Market Plus: Chris Robinson

Nov 27, 2020  | 14 min  | Ep4615 | Podcast

Podcast

Paul Yeager:

This is the Friday, November 27, 2020 version of the market plus segment joining us now, Chris Robinson and Seth Meyer. We have a, we had a different show today because we're recording on Tuesday in light of the holiday, the governor of Iowa has made Wednesday a holiday for state employees. We're produced at a state run television station, at least part of the state government. And Friday is a light trading day. Wednesday's a light trading days. So Chris, I'm letting you answer more questions that are broad in scope, but I also thought I'd bring an academic in talk about some things. We just had Chris on the MTM podcast, if you wanna learn more about him, but grew up in Pennsylvania and have worked on the board of trade on the floor. You've done all sorts of things.

Chris Robinson:

Yeah. I showed it to the board of trade in 1991. Came down for a visit and at lunchtime, I got a job offer and then went back home two days later, it was back and never left, never left.

Paul Yeager:

And, and Seth Meyer is in Missouri at the university of Missouri. But Seth, you haven't been there all the time. You've you've traveled a little bit, but an Iowa guy, which I found out, I didn't know that.

Seth Meyer:

Yup. And then went down to school at the university of Missouri for awhile, went and worked at the United nations food and ag organization in Italy for a while. And then I got a call from the chief economist who asked me to come back and work for him at USDA, spent a few years there. And then he asked me to run the world board. So the group that puts out the WASDE report and then came back home.

Paul Yeager:

To work in academic land,

Seth Meyer:

University of Missouri again.

Speaker 1:

Well, we have a USDA question just for you Seth. And a minute, I know you have to defend the organization even after you're gone, but we're actually going to ask you both of this one, this one, that acreage report, this one came from Sylvain and Quebec. And I'd like to thank Phil and Ontario for allowing some of his Canadian friends to tweet at us. So I appreciate that. Sylvain is asking with prices of corn and beans, the way they are heading. He says if it stays, whether it be more switched from other crops to corn and beans? Will more acres be planted in 2021, Chris.

Chris Robinson:

Well, that's that old, It looks old expression. The cure for high prices is high prices. So yeah, if come January, February, March, a guy can take a look and say, you know, I can make X amount of dollars planting beans or corn versus, you know, some other crop. Uh it might take a look at, you know, lots of times guys will make a decision. Are they going to plant, you know, down in the Delta? Are they going to plant cotton or they're going to plant beans, or they're going to plant sorghum instead of corn. If you've got $5 corn and you've got $13 beans, you know, farmers love to plant corn. So I would say that that they'll come forward. If it's there. It's like, if you build it, they will come.

Paul Yeager:

All right, Seth, do you think we're going to see a little more corn and soybean acres next year and maybe take away from something else?

Seth Meyer:

Yeah, I, I think it's important to also remember that, you know, this year we had a above normal prevent plant. It just, nobody talked about it because of the prior year prevent plant was so huge. So even if we kind of go back to normal planting weather, we'll gain a couple million acres in, in, in planted crops. Uit would not surprise me to see wheat potentially print a new record low, by the time you get spring wheat involved, new record, low area, that wouldn't surprise me. I wouldn't also it wouldn't surprise me to see somewhere in the neighborhood of north of 181 million acres of combined corn and soybean area. Maybe record large soybean area, given where prices are at today, unless we see some major change going into the fall. We could see again, record corn and soybean combined area. You know, we talked about wheat earlier and, and you know, we looking good. And I think the only thing that we producer might say is, I wish I was a corn and soybean producer, and we might get a little bit more area that way.

Paul Yeager:

Well, that's uh, the acreage report will come here after the first of the year and that'll be quite a, a day to see how that all shakes out, but let's move to a Matt in Maquoketa Iowa and Seth jumped because Maquoketa to Chris is not that far from where he's from, but how, and I even said, Maquoketa right, that's a whole other story. Maquoketa Matt is asking us via Facebook. How is the Chinese currency versus the us dollar driving demand? What's what's your take on that?

