally that at one point touched $12. The January soybean contract increased 10 cents, January soybean meal, expanded $2.20 per ton. March cotton gained 2 cents per hundred weight. Over in the dairy parlor December class three milk futures declined 50 cents A green two days in the livestock sector, February cattle improved $3.30, January feeders jumped $4 and the February lean hog contract grew by $1.40. In the currency markets U.S. Dollar index shed 18 ticks, January crude oil improved $2.42 per barrel, COMEX gold decreased $70.40 per ounce. And the Goldman Sachs commodity index increased more than 13 points to finish at $395.85. Now let's bring back in Chris Robinson. We'll talk about the markets. Let's start with wheat, Chris. This is one that seems to be kind of marching in place for a while. Why?

Chris Robinson:

Well, it's interesting. They kind of let us up early. We had a nice rally in wheat and a lot of people were trying to figure out what was going on. It's it looks like it's more than something than, than dryness and Russia. That's been the story out. And about every six weeks, the Russians will say, well, we're possibly going to stop our exports that usually bids the market up. It just looked like there was a story there people were trying to get, get in front of. And we've been talking about the drought meter here in North America. And that's, I think the issue too, with, with South America, if there's any sort of a drought there. You know, the world's plant has a plentiful supply of wheat, but it doesn't take much to get the markets. You know, the, to reprice, especially if what we've had in corn, we got a dollar rally in corn. So these things are all kind of intertwined. I think that moving forward, the, probably the driver and Seth, I don't know if you'd agree with me or not, but the drivers probably going to be, are we going to continue to have any sort of weather issues either in Europe or possibly in Australia you know, that could get that the wheat market going, but all in all, here's the beautiful thing.

Chris Robinson:

We've had a $1.50 rally. If you look at the long-term charts, Chicago, winter wheat, we were at six year highs. So if I'm a wheat producer and I started out last year, you know, we were worried about ten-year lows, multi-year lows. So to, to have this rally up, it's really a blessing. And the question is, is it going to last? And if you can tell me what the weather is going to be in the next six months, then we'll know, but it's it's good to have these prices. And historically, you know, the, the wheat market has been flat-lining for awhile. So it's good to have these levels. It's giving producers a great opportunity to, you know, even three, four months ago, there wasn't much worth protecting, but when you've got Chicago wheat above six bucks KC wheat holding about $5.50 those are prices worth protecting. So it's a good opportunity. I think if you look at the charts, the Chicago wheat is about a six year highs. A KC is about a two year high. So that's, that's something to be taken advantage of

Paul Yeager:

In the corn market. There is a global story. It doesn't seem to be as big of a global story as it is in wheat, but it is a weather story as well. China, a couple of weeks ago was sniffing around buying some corn, which is rare. They're not usually big buyers of U.S. Corn, as you look long-term in this corn market. What are the factors other than we've talked about the carry out, being a major one?

Chris Robinson:

Well, I think, two things, I would say, first of all, what happens with crude oil? Part of the reason we had the collapse in our corn prices was the sudden shutdown you saw crude oil drop sharply that really shut down the demand for ethanol. Ethanol takes 40% of a 15 billion bushel crop. So that was a big hurt. And that's starting to recover now as prices as of today, as of Tuesday, I think we poked above $45 a barrel, which is about an eight month high. So that's a good recovery. So that's number one, as far as are we going to get that type of demand from ethanol again. Number two is I think what is really going to be the demand from China, moving on if they need to build back their stocks and Seth was right, nobody knows people used to think they had a five-year stock pile of corn.

Chris Robinson:

You know, they've got their corn prices in on the Dallian exchange. Well, above 10 bucks, I think $10.70. So if you're in China you're feeling that pain, especially if you need corn to feed your animals over there. So that's the key. And at the end of the day, they've got a 1.4 billion people. They have somewhere close to 400,000 hogs. If, if they really need corn to you know, continue to supply their feed needs. And if there's any issues at all in South America, you know, we could have a game changer. So that's something I would continue to watch those, those, those two things, what happens with crude oil and what happens with Chinese demand for corn,

Paul Yeager:

All right, watch those two for corn. In soybeans, there's a concern that it goes up real fast, but we're going to go down either the elevator shaft, right? There was some indications Monday, Tuesday that, Oh, are we, are we looking down and starting to yell? What are the signs that something might be amiss in soybeans?

Chris Robinson:

Well, you know, we, haven't had a very volatile market like this in years, really going back to 2012. So it's another thing. The last five years, a lot of people have gotten lulled to sleep because you think, okay, beans are going to move a dollar, maybe a $1.50. Now we've rallied over $3 from our low. The contract gained over 40%. You know, this is just a move that we haven't had a long time. So the question is now, are we going to see beans in the teens? You know, that skit, there's, there's a whole another dollar to go before we get to $13. And I think that you've got to get used to seeing 20, 30 cent moves. You can go to bed at night and Malaysian palm oil is lower. The Asian markets are going to sell beans and you can, and it happened the last couple of days where we've had these 20 cent moves and people are like, that's it, that's the top.

Chris Robinson:

And lo and behold, we come in at the end of the day and, you know, we're, we're unchanged a little bit higher, so that's a sign of a bull market where it makes it hard for you to get in and it makes it you panic when you have these 20, 30 cent moves. So that's the number one thing I would say is brushed off your, your history books. We haven't had dollar moves like this and soybeans in awhile. And if we continue to have the uncertainty of, of the weather in South America, every time the weather forecast changes in Brazil, you could see 20, 30 cent moves. So I would say get used to that. And again, we haven't seen that in a while, so it's going to take people a while to, to wrap their head around the fact that we could have 20, 30, 40 cent moves on a weekly basis and soybeans until we figure out what's going on with the supply and demand and also weather.

Paul Yeager:

All right. Seth real quickly, I'm going to get you to take on an economic standpoint, Seth, if we would get beans in the teens, what's that mean for those on the farm, those off of the farm in rural America?

Seth Meyer:

Well, I mean, I think from a, from an act from on the farm, I, I, you know, I think that that's just, we'd be looking at a year that's going to, would look really excellent for farm income. You know, I don't think folks think about it that way because you know, the last couple of years have been made up with government payments kind of being the topping off, but we've had a rise in farm income every year since 2016. And this would, if we have beans in the teens, we're going to see farm income that's pretty near the top that we've seen in a long time. We'd have very strong farm income again, with a bunch of that coming from cash receipts. I don't think it, I don't think that, you know, we've seen in the past that those prices don't scare off the Chinese if they need it. And so, you know, I, I think to, to, to Chris's point, you know, you could see them continue to take it if they need it. Again, I'll go back to the Chinese are gonna take what the Chinese need.

