Market Analysis with Kristi Van Ahn-Kjeseth

[Yeager] What started as optimism with China potentially buying U.S. grain turned to disappointment as sales of any note failed to materialize for the week. The nearby wheat contract fell $0.06, and the December corn contract lost $0.04. Soybeans experienced some profit taking with the early rally brought on by trade news. The January soybean contract added $0.02, while December meals sold off 4.50 per ton. December cotton contracted by $2 and a cent per hundredweight over the dairy parlor. December Class three milk futures weakened by $0.23. The livestock market was lower. December cattle fell by 8.3 3rd January. Feeders cut 12.32, and the December lean hog contract, weakened by $1. 88. In the currency markets, U.S. dollar index was lower by 25 ticks. November. Crude oil dropped $1.14 per barrel. Comex gold lost $0.05 per ounce, and the Goldman Sachs Commodity Index was down more than three points to settle at five 5385. Here, now, to lend us her insight on these and other trends is one of our regular market analysts. Kristi Van Ahn-Kjeseth. Hello, Christi. Hey, Paul, I was thinking while reading some of those numbers over and over and down and down the sun, we lost that our sun this week, like the market lost some sun too this week. Where's that sunny disposition?

[Van Ahn-Kjeseth] Yeah, I think, you know, when you look at markets as a whole, you have that old saying that's been talked about forever. You need to feed a bull. And I think there's no new information to extend us for soybeans. Not necessarily. Meaning you need to drastically see it change. But I just think that the lack of information out there right now is causing the market that you brought in those fresh buyers, and now you're pausing to wait it out and see if we can get any more details. We did have USDA come out and say that they are going to have a crop report next Friday, the 14th. They will get the field surveys out, and I'm not sure how they're going to get it put together, but we're going to have one. And so we do get information soon.

[Yeager] Do we feel like we're in a better place because we know something might be coming, or were we in a better place when we knew nothing was coming?

[Van Ahn-Kjeseth] I think it was when nothing was coming personally, because now you are starting to have these private estimates come out for yield, and they've been a lot higher than I initially thought they would be. You know, for these yield estimates. And so, all of a sudden you have these yields that these private estimates are coming out and they're not that far off from the current yield that we have way back. And so now I'm sitting there saying, okay, if you post those numbers next Friday, that's not going to be good for this market.

[Yeager] Yeah. Let's start with wheat if we could, because that was hey, China bought some wheat. Can that continue?

[Van Ahn-Kjeseth] Yeah I think you saw that momentum and it hit its retracements and it hit a moving average. And it was like dead on. Stop the market and drop back off. And I think what we do need is we do need somebody to come in and purchase some of our wheat. It would be nice to see it happen. Overall, I think what's ringing in the back of my mind is the last trade agreement was based off of dollars purchased, right? It wasn't like we're going to commit to this many bushels of this and this many. It was like, we're willing to spend this much money on us ag products. It's a little bit different this year. But last go around, you really saw that surprise that China stepped in and was buying corn when not a lot of people expected them to. And so, I think when you started to see them purchase some wheat and that was not on anyone's radar, that you started to say, hey, could this be the trickledown effect? Did they talk about soybeans? Commit to so many soybeans, but they're actually going to start buying other products as well. But I think it was kind of that initial and we didn't see anything else. So, the market faded off. And you really you hit that moving average. You saw the sellers come in when they were supposed to and brought it back down. It was not a good close for Chicago wheat today on the charts. So that makes me a little bit concerned.

[Yeager] And when you look at corn for 35 is probably a number I just swore to you, because that seems to be the troublesome number that we just can't seem to break.

[Van Ahn-Kjeseth] Yeah. So, you know, initially you thought that if you could close the gap in corn, you would extend yourself quite a bit higher and you didn't. And so, I'm just afraid that you're stuck here like you were stuck at 420. We are stuck there for so long. Got that initial move. But here's the thing. If you do not see yield come down in this crop report a week from now, you are going to see a big carryout. I think what people are forgetting is that one of our last reports we got before the government shutdown was quarterly grain stocks, and there was more corn on hand due to low feed usage. And that that is going to show up in this report. We know that there is more old crop around than we initially thought. So that needs to come through. And if you don't see those yield decline, you're really probably looking at A22 to A24. And that is not going to support this market.

