Market Plus with Sean O'Leary, Jeff French and Don Roose

Paul Yeager: Welcome into the Friday, March 29, 2024 installment of Market. Plus. Our panel is with us. They stuck around after what we just did and that main show, which we hit a lot of the markets. Sean O'Leary is here. Hey, man. Jeff French are on that side of the table. There's Jeff and Sean. Don Roose over here. Good to see you, Don.

Don Roose: Good to see you, Paul.

Paul Yeager: You know, I, I want to, I want the record to reflect. I didn't pick on you once during that show.

Don Roose: That's unusual. So, I mean, I'm ready to hit.

Paul Yeager: This question now. Okay. We're going to start on inputs. Ryan in Iowa asked us on Facebook, Why is anhydrous so high?

Don Roose: Well, you know, he's got a good question. One is down substantially from what it was. You know, it's almost in half, but from the top. But I think when you really look at he's right, it's a big disconnect because look at natural gas. I mean, it's down here at multi, multi year lows. And for the most part, anhydrous is it's made from natural gas, big percentage. So I think it's simply because why is the price up here? I think because it can be, you know, same thing with tractors. Why are they up here? You know, I think it's that type of a thing. But no, I mean, it's got the potential to come back down more.

Paul Yeager: Sean, is this only a demand story right now with anhydrous or. Well.

Sean O'Leary: I think Don has a good point. If you look at what our corn and bean markets have done, I'd say there's a little bit of a disconnect there, too. If the prices are that much out of line with each other. Somebody mentioned land sales and how strong those are still as well. And it doesn't look as attractive when you look at the price of corn and beans.

Paul Yeager: And overall economy. In Michigan, sentiment numbers were at some of their highest. That was a huge jump today. That wasn't expected. Sentiment has been low in a lot of these reports. So maybe the other part of the economy is is thinking things are up. But, Jeff, since we've seen each other a lot here in 2024, we've I've asked you quite often about the Acres story.

Paul Yeager: You knew this was coming. We knew you were coming today. But given this incredible amount of fall field work that was done, is the high anhydrous even a story given all the work that's done and then the intentions to maybe switch to beans?

Jeff French: Well, I think it's a story because what corn prices are and that that is improved here in the last couple of weeks. But yeah when you have the inputs as high as they are with corn prices, as low as they are down here at four or five year lows, it's a much bigger deal besides when you have $5.50 or $6 corn. But, you know, fertilizer is the ultimate world market. I mean, it's sold and bought everywhere. And, you know, farm ground continues to expand. I mean, Brazil in the last four years has expanded 15 million acres and they're not slowing down. So the demand is going to continue to grow.

Paul Yeager: Sean, this one's going to be for you, Curt and Iowa wants to know what kind of short or long term impact will the most recent new headlines a little bit about avian flu in the Maryland bridge have on the ag economy in general? And if you can tailor any answer to the live cattle market, you kind of did in the main. So I kind of want you to say it again for those in the back of the congregation.

Sean O'Leary: Well, the bridge collapse, I think, is not going to have that much of an impact that's going to going to take a long time to get that replaced. But I think initially they talked about a floating bridge to get things moving again. But when it comes to the cattle market, I think you're just going to continue to see a fair amount of volatility there. And, you know, it's plays out plays out on a daily basis. And, you know, it's I go back to the E-Mini S&P. And as long as that stays dry, I think the demand will be there.

Paul Yeager: Let's a little bit in livestock with a little different here, Don. This one's going to be for you, Christine. Ah, no, that's Christy in Wisconsin. Christine, Like next week, Christine wants to know when will the price of calves, particularly bull calves, start to come back down in price? And what time frame do you see this happening? Is there any correlation on bull calves to the cattle weights and feeders? And it's always tied together, isn't it?

Don Roose: Well, I mean, I think the bull calves, when were the price come down? I think what she's really saying is, you know, you're with the feeder cattle as high as they are that, you know, you're putting, you know, all the animals on feed as possible. So when will the bulls cows start to come down is probably when the market starts to relax back down. And it doesn't look as attractive to place cattle or, you know, when the demand starts to pick up on the other side.

Paul Yeager: Jeff, you get to have Phil and Ontario's question. You're ready for this one. We've already answered part of Phil's question in the main show, but Phil wants to know what is the potential impact of bird flu? We talked about that. But what I want you to focus on is here What demand categories in Thursday's USDA report may offer hope for corn prices? Or is this mostly about a future weather market for the growing Brazil suffering a corn crop? You kind of talked about both of those in the show. Yeah, I think the.