Paul Yeager:

All right, fair enough. I need to get to the, a commodity market here, Seth. So we'll talk to you again and just a moment. I keep bringing them in, cause I can tell he's nodding along and, and wants to answer. So Chris we didn't really get into COVID too much in the economic discussion, but it's clearly a major factor when it comes to live cattle and feeders. Is that the biggest weight on this market is if a plant would have an issue and have to shut down, slow down further, or is there another weight around the neck of the market?

Chris Robinson:

Well, I think now based on where we're at with people looking ahead towards the recovery with the three vaccines possibly out there. Now, the question is how long is this going to take to switch the lights back on, you know? And that's going to be the big, big question. And are we going to have, you know, over the next two, three, four months as we go through the winter, are we going to have a spike where there will be a need to have another forced shutdown? I think that was the unique thing that really hammered the protein complex, this, you know, but when we started this thing, when we bought it out in March and April, I mean, 18 year lows in the lean hog prices, just to, you know, just a real shot that a lot of people never anticipated happening. And that had to do with the shutdown of the economy, the shutdown of the supply chain, you know, the, the stories we all went through and lived in once I'm not going to go through them again, but it was really something we hadn't seen in our lifetime.

Chris Robinson:

And I think moving forward, if that was to happen again. Yeah. But I think that it's feels to me anyhow, like they've made adjustments to the supply chain. You've seen a little bit of our correction, the last two cattle on feed reports we've, we had a negative cattle on feed this, then this last time we had a kind of a positive one, so the market's kind of adjusted to that uncertainty. And you know, the upside is if we can get the economy back going again, if next summer we're back to business as usual, I think there's a lot of people out there that have a lot of pent up demand for beef and, and protein.

Paul Yeager:

Alright, let's get into feeders quick. Are you expanding your herd right now, or your lot? If I'm a food, if I'm, if I'm a feedlot right now, my trying to find animals for my lot.

Chris Robinson:

I think you're worried about what happens if we get $5 corn, that's the thing. So if you're, you're going to plan for more animals, you better have some hedges on against you know some disaster and producing, you know, sharply higher not only corn, but also meal. And you're already starting to see a little bit of that. I think a producer if you're in a cow calf operators operation, or if you're dependent on, upon feed prices, you, it behooves you to take some protection against sharply higher prices. And again, that could be the best protection you buy, because if you buy it and you don't need it, you're going to be fine because your costs are going to stay relatively where they are right now. But boy, if I think that if we went from $4 corn to $5 corn or $5.50 corn, that's going to hurt a lot of producers. So nobody knows if we're going to get there, it's a possibility. And I think that if you're planning on growing your herd, because we know we may get that demand, it may be a situation where the, we get the demand and it's there, but you're still going to have to factor in those higher feed prices.

Paul Yeager:

I got to interrupt you and you get 10 seconds to say hogs. I'm sorry. I always do it to the hog industry. But I mean, are there big problems there?

Chris Robinson:

I wouldn't say they're big problems that markets come back. Uh surprisingly, well, not to the same extent that the cattle did as well. Again, I think if you're a hog producer its meal, you've got to worry about your meal prices there, right?

Paul Yeager:

That, that is Chris Robinson. I appreciate your time. And Seth Meyer, gentlemen, thank you so very much for that discussion. And that will do it for this installment of Market to Market. We will talk more in Market Plus. So join us. You can find it on our website of markettomarket.org. As you find yourself with more time out of the field, we have a small request. We'd like some space in your podcast feed. We have three offerings, the market analysis, which you just heard Market Plus the program you won't see on TV and the MTOM- that's discussions with the voices of agriculture. Chris Robinson was a guest on that. Subscribe today too all three, wherever you download podcasts. Next week, we'll look at trying to cut the red tape and the new battle against an old disease. Thank you so very much for watching have a great week

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Coming up on Market to Market....the crop is mostly in the bin. And now the focus turns to marketing. We look at the economic climate in rural America, a lot of special discussion, which includes market analysis with Chris Robinson. Next.

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This is the Friday, November 27 edition of Market to Market, the weekly journal of rural America.

Speaker 2:

Hello, I'm Paul Yeager. The COVID-19 virus has altered many holiday plans in 2020, including the taping of this program. We are producing it on Tuesday. So we thought we take a broader look at the economic waters impacting rural America. Seth Meyer is associate director at the food and agricultural policy research Institute, which is based at the University of Missouri. And Chris Robinson is founder of Robinson Ag Marketing, a division of TJM institutional Investor Services. Gentlemen, thank you very much for joining us. We will talk to you both at different times, but Seth, I want to start with you and really the big question that let's face it. We don't have all these family discussions, although we know plenty of people are going to get together and they're going to talk politics, but in rural areas, they're going to talk about the economy. They're going to say, are you making money? Are you doing better than you were a year ago? So if I'm a farmer sitting to the table in Jefferson City this year, am I saying I'm better off than I was last year?

Seth Meyer:

Boy, I and I think the answer to that question is varied a lot over the last couple of months, a couple months ago, I just said, well, you know, farm incomes looking a little rough, but government payments offsetting at least a chunk of the cash receipt decline, but now we've seen, we've basically seen prices increasing since mid-August. So this year's looking pretty good. It, a combination of government payments and decent cash receipts. It's looking pretty good. The question is, is how does it look when those cash receipts maybe stabilize and those government payments go away next year?

Paul Yeager:

And government payments was, I mean, let's face it. This campaign didn't really cover a lot about rural America. We knew what the President had done in those payments and structuring things with trade deals. So I guess as we go forward, is trade going to be as big of a deal in 2021?

Seth Meyer:

Oh, I, I think so. Or, or we're at least another source of uncertainty when we look, you know, one of the key differences between we were at where we're at now and where we are at in August, when, you know, when things weren't looking as great from a receipt standpoint is China has really come in strong into the market. So the question is, is this transient demand by the Chinese where they're building up stocks or they're trying to buy a little bit because they didn't have a great year or is ASF rebound from African swine fever really coming on strong and they taking the beans and they want the corn. Is this, are we turning a corner on their demand or is this transient demand? And I don't think we know,

Paul Yeager:

Well, I asked Chris all the questions about the futures, but I'm asking you about in academic purposes, you're usually looking at data, looking at things in the past, what in the past would lead you or help you decide about what's going on in the future with those underlying currents? You're just mentioning.