Chris Robinson:

Well, I think that's, you saw that battle going on, especially during the COVID spike where the dollar was at an 18 year high, you know, the dollars just come down to a two and a half are low. So not only are our, do we have, we have plenty of beans, but relative to the Chinese currency, it was on sale. So it made it way more attractive for the Chinese to come and buy our beans. So it was definitely help.

Paul Yeager:

I wanna move on to Roger in Hancock, Iowa, because I want both of these guys to answer this question. So Roger's asking earlier in the year, he said gold went up, the dollar dropped. If more stimulus comes and with demand up from China, with the new trade deal, South American weather problems, how close are we to an inflationary move and commodities that breaks through overhead resistance that has been on the charts since 2013. Seth, I'll let you take a crack at that one first.

Seth Meyer:

Well, let's see. That sounds like a little bit of a technical question in terms of trading. So I'll avoid that, but kind of tying it back to the earlier discussion about exchange rates. I think it maybe matters when you think about the strength of the dollar and inflationary move, how we look against the Brazilian currency as well. Right? I think that as you think about an inflationary move in, in commodities, you also got to remember these high prices. Are they cooling demand? Are they cooling, demand, some other places around the world, even if they don't cool demand for China. So yeah, I can see some upside demand if the Chinese continue to buy, but I can also see that they, if they have secured their needs, that may be things cool a little bit. And we don't see that surge.

Paul Yeager:

All right, Chris, do you want to handle the technical side or take a different take than that?

Chris Robinson:

No, I agree with Seth. But also if you just look at the percentage gains off the summertime, lows, multi-year lows, cotton's up 45%, soybeans up 45%. So it's already been factored in, I mean, these things move fast, managed money. They don't really particularly care if they see an opportunity they've come in. So you've got the, the investment community. Now they've all bought into this idea. Yeah, we're going to have inflation and why not? Well, for the past two, three years, they just, you know, have been printing money, 0% interest rates. They just did the first leg of the support payments due to COVID. Everybody agrees that after the first of the year, there's going to be a trillion, 2 trillion, more coming down the pike. I mean, it's, it's going to be there. It's just, now who's going to get credit. So the market's anticipating all that. And when you're, when you add a fuel to the fire like that, you know, we were always taught, it's going to give us inflation. So we'll see. I think that is the number one big picture trade guys are looking at moving forward. And if you have a weak dollar with inflation, it should be helpful for our commodity prices and it should be another tailwind for commodity prices. So are we going to get back up to where we were in 2012, 2013 to come back to that technical question? Ya know that was a drought year. But that certainly wasn't a drought year, like 88. If you want to see a real drought year 88 was the drought year, right. Go back and look at that chart. And then the problem with those years is the drought goes up and then again, it comes down so correctly, so correct so quickly. So I think that, is this going to be a two, three, four or five year deal? A lot of it depends on what happens. I think with the, if we continue to have a good recovery and they don't have, and they can dial back you know, the government support with you know, having to send everybody checks to keep everybody in business, you know, that's it. But at the end of the day, we were always taught. I think, Seth, you would agree with this, you know, when you increase the money supply, you're supposed to get inflation and we've had a lot of increase in money supply really since the, the 2010 crisis.

Paul Yeager:

Okay. I'd like you to switch gears now a little bit, Chris. Am I Ron and Waverley, I was asking how much fall 2021 corn and beans should we be selling this week or next?

