Market Plus with Ernie Goss and Chris Robinson

Paul Yeager: Welcome back to the table for the Friday, November 29th, 2024 Market Plus. We're still going Ernie Goss, Chris Robinson here and we've been talking here. Ernie, between tapings, I got a list of things I need to go back. I cut them off. He can't let, we let him have the final word. 

Chris Robinson: You know, he's smarter than me, so it's probably smart. Paul Yeager: Well, he should have let you say good night. Let's start with our first question that came in Dan in Nebraska, and he says ‘Are pork prices going on a huge bull run?’

Chris Robinson: Absolutely have been in just in the last five months. I mean, we've had a lot of volatility in 2024. The weights are continuing to drop. The demand continues to be very, very strong. The prices are at or near, contract highs are getting up to this 97 level, 92 cent level. You know, I'd love to see, if we can get lean hogs back up to the buck but, and in general, it's been a great recovery, but it was a very, very difficult year. We had a big slam for the first six months that didn't look so good. We might drop below $0.70. $0.68. so he's back up here at 92 is a great opportunity. If you follow me or if you pay any attention at all, I'm always a big believer in protecting that revenue, because it can go away so quickly. And, rather than try and look at your crystal ball and say, how much longer is going to stay here, I would say maintain as protect as much of that revenue gain as you can. But certainly, this has been the year where every time you sold a pot load, if you bought some of them back, you did very, very well.

Paul Yeager: This isn't necessarily a crystal ball question. It's more of a monitor crystal ball question. Chris. Boyce in North Dakota, I see that managed money and the total non commercials are now net long corn. Yeah. So how much more upside potential does this market have since they're already on that side of the boat.

Chris Robinson: It's the one thing they're long. They're long corn and they're long. the protein complex. They've got a record long, lean hogs. In fact, that was kind of funny. We had a little bit of a blip last week and lean hogs, and it was about two days after, a person that is noted for being a stocky analyst said that he was friendly, protein and friendly. Smithfield, literally, that was almost the top for the lean hogs. So everybody that wants to own hogs in the finance community owns it. it's a small position that they've got and the corn, like 100,000 contracts, hundred and 20,000 contracts. I'd be more impressed if it was 2 or 300 for 40,000. But it's a start. But I would say this and I've talked with other brokers and other producers about this. Why are they long? Why? These guys are not stupid people. They're short beans, they're short everything else, but they're long corn. And I think that, I'd like to see how this plays out. Maybe there's something going on that the market sees that, that we don't, we don't. It's not evident yet. So I'm a big believer and paying attention to the managed money. It is a force of nature.

Paul Yeager: Well, not necessarily managed money, but the markets start to gossip. How would you think if this stock market hits 50,000 at Christmas? What would that mean? We're already Dow hit a record 40, a 44 seven. Looks like Tuesday. We were headed to a close to a 45. 50 is not out of the realm of possibility by Christmas. What's that mean?

Ernie Goss: That, investors have lost their mind? I mean, not really, but it's.

Chris Robinson: Only ten more percent.

Ernie Goss: That's right, but 11. But the price earnings ratios are out of sight. Meaning, for every dollar of earnings, you're paying excessive amounts for the stock. And that's not a good thing. I mean, in other words what's happening is ETFs exchange traded funds, individuals are pouring money in there which automatically goes in the market. And we don't there's no, there's no buying based upon the price of the stock and the that the earnings relative the stock. That's one factor also where you put your money and there's investors in my judgment, are overly, enthusiastic. I mean, there's a price to be paid. I don't know when it happens, but what would I be looking at? I'd keep an eye on the ten year Treasury, the yield on the ten year Treasury. As I've said on your show before, what that does is tell you about what investors globally see about inflation. So that's where.

Paul Yeager: Those are the investor pirates you were referring to who's that?

Ernie Goss: The vigilantes. The vigilante vigilantes, the bond investors.

Paul Yeager: So what does that I mean, what seriously, what does that tell us, though, in making sense of this? Because to me, a 50,000 Dow makes no sense.

Chris Robinson: Like you say.

Paul Yeager: That seems it's not a measure of the full economy.

Ernie Goss: No.

Paul Yeager: It's a but it doesn't even seem like it's a part of the reality. Right.

Ernie Goss: The global economy and investors just are, are they're what, I don't know what is sleepwalking? I mean, in other words. And you've got the magnificent or fantastic seven, eight, nine, whatever you wish to call it. Those are going back, back to like the income distribution. AE 20 is the same in this lot. It's the same in the stock market. You've got the Russell 2000 Russell 5000. Not so much their growth in, in the Facebook Google now and that respect, you're going to see a Trump administration that comes in and deregulate some of that. I mean Google has been taking it on the chin from the Biden administration's Department of Justice and, and the and the other regulators. And that's I think that's some good news to come out going forward, is we're going to see some deregulation.

Chris Robinson: One can think quick about everybody wants in the stock market except for Warren Buffett. Warren Buffett has the largest cash position. He's had time. So he's waiting for something. And we're overdue. We've had multiple 10%, 20% corrections. You know, the last big correction we had was, Covid. We dropped 32%, 35% boom, boom. So it's lingering out there. A lot of people have lost a lot of money trying to time that correction. Right. When it comes, it's going to come. It's probably going to be an opportunity that we don't see. And it's going to be very difficult to tell somebody, hey, we just dropped 30%. Now's when you want to buy it. Human nature being what it is. Everybody, I think I saw a statistic where the most money has come in since the election again into these ETFs. And you just have people that were waiting, waiting, waiting. Now they're all getting in. And I think if you come back full circle, the United States is still the best place to be. It's still, you know, don't bet against the United States.

