Market Plus: Sue Martin

Jun 11, 2021  | 13 min  | Ep4643 | Podcast

Podcast

Paul Yeager: This is the Friday, June 11th, 2021 version of the market plus segment. Joining us now is Sue Martin. Sue, I'm going to just say it right off the top. We're going to talk about two things and they're going to be longer and different. We're going to, I'll just say, we're going to talk about $30 beans and we're going to talk about the 1970s. You good with those?

Sue Martin: Yes. I am.

Paul Yeager: Both topics that we need to address. So first I'm going to get out a couple of the questions that those of you who submitted them via Twitter and Facebook get a couple of those out of the way. Stay in for this discussion, please. So we're gonna start with Wayne in Southwest Iowa. And again, I told you I had a lot of weather questions. He says with the dry Northwest corn belt, do we sweep the corn bins now or save some gambling bushels? If this dryness lasts through pollination?

Sue Martin: I think since you've obviously marketed the crop, most of the crop, I would say, save these bushels for gambling and take them into July. Because we, we've seen our market price in Brazilian safrinha corn pollination. Wouldn't it seem feasible in this year that we would do the same thing for ours. I think we will. Now granted the end of the month, June 30th crop reports, they're the biggies, the supply demand report a half-hour and it was over now it's the quarterly stocks, which will see these numbers out of the supply demand report fused into, and then the final acres planted. And we have very little prevent plant this year. So it's going to be there's, you're going to have such volatility and you usually do anyway, but you're going to have a lot of volatility into those two reports.

Paul Yeager: All right. So Phil and Dresden Ontario then is going to try to pin you down on exactly what you just talked about, weather, it's the mostly defining new crop markets. Now, he says, what's your best call for acres on June 30 and with USDA's updated June 10 stock numbers. How might that change ending stocks for corn and soybeans moving forward? Is the evidence of demand destruction diminishing?

Sue Martin: Some could say it is. I don't think so, but I think what happened is first off, we've moved price so far so fast, and it took many by surprise. They never would have dreamed the market was capable of what it's done this year. But I also think that tells you just how pent up or how tightly we had coiled the rubber band of for the last eight years, seven, eight years. And therefore, we came out swinging when we started to realize we had all this demand and supplies, maybe weren't as abundant as we thought. And so we had to keep moving on until try and an effort to maybe slow that demand down. I don't think we've really slowed the demand down. One, I think you are very tight supplied on soybeans. And so, because of that, I think you know, we hit the pipeline supply of 120.

Sue Martin: If we're to see the number go under that, it would have to be probably in September that we would see that. So consequently, I think the market's resting. If you could call it resting, it's swinging, it's wearing people out because along the way, there were so many disbelievers, nobody believed the market could do this. And now all of a sudden, Hey, it's sexy to be long and try to be in the market. And so now they're getting the market's rolling and churning these people and they're taking losses, but the bottom line is we're now looking at U.S. Weather. And so now when you look at whether you're starting to go back to a supply side of the equation, and I think that that's where we're going to have to say, we need good weather, otherwise weak in beans, you can't afford to lose a bushel and even say eight tenths of a bushel or seven tenths of a bushel. We're going to be, you know, 155 million bushel carry out for 21/22. That is dirt low as it, as it is, it doesn't allow room for some vulnerability. And it tells you we have some rationing to do

Paul Yeager: Well. It sounds like you're setting yourself up for something that was said on this program at the end of February, you're going to see more of that. I think it's possible that in 2023, we could see, and this is just what you're saying. We could see $30 beans. I think corn may be 18, 19 and wheat goes to 42 and 45. Are you standing by those a, that commentary from the end of February?

Sue Martin: Very much.

Paul Yeager: Why?

Sue Martin: Very much. For one thing, if you look at the world what's happening and I'm kind of deviating getting a little bit over past the seventies thing, which we'll talk about too. But if you look at this pandemic, people underestimate what it did. Take computer chips or microchips. I mean, microchips are used in just in time inventory. You look at labor Indonesia, Thailand, even in those countries, farmers, or farm laborers are leaving, going for higher paying jobs elsewhere. So what's happening in the U. S. isn't any different it's happening all around the world. What does that subtly do? It lowers your production subtly, but it happens. And we're just not right there right at this moment. So that's kind of you shove that out. Then you have this weather that's happening. And of course the U S weather forecasts for the summer for July is expected to be quite hot.

Sue Martin: In fact, the last week of June is expected to give you a little taste of what July is going to be like. And half of August, then you get into that last half of August and you might start picking up some showers, but September is thought to be pretty warm as well. Well, what's going to happen is your crops coming home quickly,

Paul Yeager: Right.

Sue Martin: But that also is a way of cutting yield. But our when you look at the pent up demand around the world and in back in the nineties, we went to this because production almost every year, at least every even number year was increasing appreciably. We were setting records of carry out. Okay. So the rest of the world thought, oh, we don't have to pay up front. You know, we can, we don't have to have reserves. We'll just buy as we need it just in time inventory.