Chris Robinson:

Well, I think that given the fact that we're at a close to two year highs in corn and close to six year highs and soybeans, if we get above $12.08 that's on the spot month, that's going to be a six year high. So I think that it behooves you to go out and at least maybe do five percent, ten percent--cover your inputs. Now, if you don't want to sell, because you're worried about $13, $14, $15 beans whatever your, your wildest dreams are, then you need to be hedging. And you hedge yourself one of two ways, either with futures or with puts and that's a whole nother story, but you definitely need to be doing something to take advantage of these prices because you know, this story could change. Look, we've just rocketed higher in three months. Three months from now, we could be who knows where, what you don't want to lose is this opportunity to, to you're looking at 2021 beans for $10.50, nobody should have a soybean sale for 2021 under $10.00. Same thing with corn. Corn's at $4.10, $4.12. You shouldn't have a corn sale under $3.90, $4.00. And that is just a hedging pro a problem. And so yeah, I would make I would recommend doing five to ten percent of your sales and hold off you know, we don't know where we're going to be, but certainly you don't want to be in a situation where you didn't take advantage of this rally.

Paul Yeager:

Okay. I Seth, I have a question here for you go back to your USDA days. Glenn in Bryan, Ohio asked us via Twitter. He said in light of all the changes in the recent data from USDA's Nass, is there a persuasive argument as to why USDA reports should still be considered credible or reliable versus the data provided from the private sector? Heard that one before?

Seth Meyer:

I heard that one, many times. And, and when you see these revisions, I think it's a natural question, right? But I think if you also went out and asked those private providers, if they want it Nast to stop doing it, they'd say no, they make their living off the incremental difference between what they say and what NASS says. I'd also add that NASA doesn't have a, doesn't have any skin in the game in terms of what they report. And I always, I can't always tell if the commercial providers do. I know there's a lots of questions about those revisions. We've seen some brief big revisions in terms of imply from the stocks report, which gives you implied use, which may suggest something about the size of the crop. I've seen those revisions, but I will still also tell you that the system in which we produce is the, is, is the envy of the world. Uh it is hard to describe the concrete benefits to U.S. Agriculture as a whole, but let me tell you that it provides every month it provides, it puts everybody back on an even footing with respect to how the market looks. In the absence of these reports, I would argue a few people would know a lot and a lot of people would know very little. And so this provides a important step that even these commercials would say, okay, we're on an even footing. Now we calibrate to this and now we're going to move forward. And here's where I put my knowledge advantage to work.

Paul Yeager:

Chris, did you want to say to that, come on really? Did you want to answer it that way?

Chris Robinson:

It depends. I mean, I make my living working with farmers and producers. So they look at the USDA. The USDA can really only do one thing and that's hurt them every time. One of these reports, because a farmer producer, you're always a net long speculator. It's it's, you, you are speculating with one hand tied behind your back because the only thing that can hurt you is lower prices. And then also you always have the, the regret after the sale. If you think you, if you sold it and you watch it rally. So the USDA takes the brunt of that abuse. You know, at the end of the day, they're the final arbiter. Now I will tell you this. There were a couple of reports last this year that if I had had the reports out early, they were extremely bearish. You would have gone broke. So it would've been like if you had had the information earlier, you thought you knew that knew all the facts, especially as some of the whip saws we saw in soybeans. And that was the first clue that we were having a turn in soybeans because the market got bad news and it shook it off and rallied. Anyhow, we had a couple of reports like that. I don't want to get too deep into the woods, but that was kind of a first thing that was a sign. So I enjoy the USDA reports. I think that they're important because they give everybody a baseline. At the end of the day, it all comes down to supply and demand, and we're going to find out you know, at the end of the year where we're at anyhow, but it certainly is an important checkpoint every month, the 10th of the month, ninth of the month, the 10th of the month. It's, it's something I think to look forward to.

Speaker 4:

That's Chris Robinson. I appreciate your return back to the show, Chris and Seth Meyer from the university of Missouri. Gentlemen. Thank you so much. Enjoy your Thanksgivings. I know there'll be different this year in, in the insight today was wonderful. Thank you, Seth. Thank you, Chris. Thanks. That will do it for market plus next week, we'll look at the new battle against an old disease and John Roach will join us to analyze trends in the commodity markets. I'm Paul Yeager. Thank you so very much for watching, listening, or reading have yourselves a great week.

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