Seth Meyer:

Yeah, so, I mean we we've seen the Chinese purchase, let's call them corn equivalents instead of corn, you know, back in 2015, they bought a lot of barley, a lot of DDGs, a little bit of, a lot of sorghum, other things. And, you know, they took in a four and a half million metric tons in one month. They took in a chunk at the same time prices in China were very high, but they were stocking. They were stocking grain at the same time prices were really high. So, so, you know, trying to is just not very transparent. So it is difficult to say, is it different? Are they buying this corn because they need it. And it feels a little bit different. It feels a little bit different, but we have all, oftentimes in the past said, okay, now we've turned the corner and China's going to become a net importer for corn. I hate to make that kind of mistake again, but it feels different this time.

Paul Yeager:

And it feels different. I mean, I, Chris is shaking his head. He's itching to answer that question and I'll ask him in a minute, but I'm gonna stick with you for a moment here. Seth China figuring China into this factor is hard to determine. We always get the question of, well, who are these unknown purchasers? We usually pretty sure it's China. Do we know if they're going to be continuing to be purchasers? Will they be upfront that they are the ones? I mean, phase one still goes into 2021. It doesn't go away.

Seth Meyer:

Yeah. So, so I guess I'd separate out phase one impacts from what we're observing. I mean, my general thought is the Chinese by what the Chinese need. Phase one, if you look at the agreement was filled with all kinds of statements of at the market, which means they'll buy it if they need it. There are some provisions in there that facilitate trade, right? We're going to have some reciprocity in how we do paperwork and those are good things. Don't get me wrong. Those are good things. But the, I think the Chinese tend to buy what they need. And, and so again, I don't know that phase phase one is helpful, but the real question is, do the Chinese need this? Do they need this product? Do they want this corn? I think when I was at USDA running the world board and, and, and we were putting out the WASDE, the question is how big is their actual production there? How big are their stocks? You know, we put out one month, we changed it by hundreds of millions of bushels, their stocks and the market didn't do anything because the market doesn't believe it. They don't know it. And so the, you know, nobody knows what that stock number is. So it feels different this time. Like maybe we have turned the corner and the Chinese will be into the market more often for corn.

Paul Yeager:

Is China the only story that's going to impact farmers and producers in the United States in the next year?

Seth Meyer:

No, no. So, so, well, China, I think is a big deal on the demand side. We've also seen some problems with crops in other places in the world. For instance, we're going to have a good year in terms of corn exports, because the Ukrainians have had a bad crop, right? They had a bad crop. And basically when you look at what the USDA said, they took down the Ukrainian crop and almost by the exact same amount, increased our exports by that decline in Ukrainian production. So the Ukrainians had a smaller crop us steps in and meets those exports. I think the other thing that'll be a big impact for farmers in the Midwest will be, how does that Brazilian crop look in terms of beans? And then how does that second crop corn look like that's going to go in after those beans? So it's been very dry and hotter than normal in several places in Mato Grosso.

Seth Meyer:

And on top of that, those beans went in late. When those beans go in late, that means that second crop corn goes in late also, which puts it more at risk at the end of the season, when the rainy season shuts off, there's usually a very pronounced end of the rainy season. And if you get those corn that corn in late, it puts it more at risk. So I think the market has really turned and is focusing South, given that Chinese demand, given that robust Chinese demand, the market is looking forward. And we'll be watching that crop to see if how it looks down there.

Paul Yeager:

Oh, that was going to be a question of comparing China to Brazil or South America, which you kind of took it, your colleagues at your colleagues, your counterparts at Purdue, they put out a sentiment, farmer sentiment really high. It's been the last few months. You've been looking more at farm income. The two sometimes- Okay, all the time are tied together. If I'm making money, I'm feeling a lot better or have the opportunity for making money in the future. If I'm a producer in Nebraska, South Dakota, Nebraska North Dakota, Iowa, how am I feeling in March of 2021? I mean, how does this play out in three months? Cause we still have to deal with COVID too.

Seth Meyer:

Yeah. So let's look at, you know, one of the things I want to even step back and talk about where we were at in, in August where, you know, farm income looked okay. But a big chunk of it was coming from government payments, kind of making that farm income look good. I think that's where you see a divergence in farm income and sentiment. It's the dollar spends the same, but I don't want to think a producer feels as comfortable when they're getting big chunk of their net income from the government. I just think they don't feel quite so comfortable when they're relying on that. So now we jump forward several months, prices begin to rise and that cash receipts is looking a lot better. So they're seeing more income come from the sales on the farm. And, and I think that when it comes to March you know, as I think the, market's got an idea that maybe that Brazilian crop doesn't look so great. I think when it comes to March, this run-up in prices has been pretty good. And it'll depend on if the China, if, if these high prices choke off further sales, maybe we'll see, see where prices go from here, but it certainly looks much different even with those government payments than it did several months ago.

Paul Yeager:

All right, Chris Robinson, you've been listening to Seth talk. I mean, as a guy who, you know, you've got your background in the pits you mean you get your pulse on things when you hear an academic say, I think some of the same things I've read I've read that you have written, what do you think of what Seth saying in his assessment of the economy?

Chris Robinson:

I think he's spot on with his analysis at the end of the day is we don't know what's going to happen. Really. The key is the next 60 days in South America with the weather. I mean, and also what the final numbers are. You know, we started out this year, we had a 3 billion bushel carry out in corn, 3 billion bushels. Now it's down to 2.2. Some people think it's less than 2.2. Soybeans. We started out at a billion bushels. Um you know, now we're possibly under 200 million. We don't know. So that's the key if we're at pipeline and there's any hitches at all in South America, the market, well, it's already started doing it. We rallied a buck 50 in the last month after, you know, a lot of guys were praying for $10 beans. Now they're all regretting the fact they sold it because we got the $12 print and that's how our market couldn't correct. And it's been so long since we've had a demand driven market. And, you know, you say as a pit trader or trader everybody's really, there's, there's tons of information now. And that's the one thing that's changed in the past 10 years. Now, it's at your fingertips or on your phone. So there's a lot of information. So a lot of this stuff gets processed very, very quickly.

Chris Robinson:

And so I think all in all, I, I wouldn't disagree with anything. Seth said. The key is what are the real numbers, not only in China with their carry out in corn, but what are we looking at? What that will typically we be known until that January USDA report, that's going to be a big one this year.

Paul Yeager:

All right, Seth you were nodding feverishly there when Chris said a couple of things about the carry out numbers and things like that. Why is that so important to someone maybe not on the farm, but still in the rural area?

