Market Plus with Naomi Blohm

Paul Yeager: Welcome to the table for the Friday, May 30th, 2025 Market Plus. Naomi Blohm is still with us. I promised a lot of things. Let's start first though, this tailgate story, because last week I asked Sue about kind of indicating we're going to have these grill outs. We're going to talk about beef prices. It sounds like you had already hit where you were at in Wisconsin where they were. Let's not do hamburgers. Let's do pork, because tell me a little bit more about that.

Naomi Blohm: Well, it was very interesting. So at this tailgate there was the biggest variety of meat that I have ever seen at a tailgate because usually it's just brats and hamburgers. So my husband packed brats and hamburgers for us. Another family brought euros. And then there was this other mom who had pork chops, and she brought thin chops. She brought the thick pork chops, and those went first. So it was just a really interesting thing. And then there were people who had, like, chicken kabobs. So I just thought it was so interesting because just that traditional thing is gone. And it wasn't like anyone was trying to, you know, just show off their culinary talents by any means. I think it was just the reality of what is out there.

Paul Yeager: So once you hear this story, do you start asking around to others of, are you seeing a pullback? I mean, that's always the thought in this beef market is the consumer is going to be the one doing the talking?

Naomi Blohm: The consumer has. So first quarter dining out dollars is down 3% on the year. So we are seeing though of course still the increase in price or the increase in demand for ground beef at the store. So the consumer is not going out to eat as much. They are still, though, eating beef. It's the ground beef, which we know because, you know, there's not any replacement for it really. So we are starting to see the sentiment shift. but it'll be interesting to see after 4th of July what things are going to be like.

Paul Yeager: We'll find out soon enough. the topping signals, as the chart shows, there. so given technical and some headlines, it's the end there. 

Naomi Blohm: Well.

Paul Yeager: I know, I know.

Naomi Blohm: I know several people said for six months, and I have, too, thought for months that the end was going to be near. But now we have this really big bearish key reversal and we have the conversation that the herd is expanding. We are still importing a large amount of beef and so I think that is why traders are a little cautious right now. And that's why you did not see the market have a big push higher at the end of the week. And we also saw how jittery the market was on that false rumor ready to sell off on the piece of news. I was going to actually make the market go. So we'll see what transpires over the next couple of weeks. We're still going to be dealing with tight supply as cattle in the country, but it might be finally at the point where the market is running out of steam here a little bit.

Paul Yeager: Well, let's talk politics and bills that have passed the House, but not the Senate. Adam, in Iowa wants to know if the Senate keeps 45 Z in the big, beautiful bill. How will it affect corn demand?

Naomi Blohm: In the short term? Not too much. but in the longer term, the extension that it's going for takes it out to 2031. And so that is what is a bigger deal in my opinion, because then you have the biofuel processors who then can bank on literally some of their credits that they can receive back. That helps them to know how much expanding they want to do, that helps them to have a better gauge of their business practices. So in the short term, I don't know that it does any large increases in demand, but what it could set the stage for is bigger increases, over the next five years. The latter part of it maybe would help set the stage for SAF. It would help sets this stage for other things. So, I also like on that bill that they're not going to be allowing used like Chinese cooking oil to be used as part of it. So it would be more of a homegrown product that would be friendly. But in the short term, we can't put a quantifiable number on how many bushels of increased demand it would be. But it's not going to be bad for the market or the industry.

Paul Yeager: Let's look at the soybean side of it then. Because you mentioned sustainable aviation fuel earlier, there's always this RVO is going to come at some point. It's going to come, but at what point do you just have to forge ahead without whatever the government regulation is? Just know what the market could be has been to plan if you're a business.

Naomi Blohm: Well, I think that the demand is slowly increasing and we have seen that over time. So if I was a business owner in that aspect, I would just mentally be prepared for slow demand increases and of the biofuels in general. And it'll take Congress sometime to give us a specific number. That's not anything new. We've been juggling with that for years. And I think it always comes down to, are we going to have enough of a crop in this country? They want to make sure we have enough crop this summer before they make a decision, and then we'll get our answer in the fall, which makes sense to me. You know, you got to be able to meet the demand that you currently have before you start creating new demand, but I'm optimistic for it. I feel like we definitely have the right pieces in place. We have the right organizations who are doing their best to be of benefit to the biofuel industries. So I feel like it's going to be a win. It's just a slow win.