Sue Martin: I think that's going away. And I think we're going back to carrying reserves. China's working on it. And you know I've mentioned before, we've had the great grain robbery back in the seventies, which was Russia. They too, at that time had had a horrible weather situation. You look at China now, 23 out of 31 count provinces are having flood alerts, things just aren't perfect there. And you don't come back in one year in China for supplies and corn and did the week, but $10.81 or something like that, a bushel. Why, if it's so plentiful, why is corn that high it's? You know, I just can't even begin to say it enough that everybody around the world needs food. You've got food shortages. Look at the migration, even coming up into the U S a lot of times, they're when they're interviewed, what do they talk about food? And you look at Venezuela, even had some, then at 10,800, some Venezuelans coming across our border because why they don't have food and that's not just here, it's overseas and it's I just, people hungry people fight.

Paul Yeager: Well, exactly. You're only a couple of meals away from, from chaos,

Sue Martin: And that's how governments get overthrown.

Paul Yeager: And that could, that could change things. Some of the blowback from the $30 comment is that could really throw a lot of things out of whack. I'm not asking for the government to do anything, but the market would have a hard time getting to that. Wouldn't it?

Sue Martin: No, look how easy, $15, $16.

Paul Yeager: And how quick.

Sue Martin: And think of it this way. Going back into 1970, March of 1971, beans went from March of 1971 to July of 73, 416%. Now I'm not thinking for us. All we have to do is roll the thing over, just double it and look where you're at. There are many markets that have really increased prices, even since the seventies, LNG has not, but it will maybe. But you look at lumber you know, who would've thought, you'd go from 200 something up to a thousand fall, back to 600, and then you go to 1600, you know, and you all, and here's nothing the money that's in Bitcoin. These people are used to volatility. You think they're going to sneeze at even, or think twice about coming into commodities, money coming out of the stock market. If president Biden's plan for capital gains goes through talking about nicely increased capital gains tax, plus rolling it back for four years. You think that money, I think money kind of leaving the stock market, even though it's holding firm. I think money's leaving as it is. Now, you hear of many homes that are being paid for in cash and not cheap

Paul Yeager: Right in the housing market has, has taken a little bit of a breather the last couple of months. But a lot of that has been on the supplies and the lumber that you know,

Sue Martin: You can't get them.

Paul Yeager: But I've also heard from realtors that say those who wanted a new house have gotten it. And that at some point that's not going to roll over. So I'm not an economist when it comes to the housing market, but let's go back. We've been talking about the seventies. You talk about the great grain robbery. We talk about inflation. We talk about lots of these things. They sound familiar to what we've been talking about for the last couple of years.

Sue Martin: Well, and another thing, Paul back in the seventies, there were some changes, fundamental changes that were taking place. Secretary Earl Butz was Secretary of Agriculture under Nixon and Ford. And president Nixon took the dollar off the gold standard, which then set it as we were so ingrained, made the dollar, the currency of the globe that you pin everything to.

Paul Yeager: Right.

Sue Martin: And that sort of laid a footing under the, under our commodities. We had USDA wanting to get out of the grain business. We had ASC bin sites all over the Midwest and anywhere that grain was raised and they would pay farmers and buy their grain from them and store it. Well, they decided to get away from that. So, and we had good surpluses at the time as we came into 72, but in the meantime, the Soviet union is having horrific weather and they needed supplies.

Sue Martin: And the Soviet Union was one country. You could see shortages, you could walk in a grocery store and be one price. By the time he got to the checkout, it had jumped. It was that way. And your store shelves could be kind of bare almost like we've seen in the pandemic for toilet paper and different things that we'd never seen before. So what happened was Russia came in, swept us out, took all of our grain, our, our corn, especially, but took our grain. All of a sudden we hit some issues, hyperinflation or inflation takes off. And the market zings and speculators came in and what did they buy? They bought soybeans and silver and sugar. The three S's that are thought to be inflationary, hedges. And now you look at sugar, okay. It's an energy. It's also when you're starting to hit a global economies percolate, and then moving back and people have been pent up for a long time. They're going to really be, and you've got government subsidizing that's happened not only here in the U S but other parts of the world, that money is going to start circulate and getting spent. It's

Paul Yeager: It has, it has a little bit, and I, and I'll tell you what, Sue, this is a topic that we will revisit again.

Sue Martin: Oh gosh. I'm so I'm so friendly I can't stand it.

Paul Yeager: I'm gonna dial you back and we'll hold we'll hold you back. We'll come back and talk again. Thank you, Sue.

Sue Martin: You bet.

Paul Yeager: Appreciate it. That'll do it for market plus next week, we're going to look at a dairy navigating a pandemic, and Chris Robinson will join us to break down the markets. Thank you so much for watching. We'll see you next time.

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