Seth Meyer:

So, so I, I, he made mentioned something that I think I didn't emphasize enough, which is we went from what I would describe as, you know, a plentiful situation. We've got plenty on hand and turn them terms of corn and soybeans to something that looks awful tight currently. And again, so we've had a, a combination of things which is we've seen our own crop and some other folks crops shrink. And at the same time China's come roaring in with demand. So when you look out there, you know, folks, folks, not in ag necessarily, we just have smaller stocks and smaller supplies than we thought we had. So we're going to have to start rationing that and that's, what's pushing up prices. And at the same time, the Chinese keep seem to be coming in quite strong. And world demand seems to be holding up, not bad.

Paul Yeager:

Sounds like a winning combination. Is there a downside to any of this right now?

Seth Meyer:

Well, and I'd love to hear what he thinks, but again, I'll go back to, it feels different this time when it comes to Chinese demand, but is this, is this the situation where they're coming in and they're building up stocks a little bit because of general uncertainty around the globe in terms of COVID and supplies and, and, and, and general economic conditions, or is this really a turn, and they're going to focus a little bit on corn and we'll continue to see them exceed their own tariff limits for the next several years. And I, it feels different, but I don't know the answer to that for sure.

Paul Yeager:

All right. Seth Meyer, hold there. We'll we're going to go deep into the weeds a little bit on further commodities, but Seth Meyer, it's at, the University of Missouri. Thank you so much for the time. I appreciate it. All right. And again, this program is being produced on Tuesday ahead of two trading days. So we're going to give you the closes for two days, March wheat gained 18 cents on the week while the nearby corn contract added 4 cents. South American weather remained dry earlier in the week, fueling a rally that at one point touched $12. The January soybean contract increased 10 cents, January soybean meal, expanded $2.20 per ton. March cotton gained 2 cents per hundred weight. Over in the dairy parlor December class three milk futures declined 50 cents A green two days in the livestock sector, February cattle improved $3.30, January feeders jumped $4 and the February lean hog contract grew by $1.40. In the currency markets U.S. Dollar index shed 18 ticks, January crude oil improved $2.42 per barrel, COMEX gold decreased $70.40 per ounce. And the Goldman Sachs commodity index increased more than 13 points to finish at $395.85. Now let's bring back in Chris Robinson. We'll talk about the markets. Let's start with wheat, Chris. This is one that seems to be kind of marching in place for a while. Why?

Chris Robinson:

Well, it's interesting. They kind of let us up early. We had a nice rally in wheat and a lot of people were trying to figure out what was going on. It's it looks like it's more than something than, than dryness and Russia. That's been the story out. And about every six weeks, the Russians will say, well, we're possibly going to stop our exports that usually bids the market up. It just looked like there was a story there people were trying to get, get in front of. And we've been talking about the drought meter here in North America. And that's, I think the issue too, with, with South America, if there's any sort of a drought there. You know, the world's plant has a plentiful supply of wheat, but it doesn't take much to get the markets. You know, the, to reprice, especially if what we've had in corn, we got a dollar rally in corn. So these things are all kind of intertwined. I think that moving forward, the, probably the driver and Seth, I don't know if you'd agree with me or not, but the drivers probably going to be, are we going to continue to have any sort of weather issues either in Europe or possibly in Australia you know, that could get that the wheat market going, but all in all, here's the beautiful thing.

Chris Robinson:

We've had a $1.50 rally. If you look at the long-term charts, Chicago, winter wheat, we were at six year highs. So if I'm a wheat producer and I started out last year, you know, we were worried about ten-year lows, multi-year lows. So to, to have this rally up, it's really a blessing. And the question is, is it going to last? And if you can tell me what the weather is going to be in the next six months, then we'll know, but it's it's good to have these prices. And historically, you know, the, the wheat market has been flat-lining for awhile. So it's good to have these levels. It's giving producers a great opportunity to, you know, even three, four months ago, there wasn't much worth protecting, but when you've got Chicago wheat above six bucks KC wheat holding about $5.50 those are prices worth protecting. So it's a good opportunity. I think if you look at the charts, the Chicago wheat is about a six year highs. A KC is about a two year high. So that's, that's something to be taken advantage of

Paul Yeager:

In the corn market. There is a global story. It doesn't seem to be as big of a global story as it is in wheat, but it is a weather story as well. China, a couple of weeks ago was sniffing around buying some corn, which is rare. They're not usually big buyers of U.S. Corn, as you look long-term in this corn market. What are the factors other than we've talked about the carry out, being a major one?

Chris Robinson:

Well, I think, two things, I would say, first of all, what happens with crude oil? Part of the reason we had the collapse in our corn prices was the sudden shutdown you saw crude oil drop sharply that really shut down the demand for ethanol. Ethanol takes 40% of a 15 billion bushel crop. So that was a big hurt. And that's starting to recover now as prices as of today, as of Tuesday, I think we poked above $45 a barrel, which is about an eight month high. So that's a good recovery. So that's number one, as far as are we going to get that type of demand from ethanol again. Number two is I think what is really going to be the demand from China, moving on if they need to build back their stocks and Seth was right, nobody knows people used to think they had a five-year stock pile of corn.

Chris Robinson:

You know, they've got their corn prices in on the Dallian exchange. Well, above 10 bucks, I think $10.70. So if you're in China you're feeling that pain, especially if you need corn to feed your animals over there. So that's the key. And at the end of the day, they've got a 1.4 billion people. They have somewhere close to 400,000 hogs. If, if they really need corn to you know, continue to supply their feed needs. And if there's any issues at all in South America, you know, we could have a game changer. So that's something I would continue to watch those, those, those two things, what happens with crude oil and what happens with Chinese demand for corn,

Paul Yeager:

All right, watch those two for corn. In soybeans, there's a concern that it goes up real fast, but we're going to go down either the elevator shaft, right? There was some indications Monday, Tuesday that, Oh, are we, are we looking down and starting to yell? What are the signs that something might be amiss in soybeans?

Chris Robinson:

Well, you know, we, haven't had a very volatile market like this in years, really going back to 2012. So it's another thing. The last five years, a lot of people have gotten lulled to sleep because you think, okay, beans are going to move a dollar, maybe a $1.50. Now we've rallied over $3 from our low. The contract gained over 40%. You know, this is just a move that we haven't had a long time. So the question is now, are we going to see beans in the teens? You know, that skit, there's, there's a whole another dollar to go before we get to $13. And I think that you've got to get used to seeing 20, 30 cent moves. You can go to bed at night and Malaysian palm oil is lower. The Asian markets are going to sell beans and you can, and it happened the last couple of days where we've had these 20 cent moves and people are like, that's it, that's the top.