Paul Yeager: Well, and given what you said, I'm going to go to Phil now if we could. Julie, Phil's question for you is corn prices say the crop is made. At least it seems that way with DEC 25 corn at 441, is it much more plausible we had to sub $4 versus $5 in our future? I don't know what that means for June 18th, the day I think twice about selling corn…

Naomi Blohm: It's hogwash with those prices right now for corn. It's so frustrating because if we had 2 billion bushel carryout, we should have $4 corn, but we are just getting the crop planted. New crop demand is strong and it's going to likely stay strong. And with carry out right now with record yield on the extra acres, carryout is pegged at 1.8 billion bushels. That makes me think like, you know what is going on with this marketplace? I don't feel like fundamentally, there's a reason at this time for prices to be so low. And so with that data referring to again, goes back to that seasonal five year or 15 year, 30 year pattern where between Mother's Day, Father's Day, usually we get our summer pop for a price and we just haven't had it yet.

Paul Yeager: Do you think this is the market saying the last couple of years you've said it's dry or it's wet, and then you still come through with trendline yield, that the market is just too, too much of a wary eye on what's happened in the past. And that's why they're not moving higher right now.

Naomi Blohm: You know, that could be that could very well be. but at the same time, again, I go back to the crop that needs to go on the ground yet that's going to be planted in June and that's going to take yield off right off the bat. And you know, we know Iowa's great. But come on Iowa. Can you make up for that potential? 

Paul Yeager: Not everywhere in this state. No.

Naomi Blohm: Yeah. So I mean it's just it's a challenge. And producers are frustrated because they are not at any profitable price point right now. And the market gave them one chance in January to make a profitable sale. And so we have terrible soybean prices, terrible corn prices, a market that doesn't seem to be wanting to pay attention to the actual fundamentals. Fund traders that are short 100,000 bushels, if not more of corn and again, feels like things just aren't adding up. And that's almost like the market is saying we're going to assume everything is totally fine until proven otherwise. So we need Mother Nature to start to make some move here.

Paul Yeager: Well, I asked Matt’s question in Ohio. We were talking about Ohio before we started, having our discussion, and Matt was saying, Friday he was going to get another two inches of rain. He says they were replanting the replant and then the rain hit. You mentioned during the main program, millions of acres are impacted. And we're not talking in fringe states. We're talking in good key growing states of corn. Yeah. At what point is it going to be crop conditions that change the story when it's below the five year average?

Naomi Blohm: You know, that's a good point. It might be the Monday afternoon crop progress reports that start to do it. It could be some satellite imagery that comes to play. It could be more farmers, you know, lamenting on social media that things aren't as good as what the USDA is suggesting right now. I think the traders, algorithms continue to look at the fact that, oh, Nebraska got some rain and Iowa got some rain. You know, we're not out of the woods with the drought out in those regions yet. The rain has helped, of course, but we still have this weather forecast coming for July and August. That's supposed to be hot and dry. So critical pollination, critical pod filling. There's a whole lot of summer to come up.

Paul Yeager: And when you mentioned Nebraska, I mean, you look at how dry that state is and they got dry at the end of I mean, they started to look good last year for the majority of the state. Then it got dry. So you know that that's not going to be able to come to this national fill. So let's do one more Jim in North Iowa. This is one more theory to throw out there. Farmers are selling the grain they produced at a loss. While traders are selling grain they do not own making profits. Is there something amiss here? Where is more money made at the farm or in Chicago?

Naomi Blohm: That's a very fair question. And that just echoes the concern that I hear from producers throughout the Midwest. Again, they are not farming for profit right now. They're below profitable levels with where this market price is at. And the fund traders have been just amassing this short position that is potentially making their money. And at what point, though, do they exit the short to lock the profit on the book? That's the question. So that's what we're going to be watching for in the coming weeks as a matter of the calendar flipping to a new month and the fund traders do new positions for the new month, is it a matter of winning it till the end of the quarter? Are they wanting to wait for better news or final announcements with biofuels? So a lot of unanswered questions, which unfortunately for the farmers right now, it's not helping anything by any means.

Paul Yeager: But you have helped us. We thank you. Thanks for answering all my crazy questions. They go along with some of the theory questions. All right. Thanks, Naomi. Good to see you again. All right, Naomi Blohm, everyone. And a reminder to get signed up for the Market to Market Insider newsletter. It's free. Sign up at MarkettoMarket.org. Next week we are going to take a look at a view of the overall cattle picture from the heart of the feedlot. We'll also have the commodity market analysis with Matt Bennett. He'll probably also give us a weather report too. Thanks for joining us and have a great week.

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