Market Plus with Kristi Van Ahn-Kjeseth

Paul Yeager: Welcome to the Friday, April five, 2024, installment of Market Plus. Back with us. It's Kristi Van Ahn-Kjeseth, fourth time here with us. Is it getting easier yet?

Kristi Van Ahn-Kjeseth: I talk a lot. It's always a total lie.

Paul Yeager: But I did cut you off in the analysis segment there. You should know by now it flies. And I only should ask three questions in one. We left off talking about livestock and hogs and their reaction to this bird flu now. Do you anticipate is this a trend? You kind of answered the cattle side of things, but for the hogs, is this a trend higher right now or is this just a result of current situation?

Kristi Van Ahn-Kjeseth: I think there's a lot of things that are friendly hogs right now when you look at it. You know, I talked about the weights, obviously for cattle. The weights are current for hogs. So demand has been great for hogs. I think that's another thing. And then you got this story, which lends to maybe some more domestic usage. So I think everything right now is very friendly. The thing that worries me the most about hogs is just how far we've rallied your past third price counts on the chart. And to get to a fourth price count, it's really rare. And so I just think that it would take a lot to get that up and going. We're beyond two standard deviations away from trend line yield on a technical side of things. So there's enough stories to say, hey, you can be optimistic on hogs. Just don't be reckless.

Paul Yeager: Optimistic, not reckless. That's good, too. All right. We have a bunch of questions that you've submitted each week. Look for us on Wednesday and Thursday when we ask for questions. These are the ones for Christy. We are going to lead off with Paul in your state of Minnesota. Do you have any target prices for getting started on marketing sales for new crop corn and beans?

Kristi Van Ahn-Kjeseth: $4.87 is our first target for a new crop of corn. We got to $4.81 out of the report. There has been some talk about, you know, is that people's break even or not. And, you know, the big thing is, unfortunately, you know, society traders don't care about a producer's break even, which is really unfortunate. But that is the target that we want to start on marketing.

Kristi Van Ahn-Kjeseth: That's the next price count that will use above. There you get to like $5.04 or $5.24. Those are the levels that we're really looking at. And I do think with an acre number that you got, you have a good chance of getting those.

Paul Yeager: Do you have a target then for beans too?

Kristi Van Ahn-Kjeseth: $12.42 Is our target on new crop beans. It's a gap. I think it's a great start. We've previously had some obviously you're well off and where you have the ability to make some sales previously, but I think that's the target we're looking at and really it's going to take that close above $12 to really get the enthusiasm behind it.

Paul Yeager: To get the start to open the door. Is there is that dependent on whether it's that dependent on exports, that dependent on Brazil?

Kristi Van Ahn-Kjeseth: I think there's a lot of stories. I don't know if you're really get it from Brazil, even if we continue, you know, you've kind of fine tune some numbers from private estimates out of Brazil that people feel comfortable with it. And I don't think you can get a small enough number right now out of a private assignment or conab to say, hey, oh my gosh, what are we going to do here? We have been able to pick up some export business from Mexico for soybeans, which has been great to see. Right. Diversify where our exports go. Crush has been really favorable. So I think there's enough little bits of stories, but I do think it's going to either come on planting or we're going to be waiting a while to see what happens with weather.

Paul Yeager: Do you anticipate we talked about the corn, the quick planting. I mean, but there's also been this thinking lately of planting beans before corn. Right. And do you think any of that would carry into this year? And what would that do to an acreage discussion?

Kristi Van Ahn-Kjeseth: Yeah, So there's been a lot of discussion. I think there's been a lot of scientific data saying, you know, we never thought we need to rush planting soybeans, but it's proving us that if we get them in a little bit earlier, it is beneficial till yield. So I think there's always discussions, but there is something wired in a producer's brain that they all love to go after corn early and the chances and it's like, you know, they're just like a natural gambler at heart that if they can get it in as early as they can, they're going to be betting on corn.

Paul Yeager: Plenty of people who sit in that seat will always say that farmer loves to plant corn. Yeah, it's true. It is true. All right. James in Oklahoma has your next question. Will the dry areas in the Midwest grow larger as the summer rolls on? If so, how high will corn and beans go? So I guess let's talk the weather thing first, because you did mention a soybean outlook that you think isn't necessarily friendly to be.

Kristi Van Ahn-Kjeseth: Yes. So right now we've been talking for a while like La Nina is supposed to get real strong towards the end of summer. So that means as you progress through summer, hot and dry is the trend that we're having. The last run on some weather models have put a little bit more moisture in for June and then going back to hot and dry.

Kristi Van Ahn-Kjeseth: That moisture would be obviously very, very great for corn. Beans are going to take the moisture regardless. But then you look at the hot and dry and into the end of July into August, that is not great for beans and I think we saw a similar situation this year, this last growing season, that you saw a record yield in corn, but you didn't add beans.

Kristi Van Ahn-Kjeseth: And I think that came from the fact that coming into August, the first week of August, all sun beans were looking fantastic. You saw so many people really start to talk about putting on those extra pods and then all sudden we went hot and dry for so many areas that it really just the yield.

Paul Yeager: Cut them off. Yep. Yeah. So I guess I have to do time on Wisconsin's question and you've kind of answered it but he asked will beans rally? Is that anything more than weather? I mean, I know you've already kind of answered that question, but in the scenario you just laid out.