Chris Robinson:

And lo and behold, we come in at the end of the day and, you know, we're, we're unchanged a little bit higher, so that's a sign of a bull market where it makes it hard for you to get in and it makes it you panic when you have these 20, 30 cent moves. So that's the number one thing I would say is brushed off your, your history books. We haven't had dollar moves like this and soybeans in awhile. And if we continue to have the uncertainty of, of the weather in South America, every time the weather forecast changes in Brazil, you could see 20, 30 cent moves. So I would say get used to that. And again, we haven't seen that in a while, so it's going to take people a while to, to wrap their head around the fact that we could have 20, 30, 40 cent moves on a weekly basis and soybeans until we figure out what's going on with the supply and demand and also weather.

Paul Yeager:

All right. Seth real quickly, I'm going to get you to take on an economic standpoint, Seth, if we would get beans in the teens, what's that mean for those on the farm, those off of the farm in rural America?

Seth Meyer:

Well, I mean, I think from a, from an act from on the farm, I, I, you know, I think that that's just, we'd be looking at a year that's going to, would look really excellent for farm income. You know, I don't think folks think about it that way because you know, the last couple of years have been made up with government payments kind of being the topping off, but we've had a rise in farm income every year since 2016. And this would, if we have beans in the teens, we're going to see farm income that's pretty near the top that we've seen in a long time. We'd have very strong farm income again, with a bunch of that coming from cash receipts. I don't think it, I don't think that, you know, we've seen in the past that those prices don't scare off the Chinese if they need it. And so, you know, I, I think to, to, to Chris's point, you know, you could see them continue to take it if they need it. Again, I'll go back to the Chinese are gonna take what the Chinese need.

Paul Yeager:

All right, fair enough. I need to get to the, a commodity market here, Seth. So we'll talk to you again and just a moment. I keep bringing them in, cause I can tell he's nodding along and, and wants to answer. So Chris we didn't really get into COVID too much in the economic discussion, but it's clearly a major factor when it comes to live cattle and feeders. Is that the biggest weight on this market is if a plant would have an issue and have to shut down, slow down further, or is there another weight around the neck of the market?

Chris Robinson:

Well, I think now based on where we're at with people looking ahead towards the recovery with the three vaccines possibly out there. Now, the question is how long is this going to take to switch the lights back on, you know? And that's going to be the big, big question. And are we going to have, you know, over the next two, three, four months as we go through the winter, are we going to have a spike where there will be a need to have another forced shutdown? I think that was the unique thing that really hammered the protein complex, this, you know, but when we started this thing, when we bought it out in March and April, I mean, 18 year lows in the lean hog prices, just to, you know, just a real shot that a lot of people never anticipated happening. And that had to do with the shutdown of the economy, the shutdown of the supply chain, you know, the, the stories we all went through and lived in once I'm not going to go through them again, but it was really something we hadn't seen in our lifetime.

Chris Robinson:

And I think moving forward, if that was to happen again. Yeah. But I think that it's feels to me anyhow, like they've made adjustments to the supply chain. You've seen a little bit of our correction, the last two cattle on feed reports we've, we had a negative cattle on feed this, then this last time we had a kind of a positive one, so the market's kind of adjusted to that uncertainty. And you know, the upside is if we can get the economy back going again, if next summer we're back to business as usual, I think there's a lot of people out there that have a lot of pent up demand for beef and, and protein.

Paul Yeager:

Alright, let's get into feeders quick. Are you expanding your herd right now, or your lot? If I'm a food, if I'm, if I'm a feedlot right now, my trying to find animals for my lot.

Chris Robinson:

I think you're worried about what happens if we get $5 corn, that's the thing. So if you're, you're going to plan for more animals, you better have some hedges on against you know some disaster and producing, you know, sharply higher not only corn, but also meal. And you're already starting to see a little bit of that. I think a producer if you're in a cow calf operators operation, or if you're dependent on, upon feed prices, you, it behooves you to take some protection against sharply higher prices. And again, that could be the best protection you buy, because if you buy it and you don't need it, you're going to be fine because your costs are going to stay relatively where they are right now. But boy, if I think that if we went from $4 corn to $5 corn or $5.50 corn, that's going to hurt a lot of producers. So nobody knows if we're going to get there, it's a possibility. And I think that if you're planning on growing your herd, because we know we may get that demand, it may be a situation where the, we get the demand and it's there, but you're still going to have to factor in those higher feed prices.

Paul Yeager:

I got to interrupt you and you get 10 seconds to say hogs. I'm sorry. I always do it to the hog industry. But I mean, are there big problems there?

Chris Robinson:

I wouldn't say they're big problems that markets come back. Uh surprisingly, well, not to the same extent that the cattle did as well. Again, I think if you're a hog producer its meal, you've got to worry about your meal prices there, right?

Paul Yeager:

That, that is Chris Robinson. I appreciate your time. And Seth Meyer, gentlemen, thank you so very much for that discussion. And that will do it for this installment of Market to Market. We will talk more in Market Plus. So join us. You can find it on our website of markettomarket.org. As you find yourself with more time out of the field, we have a small request. We'd like some space in your podcast feed. We have three offerings, the market analysis, which you just heard Market Plus the program you won't see on TV and the MTOM- that's discussions with the voices of agriculture. Chris Robinson was a guest on that. Subscribe today too all three, wherever you download podcasts. Next week, we'll look at trying to cut the red tape and the new battle against an old disease. Thank you so very much for watching have a great week

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Coming up on Market to Market....the crop is mostly in the bin. And now the focus turns to marketing. We look at the economic climate in rural America, a lot of special discussion, which includes market analysis with Chris Robinson. Next.

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This is the Friday, November 27 edition of Market to Market, the weekly journal of rural America.

Speaker 2:

Hello, I'm Paul Yeager. The COVID-19 virus has altered many holiday plans in 2020, including the taping of this program. We are producing it on Tuesday. So we thought we take a broader look at the economic waters impacting rural America. Seth Meyer is associate director at the food and agricultural policy research Institute, which is based at the University of Missouri. And Chris Robinson is founder of Robinson Ag Marketing, a division of TJM institutional Investor Services. Gentlemen, thank you very much for joining us. We will talk to you both at different times, but Seth, I want to start with you and really the big question that let's face it. We don't have all these family discussions, although we know plenty of people are going to get together and they're going to talk politics, but in rural areas, they're going to talk about the economy. They're going to say, are you making money? Are you doing better than you were a year ago? So if I'm a farmer sitting to the table in Jefferson City this year, am I saying I'm better off than I was last year?

Seth Meyer:

Boy, I and I think the answer to that question is varied a lot over the last couple of months, a couple months ago, I just said, well, you know, farm incomes looking a little rough, but government payments offsetting at least a chunk of the cash receipt decline, but now we've seen, we've basically seen prices increasing since mid-August. So this year's looking pretty good. It, a combination of government payments and decent cash receipts. It's looking pretty good. The question is, is how does it look when those cash receipts maybe stabilize and those government payments go away next year?

