Market Plus with Ted Seifried

[Paul Yeager] Welcome to the Friday, June 9, 2023 installment of Market Plus Ted Seifried back with us. Ted, the weather.

[Ted Seifried] The weather.

[Paul] A couple of hours before you sat in that chair, the state climatologist, state climatologist of Iowa sat there on the show we record here called Iowa Press. And what Justin Gleason said was the Canadian wildfires impacting the Iowa. There's a significant impact and that's drying the atmosphere than what we would normally get this time of year. So I ask you, Ted, are we talking about the Canadian wildfires enough and their impact on agriculture?

[Ted] I really don't think we are, Paul. In fact, I find that commentary interesting. I would like to hear more meteorologists talking about this because this obviously feature. Yes, I've seen some of them some of them, you know, show charts or maps of where it's going and whatever. But, I want to know what the effect is on. Agriculture. The drying out, the atmosphere. That seems to make sense, right? Because what is smoke? Smoke. That's come from fire and fire gets rid of water. Right. So, yes, that. Would be very dry air going aloft. But it also does filter out some sun. And really does, I think, keep temperatures cooler.

So, I mean, if we're worried about hot and dry, well, that is something that's going to be a bit of a cushion that might actually help the crop out a bit. Then it depends on what happens with the rain. So if you're getting rain. And the smog and, you know, cooler temperatures, that's really kind of just what the doctor ordered after the start that we've had to this this growing season. If that's what we get in July and August, we can really still have a very good crop. Again, there is a year that you can go back and look at 1992 where we started off really dry. You had a weather pattern trait change. It got wet at the end of June into July and August. A big part of what saved that crop was a volcano. We had ash up in the in the air.Different cause.

But same thing kind of going on and by the way we were above trend line yields in ‘92. So I don't know. I would I would like to hear more conversations from the from the meteorologists, from the weather guys, about what the effects of the smog or the Canadian Wildfire. Smoke would be on our crops.

[Paul] Well, let's ask what kind of weather things you follow. Now, I mentioned Tom Skilling already, but Mike in Nebraska wants to know which models or forecast does the market tend to support the euro? The GFS, the local Chicago weather forecast, and how much trust in those mid range forecasts, 6 to 10 and that 8 to 14 day. You see it on Twitter every time? Every day.

[Ted] Yeah. Yeah. You know, I'm kind of famous for saying that you can you can trust the forecast for about as far as you can throw it. When I say that, I usually am talking about longer term forecasts, right? The shorter term have gotten really very good in the last ten years or so. But you know, sometimes certain models will be missing something and other models will be stronger. At the moment, it seems that the GFS has been a stronger correlation.

And this weekend, we talked about it in the regular program, this weekend is a real big proving ground to say to tell us how much we should be trusting weather forecasts going forward for the rest of the growing season. If these rains that were in the forecast, if they occur, well, then I think we have to put a lot of credence in to all the forecasts that come after that, if they don't happen, if those rains miss out, I think you've got to question every forecast that you see until the rains actually hitting the ground. And who knows when that will be.

Then where's the weather premium in that? Well, that's what I'm saying, if these rains happen this weekend, I don't know if you need a weather premium because we’ve got a forecast for a weather pattern. A change in weather pattern. If those rains don't happen, then we all of a sudden have to really put in a lot. of weather premium. So how much longer then, are we paying that close attention to every for our forecast changing as this through the last week of June? We get we get a few good rains. Well, if we get a few good rains, we'll have we won't have to watch it. We won't be hanging on every forecast.

[Paul] Right. One that'll alleviate. the dryer situation. But to, there's a lot of skepticism in the forecast right now. And a lot of is because the disagreement in models and they keep flipping back and forth. And we have missed out on some rains so far. But if it consistently consistency starts building again, we won't be hanging on every one to see what little intricacies have changed and not and so on and so forth.

All right. Well, let's go to William in Iowa. He asked us on Facebook here, Demand, demand, demand. How long will we see demand? Keep these grain markets capped despite drought conditions across 45% of corn country.

[Ted] Yeah, William, that is a fantastic question. And really that is the question that defines the markets right now. What I mean by that is that we have kind of taken a little bit of a pause from focusing on the lack of demand to talk about weather for the last couple of weeks, you've had a halfway decent bounce off the lows in corn, although this week  wasn't a great week. I mean, like you said, we did close down on the week, but beans have enjoyed A bit of strength this week. And again, I think a lot of that is weather related. But if we do see that weather pattern change and we're not as worried about the weather and we don't have to have this weather premium in the market, then we  to back to the conversation of demand. And that's a problematic thing for markets because we continuously see our export sales floundering. Really just not good.

