Market Plus with Sue Martin and Matthew Bennett

PY - This is the Friday, December 2nd, 2022 installment of Market Plus. Joining us again, Sue Martin. Matthew Bennett. Good to have you both. Extended discussion and who would think that we saw more to talk about? We always do. Sue do the odds favor commodity prices? Setting the highs January to March in 23?

SM - I think we'll see a high in there. Yeah, I'm hoping it can be a better high than we've seen. You know, the markets counter seasonal in a way because we did a low in July, early harvest low. There's only been ten since 1968 or 70 and out of those ten. Two of them ended up going down into December to the end of the year after they made their little initial rally from that low.

SM - And one of those, which is so it's a 5050 deal, one seeing prices turn and renewable trend and the other one went into a bear trend. I think there are so many irons in the fire right now, but I do think we could see the market try to come back into January, February, right in there.

PY -

Are we going to have that May, June high like we've had the last two years?

SM- No, I don't think so.

PY - Okay. That was Shane's question, by the way. Thank you, Shane, for that. Let's go to Jason in New Franken, Wisconsin. Matt, he wants to know what impact of a strong US dollar. What could that have on exports?

MB - Well, I mean, I think you've already seen it somewhat with corn here over the last few months. I mean, we've seen some of our big buyers kind of absent. The dollar's been awfully strong. But you look at what the dollar did this week and the dollar actually lost ground. As we talked about earlier, it lost a fair amount of ground.

MB - Typically, whenever you see the dollar lose ground and crude oil up, corn markets up, too. And so it's kind of a weird week as far as that's concerned. But I think moving forward, you know, if the dollar goes back up and stays strong, it's going to have an impact on our exports. That's all there is to it. Now, we've got to see some of the folks that have have bought our corn like China.

MB - I mean, the last two years, we got a little bit spoiled because China stepped in and bought corn. Yes, we've seen some slowdowns. Yes, there's COVID issues over there. But it also looks as if the planned usage that they thought they've talked about is not going to be met by how much corn they produce this year. And that's a trend that's been going on for several years in a row.

MB - I don't know how much corn they had on storage. I know what they say, that they got a storage. I don't know how much corn they have. So on storage. My gut feeling is that they're going to have to step in and buy some corn. I don't think we're going to hit the USDA export forecast. You know, I think a lot of that is because of the dollar.

MB - But I do think that China will come in and buy corn at some point.

PY - So you kind of alluded to it in in the first part of our discussion in the program where you you see China's delay now because of unrest and further lockdown. Well, I guess what even talk about the unrest, lockdown, maybe the unrest will lead to an earlier lifting of some of these things. But do you see China, like Matt saying, continuing to buy U.S. corn in 23?

SM - I do. I do. I think they will. Again, I you know, China was in the process of of opening doors. You know, they didn't want to keep all their eggs in one basket. And so they started even before we were really getting into COVID really hard, they were starting to make inroads with that one broad, one road, one beltway.

SM - And I think that making ability to reach into Argentina, Brazil, they're talking that they're going to be probably the largest corn producer by 2025. It may be it's going to be interesting. Course, if if Lula da Silva, it follows what he says, then maybe not. But it's going to be interesting because I do think we have so many new.

SM - I just think if China starts to get into the initiative as they start to break loose and get back to normal cars driving, you know, using fuel and going into a more of a renewable fuel stance, if they do that, that's going to take a lot of corn. It's going to take a lot of soybean oil to make.

PY - Let's talk about opportunities. Paul in Danvers, Minnesota, one of our regular contributors via questions. Paul, thank you, as always. Paul wants to know if interest continues to rise and reaches levels. It hasn't since the 1980s. What opportunities will it create for some producers?

MB - First of all, I don't think we're going to hit the levels that we saw in the eighties. Okay. And I hope that we don't you. Yeah. Someone who is a producer who's been at it for many years and create a lot of opportunities for them. But a young producer in this environment where it's so expensive to farm and to get established, it's going to be it's going to be hard for me to say it's going to give them opportunities, but it's going to give them a lot of challenges.

MB  - Maybe one thing that could happen is that these land prices would finally take a little bit of a dip. But the bottom line is the demand for land is still just robust as can be. See, $30,000 land, 2025, it's becoming fairly common. We had ground in our neck of the woods. So for 18 five in the last week or two and it wasn't what I would have thought would be ground that would go for 18 five.

MB - But regardless, that's what it sold for. And so high interest rates to me are going to create opportunities for your older producers or your established producers. They don't have to borrow much because quite frankly, they would like to see their money make a little bit more on interest.