Paul Yeager:

And government payments was, I mean, let's face it. This campaign didn't really cover a lot about rural America. We knew what the President had done in those payments and structuring things with trade deals. So I guess as we go forward, is trade going to be as big of a deal in 2021?

Seth Meyer:

Oh, I, I think so. Or, or we're at least another source of uncertainty when we look, you know, one of the key differences between we were at where we're at now and where we are at in August, when, you know, when things weren't looking as great from a receipt standpoint is China has really come in strong into the market. So the question is, is this transient demand by the Chinese where they're building up stocks or they're trying to buy a little bit because they didn't have a great year or is ASF rebound from African swine fever really coming on strong and they taking the beans and they want the corn. Is this, are we turning a corner on their demand or is this transient demand? And I don't think we know,

Paul Yeager:

Well, I asked Chris all the questions about the futures, but I'm asking you about in academic purposes, you're usually looking at data, looking at things in the past, what in the past would lead you or help you decide about what's going on in the future with those underlying currents? You're just mentioning.

Seth Meyer:

Yeah, so, I mean we we've seen the Chinese purchase, let's call them corn equivalents instead of corn, you know, back in 2015, they bought a lot of barley, a lot of DDGs, a little bit of, a lot of sorghum, other things. And, you know, they took in a four and a half million metric tons in one month. They took in a chunk at the same time prices in China were very high, but they were stocking. They were stocking grain at the same time prices were really high. So, so, you know, trying to is just not very transparent. So it is difficult to say, is it different? Are they buying this corn because they need it. And it feels a little bit different. It feels a little bit different, but we have all, oftentimes in the past said, okay, now we've turned the corner and China's going to become a net importer for corn. I hate to make that kind of mistake again, but it feels different this time.

Paul Yeager:

And it feels different. I mean, I, Chris is shaking his head. He's itching to answer that question and I'll ask him in a minute, but I'm gonna stick with you for a moment here. Seth China figuring China into this factor is hard to determine. We always get the question of, well, who are these unknown purchasers? We usually pretty sure it's China. Do we know if they're going to be continuing to be purchasers? Will they be upfront that they are the ones? I mean, phase one still goes into 2021. It doesn't go away.

Seth Meyer:

Yeah. So, so I guess I'd separate out phase one impacts from what we're observing. I mean, my general thought is the Chinese by what the Chinese need. Phase one, if you look at the agreement was filled with all kinds of statements of at the market, which means they'll buy it if they need it. There are some provisions in there that facilitate trade, right? We're going to have some reciprocity in how we do paperwork and those are good things. Don't get me wrong. Those are good things. But the, I think the Chinese tend to buy what they need. And, and so again, I don't know that phase phase one is helpful, but the real question is, do the Chinese need this? Do they need this product? Do they want this corn? I think when I was at USDA running the world board and, and, and we were putting out the WASDE, the question is how big is their actual production there? How big are their stocks? You know, we put out one month, we changed it by hundreds of millions of bushels, their stocks and the market didn't do anything because the market doesn't believe it. They don't know it. And so the, you know, nobody knows what that stock number is. So it feels different this time. Like maybe we have turned the corner and the Chinese will be into the market more often for corn.

Paul Yeager:

Is China the only story that's going to impact farmers and producers in the United States in the next year?

Seth Meyer:

No, no. So, so, well, China, I think is a big deal on the demand side. We've also seen some problems with crops in other places in the world. For instance, we're going to have a good year in terms of corn exports, because the Ukrainians have had a bad crop, right? They had a bad crop. And basically when you look at what the USDA said, they took down the Ukrainian crop and almost by the exact same amount, increased our exports by that decline in Ukrainian production. So the Ukrainians had a smaller crop us steps in and meets those exports. I think the other thing that'll be a big impact for farmers in the Midwest will be, how does that Brazilian crop look in terms of beans? And then how does that second crop corn look like that's going to go in after those beans? So it's been very dry and hotter than normal in several places in Mato Grosso.

Seth Meyer:

And on top of that, those beans went in late. When those beans go in late, that means that second crop corn goes in late also, which puts it more at risk at the end of the season, when the rainy season shuts off, there's usually a very pronounced end of the rainy season. And if you get those corn that corn in late, it puts it more at risk. So I think the market has really turned and is focusing South, given that Chinese demand, given that robust Chinese demand, the market is looking forward. And we'll be watching that crop to see if how it looks down there.

Paul Yeager:

Oh, that was going to be a question of comparing China to Brazil or South America, which you kind of took it, your colleagues at your colleagues, your counterparts at Purdue, they put out a sentiment, farmer sentiment really high. It's been the last few months. You've been looking more at farm income. The two sometimes- Okay, all the time are tied together. If I'm making money, I'm feeling a lot better or have the opportunity for making money in the future. If I'm a producer in Nebraska, South Dakota, Nebraska North Dakota, Iowa, how am I feeling in March of 2021? I mean, how does this play out in three months? Cause we still have to deal with COVID too.

Seth Meyer:

Yeah. So let's look at, you know, one of the things I want to even step back and talk about where we were at in, in August where, you know, farm income looked okay. But a big chunk of it was coming from government payments, kind of making that farm income look good. I think that's where you see a divergence in farm income and sentiment. It's the dollar spends the same, but I don't want to think a producer feels as comfortable when they're getting big chunk of their net income from the government. I just think they don't feel quite so comfortable when they're relying on that. So now we jump forward several months, prices begin to rise and that cash receipts is looking a lot better. So they're seeing more income come from the sales on the farm. And, and I think that when it comes to March you know, as I think the, market's got an idea that maybe that Brazilian crop doesn't look so great. I think when it comes to March, this run-up in prices has been pretty good. And it'll depend on if the China, if, if these high prices choke off further sales, maybe we'll see, see where prices go from here, but it certainly looks much different even with those government payments than it did several months ago.

Paul Yeager:

All right, Chris Robinson, you've been listening to Seth talk. I mean, as a guy who, you know, you've got your background in the pits you mean you get your pulse on things when you hear an academic say, I think some of the same things I've read I've read that you have written, what do you think of what Seth saying in his assessment of the economy?

