Market Plus: Ted Seifried

Mar 26, 2021  | 14 min  | Ep4632 | Podcast

Podcast

Yeager: This is the Friday, March 26, 2021 version of the Market Plus segment. Joining us now, Ted Seifried. Ted, you're always willing to put up with whatever shenanigans I come up with. This week I teased you, you and I talked about the corn hat and a pink suit. If you haven't seen the tease take a look. But we brought back the whiteboard because we have a big report coming up on Wednesday. Let's focus intently here first on the corn market. I'm going to ask you a question. What is the bigger story come Wednesday when it comes to the corn market? Is it quarterly stocks or is it the acreage report? What's the bigger story?

Seifried: Okay. By the way, last time we did this didn't we call it Ted Talks?

Yeager: We could. I think we did. We'll call it Ted Talks again.

Seifried: As long as we don't get --

Yeager: In trouble. All right, so Ted is writing down his answer and then I'm going to ask a follow up to that. So the bigger story on Wednesday for the corn market, Ted, is going to be?

Seifried: Here's my thoughts.

Yeager: Okay, so wait a minute. You have acres circled and crossed out. What does that mean?

Seifried: Yeah, so I think the market for the most part always thinks that the acreage report is going to be the bigger deal. I think the acreage numbers are going to come out pretty close to expectations. That's just my thought. You've got a lot of analysts that are in a pretty tight range for acres and it makes a lot of sense to me, which is why we're all doing it I guess. So I don't think there's going to be a big shock in acres but that's the one everybody wants to talk about before this thing. As we talked about during the regular program, I think there's kind of something going on here with what the actual corn stocks are. I'm wondering if there's going to be a big revision on this quarterly grain stocks report. That might be the one that steals the show. But if not, acres is the one everybody wants to see. But for me I think the dark horse is the quarterly grain stocks and I'm suspicious that that's the one that's really going to make the difference.

Yeager: How will we know which one is moving the market more? 

Seifried: That's a good question. We know where the expectations are and so it's what is the furthest away from expectations, what is the biggest surprise.

Yeager: So the revisions is something that has been happening and I've heard growing frustration, as I'm sure you have from your clients. My farmer friends have said, what on Earth is USDA doing? And that is boiling over to the point -- so what happens if they adjust it again? Does that hurt credibility? Does that do -- it's what the market is absolutely hanging on.

Seifried: They have to do what they have to do. And somewhat better late than never. But yeah, how does it not hurt credibility? If this is all because they got two crops wrong a few years back and they're still making amends for that, that's not good. How many times are they going to have to adjust it? They've already taken two significant, one in particular, significant cuts out of it. I mean, get it right the first time and if you can't do that, get it right the first time you revise it, don't just keep revising it. And as far as farmers and market watchers getting, or market participants getting frustrated, try trying to guess what the USDA is going to say on a quarterly grain stocks report. It should be very cut and dry when it comes to soybeans in particular because we know what exports were, we know what two out of the three months of crush was and then we have a very strong indication of what that third month was because we know NOPA and now the USDA number. But we have almost all of the demand numbers for soybeans. It should be pretty much a lay-up. But they come in and say, oh we have an extra hundred million bushels --

Yeager: Okay, let's get the conspiracy talking. So why is it that they have to make adjustments? Is there someone, something, some group being protected? Enhanced? There's the thought of oh we've got to keep food low, the prices low, that's why we adjust. I mean, do you want to get into conspiracy theories?

Seifried: Yeah, I've thought and heard so many different ones. I guess they didn't --

Yeager: They're not asking you?

Seifried: They're not asking me, right, that's a big one. But the conspiracy theory of they want to keep food prices low. Okay, yeah, but then it's also more payments that they're making when it comes to crop insurance and things like that. I don't know. I think the biggest one is that they were so very afraid to miss it on bigger yields. They were just so very afraid to be wrong to the downside. So I think they were kind of leaning higher and wanting to put, preferring to put that higher number out rather than putting a lower number out. That is about the best I can come up with. But I really don't know. I'm not really a big fan of conspiracy theories. I really do think the USDA tries to be right. But it has become very clear that they weren't for a longer period of time and that is why they've had to come in and make these revisions. I'd like to see them be done with these revisions, just rip the Band-Aid off. If they know about it, just rip the Band-Aid off, please.

Yeager: Just make a number, stick with it, don't change it. Okay. Sticking with corn then, Ted, real quick if I have new crop corn to sell or I want to sell on Wednesday, am I going to view this report as bullish or bearish? And should I be making a sale quickly after the report on Wednesday?

Seifried: So, is this --

Yeager: This is on new crop corn. On my '21 corn.

Seifried: Will this report be bullish or bearish for new crop corn? Is that the question?

Yeager: That's the first question. And then what should I do?

 

Yeager: The secret password is --

Seifried: Okay. So for new crop corn, here's my thought. I think the acreage number for new crop corn is going to be a little bit on the bearish side. I think it's going to be a little bit higher than what the market is expecting. This is a tricky report because it's an intentions report and a lot of it is going to depend on what weather is going to be like, when we get to the final number what weather is like and intentions aren't always what we follow through on. So maybe it's not so much the intentions report. But either way the final corn number that we get I think is going to be bigger than what the market was currently thinking. Or certainly I really think it's going to be bigger than the USDA's outlook number of the 92 million acres. I think we're going to get 93 to 94 million acres of corn mainly because the weather looks good but also because the relative strength that we've had in corn since the beginning of the year, it's just asking for more corn acres. We like to plant more corn acres. So give us any excuse to go and plant more corn acres, we're going to do that.

Yeager: All right, I need to move to beans. Same question. What is the bigger story on Wednesday's report, the quarterly stocks or the acres planted? And for bonus credit you can write.

