Market Analysis with Kristi Van Ahn-Kjeseth

Yeager: Flat export demand kept the lid on grains in sideways trading as last week’s report is in the rear view. For the week, the nearby wheat contract added 7 cents and the May corn contract lost 8 cents. Despite good demand for meal, fuzzy signs from China kept beans neutral. The May soybean contract lost 7 cents while May meal fell $4.60 per ton. May cotton shrank by $5.14 per hundredweight. Over in the dairy parlor, May Class Three milk futures fell 29 cents. The livestock market was mixed. June cattle dropped $8.20. May feeders cut $10.52. And the May lean hog contract found $5.05. In the currency markets, the US dollar index lost 17 ticks. May crude oil added $4.03 per barrel. COMEX gold rose $103.60 per ounce. And the Goldman Sachs Commodity Index was up nearly 27 points to settle at 599.90. Joining us now is regular market analyst Kristi Van Ahn Kjeseth. Hey. How are you doing?

Van Ahn Kjeseth: Good. How are you?

Yeager: You know, I wish we had big reports to talk about. But in a way we kind of do.

Van Ahn Kjeseth: Right.

Yeager: When you look back at last week's report, did the market digest them quicker than you anticipated? Or did they just shrug their shoulders and we just made a whole big to do about nothing last week?

Van Ahn Kjeseth: Yeah, so I thought you were going to actually extend off of corn. Corn got some friendly numbers out of that report. And so, I thought you would extend it off and then we got into this week and there was just enough other news that I think the market was like, oh we'll deal with this later, type of a thing.

Yeager: It's always that we look forward to something and then it is digested and we move on. So, when you look at wheat, we're kind of dealing with some of the same scenarios, we're always dealing with Russia, we don't know what is going to happen in Europe, we're dealing with dry conditions. But we did have some U.S. news develop this week and we also had the different markets were trading in different directions. As a generality, where is wheat headed right now?

Van Ahn Kjeseth: Yeah, I think that's probably one of the aspects I'm most friendly about out of this week was wheat and the fact is that you were able to closer higher and it just felt like it has been a struggle fest for this market to get up and get going. I think there's enough dynamics happening around the world that you're starting to see this buying come back in. And the old saying is, if you really want to see a bull rally, it does need to be led by wheat. And so, fingers crossed that we can see something build off of this momentum.

Yeager: I guess I'll ask you in corn in a minute. But can wheat pull others along for the ride?

Van Ahn Kjeseth: Oh yeah, wheat is like that annoying friend that just likes to take everyone either up or down with them. And so, I do think that it can be the leader, but it can also be the thorn in corn's side. And I think that is what we've seen leading up to this report last Thursday is that wheat was consistently just not able to follow through on a rally and it just seemed like it was pulling corn down with it when it started to flip to red.

Yeager: As you look at wheat moving ahead, do you have a range that you like?

Van Ahn Kjeseth: For the most part I'd just like to see actual chart action that you can actually put some extensions off of it. As of now, you really have not opened up any top side. So, I don't want to get too excited about it, but it would be nice to see some follow through next week and then you'll start to generate some price points to the top side that you can say hey, I'm looking forward to this or I'm looking at a 38% retracement line. We're just not quite there yet.

Yeager: When you look at the corn market then, as we look at, again, the annoying friend, that's what I was writing down, with wheat. But you look at this old crop, it still seems we're sitting on a ridiculous amount of grain on the farm. Nothing seemed to prompt the sales this week, did it?

Van Ahn Kjeseth: You mean like almost a billion bushel more corn on hand than a year ago, that type of thing? Yeah, there's a lot of corn around. So, you did get friendly numbers. So, when you talk about the numbers, acre number no doubt out of the bottom end of the range of expectations. We use the most corn in this first quarter period from Dec to the end of Feb, we use the most corn on record here. And so that is a favorable aspect. And I think that was probably one of those things that you took home over the weekend and then came into the week and then all of a sudden you're talking about bird flu and maybe feed usage and I feel like that feed usage was what gave us the great usage in the first chunk. And now we're saying, could that decrease? So, I think there was that aspect that took it away. But overall, when you look at corn to be able to see it make some price points, I think it can get there. The problem is they're really shrunk up to see those price points, you're talking $4.54 for May corn, and you're right, there's a lot of grain in farmers' hands. I think it's 24% more year over year. The nice thing is that you actually saw the end users, the elevators, the off-farm storage decrease year over year. And so that is telling me that the grain is getting there, it's getting used and getting out, that hopefully on the cash side of things basis might remain strong. And that's what we've seen lately is that there has been a basis push for corn.

Yeager: As we look at December, the acreage number there is a little bit of it seemed like Monday, Tuesday had a no really, what's going to happen? People weren't believing some of the numbers. But we also didn't have a good early, that temptation to plant before the insurance deadline here in parts of the Midwest. So, when you look at that deferred crop right now, do you think anybody has changed their minds since last Thursday?

Van Ahn Kjeseth: I don't believe that number. But the good thing is we have that number to trade off of until June. So, it's that same situation, you might not believe it but that is the number we're going to use, that's the number they're going to use in the May report, which is also great that we're going to be using those lower acres. The thing is, you did have a lot of people talking about starting early and this pushed it off. I didn't see anyone rolling any field work on my way down this morning. And so, you did see that pushed off. But the fact is, we're dry in so many areas that I don't think it matters. I think you're looking at an extended forecast for the next two weeks that looks hot and dry for a lot of areas. And to be honest, we got a lot of moisture over this last little bit and I don't have anyone telling me that they're wet. And so, that is problematic to me that you're still going to be able to get an aggressive early start for planting.

