Market Plus with Dan Hueber

Market to Market | Clip
May 10, 2024 | 11 min

Dan Hueber discusses the commodity markets in a special web-only feature.


Paul Yeager: Welcome into the Friday, May ten, 2024 installment of the program we call Market Plus. It's the Extra Free Bonus Podcast video How to Show. We're going to demonstrate today how to find the center of a two by four. Dan, go ahead. The floor is yours for you.

Dan Hueber: Take a screen. All right.

Paul Yeager: The Internet is full of pictures of some planters sitting to the side here and some back in the field. Leads to our first question. Let's start with Mike in Iowa. And he says, Will the wet weather continue to affect the markets? And if you look at the pictures, you have some in say, Ohio, Ontario, sitting on the side.

Paul Yeager: What's the weather doing to these markets now?

Dan Hueber: We're sitting at the side because we can't go or can't go because we're finished.

Paul Yeager: Oh, not quite there? You know...

Dan Hueber: I mean, certainly if it drags out much longer and the corn, you know, another two weeks is probably going to be a supportive factor. Is it going to be a major driving factor? I don't think so. We're probably have moved far enough ahead at this point to eliminate that. And as we had commented in the previous segment, difficult to rally on too much rain unless it's just absolute flooding in areas. So, yeah, could be a little bit of a shift. But, you know, neither in corn or beans are we looking at a critical acreage situation. We still even if you lose a couple of million acres in corn, we're still going to produce a potential to produce a very large crop. So I don't see where that becomes a major market event. Hot, dry weather in July would probably impact is more than too much moisture in May.

Paul Yeager: And the rally this week you're not circling weather is the big cause.

Dan Hueber: I think it's a contributing factor, but I think it's more of a seasonal type of thing where the large suspects who have been extremely short in the corn market have less than that load.

Paul Yeager: Will fill in Canada from Dresden has a couple of questions. We're going to put up his graphic twice because he's got a couple of ones that we want to talk about. Sure. Phil wants to know we had the opportunity. We've had the opportunity to price corn, soybeans and wheat the last week before a drop off wet fields continue to dog planting progress.

Paul Yeager: Question one: Will we have to wait on hot and dry?

Dan Hueber: For any more advance or.

Paul Yeager: Any more?

Dan Hueber: Advance? You know, of course, we close the week, probably even a little stronger note than many anticipated two days ago. I you know, to see anything significantly above where we have been already. Absolutely. I think it would take hot and dry. I do think there is a possibility that we could get December corn, you know, even right now close to that $5 mark $4.95 to $5.But boy, above and beyond there, I think we have to have a far more serious of production hiccup than just wet weather in the spring.

Paul Yeager: And you said July hot and dry is that's your next pricing opportunity. How it would come?

Dan Hueber: You know, from a personal standpoint, when I look at the overall picture, fundamental picture, I don't want to wait for that. You know, sure, you could leave some calls on, you know, and again in me as any year you know if you looked at some calls in the spring to make it easier to price against that was that seems to be have been a good strategy this year. But you know I think if we're between now and the end of June, you know anything in this price range, if we have not found a new story, then you've got to be a pretty aggressive seller.

Paul Yeager: If you don't want to get to fundamentals, I'll get to something you said this week on technicals in soybeans. You kind of alluded to the question, is the wave completed? We've seen some waves. Is there going to be any? It's hard to predict technicals, but it seems that a lot of technical signals have played out here recently.

Dan Hueber: The it's been a pretty classic classically driven technical rally, which would tend to again reinforce the idea that this is more of a money move than it is really a weather move per se. I think the way the beans are positioned right now, they have room for one more swing higher as we move into the next, maybe even just the next week. But yeah, I think there's a possibility that we're going to get the November beans in that $12.50 if it really got excited, $13. But I think anything $12.50 and thereabouts is time to take advantage of.

Paul Yeager: The third question from Phil is this is going to be impressive if you can answer this. All right. This one might be of all the questions, if you look on the on the graphic that we're going to put back up here, is there a black swan on the horizon? Can you predict those, Dan?

Dan Hueber: Well, you know, by nature, black swans are the surprises. We don't know. We assume they're all swimming out there, that something could disruptive happen. Boy, you have really got to use your imagination to try to come up with an idea what would happen this year and again over the next 30, 60 days, whether it's the most obvious thing that and again, you know, nobody's really predicting any kind of a major heat wave or a shortage of moisture. We're restoring a lot of subsoil. I think. I think you heard on the way over here today that most of the most of Iowa is now out of the drought stage. I mean, maybe a few points here and there that haven't really recovered. But, you know, right now it doesn't seem to be that that weather is going to be enough of the cards to make that happen.

Dan Hueber: If you look overseas, yeah, we we've certainly gotten some support from the problems that have happened in Argentina, Brazil. But that soon to end, I mean, that harvest is going to be over here one way or the other and, you know, you're not going to make it a lot worse from that point forward. So, you know, we don't seem to really react much to Russia, Ukraine any more. So, yeah, I guess those are the obvious ones. But, you know, that's black swans are not obvious, I guess.