Actually, this week was one of the better weeks for soybeans that we had seen in a while. But still old crop, 230,000 metric tons, not enough to hit the U.S.D.A.’s target. We really need to see that pick up. And it's at a time of year where we don't usually have that big of a market share in our global export market because Brazil. Unless Brazil has a bad crop They did not. Brazil had a gangbusters first season soybean crop. So it's going to be tough to get to that level to the U.S.D.A.’s target, even though they just lowered today. But for corn, that's the really disappointing one, because this is the season where we should be selling a lot of corn. And you look down at that second season corn crop in Brazil, we keep pushing the estimates higher on that one that's going to come and steal our market. We have a very small window of time to be selling and shipping corn in. It's just not happening and that's a problem.

[Paul] Well, you open up what is easy to get caught up in. And Robert in South Dakota asks the question when they say don't look out your backyard for marketing, how far does that go? He says, I did a big mile circle in my area of 230 miles. And he says it looks kind of pathetic. So given what you've just said, given people start traveling a little bit more I talked to people at the World Pork Expo this week about their conditions. Yeah. How do you mark it if it looks bad out in my backyard? Knowing not everybody's in the same boat. 

[Ted] It’s extremely hard.

I'll say that for really every, every producer, but even for myself, right. I do a fair amount of traveling during the growing season, especially in the second half of the growing season, you know, crop tours and things like that. So I do very much on purpose, try to cover as much ground as I can to see as much as I can. But it's hard to ignore what you see right in front of you and a 230 mile radius. That's a pretty decent chunk of ground to cover.

There are some tools out there, right? I mean, a drought monitor,  drought map, those things. Sure, That's good to know. But then you have conversations like this. You know, people talk about markets and they have I have contacts all over, I mean, clients all, I mean, clients all. over the Corn Belt, So I'm getting firsthand information from people from all over. And I'm able to express that and tell you what I saw or tell somebody else what what I'm hearing. But also. Okay, there's another really good one. Reuters Karen Braun does crop watch. And she's got I think it's now 14 or 15 farmers from across the Belt that weekly, she gives updates a lot of times with accompanied photos and things like that.

I mean that's at least for me, it's a fascinating thing to watch. And to read. It's she's even got a scale assigned to it. So there are tools out there. That's the one I use personally. But there are tools out there for this sort of thing. And you have to try you have to try to get out of the back or the Backyarditis as much as you possibly can because that can be a detriment to a lot of producers that are trying. o make marketing decisions that have a problem outside their door but then, you know, again, 500 miles away, things are potentially record. I'm not saying that's the case right now. We have a widespread issue at the moment, but if the rains start coming in and things, I mean, we're not going to fix every problem spot, right? There's still going to be problems spot. And if you're sitting in that problem spot saying 'Oh, corn's got to go to $7' but ignoring the fact that, you know, actually gotten a lot better. Well, then, you're going to have a problem, have a hard time making the correct decisions on your marketing.

[Paul] Let's finish up with livestock. I said, we talk about feeders. There's concern growing that the feeder market has now softened in the sense there's people hesitant to enter, which then might actually drive prices up, but then create another problem down the road. 

[Ted] Yeah, down the road.

[Paul] Where do you see that going right now? 

[Ted] Well, you know, we've been we've been saying for a while that the animals just aren't out there and that's a problem. That's part of the reason why we've rallied as much as we have. I think when we talk about high prices being the cure for high prices, you know, when we talk about demand rationing, right? You see that happening sort of in the feeder cattle market. But also something that demand corn, right? The one of the biggest problems for feeders cattle for the last two years is that corn has been so expensive, feedstocks have been so expensive. And with all the drought situation pastures just not available. So it's been. very expensive. If corn prices continue to come down, which again, we just talked at length about that, that's based on weather. But if corn prices continue to come down, I think we'll see a very much renewed interest in putting more animals on feed.

[Paul] How soon? Well, I, tell me what’s the forecast I mean, you're not supposed to do me, I’m supposed to do that to you.

[Ted] There is definitely going to be going to be a month or two lag. Right. You know, people guys have to be comfortable with that, okay, lower prices are here. They're look like they're going to stick around. And I'm talking. About lower feedstock prices or an improvement in pasture. Or a combination of those two things. But if it's going to cost you less, you know, then you're going to take that risk rather than the high risk that you've had to take for the last couple of years.

[Paul] Ted, thank you.

[Ted] Pleasure's mine. Paul, as always good to see you.

[Paul] Thank you so much. That's Ted Siefried, everybody. Next week, we are going to take a look at the legacy left by Greyhound racers in the Midwest. And we'll have the market analysis of Don Roose. Thanks for joining us. Have a great week.