[Yeager] All right. So, we talked a little bit about profit taking in beans. But in corn are we at that point right now where we maybe need to make some sales.

[Van Ahn-Kjeseth] Yeah. Corn is like tricky for me right now because it's not at a great price. Guys aren't thrilled about it, but it's been in such a narrow range that it's kind of felt like you could put it on the back burner to a degree and say, hey, it's not really moving all that much. Let's just give it some time. I do think that if you get a bearish report, you can bring it back down to probably the 415 level. I would use that as a buying opportunity with courage calls. And then hopefully into this time frame, into the December, late December, January, February time frame, hopefully find those marketing opportunities. We know seasonally you still come down a little bit here throughout the next month or so. So, it wouldn't surprise me if we got a bearish report. That 415 number is my target to look at being a buyer. But overall, as far as marketing opportunity, I would say if it's corn, I'm not crazy about it right now, unless for some odd reason you got to push on basis. And I just really haven't seen that. I've seen the pushes happen in soybeans right now, but I have not seen them in corn.

[Yeager] Well, you mentioned bears, which means we have to talk about a bullish question. Last week, Sue was pretty bullish on a couple of things. And this is a question from Phil in Ontario where he wants to know is the current stagger in the soybean. Is it bullish push? Is it real? Is this soybean bullish push real or will we see these beans in the teens depending on South American conditions?

[Van Ahn-Kjeseth] Yeah I think this is a great question Phil I think that there's so many moving aspects to soybeans right now. If you really break down the trade agreement with China, you could spin it however you wanted to spin it. You could say it was great, it was fantastic. You could spin it on the fact that it's you're pretty much having them commit to a small amount this year and average at best moving forward. The big question is, you know, were we going to see them at all? We know the writing on the wall is that China has preferred Brazil soybeans that initially, you know, eventually we were going to lose our market share the way it was. So at least we have them committed to buying some of our soybeans. So, I think it was good there. As far as if you see beans in the teens, I think that really directly relates to two things. One, where do we see yield come in? Because if you're not going to downtick that yield, you're stuck for a little bit. Two it comes to South American weather. Like the question comes, the thing that worries me about Brazil is that Brazil's kind of that same aspect we're in as far as corn right now is that we planted so many acres of corn that even with a crop problem, which we really didn't have, even with a crop problem, you are still looking at large production. That's where Brazil is at right now for soybeans is that they continue to grow their acreage so much that you are just sitting in a situation where it would take a really big problem for them to have that, and you look at kind of how proactive China has been, you know, you look at Brazil's soybean exports for the month of October, there were like 2 million metric ton more than they were the prior year. So, China's been gearing up for this. So, I just worry, you know, it's going to take something very large for it to be able to happen to. But I look at it and I look at it as more long-term, long-term story. So, like Sue said, a year from now.

[Yeager] A year from now. So, I mean, we punched that $11 mark, finished at 1101 on the week. Still that's higher than what we have been. We have pushed through some significant technical marks. Does that give you hope?

[Van Ahn-Kjeseth] It does to a degree. I also what gives me hope is that even at $11, I'm going to be honest, even at 1150 $12, the U.S. farmer is not excited to be planting soybeans. So, it's going to take a lot to be able to say, hey, let's plant a lot of soybeans. Even rotational base. You know, you should see more soybeans next year. You still talk to people and they say, no, I'm still going to go with corn, especially with high rent prices that you have. You're going to see them take that chance at a high yield. And so, I just think that the writing's on the wall for the situation to remain tight. But it's going to take a lot of pencil pushing and getting them to actually commit to their purchases.

[Yeager] I'm smirking only because I received a couple of messages this week about people telling me they were going to raise the rent on their farmer, and that's going to be a legitimate discussion that people are going to have. They're going to see certain things, and that farmer is going to be in a tougher spot. The stone x mention or estimate was 53.6 bushels per acre. That's still a great number. And you talk about acreage in the fight. So, let's we talk about planting. Let's just real quickly finish off selling. You don't sound very excited to sell right now. And it doesn't sound like from what you just said, nobody else is either.