Ernie Goss: The dollar's rising, but it's one of the reasons it is overvalued.

Chris Robinson: And and but there's little expression. Right. The market can remain irrational longer than it can remain, liquid.

Ernie Goss: And what about baby boomers that they said, well, if it turns down, you'll get time. Well, how much time does a baby boomer have to recover from the downturn in 2008 and nine. It took several years to get back. Well, do you have the time when you have five RMDs required? Minimum distributions. Also, you need money to live on. So there are some real issues out there.

Paul Yeager: Do you have any concern that any of the we talked about no farm crisis, but do you see Great Recession clouds forming? I mean, housing.

Ernie Goss: Housing is.

Paul Yeager: Still high again, right?

Ernie Goss: It's like the stock market. It's overpriced. If you look at what it takes for a a first time homebuyer putting 10% down or 20% down your payment in Iowa and the other states around that, we Nebraska that we survey, the price is almost the monthly payment is almost tripled. And since the pandemic. I'm speaking of can you imagine that tripling of the monthly payment now with the interest rates. And now the mortgage rates are now back up to almost 7%. Now, why is that inflation? I mean, there's inflation fears, as you say. Right.

Paul Yeager: Well, inflation hit inputs Chris. Gary in Wisconsin wants to know how fertilizer tariffs on Canadian products affect grain prices. And you can also answer from higher inputs.

Chris Robinson: No, I don't think that if they try and pass those tariffs on to our inputs, especially for stuff that does come in from Canada, it's definitely not going to be a positive, thing for a producer here has to buy that. There's no two ways about it. It gets sloughing off, and it's really difficult to just pass that on to somebody when you're trapped because you've got your fixed, fixed input costs and what you produce, what you sell is at four year lows. Right. And then you're worried is it going to go any lower or is it going to go higher. So I think it's something that again, this is going to be a year where you're gonna have to be very, very, careful and know the levels that you need, especially if they do, increase the price of inputs because of tariffs.

Paul Yeager: Crude has dropped back below 70. diesel you were talking about.

Chris Robinson: Earlier, just the three year lows. I mean.

Paul Yeager: Are you locking in anything right now?

Ernie Goss: Right. Yes as well.

Chris Robinson: Everything's been coming down, depressed. You just saw crude oil. Crude oil. You know, if you look at a big picture of the past three years, we've been in about a 30 hour trading range, 65 bucks to 90 bucks, give or take. So when we get down here, sub 70, that's an opportunity you did mention diesel about. I think about six weeks ago to two months ago we were at three year lows. And with my marketing advice I was like, hey, we're at three year lows. If you can, if you know, you use a lot of diesel when it gets down there like that, that's when you want to maybe go throw your tanks up as opposed to waiting. If we do have, you know, because we're always one headline away from gas prices spiking, then then you've got a problem. So when the market gives you the opportunity to take advantage of it, and I again, that is a silver lining for producers. The fact that gasoline is cheaper and.

Paul Yeager: Yeah, gasoline is cheaper. I think you're below $3 average. If President Trump comes in and says, I want to continue to drill and put more oil into this market, doesn't that further just depress things.

Ernie Goss: And depresses the price? But that doesn't mean the economy. I mean with cheaper energy prices, we're apt to see an expansion there. But one other factor is the LNG liquefied natural gas. President Biden put a halt to new licenses to export. That's going to be some very good news. And it's the apt push up like natural gas prices, which have now been very low. So the the gains there and the back to the, the, the oil industry, they will still do quite well with these, with these prices at 60, even below 60, perhaps that's not going to be a big issue. I think it'll be good for the economy.

Paul Yeager: I could do this all day, but I just have one more thing I need to quickly ask you. And that's about the labor issue right now, because there is impact that could be on agriculture in areas. Do you see labor as a major challenge in ‘25?

Ernie Goss: Oh, absolutely. Especially if you don't, we're not judicious about sending individuals back to their home nations. And we depend heavily, heavily on immigration. And I'll turn to Lee. I'm talking about legal immigration. When a person graduates from a college in this part of the country, whether that's junior college or universities, give them a green card. At the same time, we need labor. Our birth rates are so low that we've got to get more labor in this. And that's what's really choking this part of the country, the economy.

Paul Yeager: You want to dive in on immigration before we go?

Chris Robinson: I think the risk is and again, it'll probably be passed on. But what happens if there is an issue with, especially the meat processing plants? I'll just leave it at that. I think also, if you go to California, that's a whole different labor issue because that's a whole different, you know, ball of wax. But I think that how it affects the Midwest, we're sitting here in the Midwest. Certainly if they start getting aggressive, it could have an impact to, probably not the demand for, beef and pork, but it's going to impact the bottom line of those companies that are in that business.

Paul Yeager: Chris Robinson, so good to see you. Thank you so much for the time. Ernie Goss, thank you so much.

Ernie Goss: Good to be here.

Chris Robinson: Appreciate it.

Paul Yeager: Happy Thanksgiving to you both.

Chris Robinson: Happy Thanksgiving.

Paul Yeager: That is what we are going to do it, here for our Market Plus. And I want to remind everybody to get signed up for our new free newsletter at Market to market.org next week. We'll keep tabs on the decision makers and connecting readers. We’ll tell you that story, and we'll also have the commodity market analysis with Mark gold. Thanks for joining us. Have a great week.

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