PY - Well, I don't know if you know this exactly, but there's a lot of people paying for land with cash right now. Is that the same in your area?

MB - Well, yeah. I mean, there's no question that there's there's cash available. But what I'm saying is, you know, I've got a son is a senior in college and he wants to farm. I started buying farm ground whenever I was his age. I can't imagine him being able to step in and try to buy a piece of ground for 15 to $20000.

MB - That's just not really possible. Even if you get your young farmer loan, you better have a fair amount of other stuff to go with it, whether it's rented land or whether it's dad. Just simply saying, Hey, guess what, we're going to buy some ground. I'm just saying it provides a lot of headwinds for a young, not established producer to be able to break in and be able to get established.

PY - All right. I need to go back on a global scale here, Matt and Sue. Let's go. Tim in Crookston, Minnesota, for this question for you. Sue, is the war in Ukraine drags on to another crop or could some of Ukraine and Russian grain export business be lost to other exporting countries even after the war is over?

SM - I think they'll come back. Those countries will come back to Ukraine and Russia after the war ends. The one thing that I would see and I don't think the market has really dialed it in, but you keep hearing how much production is and how much it's down this year from last year. And it's a big step down. And and Ukraine is the world's fourth largest exporter of corn.

SM - Under normal circumstances, China has agreements with Ukraine to buy corn from Ukraine, and they're not getting it from Ukraine. So I think when I look at on a global scale, I could see us maybe those countries, European countries going back to Ukraine and starting, but they're going to have to get back into the swing of producing and getting their their infrastructure back in shape to be able to do so.

SM - So I think it's not going to be an immediate situation, but I think it'll come.

MB - All right. Oh, yeah. Yeah. I mean, you know, the thing is, is that once the grain corridor opened, they actually shipped more out of that part of the world than what we really thought they were going to originally. But at the same time, I've said several times whenever I've been out speaking, if you if I was a captain for Maersk and someone asked me to go to the Black Sea and pick up some corn, I'd probably take vacation, you know, I mean, there's just a lot of uncertainties there still.

MB - And I agree with Sue. We've got to get back to more of a sense of normalcy before we can start to count on what happens if this weekend we see another ship get bombed or something happens, you know, I mean, we don't know in the timing of some of these events have been quite interesting and they've definitely impacted the market very heavily.

PY - As as our old friend Virgil Robinson used to say, as I sit here tonight, because we know how quickly things can change, I think of poor Ted Seifried can't believe I said those sentence a couple of weeks ago when he was here. Something happened. I can't even remember what it was so dramatic that changed what he said Friday at three in the afternoon to even the time that it aired in Iowa.

PY - But that's another story. Let's let's go on this final question here, Robert in South Dakota I haven't heard from Robert in a while. Robert wants to know what props other than wheat, corn and soybeans might a farmer look at growing to be profitable in 23? Let you both take a snap at this one sunflowers.

SM - Yeah because of the it's an oilseed so I guess I would say sunflowers, but I don't think they're going to be dry coming into spring. I look for a cool wet spring, so I don't know. I was thinking maybe sunflowers.

PY - What do you think, Matt?

MB - I would agree, especially in that part of the world. I mean, you don't see any sunflowers in my part of the world, but I've seen them in South Dakota driving around. But and I don't know if this is called growing a crop, but I'll tell you what, if a person could get a hold of some cattle, that's still my preferred method right now is to have some cattle on hand.

MB - People have asked me, what about retaining heifers? What about? I said, you know what, if you can and if you've got feed, you've got the ability to do so and financially you can make it work. I'd hold on every cow I've got on the place.

SM - Oh, absolutely. I think so too.

PY - So you could pencil it out. But it's been a hard time to get that pencil to sharpening right now.

SM  - Well, and one thing, too, if we get if we get some moisture coming in towards spring, you could see those cattle that normally would be coming off of wheat pastures and whatever you might see them, well, they'll come off in a normal way. But you aren't going to have you're going to keep that cow calf man alive. And he's really struggling right now.

SM - And, you know, you talked about Texas. I was reading yesterday where the feed yards at Lubbock and also at Amarillo are almost gone. Yeah.

PY - Sad. It's far from that story's far from over. And we'll continue to follow it and discuss it here. Sue MARTIN Thank you so much. Good to see you, Matt. Bennett Thank you. Thank you for squeezing this in your busy man, all of his travels and he stops by to say hello and we always appreciate you when you take a while, take us along.

PY - Whether it's in podcast or on video form, next week we are going to look at the ramifications of the EPA and what they said about the RVO. We'll also have commodity market discussion like we always do each and every week. We'll see you next time. Thanks for watching.

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