[Van Ahn-Kjeseth] Yeah. So, I'm not excited about selling corn, but we've been moving on marketing for soybeans because I just think that you got to really respect this rally that we've had. You've also seen a push on basis because you're starting to see it. And I think farmers did a really good job at tucking away soybeans that the end user is saying, all right, we actually do need to push for the bid and get it. So, I think you saw both sides come in and give you, you know, a dollar to $1.50 higher prices. You should reward that.

[Yeager] Are we rewarding anything in the cattle market right now? Is that part of this sell off?

[Van Ahn-Kjeseth] You know the nice thing about cattle is that the futures and the cash price have not been going hand in hand, right. So that has been great. But what I look at now is that you take this market and you've pretty much taken all the premium away of the border being closed. So, it doesn't sound like the border is going to open up anytime soon. And so, if you've taken all that premium away and we come two weeks from now, a month from now, and they're still saying no, we don't feel comfortable opening up that border, that premium needs to be put back in there. We're holding support right where we need to for the feeders and live cattle. And you look at the situation, it's not going to change any time soon. So, my biggest concern would be if you found a way to get Brazil's beef back in the U.S. I think that is where you would break the support line. But the border right now, it just sounds like all the work they went through to keep Screwworm out of the U.S., they're not going to risk it anytime soon. You've had multiple meetings with Mexico coming and trying to talk to us about opening it up, and it just doesn't seem like they're quite there.

[Yeager] So that gets to be then the impact on the feeder market as well, because we got to figure out where retention is going to happen. We got to figure out what we're going to feed these animals. If we see corn hanging around, are you in a position to fill any of those feed needs right now?

[Van Ahn-Kjeseth] Yeah, I still think you have that chance here. Coming back down to 415 for corn, and especially with just the recent estimates that we've had, corn has done a really good job staying in a range. So, the upper end of the range that I think are even like a next marketing target is 443 on December corn. And so that's actually, you know what $0.08 away. So, it's not that far away that I'm willing to say let's sit back. Let's wait on this. And if you end up paying a little bit more for feed use, I think that's still okay. Given the price levels that we're at for cattle that I'm not too worried about those now. But if we did push back, like I said at that 415 mark, that's where I would be going after some form of ownership on some feed needs.

[Yeager] And you talked about moving averages in some of the grains. It's also the big story in the in the hog market, 200 day moving averages, where we're kind of bouncing around. What's that telling.

[Van Ahn-Kjeseth] Yeah. You need to hold this level right. And you're holding support levels from your summer hogs from this summer in July. You're at such big levels of support for hogs right now that if you break that, I am very, very concerned. And so, we're holding in there. I think one big question when you look at hogs is that you had managed money very long prior to this government shutdown, and we have no idea what they've done. I have a feeling that they've been massive sellers and hopefully that dries up pretty quick, that that can really help the market find the support it needs to find and build moving forward seasonally. You do still see some pressure coming in through the rest of the year for hogs, but I do think that it's doing what it needs to do on those support lines.

[Yeager] Do you? The meat story is one that is just not going away, and the holiday is always that story. But again, with a lack of reports, we'll just have to see how it all sorts out. Kristie, thank you very much. I'm just going to speak and maybe I'll let you answer some questions in plus. Thank you. 

[Van Ahn-Kjeseth] Thank you.

[Yeager] I appreciate your time. You've been watching the market analysis segment here. And in a moment we will continue our discussion in an online only segment. We call that Market Plus. So how do you find it? You search Market Plus with Kristi Van Ahn-Kjeseth wherever that you get your podcasts, or you can hear that conversation and read it as well on our website of Markettomarket.org. Rural America certainly knows how to show off in a good photo. We have some of those posted on our Instagram page. Follow along for the images that we're talking about and other behind the scenes tidbits that we might share at instagram.com. Market to Market show next week harvesting the superfood blueberries while growing new markets. Thank you so much for watching! Have a great week!

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