Market Plus with Chris Robinson

Yeager  Welcome into the Friday, May five, 2023. This is MarketPlus. I'm Paul Yeager. That's Chris Robinson. Glad to have you here. Chris, right before we started rolling, I was asking you, what did you see yesterday on the drive? A lot of people in the field.

Robinson  Not a lot, but actually some a lot of activity. And it was actually a beautiful drive. Drive. Drove into the sun the whole way in the sunset. But, you know, nothing dramatic. But I did see some you know, some people a.

Yeager Lot of dust.

Robinson Yeah. You know, it was surprising. I was surprised once I got over the Mississippi, it got dustier. Yeah.

Yeager So, yeah, we're going to talk about drought right here. We're going to start with Eric in Ohio. What factor caused the bump in the wheat market midweek? Can that factor cause a sustained increase in the wheat market? During the main program, we already talked about the Black Sea. How do you want to answer that question?

Robinson Well, for today's action, it was a very, very good recovery of the last flush, because we keep having these flushes, we rally back, we flush, we rally back. It was a good way to end the week. We'll see if there's any more follow through. That's what the wheat has has been lacking. And the number one driver in the wheat, as far as I'm concerned, is the massive Chicago wheat short position that the funds have. They have to buy that back. That alone will will help support prices. So I would watch that carefully. The next week is going to be really key because again, somebody asked a question earlier about 100 day moving average, all those technicals. We've been oversold in wheat for, you know, three months, multiple times. People have called the bottom in wheat.  So hopefully this is the bottom that will hold it. Just the timing is right. We're heading in the May, you know, this time last year, 2022. Little did you and I know that when we were peaking, you know, May, June and then boom. So maybe now hopefully this year it's we're turning so.

Yeager Well seasonals haven't mattered the last couple of years.

Robinson Right and the seasonals have been screaming buys there some very well followed cash you know brilliant cash guys that have been like for the past three weeks are like they're getting big big buy signals. But, you know, like everything else, sometimes those those programs don't work until people finally throw in the towel. It felt like this week was a throw in the towel week. Hopefully the lows are in.

Yeager Is drought have anything to do with this?

Robinson Yeah, that was another thing. There were some drought monitors came out today, a couple of them more well followed services had some I guess you just have to call them friendly or bullish ideas on, you know, we may be heading into a drought this year. I keep making this analogy. It makes you think a lot of 2012, 2012, if you look at the charts, which I spent a lot of time doing, we trended lower all the way till June. It was miserable. And then boom, that drought came and then it was off. Two reasons. So somebody asked earlier about making sales down here. If you do, you got to reown on it because you don't want to sell it in the hole and then watch it rally on a on a weather issue. And that's what's going to be the driver. We we we need a weather issue. And you know what? In the last 30 years, every planting season, there's usually one or two weather hiccups. So hopefully that's what we're set up for in the next 2 to 3 weeks.

Yeager Unless you're the one in the weather problem, you just need them, right? That's the unfortunate thing. All right. Let's let's go with Nathan in Illinois. And Chris, he wants to know, what is your export outlook going forward for this year? Which crop commodity do you like the best for exports right now?

Robinson Well, I'd say across the board, things can only get better. That and our main export partner, other than Mexico, Mexico's been pretty steady buyer of pork and corn. You know, China needs to get back in the game. Really, what it comes down to, they they've been steady with soybeans, but they're waiting for the South American crop, which is now about to come online. They just took their first soybean shipment from from South Africa I read today. So they're looking for other markets. So that's the number one driver they've been asleep at the wheel for as far as it comes to wheat and corn. And then to add insult to injury, last week, they they had the cancelation. You know, in the past you and I have talked about this there their famous for doing cancelations, folding their arms and then you know somebody back over here buys it so we'll see.

Robinson Maybe that was their strategy this time. It might have blown up on them this time, though, because we did have such a pretty good turnaround, especially in corn and new crop corn. So I wouldn't be surprised to see them come back in. When corn's at 17 month lows when wheat's at two year lows. If you're an end user, you know, this is a it's a it's a gift.

Yeager The green light.

Robinson Like you're green light. Yeah, it's you know, can it go lower? Yeah. But I think if you're an end user, this is where you want to step in and start taking some protection.

Yeager Okay. Step out of commodities into the overall picture of ag and this is Joel in Oklahoma. Have farmland values and sales hit a plateau?