Chris Robinson:

I think he's spot on with his analysis at the end of the day is we don't know what's going to happen. Really. The key is the next 60 days in South America with the weather. I mean, and also what the final numbers are. You know, we started out this year, we had a 3 billion bushel carry out in corn, 3 billion bushels. Now it's down to 2.2. Some people think it's less than 2.2. Soybeans. We started out at a billion bushels. Um you know, now we're possibly under 200 million. We don't know. So that's the key if we're at pipeline and there's any hitches at all in South America, the market, well, it's already started doing it. We rallied a buck 50 in the last month after, you know, a lot of guys were praying for $10 beans. Now they're all regretting the fact they sold it because we got the $12 print and that's how our market couldn't correct. And it's been so long since we've had a demand driven market. And, you know, you say as a pit trader or trader everybody's really, there's, there's tons of information now. And that's the one thing that's changed in the past 10 years. Now, it's at your fingertips or on your phone. So there's a lot of information. So a lot of this stuff gets processed very, very quickly.

Chris Robinson:

And so I think all in all, I, I wouldn't disagree with anything. Seth said. The key is what are the real numbers, not only in China with their carry out in corn, but what are we looking at? What that will typically we be known until that January USDA report, that's going to be a big one this year.

Paul Yeager:

All right, Seth you were nodding feverishly there when Chris said a couple of things about the carry out numbers and things like that. Why is that so important to someone maybe not on the farm, but still in the rural area?

Seth Meyer:

So, so I, I, he made mentioned something that I think I didn't emphasize enough, which is we went from what I would describe as, you know, a plentiful situation. We've got plenty on hand and turn them terms of corn and soybeans to something that looks awful tight currently. And again, so we've had a, a combination of things which is we've seen our own crop and some other folks crops shrink. And at the same time China's come roaring in with demand. So when you look out there, you know, folks, folks, not in ag necessarily, we just have smaller stocks and smaller supplies than we thought we had. So we're going to have to start rationing that and that's, what's pushing up prices. And at the same time, the Chinese keep seem to be coming in quite strong. And world demand seems to be holding up, not bad.

Paul Yeager:

Sounds like a winning combination. Is there a downside to any of this right now?

Seth Meyer:

Well, and I'd love to hear what he thinks, but again, I'll go back to, it feels different this time when it comes to Chinese demand, but is this, is this the situation where they're coming in and they're building up stocks a little bit because of general uncertainty around the globe in terms of COVID and supplies and, and, and, and general economic conditions, or is this really a turn, and they're going to focus a little bit on corn and we'll continue to see them exceed their own tariff limits for the next several years. And I, it feels different, but I don't know the answer to that for sure.

Paul Yeager:

All right. Seth Meyer, hold there. We'll we're going to go deep into the weeds a little bit on further commodities, but Seth Meyer, it's at, the University of Missouri. Thank you so much for the time. I appreciate it. All right. And again, this program is being produced on Tuesday ahead of two trading days. So we're going to give you the closes for two days, March wheat gained 18 cents on the week while the nearby corn contract added 4 cents. South American weather remained dry earlier in the week, fueling a rally that at one point touched $12. The January soybean contract increased 10 cents, January soybean meal, expanded $2.20 per ton. March cotton gained 2 cents per hundred weight. Over in the dairy parlor December class three milk futures declined 50 cents A green two days in the livestock sector, February cattle improved $3.30, January feeders jumped $4 and the February lean hog contract grew by $1.40. In the currency markets U.S. Dollar index shed 18 ticks, January crude oil improved $2.42 per barrel, COMEX gold decreased $70.40 per ounce. And the Goldman Sachs commodity index increased more than 13 points to finish at $395.85. Now let's bring back in Chris Robinson. We'll talk about the markets. Let's start with wheat, Chris. This is one that seems to be kind of marching in place for a while. Why?

Chris Robinson:

Well, it's interesting. They kind of let us up early. We had a nice rally in wheat and a lot of people were trying to figure out what was going on. It's it looks like it's more than something than, than dryness and Russia. That's been the story out. And about every six weeks, the Russians will say, well, we're possibly going to stop our exports that usually bids the market up. It just looked like there was a story there people were trying to get, get in front of. And we've been talking about the drought meter here in North America. And that's, I think the issue too, with, with South America, if there's any sort of a drought there. You know, the world's plant has a plentiful supply of wheat, but it doesn't take much to get the markets. You know, the, to reprice, especially if what we've had in corn, we got a dollar rally in corn. So these things are all kind of intertwined. I think that moving forward, the, probably the driver and Seth, I don't know if you'd agree with me or not, but the drivers probably going to be, are we going to continue to have any sort of weather issues either in Europe or possibly in Australia you know, that could get that the wheat market going, but all in all, here's the beautiful thing.

Chris Robinson:

We've had a $1.50 rally. If you look at the long-term charts, Chicago, winter wheat, we were at six year highs. So if I'm a wheat producer and I started out last year, you know, we were worried about ten-year lows, multi-year lows. So to, to have this rally up, it's really a blessing. And the question is, is it going to last? And if you can tell me what the weather is going to be in the next six months, then we'll know, but it's it's good to have these prices. And historically, you know, the, the wheat market has been flat-lining for awhile. So it's good to have these levels. It's giving producers a great opportunity to, you know, even three, four months ago, there wasn't much worth protecting, but when you've got Chicago wheat above six bucks KC wheat holding about $5.50 those are prices worth protecting. So it's a good opportunity. I think if you look at the charts, the Chicago wheat is about a six year highs. A KC is about a two year high. So that's, that's something to be taken advantage of

Paul Yeager:

In the corn market. There is a global story. It doesn't seem to be as big of a global story as it is in wheat, but it is a weather story as well. China, a couple of weeks ago was sniffing around buying some corn, which is rare. They're not usually big buyers of U.S. Corn, as you look long-term in this corn market. What are the factors other than we've talked about the carry out, being a major one?

Chris Robinson:

Well, I think, two things, I would say, first of all, what happens with crude oil? Part of the reason we had the collapse in our corn prices was the sudden shutdown you saw crude oil drop sharply that really shut down the demand for ethanol. Ethanol takes 40% of a 15 billion bushel crop. So that was a big hurt. And that's starting to recover now as prices as of today, as of Tuesday, I think we poked above $45 a barrel, which is about an eight month high. So that's a good recovery. So that's number one, as far as are we going to get that type of demand from ethanol again. Number two is I think what is really going to be the demand from China, moving on if they need to build back their stocks and Seth was right, nobody knows people used to think they had a five-year stock pile of corn.