Kristi Van Ahn-Kjeseth: Yeah, I think there's plenty of stuff I think you could say demand obviously crush. We've talked about that. I think you can also say on the fact that manage money, I know we're going to get into a question about manage money, but manage money are short beans and they don't really like to be short beans. The really the only time frame that they were aggressively short beans was the trade war era. And so you could just see that even easing up. We also know that you have a ton of stock on hand to sell for corn. But those bushel amounts are different than when you come to two beans. So I think that a farmer selling can kill a corn rally. I'm not so sure a farmer selling can do that to be. And so beans have the ability to streak if they want a streak.

Paul Yeager: All right. Well, let's get into that managed money question. Phil in Ontario wants to know how undisciplined are the funds when it comes to keeping their short positions? Is it a case of grain fundamentals change quickly because of weather, will they cover their shorts in a sort of panic, or are they simply reading futures spreads and stocks to use ratios?

Kristi Van Ahn-Kjeseth: Yeah. When management wants to buy or sell, they want to buy or sell, they will kind of skate by and then they'll get really aggressive. So I think they have the ability to really even up on positions in a quick fashion. If they want to. As far as what they're paying attention to, I think a lot of it just comes into portfolios. I think you're looking at all sorts of aspects. What we do know and what you had talked about earlier is that we had started off this season or I should say, even into winter, thinking we were going to get rate cuts and now all of a sudden you're like, oh, I don't know if we're really going to see those rate cuts.

Kristi Van Ahn-Kjeseth: And I think if you're not seeing that, if you're not seeing the rate cuts, you're really friendly, the economy, you're friendly, you're thinking inflation is going to continue to be there. And part of inflation has commodity prices. And I think you could see management say, I don't want to be on the short side of talking about inflation or growth.And so I think you have a lot of aspects for manage money to even up on positions and that would be friendly. I just worry the lopsidedness when it comes to corn right how much farmer selling will offset the ability to for manage money to get to neutral. I'm not too concerned about that when it comes to soybeans.

Paul Yeager: But with corn it's going to take farmers selling to move the market, even though it might be lower to start.

Kristi Van Ahn-Kjeseth: Yeah. So farmer selling is can be really stubborn. And so I think that's one thing when you look at it. For example, he a couple of weeks ago we had an ethanol plant in Minnesota make a big push for basis. They said, hey, we want the grain, we want it right now. We're going to push $0.10 $0.15 on basis. And they were able to pick up a half a million bushel and a half a day. And I think that's the problem that we're seeing, is that those big days, the big movement, whether it's basis or futures, is met by selling pressure. And we need to get through that. I think that you have a lot of people wishing for $5 again, and I think that's going to be where the market really gets pounded. Those last bushels come out saying, hey, you know, to be honest, I know it feels like a ways away. We haven't even planted the crop yet. But before you know what these guys are going to be like, I need this grain out of my bins. I need it done now. And so we're running out of time for one. But I think if we can get to $5, that's where you really going to see the farmer say, no, take it. We'll focus on next year.

Paul Yeager: In that sense, the end user might just not reward any rally because they know that there's going to have to be some cheaper product coming.

Kristi Van Ahn-Kjeseth: Yeah, and I think that we saw that leading up to the 30th or the 28th. The report is that the end users, the ethanol plants, they made this big push on basis. And I think what they were looking at is saying corn is really cheap here. I'm willing to push the basis so I can get some of this locked up. We know that ethanol profitability on a chart doesn't look that great, but you have some added features in there, dogs and all of that that I think add into it and make it profitable. But I think you're just looking at it and saying that the end users saw this as a cheap product, they bought it. And now if we get there we might be $5 futures. But what's the difference in basis? That's my concern.

Paul Yeager: You mentioned a couple of things. You mentioned Crush during the show. Let's get this question all the way. Keith here on Earth said, what is your take on the increase in soybean crush capacity and how will it affect exports of soybeans and the products you mentioned, the ethanol plant that you were talking to, but you're also geographically located where there are some more crush plants coming online this week, Blatant self-promotion. The M2 m podcast was about the soybean crush and Cobain's view of things. Worried that we might overbuilt.

Kristi Van Ahn-Kjeseth: I don't know about that. I'm like, Really friendly when it comes to crushing. And I think, you know, you have so many aspects going into it that are really friendly when it comes to crush and renewable diesel. One. Everyone seems to be on board, right? When you had ethanol, you had big oil. Fight it. Big oil is part of almost every single one of these facilities. The tax credits that you have for big oil to be part of this are huge. The tax credits in general for anyone involved in this is huge. So the profitability is there. I think the writing is on the wall that they want this to happen. Now you're looking at it and you're saying, okay, this is great, but what's going to happen for meal prices, we're going to have this abundance of meal. How are we going to figure this out? Exports? Are we going to have to give up some exports? Well, we've seen this year that China, if they don't if they can get their grain from somewhere else, they're going to get their grain from somewhere else. And so this is going to be a good thing to diversify our market. If you look at where corn is and you took out ethanol usage out of corn, we would be just disastrous without it. And so I think this is just so exciting that we can spread this out and maybe something has to give, But in the end, it's going to be a good thing for farmers.

Paul Yeager: And the end of our time is here. Thanks, Kristi, Good to see you again. Thank you. All right, Kristi Van Ahn-Kjeseth, thank you so much. Next week, we are going to be talking about growing resistance in pet antibiotics. And Ted Seifried will share his thoughts on the markets. Thank you so much for joining us. Have a great week.

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