Paul Yeager: But prior to 2020, we didn't talk about black swans. They didn't quite happen on a regular basis. I mean, you can't really say that the drought of 2012 was a black swan. That was a weather event. The Russia Ukraine could be considered the Deracho, those types of things. So if I'm a producer, am I better to plan given I guess the law of averages, law of technicals that we've put all these black swans in the hopper, we've already we've already spit them out. We're better to predict regular movements, traditional movements of grains.

Dan Hueber: I would I think on any given year, that's probably the best way to market. You know, you're not really it's hard to plan on the disaster to make your decision to pull you out of maybe some poor decisions previously. So I think yeah absolutely. I mean the way you to market it is you can always take if you're really concerned about those events, I mean those are what option markets are for are almost man made for boy. But when it comes to actual, you know putting together a marketing plan, you have to go with the averages and you know, basically the name of the game is locking in profitability. And if you do that every year, then things are going to be all right. But a little more challenging this year, I mean, to find those levels. But, you know, not that we can't get them.

Paul Yeager: Well, there's been some profitability for some in the cattle market. But let's look one last question here from Bradley in Nebraska. He was very busy planting this week, so he sent me a question he had already asked someone else. So, Bradley, I hope things are going well. I think I saw you say hoping by the end of the weekend to be done planting. Good luck to you there. Beef imports are up 25% year over year right now due to high prices. Also working to cap retail prices, which will then cap Packer bids. The question, Dan, when will the feedlot start bidding lower for feeder cattle?

Dan Hueber: Well, you know, part of that could be already in the works. But I think one of the things in the feedlot, a lot of feedlots put in much lighter weight animals earlier this year. So, I mean, you know, you probably just have not had as much demand to you're not turning them over as rapidly as normal. So, I mean, they've just delayed really starting to even think about putting stuff back in there at this point in time. So it would tend to make sense to me, particularly if feed grains start moving up here a little bit over the next 30 or 60 days or moving further. You know, that's probably going to temper it a little bit. But yeah, I just like the fat cattle At this point in time, though, I think this this whole cattle market is just in a state of flux and really has a is having a challenging time trying to decide which way we need to move from here.

Paul Yeager: I asked you about the dollar at the end of the main program just the dollar play. Usually the dollar has a little more influence with live cattle, but does the dollar where do you see the dollar?

Dan Hueber: It certainly I mean, when you talk about beef imports, you know that certainly has played there. I mean, most of those imports, of course, come out of South America. And, you know, not only is the dollar strong, it's, you know, tremendously strong against the Argentinian peso. So it you know, I really kind of tend to think the dollar has reached a zenith for the time of the year. You know, everybody knows that interest rates sometime are going to come lower or at least we're not going to move any higher. And I think we of course, we've of course, factored in the elevated interest rates. And there was this point in time now that we're going to come out of bed, I mean, we are still the basically the no argument that we're the strongest economy of the developed nations in the world. Any time there's still going to be turmoil, people are going to run back to the dollar no matter if it's if they even care to jump into gold or Bitcoin dollar is still going to be the place to be. So it's I think that really keeps it from deteriorating significantly.

Paul Yeager: Well, do you see anything happening with Brazil this week with their central bank getting involved with their currency influencing us here.

Dan Hueber: Oh, well, you know, it didn't seem to impact the real, you know, terribly at this point in time. So, you know, the real has really been bouncing around at the same level for about two years, maybe three years now. So, you know, granted, they have a number of challenges within their economy as well. So I it's hard to imagine other than just, you know, short term moves, seeing it improve much against the dollar.

Dan Hueber: And of course, if it doesn't, it continues to provide Brazilian farmers with all the incentive they need to keep expanding acreage down there.

Paul Yeager: Gas prices lower this week. Oil up just two pennies. Anything to tell you, telling you that crude is kind of done on this run higher, right?

Dan Hueber: Well, I absolutely. You know, of course, part of the move higher is, you know, continuing to try to trim back production levels. As long as we don't look at who is cheating out there. But domestically, you know, we continue to put record amounts of record amount of production of, you know, just total energy out there. So I think that percent, even with the summer driving season, you know, upon us, you know, with that's pretty well been factored into the prices at this point. So I think, you know, it's going to be pretty challenging to move energy prices much higher than they have already.

Paul Yeager: Whose cheating? Really, that's what we're going to.

Dan Hueber: And I've been told that I'm not sure if that ever really happened.

Paul Yeager: And we won't name names. No. Maybe next time. Right. Dan Hueber: Good to see you. Thank you so much. Appreciate the time.

Dan Hueber: Thanks very much.

Paul Yeager: Right next week, we are going to look at the push for genetic diversity in livestock. And we're going to talk with senior market analyst John Roach. Thanks for joining us. Have a great week.

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