Robinson We'll see a lot of it. I think it was interesting. It's been driven really, because most of these cash, most of these sales are cash. They haven't always been borrowing money to do it. So that's another thing. Those those sales might be done. Anybody that's looking to go to the bank a year ago, you know, we went from we were at 2.8%. Now we're at six and a half percent. That might slow some people down, slow the roll a little bit like everything else, you know, market values, they trend up, trend up, turned up. And then if they do correct, unfortunately, they always usually correct sharply. But I think in general, I was joking earlier. I mean, I some friends of mine have been trying to buy some land and some ideas for a while, probably when they buy the top, when they buy, when they finally ink the deal, write the check, that that might be at the top.  So they haven't done it yet.

Yeager That's everybody's fear. Yeah. They always think when I sell that was the low. Yeah. And I, you know, whatever it is. Okay. Let's go. Phil in Ontario. With the July contracts of corn, soybeans and all three wheat trading below their 100 day averages, what's the bullish argument looking ahead for old crop versus new crop?

Robinson Old crop corn has had, in fact, I wrote about it. I mean, there was a huge basis bump up. If you look at May as May was going off the board, May was $0.50 over July. That was they were begging you for if you had corn on the bean to let it move, get rid of it. I wrote it in my letter. I'm like, If your basis is good and guys are getting north, you know, north of $7 corn, I how can you say no to that when you're looking out at new crop corn? You know, not at six anymore, not at $5.50. At one point we dropped down, you know, below $5.20 for a second. Now it looks like we're going to head back up. So, yeah, don't look a gift horse in the mouth. And the other thing to watch to if you're interested in that is that what's that July-Dec spread the all the old crop, new crop you'll see it start to turn and again kind of to bring in the other question about exports, they'll be the most sensitive to any moves. And then finally, with old crop corn, the funds are short. They finally flip themselves in a short position as of last week. So they may have sold in the hole, too. They're not always perfect. They may have to buy that back. So the traps been set, right. So hopefully they're nailed and they and they have to get out of it and it helps us get a recovery.

Yeager So what's the bait in your analogy?

Robinson Oh, they don't want to lose money. The funds don't.

Yeager Really in the funds. But any no specific commodity right now is the is the bait.

Robinson Well when you've got corn at 17 month lows on the multi multi-month lows, everything's oversold. People are getting ready to, you know, to to not throw the towel in but just, you know, get very, very frustrated then and also to then all we have to have is some sort of demand or some sort of weather issue. And it looks a lot like 2012.

Yeager What is the only big story, big shoe, big snap of the trap to go is whether the only thing that's really going to rally us.

Robinson I think it's weather and also how the overall economy does if we can get away from this, these bank issues. Right. Which and if you look at the march low was down to Orlando for Commodity Classic when that happened that was spurred by the bank issue because when the markets get scared, these guys will that's risk off. It's called risk off. Sell all commodities. It makes no sense. But that's the go to button here to sell. But then they buy then they spent we if you look at March, we had a 50 cent rally in corn and an 80 cent rally and beans and everybody's like, Oh, it's, it's behind us. So if we can get away from that problem, I think that'll help things get back to normal.  And then hopefully we can get back to trade and supply and demand.

Yeager That's what I was trying to set you up for, is that we can go back to that. All right. I want to close on energy. Crude off $5 this week, 7%, natural gas off 11%. How much lower can these two go?

Robinson Natty gas is sitting a two-year low. I mean, you got to remember, a year ago we were at $10, we’re at $2, it looks like it's trying to find a bottom same thing with that action that we had this week where we went down and took out that $65 low and then literally 3 minutes later we were gone. It was if you want to look at a scary chart, it was like one minute, 2 minutes. It was just, you know. So hopefully the lows were in for for crude. Why is that? Higher crude is good? Because when crude is supported, there is more desire among the finance community to own all commodities. So it helps lift all commodities that are rising tide. But if you look at the if you put a chart up of crude oil and corn, every time crude had a big move, corn has moved as well. So, if you're bullish, corn from the corn, you want to see crude stay north of $70.

Yeager Well, Russia came out this week. They are still finding buyers for their products. OPEC, I guess the United States might send someone to Saudi Arabia. I'm guessing oil will be on that docket discussion. Oil still at the center of a lot of our economic discussions.

Robinson So when we sold the SPR, right, somebody somebody got to buy 185 million barrels of oil.

Yeager Maybe they're the ones that sent the the market higher up. Yeah, could have been. All right, Chris, thank you so much. Good to talk to you again.

Robinson Good to be here.

Yeager Thanks. That's Chris Robinson, everyone. Thank you. Next week, I'll look at a new approach to handling mental health emergencies in rural America. We'll also have the market analysis of Naomi Bloom. Thank you for joining us. Have a great week.