Seifried: We're going to do that again? Okay, so but while I write --

Yeager: Do you want to fill with a song? You'll get us in trouble.

Seifried: No. But I am going to say selling new crop corn, you can reown that with calls like we were talking about on the main program and I am a fan of doing that. I would like to see guys 40% to 50% sold on new crop corn but then also have reownership of that because, like we said, there might be something going on with the corn stocks that we're not seeing right now.

Yeager: All right, we're in soybeans now. Thank you, Ted, for following up on my fifth question.

Seifried: Here's my thought. I think the acreage number could be bullish for soybeans. So I think the acreage number is going to be the one that moves the soybeans. But just like we talked about in corn and just like what we talked about with what the old crop spreads are saying, I wouldn't be shocked if we saw a quarterly grain stocks number come in bigger than expected and we saw oh wow, the USDA is revising production higher from last year or even two years ago or who knows. So I want to say acreage. But for both of them I'm more worried about what can happen in this quarterly grain stocks number than what can happen on the acreage number. I'm hoping that there aren't any big shocking revisions on quarterly grain stocks and that's all just kind of okay, no big deal, let's get back to talking about acreage. But that quarterly grain stocks number, that's the number, that's the one that makes me nervous for this report and it's because of the revisions. It's impossible to try to guess the revisions that the USDA might have and that is the one that can really throw us for the loop if there are revisions. If not though, for soybeans I think the acreage number is going to be the one.

Yeager: All right, I want to quick get into cotton on the sense of going into today's session it was eight of nine days down. Is there an acreage story -- that has been the debate is about the acreage. We're almost past the point of planting cotton. So what is the drain on that market right now?

Seifried: Weather. And so a few weeks ago people were saying, well we're not going to get as many cotton acres. But then the question was really, why? Cotton prices had been really solid. It's not like cotton was flat while row crops went sharply higher and row crops are stealing all these acres. In fact, if you go back the last few years we've been seeing cotton acres decline. So did we have a reason to see acres decline any further? And I think that kind of was the realization in the market is that well, no we're probably going to get 14 million acres of cotton, maybe a little more than that. So yeah, that has been a wet blanket on the cotton market. I think technically you needed to see a bit of a correction. I'm kind of starting to think cotton is in an area where it might be a nice value buy here at this point. But that will be a big report for cotton there on Wednesday too.

Yeager: We've got great questions again but I kind of folded some of your questions into what I'm asking. I am going to do one, Jeff in Nebraska asked us -- and I didn't put his Twitter handle but this one did come via Twitter and it's going to say Facebook. That's my own fault. How many export sales of corn and soybeans get cancelled? Or how much do you think they roll to the next crop year? And how big of an issue is ASF in Asia right now? A couple of people wanted to know this one.

Seifried: So many questions. Let's see, what can I write about this?

Yeager: Well, let's see. So, do you think export sales of corn and soybeans are going to get cancelled? Oh, you're going to do the hog answer first? Okay.

Seifried: No, I just like drawing things. Anyway, that's my pig. So do I think export sales get cancelled? No, I don't think there's going to be massive rounds of cancellations barring any big political right, which who knows, that can happen at any time, sure. But no, I don't think there's going to be big cancellations per se. Although I will say the outstanding sales that we have to China for corn aren't shipping at a very fast pace and it's not that we can't do that, I think that might be on the buyer's side. So I do worry a little bit that some of the big number sales or the big quantity sales that we just made to China might get rolled over into the new crop. I think there's going to be a fair amount of corn sales that roll over into the new crop. For soybeans, no. I think as much of that as we can possibly ship or that we have to ship is going to go out the door because we are, I'm not going to say caught up on our sales, but we're not far behind. There aren't a whole lot of outstanding sales left there for soybeans to be cancelled, certainly not from a percentage basis. I think those beans get shipped out. And I think we're going to hit the USDA's target pretty handily.

Yeager: And the third question was about ASF and you did talk about how big of a deal it is in China during the show.

Seifried: Yeah, it's tough, right, because this seems to be a different strain of ASF than what we were dealing with a year and a half, two years ago. It's more contagious from what we can tell but it's not quite as deadly. They have culled some herds. But I wonder if China's answer to this is going to be more animals rather than less animals. They seem to be taking in as many soybeans as they can. Yes, the ASF news has hurt their soybean prices on their exchanges. I don't think ultimately this is going to be as bad as it was before, just sort of like bird flu or mad cow, any time we talk about these diseases the first time around it's a big shock to the market but then we figure out how to deal with it and I think China is in a much better position to deal with it this time. Again, they have moved a lot of their hog herds up to the north and the east in the concrete bunkers. Until we start hearing problems in those areas in these hugs massive hog hotels going down I don't think your smaller mom and pop herds getting ASF is going to dramatically affect their overall soybean demand.

Yeager: And maybe that is part of what you're saying is that if they can grow more in the hotels, I get what you're saying. Okay. Anything else?

Seifried: No, I think we're good.

Yeager: Did I cut you off again or something?

Seifried: It's okay, Paul.

Yeager: I do it all the time. I'm sorry. I'm trying to move it along.

Seifried: It's kind of your job, you're good at it.

Yeager: I guess thank you, appreciate it. All right, thanks Ted. Good to see you.

Seifried: Always a pleasure.

Yeager: That will do it for Market Plus. Next week we're going to look at changes in the grocery store. We'll have a conversation about that and Arlan Suderman, he's going to break down what Ted just talked about. Maybe we'll have Arlan hold a whiteboard and grayed out Ted. I don't know. You'll have to watch us. Thanks for watching Market Plus. Have a great week.

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