Market Plus: Dan Hueber

Oct 1, 2021  | 10 min  | Ep4707 | Podcast


Yeager: Welcome into the Friday, October 1, 2021 Market Plus. Ladies and gentlemen, I present Dan Hueber. Dan, on your drive, percentage of beans out?

Hueber: I think we're probably in the 60% to 70% range from the north part of Illinois where I came out of to Des Moines. Granted, some spots were heavier worked into than others, but I was a little bit surprised it was that far along.

Yeager: And beans? Oh did I ask beans first?

Hueber: I hope you did because it's what I answered.

Yeager: Okay, so corn.

Hueber: Corn maybe 20%, a lot of combines rolling today. And of course I ran through rain, which for me I haven’t seen rain for the better part of six months it seems like.

Yeager: Is weather going to be a story next year or even this year?

Hueber: Well, I guess we could run into some issues yet. I know we've got a little rain through the Midwest this weekend. If it's going to be a story it's probably going to be to the south where it's already wet in the Delta and we've had enough tropical storms and hurricanes to come through to make a mess down there, not that that's unusual for this time of year. But for the Midwest and the Upper Midwest it doesn't look like it's probably going to be a tremendously big story.

Yeager: Here's a story from this week in the ag world. It's Matt in Nebraska's question that came in via Twitter. He says, in today's world of information overload, how in the world are there this big of surprises in USDA reports still?

Hueber: And granted, we're dealing with something that encompasses the entire country as far as growing regions that are trying to come up with a number. I don't think the surprises are maybe necessarily as big as the market makes them out to be sometimes.

Yeager: The market or those who watch the market?

Hueber: Yeah -- when I say the market I guess it's those who participate and are trying to anticipate things. Realistically I give the credit to the USDA in the respect that they probably have more statistical data than anybody else. They do tend to rely more on statistics today than maybe they did in years past and of course COVID accentuated that over the last year, less people out in the field doing those type of things. And until we get to the point where we can afford to have satellite readings and sensors out in the field and this kind of thing there is always going to be that room for error, room for variability. Again, maybe the issue is more with people who are estimating what those reports are going to say than the reports themselves. I don't know how everybody puts their numbers together but some of them might be just a little more than a shot in the dark to begin with.

Yeager: So the natural follow-up question comes from Mark in Manchester, Iowa. Is it time to do away with the crop reports? Do they only hurt farmers?

Hueber: I think you can probably go back and find just as many times as they help. We tend to forget about them when we get a negative one. Wheat being an example this week, it came out with a very positive number on the wheat. I think taking information away probably does nobody any good at that point other than those who are probably the biggest players in the market who have their own data to begin with and probably rely on that anyway. So if we go back in the history of the USDA, Abraham Lincoln is the one that founded it specifically because farmers were not getting information about what was happening around the nation. So I do think we need that independent, non-profit theoretical source that provides that information for us and maybe we just need to put the funding in it to -- I think people in the USDA say this -- give us the funding to put the boots on the ground and we can give you better reports. Well, each year we tend to cut back on those budgets and not put that money into getting that kind of information to us.

Yeager: Well, Jake in Illinois asks a question related to the report. Where did we hide 87 million bushels of beans for the past year?

Hueber: Well, the beans have always been a little tricky to do inventory numbers on because they do get tucked away on a lot of farms, a lot of places where you can't store corn just because you don't really need to condition the beans in the same way. So when you get to high priced beans we always tend to start dragging those out of the nooks and crannies that we don't realize are there. So maybe, again, probably part of it a little undercounted from last year, maybe that has been running for a couple of years here. But like I say, high prices tend to really bring inventory out that we forgot was out there to begin with.

Yeager: And high prices cure high prices.

Hueber: Just as low prices cure low prices, that's right.

Yeager: All right, so this is a question about soybeans. I made you do a little homework before you came out here. Harry in Alam, Arkansas, we had a similar question last week, but what percentage of American soybeans goes to China?