Chris Robinson:

You know, they've got their corn prices in on the Dallian exchange. Well, above 10 bucks, I think $10.70. So if you're in China you're feeling that pain, especially if you need corn to feed your animals over there. So that's the key. And at the end of the day, they've got a 1.4 billion people. They have somewhere close to 400,000 hogs. If, if they really need corn to you know, continue to supply their feed needs. And if there's any issues at all in South America, you know, we could have a game changer. So that's something I would continue to watch those, those, those two things, what happens with crude oil and what happens with Chinese demand for corn,

Paul Yeager:

All right, watch those two for corn. In soybeans, there's a concern that it goes up real fast, but we're going to go down either the elevator shaft, right? There was some indications Monday, Tuesday that, Oh, are we, are we looking down and starting to yell? What are the signs that something might be amiss in soybeans?

Chris Robinson:

Well, you know, we, haven't had a very volatile market like this in years, really going back to 2012. So it's another thing. The last five years, a lot of people have gotten lulled to sleep because you think, okay, beans are going to move a dollar, maybe a $1.50. Now we've rallied over $3 from our low. The contract gained over 40%. You know, this is just a move that we haven't had a long time. So the question is now, are we going to see beans in the teens? You know, that skit, there's, there's a whole another dollar to go before we get to $13. And I think that you've got to get used to seeing 20, 30 cent moves. You can go to bed at night and Malaysian palm oil is lower. The Asian markets are going to sell beans and you can, and it happened the last couple of days where we've had these 20 cent moves and people are like, that's it, that's the top.

Chris Robinson:

And lo and behold, we come in at the end of the day and, you know, we're, we're unchanged a little bit higher, so that's a sign of a bull market where it makes it hard for you to get in and it makes it you panic when you have these 20, 30 cent moves. So that's the number one thing I would say is brushed off your, your history books. We haven't had dollar moves like this and soybeans in awhile. And if we continue to have the uncertainty of, of the weather in South America, every time the weather forecast changes in Brazil, you could see 20, 30 cent moves. So I would say get used to that. And again, we haven't seen that in a while, so it's going to take people a while to, to wrap their head around the fact that we could have 20, 30, 40 cent moves on a weekly basis and soybeans until we figure out what's going on with the supply and demand and also weather.

Paul Yeager:

All right. Seth real quickly, I'm going to get you to take on an economic standpoint, Seth, if we would get beans in the teens, what's that mean for those on the farm, those off of the farm in rural America?

Seth Meyer:

Well, I mean, I think from a, from an act from on the farm, I, I, you know, I think that that's just, we'd be looking at a year that's going to, would look really excellent for farm income. You know, I don't think folks think about it that way because you know, the last couple of years have been made up with government payments kind of being the topping off, but we've had a rise in farm income every year since 2016. And this would, if we have beans in the teens, we're going to see farm income that's pretty near the top that we've seen in a long time. We'd have very strong farm income again, with a bunch of that coming from cash receipts. I don't think it, I don't think that, you know, we've seen in the past that those prices don't scare off the Chinese if they need it. And so, you know, I, I think to, to, to Chris's point, you know, you could see them continue to take it if they need it. Again, I'll go back to the Chinese are gonna take what the Chinese need.

Paul Yeager:

All right, fair enough. I need to get to the, a commodity market here, Seth. So we'll talk to you again and just a moment. I keep bringing them in, cause I can tell he's nodding along and, and wants to answer. So Chris we didn't really get into COVID too much in the economic discussion, but it's clearly a major factor when it comes to live cattle and feeders. Is that the biggest weight on this market is if a plant would have an issue and have to shut down, slow down further, or is there another weight around the neck of the market?

Chris Robinson:

Well, I think now based on where we're at with people looking ahead towards the recovery with the three vaccines possibly out there. Now, the question is how long is this going to take to switch the lights back on, you know? And that's going to be the big, big question. And are we going to have, you know, over the next two, three, four months as we go through the winter, are we going to have a spike where there will be a need to have another forced shutdown? I think that was the unique thing that really hammered the protein complex, this, you know, but when we started this thing, when we bought it out in March and April, I mean, 18 year lows in the lean hog prices, just to, you know, just a real shot that a lot of people never anticipated happening. And that had to do with the shutdown of the economy, the shutdown of the supply chain, you know, the, the stories we all went through and lived in once I'm not going to go through them again, but it was really something we hadn't seen in our lifetime.

Chris Robinson:

And I think moving forward, if that was to happen again. Yeah. But I think that it's feels to me anyhow, like they've made adjustments to the supply chain. You've seen a little bit of our correction, the last two cattle on feed reports we've, we had a negative cattle on feed this, then this last time we had a kind of a positive one, so the market's kind of adjusted to that uncertainty. And you know, the upside is if we can get the economy back going again, if next summer we're back to business as usual, I think there's a lot of people out there that have a lot of pent up demand for beef and, and protein.

Paul Yeager:

Alright, let's get into feeders quick. Are you expanding your herd right now, or your lot? If I'm a food, if I'm, if I'm a feedlot right now, my trying to find animals for my lot.

Chris Robinson:

I think you're worried about what happens if we get $5 corn, that's the thing. So if you're, you're going to plan for more animals, you better have some hedges on against you know some disaster and producing, you know, sharply higher not only corn, but also meal. And you're already starting to see a little bit of that. I think a producer if you're in a cow calf operators operation, or if you're dependent on, upon feed prices, you, it behooves you to take some protection against sharply higher prices. And again, that could be the best protection you buy, because if you buy it and you don't need it, you're going to be fine because your costs are going to stay relatively where they are right now. But boy, if I think that if we went from $4 corn to $5 corn or $5.50 corn, that's going to hurt a lot of producers. So nobody knows if we're going to get there, it's a possibility. And I think that if you're planning on growing your herd, because we know we may get that demand, it may be a situation where the, we get the demand and it's there, but you're still going to have to factor in those higher feed prices.

Paul Yeager:

I got to interrupt you and you get 10 seconds to say hogs. I'm sorry. I always do it to the hog industry. But I mean, are there big problems there?

Chris Robinson:

I wouldn't say they're big problems that markets come back. Uh surprisingly, well, not to the same extent that the cattle did as well. Again, I think if you're a hog producer its meal, you've got to worry about your meal prices there, right?

Paul Yeager:

That, that is Chris Robinson. I appreciate your time. And Seth Meyer, gentlemen, thank you so very much for that discussion. And that will do it for this installment of Market to Market. We will talk more in Market Plus. So join us. You can find it on our website of markettomarket.org. As you find yourself with more time out of the field, we have a small request. We'd like some space in your podcast feed. We have three offerings, the market analysis, which you just heard Market Plus the program you won't see on TV and the MTOM- that's discussions with the voices of agriculture. Chris Robinson was a guest on that. Subscribe today too all three, wherever you download podcasts. Next week, we'll look at trying to cut the red tape and the new battle against an old disease. Thank you so very much for watching have a great week

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