Jeff French: You know, as we progress here, the Brazil suffering, the corn crop weather is getting less and less. I mean, they've had really good rains and actually, you know, Argentina was getting too much rain and that's backed off here a little bit. You know, the story on the report there Thursday with the corn, you know, seasonally right now we should be working higher into the growing season. And you got to look at, you know, the funds as sure as they are. Let's say they're short 170 hundred and 80,000 contracts. I mean, do they want to be short all that corn going through plan and then going into the first part of the growing season, history would say no, but we'll have to see what happens here this spring.

Paul Yeager: And any take on that one?

Sean O'Leary: Well, I think Jeff has a good point. I would just submit that if you're trying to make money on the long side of corn or beans and you have to rely on weather, quite often, you're going to be disappointed not to say we're not going to have an issue at some point. But, you know, I think any given year, chances are things will get done in a timely fashion. Most areas east, east and west all have decent weather. You know, it's kind of a one on one. So every ten or 12 years issue where we have something that's major hiccup.

Paul Yeager: We talked about the weather before we started rolling and how it rained and we discussed. But do you have clients that were itching to go and this rain slow them down for making that decision of starting a little too early?

Sean O'Leary: Well, I'd say it is plenty early. Plenty early, Yeah.

Paul Yeager: But do you think that dawn an early crop? What happens is the thing does get planted super early. We're done by May one.

Don Roose: Well, you know, you still want growing season, so you got to plan and you still have to get through pollination. So, you know, I think that's one thing. But you know, you were talking about the funds and I was just thinking about this. You know, the funds are short. We'll say 200,000 contracts, a billion bushels. Well, the farmers long about 5 billion. So, I mean, it's kind of this battleground. Who's going to win this war and is probably coming count going to come down to weather like you're saying, Paul.

Paul Yeager: Recently we have been asking as we're about to head into the field and we have some folks that are going to be, you know, pretty focused on getting that crop. It give me some advice for a producer who are not saying set it and forget it. But what should they be trying to just high level things look for in the next 6 to 8 weeks?

Don Roose: Well, I think the number one thing you look at is, you know, what do you what's my break even and what do I need to do to survive until we see what's going to really happen in these years going forward? Are we going to eventually be trading $3.50 to $4 cash, corn, or is it going to be, you know, $4.50 to $5? And we don't know we're in that transition, Paul So I would say protect yourself when you have the chance to and make sure you're doing a good job. The next you're talking about six weeks. That's what I would be doing.

Paul Yeager: Remember what Sean said if five seems so long ago? But he's right.

Don Roose: He does. Except if you look at corn today, we went to, what, $4.80 on DEC corn.

Paul Yeager: We were sniffing it.

Don Roose: Right. And you put a carry on the market out to July of let's just say $0.30 we were at you're on $5.10 out in July. Probably eventually put a basis on that You're at five.

Paul Yeager: Sean does your phone start ringing Monday? If we close over five on Tuesday, I should say.

Sean O'Leary: I think that would get a lot of people interested. And I think, as Don said, you know, you have to take some protection. And I just go back to last year and it happened early, but it was brief and there's a lot you can do. You don't have to make an actual cash sale. You don't have to sell futures on the board. There's plenty of options strategies, including covered short calls, strategies. You that's a strategy. You have a limited profit potential, limited risk. You leave the upside open. Those are positions you can kind of scale into without thinking you know you just made a sale and it's done for.

Paul Yeager: Well, Jeff, I'm going to ask you this because I try to find my notes. I make sure I get this right. We I think had some of the highest stocks on ethanol in more than a year. Crude oil continues to creep up. Or does that play into this discussion on.

Jeff French: Six month high? I think in crude $83, $84 a barrel, you know, with you know, we'll see. I mean, the Fed said they're going to cut rates three times this year. The economic indicators are saying slow down on that. So I don't see too much downside right now in the crude. And if you go back in the last year, I mean, $70 has been a very good floor. Now we've gotten above $80. We've held that here for the last week and a half. But yeah, that makes everything more expensive to produce. But also it does lend support, especially to the buying complex.

Paul Yeager: Don. Last question. The dollar, the volatility at least this week wasn't there. Will it come.

Don Roose: Back? Well, you have to be very concerned with the dollar because we're printing a lot of money. I think over the next year we're going to go up another $3 trillion in debt. So the more debt you have, the weaker the dollar historically says. I would say you have to be careful that the dollar hasn't topped out. Look at some of these other like bitcoin's I mean, people are looking for alternatives to the dollar, unfortunately.

Paul Yeager: Welcome in the market plus plus as we cover bitcoin next time. Thanks, Don. Don Rose Thank you. Good to see you. Sean O'Leary Thank you very much. Jeff French, gentlemen, thank you. Appreciate your time. Thank you, everybody, for watching. Next week, we are going to look at the battle with feral hogs and Kristi Van Ahn Kjeseth will join us to share her views of the markets. Thank you so very much for joining us and have a great week.

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