Hueber: Currently, approximately -- I should say 60% of the exports that leave this country are moving to China right at this point in time, which really that equates to about 24% of the total crop. So it is our export business. When you look at the numbers each week we'll have sold a million ton of soybeans of which 700,000 are to China or to unknown destinations. So without them in the market right now we would be not looking at a lot of export business.

Yeager: It would be a different story too. We would probably not be with double digits in front of the price. All right, Ram in Edgar, Wisconsin was asking, we did kind of cover this in the program, what direction is cattle headed? He's asking, about fats and feeders steady to lower?

Hueber: I want to tend to say more steady at this point in time. Again, it's not like we're putting a lot of animals on feed at this juncture. As we talked about earlier in the previous segment, this is not the time of the year where you really see a tremendous amount of demand, the grilling season is behind us at this point in time. But I don't see a lot of downside here at this point in time. I think we have come to a point of value and particularly now with the hog market accelerating to new highs that's probably going to make people think, do a little more comparison shopping when it comes to the meat counter.

Yeager: All right, I have equal opportunity on my operation. Should I be expanding my beef herd or my hog herd right now?

Hueber: Well -- they’re both difficult to expand on in most places of the country just because of all the external factors. I guess I would probably tend to say hogs. I think hogs are still going to be viewed as a more competitive meat year in, year out, and I think the hog industry is doing a nice job of repositioning itself as a good flavor alternative as well.

Yeager: Doug in Thornton, he always likes a good cattle market question, but this time he's asking about what is up with the oat market? Is it a better choice than corn? Last week the discussion was oats know.

Hueber: Well, of course, if you are in the Northern Plains oats may be a better move this year and granted, the problems in the Canadian prairies this year really cut into the oat production, the oats we could bring in. I guess I haven't watched it, I know years past we used to bring quite a few oats out of Sweden. I haven't seen if they have made any major changes or had any problems here this year. Here again, as with any market, any small grain market like that, it tends to be a spot market. So what looks great today may not translate into what July oats are for next year. I haven't really looked out there and I doubt there's a whole lot of trade in that new crop oat contract at this point in time. So if you really thought you were going to expand acres I guess I would find a way if I could lock those in at this point in time too.

Yeager: All right, this is a little more something we already covered. But David in Eastern Iowa asked us this question last week and we've talked a lot about ASF. So what happens to ASF if we have a positive case in the U.S., not so much what it does to the hog market, but what does it do to the cattle market?

Hueber: I guess it has to be a boon for all meats at that point in time. Granted, if it really, we really had a crackdown and granted, having a case doesn't mean it's necessarily spreading but I think one, psychologically people are going to think if there is a disease in the meat I don't want  it either, let alone what the potential death toll would be within the hog industry there. So I would have to say it would be supportive to poultry and beef both.

Yeager: Okay. Lastly, and this is something you covered a little bit as well talking about inputs. And there are discussions online about maybe I'm going to flip from one to the other. Mike in Stillwater, Oklahoma asked last week and again, Ted covered it, I want you to cover it. Number one choice, what is your price protection for inputs or crops? Which one are you protecting in 2022? Are you protecting your inputs or are you protecting your crops next year with price protection?

Hueber: I would probably tend to go to the crops. I think the commodity sector for a lot of reasons is probably at a pinnacle and particularly if we see the dollar continue to strengthen in 2022 I think that is going to put defensive action in all the commodities, crude oil included, natural gas included, which is just going to also affect the price of those inputs. So I guess I would worry about protecting crops first and worry about the inputs later.

Yeager: All right, Dan Hueber, good to see you.

Hueber: Likewise, great to be here. Thank you.

Yeager: Thanks for the conversation. That will do it for this installment of Market Plus. Next week we're going to look at the supply-chain strain on manufacturing and Arlan Suderman will join us to analyze the markets. Thank you so much for watching. Have a great week.

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