Yeager: Well, that's '24, let's talk '25 real quick. We had a question. Jeff in North Dakota wanted to know, should we be considering any December '25 corn sales at some point?

Van Ahn Kjeseth: Yeah, I love this question and I think it's a great one. I am a big believer in looking at '25 corn and saying hey, we're really hovering around this area, we found support at $4.80. If we get to $5.00, I do think it should be done. Even right now, if somebody wanted to make some sales, I have no problem with it. Also, if you look, the timeframe to get us out to '25, it gives us a lot of option volatility, which ends up giving some good accumulators. So, if that's your jam to go to the elevator or an outside source and be doing an accumulator through the elevator, you're getting a lot of premium on top of that '25. So, I really like going out there and getting a start on it.

Yeager: Can you smile talking about soybeans?

Van Ahn Kjeseth: Well, I mean, I could sleep. But it is a little bit when you look at soybeans they're just not getting anywhere. It seems like both May and November want to get up to $12 and then they fade back off and they get back up there and it's just we cannot break through there. If we break through there, there's some gaps about 40 cents higher that I do think we'll be able to get. So, I think the writing is on the wall. I also look at soybeans as saying, hey they're in sleeper mode. You typically say hey, corn didn't get the acres so you automatically think beans got the acres. We didn't see that. We saw that there just was a lack of acres. So, if we come in here and we have kind of a slower start or you look at it and also the extended forecast, and I'm not talking two weeks out, I'm talking the summer forecast, looks like a not so ideal situation for soybeans. It looks to get really hot and dry in that key timeframe for beans. So, I think beans could be that sleeper mode.

Yeager: Do you also think sleeper for the deferred, the November contract too?

Van Ahn Kjeseth: Yeah, that's mostly what I'm talking about.

Yeager: So, does demand come into this factor at all? We kind of alluded to it in the open talking about China's fuzziness. We don't really know what their intentions are for a lot of countries.

Van Ahn Kjeseth: Yeah, so if we look back and we talk about how disastrous it was during the trade war era, that's where we're at right now for exports. So, a lot of people aren't talking about that. We know that exports are down but they're that low. And so, I think if you can look at it and say exports were this level during the trade war and we're able to do it, I think you're looking at it and saying, we should be able to keep a decent amount, this should be the bottom end of the range for exports. The nice thing is moving forward we continue to hear these favorable stories about crush, about the want for renewable diesel, the desire, the plants coming up, and we're not going to see these plants come up and just run half capacity, they're going to get going when they want to go.

Yeager: Livestock I have to move to because that was a dramatic pull back in live cattle and in feeders. is that all tied to this flu?

Van Ahn Kjeseth: Not necessarily. I think the writing was on the wall when you looked at it. Weights are really heavy right now in cattle. So, I think that was starting to creep and get talked about a little bit more that we obviously know the supply story is tight, the inventory is tight, but all of a sudden, our weights are over 20 pounds more year over year, five pounds more than they were a month ago. And you're like, what is going on here? So, I think that was the tip and then we got this story and it really just brought the sellers. We have to remember where our managed money is as well. So, I think they were bailing on the contracts.

Yeager: But did hogs benefit though?

Van Ahn Kjeseth: Yeah, I think you're looking at consumer sentiment. Whether or not you agree with everything that is happening with the flu, whether or not we know that consumption, it's not going to affect consumption, but when you're hearing that story on the nightly news, some people are going to be like, I'm out, I'm not going to be buying that product for a while. We have not heard about anything for our pork. And so, the general sentiment is that you could see the demand shift somewhat from beef consumption to pork consumption coming into grilling season and I think that is helping the pork market.

Yeager: And we don't necessarily discuss poultry on a regular basis here, but that also there has to be concern in poultry states too.

Van Ahn Kjeseth: Oh yeah, and so you're all looking at it and you're saying, which one hasn't brought up to the subject, which one hasn't been brought into the bird flu story? And that is pork. So, I think you're looking at not only the switch from beef to pork but also the switch from chicken and poultry over to pork as well.

Yeager: All right, lump them all together, livestock and -- do you see this as a temporary thing? Is this a pause and we're going to go back higher? And I guess I ask the reverse for hogs.

Van Ahn Kjeseth: Yeah, so on the cattle market I think actually you could be looking at something that ends up being friendly, eventually this story works its way through. We stop talking about it on the nightly news, we stop seeing the headlines, people are going to stop selling it. And then you look at it and we're still at tight inventory, the cash trade has softened but it's still favorable. So, I think that eventually you are going to be able to build out of this. We are just at the first price count to the downside for lives, feeders a little bit past that. But when you look at hogs --

Yeager: And I'll have to get your hog take in Market Plus. Sorry, I shouldn't have asked five questions. Thanks, Kristi. See ya. Kristi Van Ahn Kjeseth, appreciate your time. And we are going to pause the Analysis and continue our discussion about these markets in our Market Plus segment. You can find both Analysis and Plus on our website of markettomarket.org. Instagram season is kicking into gear as plant '24 gets ready to roll. We will post some of our own images and share your best work on our feed of MarketToMarketShow. Follow along today. Next week, growing resistance in pet antibiotics. Thank you so much for watching. Have a great week.

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